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CEIS: CENTRE FOR ECONOMIC & INTERNATIONAL STUDIES
Vincenzo Atella - Director "Corruption in PPPs, Incentives and Contract Incompleteness" 
CEIS Working Paper No. 317 ELISABETTA IOSSA, University of Rome Tor Vergata, University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)
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DAVID MARTIMORT, Paris School of Economics (PSE)
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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 (supervisor) has private information on contracting costs and chooses the degree of contractual incompleteness on behalf of an upper-tier public authority. As the public official may be biased towards the contractor, delegating the contractual choice to that lower-tier may result in incomplete contracts being chosen too often. Empirical predictions on the use of incomplete contracts and policy implications on the benefits of standardized contract terms are discussed. "How to Safeguard World Heritage Sites? A Theoretical Model of 'Cultural Responsibility'"
CEIS Working Paper No. 318 LEONARDO BECCHETTI, University of Rome II - Faculty of Economics
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NAZARIA SOLFERINO, University of Rome II - Faculty of Economics
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MARIA ELISABETTA TESSITORE, University of Rome II
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We outline a model in which preservation of UNESCO heritage sites is analyzed as a classical global public good problem where the decentralized Nash equilibrium yields suboptimal contribution vis-Ã -vis the Social Planner equilibrium. The absence of a Global Social Planner and the need of coordination across different countries for the implementation of the second solution make the Social Planner equilibrium hardly attainable. The same problem arises when trying to enforce symmetric or asymmetric tax deductions in different countries. We analyse the contribution that cultural corporate responsibility can give to the solution of the problem discussing its limits and potential vis-Ã -vis the other two alternatives. | | ^top
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