EconPapers    
Economics at your fingertips  
 

The Commitment Value of Contracts under Dynamic Renegotiation

Paul Beaudry and Michel Poitevin

RAND Journal of Economics, 1994, vol. 25, issue 4, 501-517

Abstract: We examine why different renegotiation processes can lead to opposite results regarding the commitment value of third-party contracts in the presence of asymmetric information. Our main result is that a contract loses all strategic value if renegotiation is allowed during the production stage rather than only before production begins. This result casts serious doubt on the relevance of previous findings which emphasize how contracts can have commitment value even in the presence of renegotiation. Our analysis can also be used to understand the differences between many of the results in the renegotiation literature.

Date: 1994
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://links.jstor.org/sici?sici=0741-6261%2819942 ... O%3B2-F&origin=repec full text (application/pdf)
Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

Related works:
Working Paper: The Commitment Value of Contracts Under Dynamic Renegotiation (1992)
Working Paper: The Commitment Value of Contracts Under Dynamic Renegotiation (1992)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rje:randje:v:25:y:1994:i:winter:p:501-517

Ordering information: This journal article can be ordered from
https://editorialexp ... i-bin/rje_online.cgi

Access Statistics for this article

More articles in RAND Journal of Economics from The RAND Corporation
Bibliographic data for series maintained by ().

 
Page updated 2025-04-10
Handle: RePEc:rje:randje:v:25:y:1994:i:winter:p:501-517