Relational Contracts and Property Rights

Giancarlo Spagnolo and Matthias Blonski

No 3460, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We propose a general framework for analyzing and comparing ownership structures with respect to creating incentives for co-operative behavior (e.g. efficient investment) in long-run relationships. We generalize models by Garvey (1995), Halonen (2002), and Baker, Gibbons and Murphy (2002) and compare their results in the light of our theory, going in depth into the issue of renegotiation of ownership and strategies. We show that when agents are not restricted in their strategy choice, the short?term efficient ownership structure identified by Hart and Moore (1990) is not relational efficient ? i.e. does not maximize the set of discount factors under which efficient investment can be supported in equilibrium of the repeated game. Moreover, the relational efficient ownership structure is independent of what can be renegotiated: ownership, strategies, both or none.

Keywords: Theory of the firm; Implicit contracts; Incomplete contracts; Vertical integration; Non-contractual relations; Ownership structures; Supply relations (search for similar items in EconPapers)
JEL-codes: D23 L22 (search for similar items in EconPapers)
Date: 2002-07
New Economics Papers: this item is included in nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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