Rigidity of Public Contracts

44 Pages Posted: 26 May 2015

See all articles by Marian W. Moszoro

Marian W. Moszoro

George Mason University - Department of Economics; George Mason University - Interdisciplinary Center for Economic Science (ICES); Warsaw School of Economics (SGH)

Pablo T. Spiller

University of California, Berkeley - Business & Public Policy Group

Sebastian Stolorz

George Mason University - School of Policy, Government, and International Affairs; World Bank

Multiple version iconThere are 4 versions of this paper

Date Written: May 2015

Abstract

We apply algorithmic data reading and textual analysis to compare the features of contracts in regulated industries subject to public scrutiny (which we call "public contracts") with relational private contracts. We show that public contracts are lengthier and have more rule-based rigid clauses; in addition, their renegotiation is formalized in amendments. We also find that contract length and the frequency of rigidity clauses increases in political contestability and closer to upcoming elections. We maintain that the higher rigidity of public contracts is a political risk adaptation strategy carried out by public agents attempting to lower third-party opportunistic challenges.

Suggested Citation

Moszoro, Marian W. and Spiller, Pablo T. and Stolorz, Sebastian, Rigidity of Public Contracts (May 2015). NBER Working Paper No. w21186. Available at SSRN: https://ssrn.com/abstract=2610463

Marian W. Moszoro (Contact Author)

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States

HOME PAGE: http://economics.gmu.edu/people/mmoszoro

George Mason University - Interdisciplinary Center for Economic Science (ICES) ( email )

400P Truland Building
George Mason University
Fairfax, VA 22030
United States

Warsaw School of Economics (SGH) ( email )

aleja Niepodleglosci 162
PL-Warsaw, 02-554
Poland

Pablo T. Spiller

University of California, Berkeley - Business & Public Policy Group ( email )

545 Student Services Building
Berkeley, CA 94720
United States
510-642-1502 (Phone)
510-642-2826 (Fax)

Sebastian Stolorz

George Mason University - School of Policy, Government, and International Affairs ( email )

Founders Hall
3351 Fairfax Dr.
Arlington, VA 22201
United States

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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