Contractual signaling, relationship-specific investment and exclusive agreements

Vasconcelos, L

Contractual signaling, relationship-specific investment and exclusive agreements

Vasconcelos, L

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Publication Type:: Journal Article
Citation:: Games and Economic Behavior, 2014, 87 pp. 19 - 33
Issue Date:: 2014-01-01

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Field	Value	Language
dc.contributor.author	Vasconcelos, L https://orcid.org/0000-0002-2952-5674	en_US
dc.date.issued	2014-01-01	en_US
dc.identifier.citation	Games and Economic Behavior, 2014, 87 pp. 19 - 33	en_US
dc.identifier.issn	0899-8256	en_US
dc.identifier.uri	http://hdl.handle.net/10453/135748
dc.description.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. © 2014 Elsevier Inc.	en_US
dc.relation.ispartof	Games and Economic Behavior	en_US
dc.relation.isbasedon	10.1016/j.geb.2014.04.006	en_US
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject.classification	Economic Theory	en_US
dc.title	Contractual signaling, relationship-specific investment and exclusive agreements	en_US
dc.type	Journal Article
utslib.citation.volume	87	en_US
utslib.for	1401 Economic Theory	en_US
utslib.for	1402 Applied Economics	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access	*
pubs.publication-status	Published	en_US
pubs.volume	87	en_US

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. © 2014 Elsevier Inc.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/135748