Contracting with Governments

26 Pages Posted: 21 May 2009

See all articles by Eric Brousseau

Eric Brousseau

Université Paris X Nanterre - Department of Economics

Stéphane Saussier

IAE - University of Paris I Sorbonne

Date Written: March 21, 2009


In this paper we review contracting issues raised by a government’s decision to contract out activities linked to public services, as well as highlighting potential future research avenues. We first review the different kinds of contracting arrangements and public private partnerships used by government to contract out their activities. In Section 1, we highlight the difficulties linked to the specificities of the arrangements between the government, considered a competent and benevolent dictator, due to complex information and commitment issues. We focus on the different sources of contractual failures resulting from contractual incompleteness and from imperfect competition among the potential private providers of public services. We then focus on the specificities of the relationship between the private and public parties that might be non-benevolent and therefore submitted to specific constraints to control potential disfunctioning like corruption, (see Section 2). Lastly we consider the “government” no longer as an homogeneous entity, but as a complex, multi-purpose organization submitting third parties to specific hazards (Section 3). Suggestions for further research follow in the conclusion.

Suggested Citation

Brousseau, Eric and Saussier, Stephane, Contracting with Governments (March 21, 2009). Available at SSRN: or

Eric Brousseau

Université Paris X Nanterre - Department of Economics ( email )

Nanterre Cedex, 92001
+33140975922 (Phone)
+33140975907 (Fax)


Stephane Saussier (Contact Author)

IAE - University of Paris I Sorbonne ( email )

21, Rue Broca
Paris, 75005

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