Political Contestability and Public Contracting
Journal of Public Economic Theory (Forthcoming)
33 Pages Posted: 8 Dec 2011 Last revised: 15 Jun 2018
Date Written: June 5, 2018
Do public agents undertake socially inefficient activities to protect themselves? In politically contestable markets, part of the lack of flexibility in the design and implementation of the public procurement process reflects public agents' risk adaptations to limit the political hazards from opportunistic third parties---political opponents, competitors, and interest groups. Reduced flexibility limits the likelihood of opportunistic challenges, while externalizing the associated adaptation costs to the public at large. We study this matter and provide a comprehensive theoretical framework with empirically testable predictions.
Keywords: Transaction Costs, Bureaucracy, Procurement
JEL Classification: D23, D73, H57
Suggested Citation: Suggested Citation