Costly Coasian Contracts

Luca Anderlini and Leonardo Felli

Cambridge Working Papers in Economics from Faculty of Economics, University of Cambridge

Abstract: The authors identify and investigate the basic `hold-up' problem which arises whenever each party to a contingent contract has to pay some ex ante cost for the contract to become feasible. They then proceed to show that, under plausible circumstances, a contractual solution' to this hold-up problem is not available. This is because a contractual solution to the hold-up problem typically entails writing a `contract over a contract' which generates a fresh set of ex ante costs, and hence is associated with a new hold-up problem. The paper concludes by investigating two applications of the results to a static and to a dynamic principal-agent model.

Date: 1997-01
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Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Costly Coasian Contracts (1998)
Working Paper: Costly coasian contracts (1998)
Working Paper: Costly Coasian Contracts (1997)
Working Paper: Costly Coasian Contracts
Working Paper: Costly Coasian Contracts'
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