Do we need handshakes to cooperate in buyer-supplier relationships?
AbstractDoes formal contracting foster cooperation in a buyer-supplier relationship? In line with the literature, we find that a renegotiable contract with relationship-specific joint investments does not make it possible to reach the first-best. However, we show that a renegotiable contract may induce more cooperation than an informal arrangement. This result may help to understand how cooperation emerges in Japanese procurement practices, which typically involve relationship-specific joint investments and renegotiable contracts.
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Bibliographic InfoPaper provided by INRA UMR SMART in its series Working Papers SMART - LERECO with number 10-13.
Length: 35 pages
Date of creation: 2010
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Incomplete contracts; relationship-specific investments; cooperation;
Other versions of this item:
- José De Sousa & Xavier Fairise, 2009. "Do we need handshakes to cooperate in buyer-supplier relationships?," Documents de recherche 09-15, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
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