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Third-Party Opportunism and the Nature of Public Contracts

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  • Marian W. Moszoro
  • Pablo T. Spiller

Abstract

The lack of flexibility in public procurement design and implementation reflects public agents' political risk adaptation to limit hazards from opportunistic third parties - political opponents, competitors, interest groups - while externalizing the associated adaptation costs to the public at large. Reduced flexibility limits the likelihood of opportunistic challenge lowering third parties' expected gains and increasing litigation costs. We provide a comprehensible theoretical framework with empirically testable predictions.

Suggested Citation

  • Marian W. Moszoro & Pablo T. Spiller, 2012. "Third-Party Opportunism and the Nature of Public Contracts," NBER Working Papers 18636, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:18636
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    Citations

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    Cited by:

    1. Olga N. Balaeva & Andrei A. Yakovlev & Yuliya D. Rodionova & Daniil M. Esaulov, 2018. "Public Procurement Transaction Costs: A Country-Level Assessment Based On Microdata," HSE Working papers WP BRP 20/PSP/2018, National Research University Higher School of Economics.
    2. Ivanov, A., 2015. "On the new approach to the risks' identification in the projects of public-private partnership," Working Papers 6414, Graduate School of Management, St. Petersburg State University.
    3. Stéphane Saussier & Paola Valbonesi, 2018. "Introduction to the special issue: Public Procurement—new theoretical and empirical developments," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 1-4, March.
    4. Bertrand V. Quélin & Ilze Kivleniece & Sergio Lazzarini, 2017. "Public-Private Collaboration, Hybridity and Social Value: Towards New Theoretical Perspectives," Journal of Management Studies, Wiley Blackwell, vol. 54(6), pages 763-792, September.
    5. Nicola Branzoli & Francesco Decarolis, 2015. "Entry and Subcontracting in Public Procurement Auctions," Management Science, INFORMS, vol. 61(12), pages 2945-2962, December.
    6. Julie de Brux & Frédéric Marty, 2014. "IPPP – Risks and opportunities An economic perspective," Working Papers hal-03470399, HAL.
    7. Ivanov, A., 2015. "How to improve effectiveness of anti-corruption expertise: Public procurement case," Working Papers 6433, Graduate School of Management, St. Petersburg State University.
    8. Philippe Gagnepain & Marc Ivaldi, 2017. "Economic Efficiency and Political Capture in Public Service Contracts," Journal of Industrial Economics, Wiley Blackwell, vol. 65(1), pages 1-38, March.
    9. Marian W. Moszoro & Pablo T. Spiller, 2016. "Coase and the transaction cost approach to regulation," Chapters, in: Claude Ménard & Elodie Bertrand (ed.), The Elgar Companion to Ronald H. Coase, chapter 19, pages 262-275, Edward Elgar Publishing.
    10. Jean Beuve & Marian W Moszoro & Pablo T Spiller, 2023. "Doing It by the Book: Political Contestability and Public Contract Renegotiations," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 39(1), pages 281-308.
    11. Riccardo Camboni Marchi Adani & Paola Valbonesi, 2016. "Favouritism in scoring rule auctions," "Marco Fanno" Working Papers 0210, Dipartimento di Scienze Economiche "Marco Fanno".
    12. Marian Moszoro & Pablo T. Spiller & Sebastian Stolorz, 2016. "Rigidity of Public Contracts," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 13(3), pages 396-427, September.
    13. Andrey V. Tkachenko & Andrei A. Yakovlev & Olga A. Demidova & Irina O. Volmenskikh, 2014. "The Effects Of Regulatory Reforms On Public Procurement: The Case Of A National University In Russia," HSE Working papers WP BRP 19/PA/2014, National Research University Higher School of Economics.
    14. Marian Moszoro, 2013. "Overcoming Opportunism in Public-Private Project Finance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 25(1), pages 89-96, March.
    15. Marian W. Moszoro & Pablo T. Spiller, 2018. "Implications of Third Parties for Contract Design," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 5-16, March.
    16. Ivanov, A. & Maslova, S., 2014. "Applying modelling in the process of anti-corruption expertise of legal regulation of public procurement," Working Papers 6382, Graduate School of Management, St. Petersburg State University.
    17. Abhay Aneja & Marian Moszoro & Pablo T. Spiller, 2015. "Political Bonds: Political Hazards and the Choice of Municipal Financial Instruments," NBER Working Papers 21188, National Bureau of Economic Research, Inc.
    18. Andrey Yakovlev & Aleksandra Bashina & Olga Demidova, 2014. "The effectiveness of simple homogeneous commodity procurement under rigid govermental regulation: the case of granulated sugar procurement in Russia," HSE Working papers WP BRP 13/PA/2014, National Research University Higher School of Economics.
    19. Andrei Ivanov, 2015. "Applying modelling in the process of anticorruption expertise of legal regulation of public procurement," OBEGEF Working Papers 041, OBEGEF - Observatório de Economia e Gestão de Fraude;OBEGEF Working Papers on Fraud and Corruption.
    20. Jensen, Olivia & Wu, Xun, 2017. "The hybrid model for economic regulation of water utilities: Mission impossible?," Utilities Policy, Elsevier, vol. 48(C), pages 122-131.
    21. Olga N. Balaeva & Andrei A. Yakovlev, 2015. "Estimation of Costs in the Russian Public Procurement System: A Case Study of Voronezh State University," HSE Working papers WP BRP 41/MAN/2015, National Research University Higher School of Economics.
    22. repec:hal:spmain:info:hdl:2441/3n1h5ijlcf80v9csi63s61fdvk is not listed on IDEAS
    23. Bertrand V. Quelin & Sandro Cabral & Sergio Lazzarini & Ilze Kivleniece, 2019. "The Private Scope in Public–Private Collaborations: An Institutional and Capability-Based Perspective," Organization Science, INFORMS, vol. 30(4), pages 831-846, July.
    24. Carpintero, Samuel & Siemiatycki, Matti, 2016. "The politics of delivering light rail transit projects through public-private partnerships in Spain: A case study approach," Transport Policy, Elsevier, vol. 49(C), pages 159-167.

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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement

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