Inefficient R&D in Public Procurement: Negative Consequences of a Separation between Award and Actual Contract
CESifo, Munich, 1999
CESifo Working Paper No. 208
![](https://cesifo.org/DocImg/cesifo_wp208.jpg?c=1689237139)
In public procur ement a temporal separation between award and actual contract allows private entrepreneurs who did not get the award to sue to become contractor. Hence, not only the award-winning entrepreneur, but also the losers will engage in relationship-specific investments. Unfortunately, in such a situation it is impossible to find fixed prices which guarantee the achievement of both efficient trade and efficient investment.