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Third-Party Opportunism and the Nature of Public Contracts

  • Marian W. Moszoro
  • Pablo T. Spiller

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18636.

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Date of creation: Dec 2012
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Publication status: published as 11. Third-party opportunism and the theory of public contracts: operationalization and applications Marian W. Moszoro and Pablo T. Spiller The Manufacturing of Markets Legal, Political and Economic Dynamics Editors: Eric Brousseau, Université de Paris IX (Paris-Dauphine) Jean-Michel Glachant, European University Institute, Florence View all contributors Date Published: May 2014 availability: Available format: Hardback isbn: 9781107053717
Handle: RePEc:nbr:nberwo:18636
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  1. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
  2. Pablo T. Spiller, 2009. "An Institutional Theory of Public Contracts: Regulatory Implications," Chapters, in: Regulation, Deregulation, Reregulation, chapter 3 Edward Elgar Publishing.
  3. Gregory Lewis & Patrick Bajari, 2011. "Procurement Contracting With Time Incentives: Theory and Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 126(3), pages 1173-1211.
  4. Jean-Jacques LAFFONT & Jean TIROLE, 1990. "The Politics of Government Decision-Making : a Theory of Regulatory Capture," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9004, Université de Lausanne, Faculté des HEC, DEEP.
  5. Oliver E. Williamson, 2005. "The Economics of Governance," American Economic Review, American Economic Association, vol. 95(2), pages 1-18, May.
  6. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680, December.
  7. Anita V, 2007. "Efficiency and Bureaucracy," Working Papers 181, Institute for Social and Economic Change, Bangalore.
  8. Ernst Fehr & Oliver Hart & Christian Zehnder, 2011. "Contracts as Reference Points--Experimental Evidence," American Economic Review, American Economic Association, vol. 101(2), pages 493-525, April.
  9. Robert C. Marshall & Michael J. Meurer & Jean-Francois Richard, 1994. "Curbing Agency Problems in the Procurement Process by Protest Oversight," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 297-318, Summer.
  10. Spiller, Pablo T. & Urbiztondo, Santiago, 1994. "Political appointees vs. career civil servants: A multiple principals theory of political bureaucracies," European Journal of Political Economy, Elsevier, vol. 10(3), pages 465-497, October.
  11. de Figueiredo, Rui J P, Jr & Spiller, Pablo T & Urbiztondo, Santiago, 1999. "An Informational Perspective on Administrative Procedures," Journal of Law, Economics and Organization, Oxford University Press, vol. 15(1), pages 283-305, April.
  12. Canice Prendergast, 2003. "The Limits of Bureaucratic Efficiency," Journal of Political Economy, University of Chicago Press, vol. 111(5), pages 929-958, October.
  13. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, March.
  14. George A. Boyne, 2002. "Public and Private Management: What's the Difference?," Journal of Management Studies, Wiley Blackwell, vol. 39(1), pages 97-122, 01.
  15. Robert C. Marshall & Michael J. Meurer & Jean-Francois Richard, 1994. "Litigation Settlement and Collusion," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 211-239.
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