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Court Efficiency and Procurement Performance

Listed author(s):
  • Coviello, Decio
  • Moretti, Luigi
  • Spagnolo, Giancarlo
  • Valbonesi, Paola

Disputes over penalties for breaching a contract are often resolved in court. A simple model illustrates how inefficient courts can sway public buyers from enforcing a penalty for late delivery in order to avoid litigation, therefore inducing sellers to delay contract delivery. By using a large dataset on Italian public procurement, we empirically study the effects of court inefficiency on public work performance. We find that where courts are inefficient: i) public works are delivered with longer delays; ii) delays increase for more valuable contracts; iii) contracts are more often awarded to larger suppliers; and iv) a higher share of the payment is postponed after delivery. Other interpretations receive less support from the data.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 11426.

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Date of creation: Aug 2016
Handle: RePEc:cpr:ceprdp:11426
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  25. Steven Tadelis, 2009. "Auctions Versus Negotiations in Procurement: An Empirical Analysis," Journal of Law, Economics and Organization, Oxford University Press, vol. 25(2), pages 372-399, October.
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