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The Importance of Reputation in Awarding Public Contracts

Nicola Doni
University of Florence - Dipartimento di Scienze Economiche

Annals of Public and Cooperative Economics, Vol. 77, No. 4, pp. 401-429, December 2006

Abstract:
The main economic literature emphasizes that the efficiency of the awarding procedure depends on the contractual rules, especially those regarding firm's remuneration. In this work we show the existence of a reverse link: when the enforcement of contractual terms is imperfect, the rules of the awarding mechanism can help to improve the efficiency of the contractual relationship. In some circumstances, awarding rules based only on bids are not able to deal with the problem of opportunistic behaviour during the execution of the contract. Our model points out that the public administration can incentivize the contractor's fairness by considering not only competitors' bids, but also their different reputation.

Accepted Paper Series

Date posted: November 29, 2006 ; Last revised: December 11, 2006

Suggested Citation

Doni, Nicola, The Importance of Reputation in Awarding Public Contracts. Annals of Public and Cooperative Economics, Vol. 77, No. 4, pp. 401-429, December 2006. Available at SSRN: http://ssrn.com/abstract=947936 or doi:10.1111/j.1467-8292.2006.00313.x

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Contact Information

Nicola Doni (Contact Author)

University of Florence - Dipartimento di Scienze Economiche ( email )

Florence 50127 Italy
++39 055 4374905 (Fax)