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Rigidity of Public Contracts
Author(s) -
Moszoro Marian,
Spiller Pablo T.,
Stolorz Sebastian
Publication year - 2016
Publication title -
journal of empirical legal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.529
H-Index - 24
eISSN - 1740-1461
pISSN - 1740-1453
DOI - 10.1111/jels.12119
Subject(s) - scrutiny , rigidity (electromagnetism) , politics , law and economics , business , public economics , contract management , economics , public use , political science , law , marketing , engineering , structural engineering
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 contracts between nongovernmental entities. 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 to lower the likelihood of success of politically‐motivated challenges from opportunistic third parties.