Contractual Flexibility and Political Tolerance: Revisiting Public Contract Renegotiations

Abstract: We compare renegotiation rates of procurement contracts in which the procurer is either a public administration or a private corporation. We find that public-to-private contracts are renegotiated more often than private-to-private contracts and that this pattern is more salient in politically contestable jurisdictions. The frequent renegotiation of public contracts results from their inherent rigidity and provides a relational quality of adaptability to contingencies in politically contestable environments.