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Relational Incentive Contracts

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  • James Malcomson

Abstract

This chapter reviews the literature on the theory of relational incentive contracts.� It motivates the discussion by the classic applications of relational contracts to the GM-Fisher Body relationship and the relationships between Japanese automobile manufacturers and their subcontractors.� It presents basic models with symmetric information to illustrate the fundamental issues and then goes on to consider specific investments, the role of legally enforceable contracts alongside relational contracts, private information, multiple suppliers, and issues of organization design.

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Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number 508.

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Date of creation: 01 Oct 2010
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Handle: RePEc:oxf:wpaper:508

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Keywords: Relational contracts; informal enforcement; legal enforcement; incentives; private information; partnerships; vertical integration; organization design;

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Cited by:
  1. Robert Gibbons, 2010. "Inside Organizations: Pricing, Politics, and Path Dependence," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 337-365, 09.

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