EconPapers    
Economics at your fingertips  
 

Exclusive Contracts and Protection of Investments

Ilya Segal and Michael Whinston

RAND Journal of Economics, 2000, vol. 31, issue 4, 603-633

Abstract: We consider the effect of a renegotiable exclusive contract restricting a buyer to purchase from only one seller on the levels of noncontractible investments undertaken in their relationship. Contrary to some informal claims in the literature, we find that exclusivity has no effect when all investments are fully specific to the relationship (i.e., are purely "internal"). Exclusivity does matter when investments affect the value of the buyer's trade with other sellers (i.e., have "external" effects). We examine the effects of exclusivity on investments and aggregate welfare, and the private incentives of the buyer-seller coalition to use it.

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (87) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
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:31:y:2000:i:winter:p:603-633

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 2020-03-29
Handle: RePEc:rje:randje:v:31:y:2000:i:winter:p:603-633