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dc.contributor.authorDosi, Cesareen_US
dc.contributor.authorMoretto, Micheleen_US
dc.date.accessioned2012-07-05en_US
dc.date.accessioned2012-07-13T14:52:32Z-
dc.date.available2012-07-13T14:52:32Z-
dc.date.issued2012en_US
dc.identifier.urihttp://hdl.handle.net/10419/59708-
dc.description.abstractTime overruns are common in public works and are not confined to inherently complex tasks. One explanation advanced in this paper is that bidders can undergo unpredictable changes in production costs which generate an option value of waiting. By exploiting the real-option approach, we examine how the inability to force sellers to meet the contract time influences their bidding behaviour, and how this can ultimately affect the parties' expected payoffs. Further, we examine the outcome of the bidding process when legal rules prevent the promisee from contracting for damage measures which would grant more than her lost expectation. We show that when the pre-agreed compensatory payments prove insufficient to discourage delayed orders, setting a liquidated damages clause would not lead to a Pareto superior outcome with respect to the no-damage-for delay condition. While such a clause would increase the seller's expected payoff, the buyer's expected payoff is lower than when the contract does not provide for any compensation for late-delivery.en_US
dc.language.isoengen_US
dc.publisherFondazione Eni Enrico Mattei Milanoen_US
dc.relation.ispartofseriesNota di lavoro, Fondazione Eni Enrico Mattei: Economy and Society 45.2012en_US
dc.subject.jelC61en_US
dc.subject.jelD44en_US
dc.subject.jelD86en_US
dc.subject.jelK12en_US
dc.subject.ddc330en_US
dc.subject.keywordPublic Procurementen_US
dc.subject.keywordFixed-Price Contractsen_US
dc.subject.keywordCost Uncertaintyen_US
dc.subject.keywordTime Overrunsen_US
dc.subject.keywordLiquidated Damagesen_US
dc.subject.keywordReal Optionsen_US
dc.titleProcurement with unenforceable contract time and the law of liquidated damagesen_US
dc.typeWorking Paperen_US
dc.identifier.ppn718935624en_US
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen_US
Appears in Collections:FEEM Working Papers, Fondazione Eni Enrico Mattei

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