Authors: Decio COVIELLO (HEC Montreal), Luigi MORETTI (University of Bologna), Giancarlo SPAGNOLO (SITE-Stockholm, U. Rome ‘Tor Vergata’, CEPR) and Paola VALBONESI (University of Padova)

Speaker:  Paola VALBONESI (University of Padova)

Paola Valbonesi is university professor of Economics, and her main research interest refers to firms’ performance and related effects on consumer welfare under different market settings, property rights and rules, primarily where government intervention plays a role. She has published extensively on international journals on regulation/incentives schemes, antitrust, state aid, and procurement supply chain. Her publications as well as more details about her CV and research activity are available here.

 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, therefore 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. 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; and iv) a higher share of the payment is postponed after delivery. Other interpretations receive less support in the data.

Mots clefs:Court efficiency; public procurement; time incentives; performance in contract execution; delay; litigation; enforcement cost.

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