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Short-term or long-term contracts? - A rent-seeking perspective

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  • Gürtler, Oliver

Abstract

In this paper, .rms engage in rent seeking in order to be assigned a governmental contract. We analyze how a change in the contract length a¤ects the .rms. rent-seeking behavior. A longer contract leads to more rent seeking at a contract assignment stage, as the .rms value the contract higher. On the other hand, the contract has to be assigned less often, which of course leads to less rent seeking. Finally, a longer contract makes a possible cooperation between the .rms solving the rent-seeking problem more difficult to sustain.

Suggested Citation

  • Gürtler, Oliver, 2013. "Short-term or long-term contracts? - A rent-seeking perspective," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 208, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  • Handle: RePEc:trf:wpaper:208
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    File URL: https://epub.ub.uni-muenchen.de/13344/1/208.pdf
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    More about this item

    Keywords

    Contract length; rent seeking; cooperation; relational contract;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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