Pareto improvements by in-kind-transfers

Frank Stähler

No 541, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: This paper shows that in-kind-transfers are an effective instrument to stabilize agreements when compliance cannot be guaranteed. It demonstrates the weak superiority of in-kind-transfers for a unilateral relationship between two agents. In particular, it proves that, under conditions of perfect knowledge and necessary selfenforcement of contracts, both agents are at least not worse off by in-kind-transfers compared to monetary payments when no selfenforcing contract exists which,is based on monetary payments. This result holds for finitely and for infinitely repeated games.

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:541

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