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Cooperative Investments and the Value of Contracting: Coase vs Williamson

Author

Listed:
  • Che, Y.K.
  • Hausch, D.B.

Abstract

Several recent articles have shown that the efficient outcome for bilateral trade, even in the face of specific investments and incomplete contracting, can be supported with approximately-designed contracts. These studies have, for the most part, restricted attention to specific investments that benefit the investor (e.g., the seller's investment reduces her cost of producing the good). We find very different results for "cooperative" specific investments that directly benefit the investor's partner (e.g., the seller's investment improves the buyer's value of the good).

Suggested Citation

  • Che, Y.K. & Hausch, D.B., 1996. "Cooperative Investments and the Value of Contracting: Coase vs Williamson," Working papers 9608, Wisconsin Madison - Social Systems.
  • Handle: RePEc:att:wimass:9608
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Leonardo Felli & Kevin Roberts, 2016. "Does Competition Solve the Hold-up Problem?," Economica, London School of Economics and Political Science, pages 172-200.
    2. Klaus Schmidt, 1998. "Sequential Investments and Options to Own," CESifo Working Paper Series 160, CESifo Group Munich.
    3. Aaron S. Edlin & Benjamin E. Hermalin, 1997. "Contract Renegotiation in Agency Problems," Microeconomics 9705002, EconWPA.

    More about this item

    Keywords

    INVESTMENTS; CONTRACTS; WELFARE ECONOMICS;

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law

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