Do we need handshakes to cooperate in buyer-supplier relationships?

José De Sousa () and Xavier Fairise ()

No 10-13, Working Papers SMART from INRAE UMR SMART

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. This result may help to understand how cooperation emerges in Japanese procurement practices, which typically involve relationship-specific joint investments and renegotiable contracts.

Keywords: Incomplete contracts; relationship-specific investments; cooperation (search for similar items in EconPapers)
JEL-codes: C7 K12 L22 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2010
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http://ageconsearch.umn.edu/bitstream/210389/2/WP%20SMART-LERECO%2010.13.pdf (application/pdf)

Related works:
Working Paper: Do we need handshakes to cooperate in buyer-supplier relationships? (2010)
Working Paper: Do we need handshakes to cooperate in buyer-supplier relationships? (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:rae:wpaper:201013

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