On the value of partial commitment for cooperative investment in buyer–supplier relationship

José Sousa () and Xavier Fairise ()

Journal of Economics, 2014, vol. 111, issue 2, 171 pages

Abstract: Does 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 can. This result may help to understand how cooperation emerges in Japanese procurement practices, which typically involve relationship-specific joint investments and renegotiable contracts. Copyright Springer-Verlag Wien 2014

Keywords: Incomplete contracts; Relationship-specific investments; Cooperation; K12; L22; C7 (search for similar items in EconPapers)
Date: 2014
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Working Paper: On the value of partial commitment for cooperative investment in buyer-supplier relationship (2013)
Working Paper: On the value of partial commitment for cooperative investment in buyer-supplier relationship (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:111:y:2014:i:2:p:151-171

DOI: 10.1007/s00712-013-0360-6

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