Contract, renegotiation, and holdup: Results on the technology of trade and investment

• 成果类型: Article
• 署名作者: Buzard, Kristy; Watson, Joel
• 署名单位: University of California System; University of California San Diego
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1555-7561
• DOI: 10.3982/TE818
• 发表日期: 2012-05-01
• 页码: 283-322
• 关键词: Contract; RENEGOTIATION; holdup; forcing contracts; nonforcing contracts; specific investment; technology of trade; mechanism design

摘要

This paper examines a class of contractual relationships with specific investment, a nondurable trading opportunity, and renegotiation. Trade actions are modeled as individual and trade-action-based option contracts (nonforcing contracts) are explored. The paper introduces the distinction between divided and unified investment and trade actions, and it shows the key role this distinction plays in determining whether efficient investment and trade can be achieved. Under a nonforcing dual-option contract, the party without the trade action is made the residual claimant with regard to the investment action, which induces efficient investment in the divided case. The unified case is more problematic: here, efficiency is typically not attainable, but the dual-option contract is still optimal in a wide class of settings. More generally, the paper shows that, with ex post renegotiation, constraining parties to use forcing contracts implies a strict reduction in the set of implementable value functions.