Getting Around the Lowest-Bidder Rule?

Politically connected firms bid low on government contracts to give the appearance of fairness, but then extract higher payments through renegotiations during the often years-long duration of the contract. That's the key finding in “Political Influence and the Renegotiation of Government Contracts,” published in the Review of Financial Studies and co-authored by Professor Ran Duchin (Finance), the Giuriceo Family Faculty Fellow.

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