Vasconcelos, Luis (2014) Contractual signaling, relationship-specific investment and exclusive agreements. Games and Economic Behavior, 87. pp. 19-33. DOI https://doi.org/10.1016/j.geb.2014.04.006
Vasconcelos, Luis (2014) Contractual signaling, relationship-specific investment and exclusive agreements. Games and Economic Behavior, 87. pp. 19-33. DOI https://doi.org/10.1016/j.geb.2014.04.006
Vasconcelos, Luis (2014) Contractual signaling, relationship-specific investment and exclusive agreements. Games and Economic Behavior, 87. pp. 19-33. DOI https://doi.org/10.1016/j.geb.2014.04.006
Abstract
I analyze a model of hold-up with asymmetric information at the contracting stage. The asymmetry of information concerns the value of trade with external parties. I show that contractual signaling and efficiency of investment can conflict if only quantity is contractible. This conflict generates inefficient equilibria in terms of investment. Contracting on exclusivity in addition to quantity resolves the conflict and consequently eliminates the inefficiency of investment.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | Relationship-specific investment; Asymmetric information; Exclusivity |
| Subjects: | H Social Sciences > HB Economic Theory |
| Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
| SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
| Depositing User: | Unnamed user with email elements@essex.ac.uk |
| Date Deposited: | 14 Jan 2015 15:23 |
| Last Modified: | 30 Oct 2024 15:52 |
| URI: | http://repository.essex.ac.uk/id/eprint/12309 |
Available files
Filename: Contract_Signal_Investment_Final.pdf