Do we need handshakes to cooperate in buyer-supplier relationships?
José de Sousa () and
Xavier Fairise ()
No 10-13, Working Papers SMART - LERECO from INRA UMR SMART-LERECO
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: K12 L22 C7 (search for similar items in EconPapers)
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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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