Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/59708 
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dc.contributor.authorDosi, Cesareen
dc.contributor.authorMoretto, Micheleen
dc.date.accessioned2012-07-05-
dc.date.accessioned2012-07-13T14:52:32Z-
dc.date.available2012-07-13T14:52:32Z-
dc.date.issued2012-
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
dc.language.isoengen
dc.publisher|aFondazione Eni Enrico Mattei (FEEM) |cMilanoen
dc.relation.ispartofseries|aNota di Lavoro |x45.2012en
dc.subject.jelC61en
dc.subject.jelD44en
dc.subject.jelD86en
dc.subject.jelK12en
dc.subject.ddc330en
dc.subject.keywordPublic Procurementen
dc.subject.keywordFixed-Price Contractsen
dc.subject.keywordCost Uncertaintyen
dc.subject.keywordTime Overrunsen
dc.subject.keywordLiquidated Damagesen
dc.subject.keywordReal Optionsen
dc.titleProcurement with unenforceable contract time and the law of liquidated damages-
dc.typeWorking Paperen
dc.identifier.ppn718935624en
dc.rightshttp://www.econstor.eu/dspace/Nutzungsbedingungenen

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