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Political contestability and public contract rigidity: An analysis of procurement contracts
Author(s) -
Beuve Jean,
Moszoro Marian W.,
Saussier Stéphane
Publication year - 2018
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/jems.12268
Subject(s) - procurement , politics , contract management , business , corporation , rigidity (electromagnetism) , finance , economics , law and economics , public administration , political science , marketing , law , structural engineering , engineering
Are public contracts less adaptable than private contracts? Using a comprehensive set of contracts for a standard product, we compare procurement contracts in which the procurer is either a public administration or a private corporation. We find that public‐to‐private contracts feature more rigidity clauses than private‐to‐private contracts and that the use of rigidity clauses in public contracts rises when political risks are more salient. We argue that a significant part of the increased rigidity of public contracts is a contractual adaptation to limit political hazards from political opponents and interested third parties.