Bajari, Patrick; Houghton, Stephanie; Tadelis, Steven - In: American Economic Review 104 (2014) 4, pp. 1288-1319
Procurement contracts are often renegotiated because of changes that are required after their execution. Using highway paving contracts we show that renegotiation imposes significant adaptation costs. Reduced form regressions suggest that bidders respond strategically to contractual...