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Negotiating contract types and contract clauses in the German construction industry during the Third Reich

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  • Jochen Streb

Abstract

This article examines the determinants of contractual form and renegotiations in the German construction industry during the Third Reich. At the beginning of World War II, firms dealt with growing uncertainty by convincing procurement agencies either to use cost‐plus contracts or to include an additional risk premium in fixed‐price contracts. In the later years of the war, procurement agencies initiated renegotiations over contract clauses to reduce the extraordinary profits resulting from information rents and high‐risk premiums. This regulatory course undermined the credibility of the regulatory commitment, thereby weakening the incentives of the fixed‐price contracts still in use.

Suggested Citation

  • Jochen Streb, 2009. "Negotiating contract types and contract clauses in the German construction industry during the Third Reich," RAND Journal of Economics, RAND Corporation, vol. 40(2), pages 364-379, June.
    • Handle: RePEc:bla:randje:v:40:y:2009:i:2:p:364-379
    DOI: 10.1111/j.1756-2171.2009.00069.x
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    2. Buchheim, Christoph & Scherner, Jonas, 2006. "The Role of Private Property in the Nazi Economy: The Case of Industry," The Journal of Economic History, Cambridge University Press, vol. 66(2), pages 390-416, June.
    3. Laffont, Jean-Jacques & Rochet, Jean-Charles, 1998. "Regulation of a Risk Averse Firm," Games and Economic Behavior, Elsevier, vol. 25(2), pages 149-173, November.
    4. Bajari, Patrick & Tadelis, Steven, 2001. "Incentives versus Transaction Costs: A Theory of Procurement Contracts," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 387-407, Autumn.
    5. William P. Rogerson, 2003. "Simple Menus of Contracts in Cost-Based Procurement and Regulation," American Economic Review, American Economic Association, vol. 93(3), pages 919-926, June.
    6. repec:wbk:wbpubs:15024 is not listed on IDEAS
    7. Streb Jochen, 2003. "Das Scheitern der staatlichen Preisregulierung in der nationalsozialistischen Bauwirtschaft'," Jahrbuch für Wirtschaftsgeschichte / Economic History Yearbook, De Gruyter, vol. 44(1), pages 27-48, June.
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    Citations

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    Cited by:

    1. Tetsuji Okazaki, 2022. "Controlling Funds Allocation for the War: The Experience of Japan in the Late 1930s," CARF F-Series CARF-F-537, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    2. Tetsuji OKAZAKI, 2022. "Controlling Funds Allocation for the War: The Experience of Japan in the Late 1930s," CIGS Working Paper Series 22-005E, The Canon Institute for Global Studies.
    3. Tetsuji Okazaki, 2023. "Designing wartime economic controls: Productivity and firm dynamics in the Japanese cotton spinning industry, 1937–9," Economic History Review, Economic History Society, vol. 76(4), pages 999-1022, November.
    4. Tetsuji Okazaki, 2022. "Controlling Funds Allocation for the War: The Experience of Japan in the Late 1930s," CIRJE F-Series CIRJE-F-1191, CIRJE, Faculty of Economics, University of Tokyo.
    5. Lutz Budrass & Jonas Scherner & Jochen Streb, 2010. "Fixed‐price contracts, learning, and outsourcing: explaining the continuous growth of output and labour productivity in the German aircraft industry during the Second World War1," Economic History Review, Economic History Society, vol. 63(1), pages 107-136, February.
    6. Tetsuji OKAZAKI, 2022. "Designing wartime economic controls: Productivity and firm dynamics in the Japanese cotton spinning industry, 1937–1939," CIGS Working Paper Series 22-002E, The Canon Institute for Global Studies.
    7. Tetsuji Okazaki, 2022. "``Designing Wartime Economic Controls: Productivity and Firm Dynamics in the Japanese Cotton Spinning Industry, 1937-1939''," CIRJE F-Series CIRJE-F-1187, CIRJE, Faculty of Economics, University of Tokyo.

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