Court Efficiency and Procurement Performance

41 Pages Posted: 22 Jul 2014

See all articles by Decio Coviello

Decio Coviello

HEC Montreal

Luigi Moretti

University of Padua - Department of Economics and Management

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Paola Valbonesi

University of Padua

Multiple version iconThere are 3 versions of this paper

Date Written: July 20, 2014

Abstract

Disputes over penalties for breach of contract are often solved in court. A simple model shows how inefficient courts may induce public buyers to refrain from enforcing penalties for late delivery to avoid litigation, inducing sellers to delay. Using a large dataset on Italian public procurement, we then study empirically the effects of court inefficiency on public work performance. We find that, where courts are inefficient: i) public works are delivered with longer delays; ii) delays increase for more valuable contracts; iii) contracts are more often awarded to larger suppliers; iv) a higher share of the payment is postponed after delivery.

Keywords: court efficiency; public procurement; time incentives; performance in contract execution; delay; litigation; enforcement cost

JEL Classification: H41, H57, K41

Suggested Citation

Coviello, Decio and Moretti, Luigi and Spagnolo, Giancarlo and Valbonesi, Paola, Court Efficiency and Procurement Performance (July 20, 2014). Available at SSRN: https://ssrn.com/abstract=2468867 or http://dx.doi.org/10.2139/ssrn.2468867

Decio Coviello

HEC Montreal ( email )

3000, chemin de la Cote-Saint-Catherine,
montreal, Quebec H2V3P7
Canada

Luigi Moretti

University of Padua - Department of Economics and Management ( email )

Via del Santo, 33
Padova, 35123
Italy

Giancarlo Spagnolo

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

Paola Valbonesi (Contact Author)

University of Padua ( email )

Via 8 Febbraio 1848, 2
Padova, 35122
Italy

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