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Corruption in PPPs, Incentives and Contract Incompleteness
2014
Social Science Research Network
In a public procurement setting, we discuss the desirability of completing contracts with state-contingent clauses providing for monetary compensations to the contractor when revenue shocks occur. Realized shocks are private information of the contractor and this creates agency costs of delegated service provision. Verifying the contractor's messages on the shocks entails contracting costs that make incomplete contracts attractive despite their higher agency costs. A public official
doi:10.2139/ssrn.2433467
fatcat:6l4yp5qs6fgdfe6ra5ogfkjl5e