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Court Efficiency and Procurement Performance

Author

Listed:
  • Decio Coviello

    (HEC Montréal - HEC Montréal)

  • Luigi Moretti,

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Spagnolo Giancarlo

    (CEPR - Center for Economic Policy Research, SSE - Stockholm School of Economics)

  • Paola Valbonesi

    (Unipd - Università degli Studi di Padova = University of Padua)

Abstract

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.

Suggested Citation

  • Decio Coviello & Luigi Moretti, & Spagnolo Giancarlo & Paola Valbonesi, 2018. "Court Efficiency and Procurement Performance," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01476673, HAL.
    • Handle: RePEc:hal:cesptp:hal-01476673
    DOI: 10.1111/sjoe.12225
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    Keywords

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    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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