Doing It by the Book: Political Contestability and Public Contract Renegotiations

Abstract We present a public procurement model in which contractual flexibility and political tolerance for deviations determine renegotiations. In the model, allows adaptation without formal renegotiation, while decreases with competition. then compare renegotiation rates of contracts procurer is either administration or private corporation. find robust evidence consistent predictions: public-to-private are renegotiated more often than comparable private-to-private contracts, that this pattern salient politically contestable jurisdictions. The frequent results from their inherent rigidity provides relational quality adaptability to contingencies environments. (JEL D23, D72, D73, D78, H57).