This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Contract Renegotiation: A Simple Framework and Implications for Organization Theory

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
Paul Beaudry
Michel Poitevin

Additional information is available for the following registered author(s):

Abstract

This paper provides a unifying framework for studying renegotiation of contracts in the presence of asymmetric information. We show that interim renegotiation does not constrain the set of contracts attainable with full commitment, regardless of whether renegotiation offers are made by the informed or the uninformed agent. Ex post renegotiation, however, does constrain the set of attainable contracts. These constraints depend on the identity of the agent making the renegotiation offer. We then show how the theory of contract renegotiation can provide insights for organization theory. Specifically, we show how decentralization of decision making can be an optimal response to the threat of ex post renegotiation. Finally, we show that our framework can be used to analyse the trade-off between internal and external markets.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://links.jstor.org/sici?sici=0008-4085%28199505%2928%3A2%3C302%3ACRASFA%3E2.0.CO%3B2-E
File Format: text/html
File Function:
Download Restriction: only available to JSTOR subscribers

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 28 (1995)
Issue (Month): 2 (May)
Pages: 302-35
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:cje:issued:v:28:y:1995:i:2:p:302-35

Contact details of provider:
Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
Email:
Web page: http://economics.ca/cje/
More information through EDIRC

Order Information:
Email:
Web: http://economics.ca/en/membership.php

For technical questions regarding this item, or to correct its listing, contact: (Prof. Werner Antweiler).

Related research
Keywords:

Other versions of this item:

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
  1. Jean Hindriks & Benjamin Lockwood, 2005. "Decentralization and Electoral Accountability: Incentives, Separation, and Voter Welfare," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Michel Poitevin, 1995. "Contract Renegotiation and Organizational Design," CIRANO Working Papers 95s-03, CIRANO. [Downloadable!]
  3. Stefan Ambec & Philippe Barla, 2001. "A Theoretical Foundation of the Porter Hypothesis," CSEF Working Papers 54, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy. [Downloadable!]
    Other versions:
  4. Jonathan Treussard, 2005. "Life-Cycle Consumption Plans and Portfolio Policies in a Heath-Jarrow-Morton Economy," Boston University - Department of Economics - Working Papers Series WP2005-033, Boston University - Department of Economics. [Downloadable!]
  5. ThŽophile, AZOMAHOU & Raouf, BOUCEKKINE & Phu, NUYEN VAN, 2003. "Energy consumption, technological progress and economic policy," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2003025, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES). [Downloadable!]
  6. Stefan Ambec & Michel Poitevin, 2000. "Organizational Design of R & D Activities," Econometric Society World Congress 2000 Contributed Papers 0190, Econometric Society. [Downloadable!]
    Other versions:
  7. AMBEC Stefan & POITEVIN Michel, 2008. "Marketing vs Engineering: Who Should Decide ?," Working Papers 08.22.266, LERNA, University of Toulouse. [Downloadable!]
  8. Levent Kockesen & Emanuele Gerratana, 2009. "Strategic Effects of Incomplete and Renegotiation-Proof Contracts," TÜSİAD-Koç University Economic Research Forum Working Papers 0908, TUSIAD-Koc University Economic Research Forum. [Downloadable!]
  9. Levent Koçkesen & Emanuele Gerratana, 2008. "Delegation with Incomplete and Renegotiable Contracts," TÜSÄ°AD-Koç University Economic Research Forum Working Papers 0803., TUSIAD-Koc University Economic Research Forum. [Downloadable!]
Statistics
Access and download statistics

Did you know? IDEAS also indexes book chapters.

This page was last updated on 2009-11-25.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.