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Court Efficiency and Procurement Performance (Revision required by the Scandinavian Journal of Economics - under revision)
(2013)
  • Paola Valbonesi
  • Decio Coviello, HEC Montréal
  • Luigi Moretti
  • Giancarlo Spagnolo
Abstract

Disputes over penalties for breach of contract are often solved in court. We provide a simple model showing how inefficient courts may cause buyers to refrain from enforcing penalties for late delivery to avoid litigation, inducing sellers to delay. Using a large dataset on Italian public procurement, we then study empirically the effects of court inefficiency on public work delays. 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; iv) a higher share of the payment is postponed after delivery.

Keywords
  • court efficiency,
  • enforcement cost,
  • delay,
  • litigation,
  • public procurement contracts,
  • time incentives.
Disciplines
Publication Date
Summer June 27, 2013
Comments
Coviello, D., Moretti, L. Spagnolo, G. and P. Valbonesi (2013): "Court Efficiency and Procurement Performance", WP 164/2013 Dept. of Economics, Univ. of Padova
Citation Information
Decio Coviello, Luigi Moretti, Giancarlo Spagnolo and Paola Valbonesi (2013): "Court Efficiency and Procurement Performance", Dept. of Econ and Managment - Univ. of Padova, WP N°164/2013.