An Incomplete Contract Theory of Contract Duration and Specific Investment

B.R. Lyons

University of East Anglia Discussion Papers in Economics from School of Economics, University of East Anglia, Norwich, UK.

Abstract: This paper develops a theoretical model of contract duration. The model fills a gap in incomplete contract theories, which for the most part assume timeless contracting, or contracts which last for the full life of a specific investment. The model reveals an asymmetry between buyer and seller investment, and the precise sense in which duration can be expected to depend on specific investments. It also addresses the importance of the background legal system.

Keywords: CONTRACTS; INVESTMENTS (search for similar items in EconPapers)
JEL-codes: E20 E22 (search for similar items in EconPapers)
Pages: 37 pages
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:uea:papers:9707

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