Adverse Selection and Renegotiation in Procurement

Jean-Jacques Laffont and Jean Tirole

The Review of Economic Studies, 1990, vol. 57, issue 4, 597-625

Abstract: As was shown by Dewatripont, optimal long-term contracts under asymmetric information are generally not time-consistent. This paper fully characterizes the equilibrium of a two-period procurement model with commitment and renegotiation. It also analyzes whether renegotiated long-term contracts yield outcomes resembling those under either unrenegotiated long-term contracts or a sequence of short-term contracts, and links the analysis with the multiple unit durable good monopoly problem.

Date: 1990
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Working Paper: Adverse Selection and Renegotiation in Procurement (1990)
Working Paper: Adverse Selection and Renegotiation in Procurement (1988)
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:57:y:1990:i:4:p:597-625.

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