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Government Contracting and the Threat of Re-Election

17 Pages Posted: 26 Feb 2015  

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business

Date Written: February 24, 2015

Abstract

Incumbent politicians may worry about their chances of re-election. Re-election concerns may induce incumbents to write contracts that have low power incentives (LPI) instead of high power incentives (HPI). This may result in inefficient outcomes in cases where high power incentives are desirable. The purpose of this research is to model the incumbent’s decision to choose between contracts of high or low powered incentives, and derive conditions under which the incumbent will favor LPI over HPI, even if HPI is more efficient. The model builds directly off of an earlier model developed by Coate and Morris (1995).

Keywords: contracts, government provision, elections, incentives

JEL Classification: D72, H42, L33

Suggested Citation

Seamans, Robert, Government Contracting and the Threat of Re-Election (February 24, 2015). Available at SSRN: https://ssrn.com/abstract=2569288 or http://dx.doi.org/10.2139/ssrn.2569288

Robert Seamans (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

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