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Contract Form and Procurement Costs: The Impact of Compulsory Multiple Contractor Laws in Construction

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  • Orley Ashenfelter
  • David Ashmore
  • Randall Filer

Abstract

It is claimed that many regulatory rules enforce inefficiencies in order to achieve the appearance of cost control. We assess the importance of these claims by measuring the effect of New York state's compulsory multiple contractor law on the cost of public construction in New York City. Multiple contractor laws, which exist in many states, prohibit the use of general contractors in order to promote the appearance of competition. Contrasts of construction costs between buildings with identical blind cost estimates indicate that this law increases public construction costs by 8% and increases construction delays by more than a calendar year.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5916.

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Date of creation: Feb 1997
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Handle: RePEc:nbr:nberwo:5916

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Cited by:
  1. Lisa J. Cameron, 2000. "Limiting Buyer Discretion: Effects on Performance and Price in Long-Term Contracts," American Economic Review, American Economic Association, vol. 90(1), pages 265-281, March.
  2. Michel Trommetter & Alban Richard, 2000. "Choix de mécanismes incitatifs dans les contrats agri-environnementaux," Économie et Prévision, Programme National Persée, vol. 145(4), pages 145-155.

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