Inefficient R&D in Public Procurement: Negative Consequences of a Separation between Award and Actual Contract

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.