Court Efficiency and Procurement Performance

70 Pages Posted: 8 Aug 2016

See all articles by Decio Coviello

Decio Coviello

HEC Montreal

Giancarlo Spagnolo

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

Luigi Moretti

University of Bologna - Department of Economics

Paola Valbonesi

University of Padua - Department of Economics and Management, DSEA

Multiple version iconThere are 3 versions of this paper

Date Written: August 2016

Abstract

Disputes over penalties for breaching a contract are often resolved in court. A simple model illustrates how inefficient courts can sway public buyers from enforcing a penalty for late delivery in order to avoid litigation, therefore inducing sellers to delay contract delivery. By using a large dataset on Italian public procurement, we empirically study 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; and iv) a higher share of the payment is postponed after delivery. Other interpretations receive less support from the data.

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 Spagnolo, Giancarlo and Moretti, Luigi and Valbonesi, Paola, Court Efficiency and Procurement Performance (August 2016). CEPR Discussion Paper No. DP11426, Available at SSRN: https://ssrn.com/abstract=2820081

Decio Coviello (Contact Author)

HEC Montreal ( email )

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

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

Luigi Moretti

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Paola Valbonesi

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

via Del Santo 33
Padova, 35123
Italy
+39+049+8274058 (Phone)

HOME PAGE: http://www.decon.unipd.it

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