Court Efficiency and Procurement Performance

33 Pages Posted: 13 Jul 2018

See all articles by Decio Coviello

Decio Coviello

HEC Montreal

Luigi Moretti

Université Paris I Panthéon-Sorbonne

Giancarlo Spagnolo

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

Paola Valbonesi

University of Padua - Department of Economics and Management, DSEA

Multiple version iconThere are 3 versions of this paper

Date Written: July 2018

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, thereby 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. Where courts are inefficient, we find the following: public works are delivered with longer delays; delays increase for more valuable contracts; contracts are more often awarded to larger suppliers; and a higher share of the payment is postponed after delivery. Other interpretations receive less support from the data.

Keywords: Court efficiency, delay, enforcement cost, litigation, performance in contract execution, public procurement, time incentives

Suggested Citation

Coviello, Decio and Moretti, Luigi and Spagnolo, Giancarlo and Valbonesi, Paola, Court Efficiency and Procurement Performance (July 2018). The Scandinavian Journal of Economics, Vol. 120, Issue 3, pp. 826-858, 2018, Available at SSRN: https://ssrn.com/abstract=3210980 or http://dx.doi.org/10.1111/sjoe.12225

Decio Coviello (Contact Author)

HEC Montreal ( email )

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

Luigi Moretti

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

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

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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