How (Not) to Purchase Novel Goods and Services: Specific Performance Versus at-will Contracts

• 成果类型: Article
• 署名作者: Schmitz, Patrick W.
• 署名单位: University of Cologne; Centre for Economic Policy Research - UK
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueac024
• 发表日期: 2022
• 页码: 2563-2577
• 关键词: relationship-specific investment; hold-up problem; limited-liability; incomplete contracts; renegotiation design; INFORMATION; EFFICIENCY; mechanisms; principal; breach

摘要

A buyer wants to purchase an innovative good from a seller. Both parties are risk-neutral, and payments from the buyer to the seller must be non-negative. After the contract is signed, the seller privately observes a signal which may be informative about the seller's costs. We compare two contracting regimes. In the case of specific performance, the courts enforce the contractually specified trade level. In the case of at-will contracting, the seller is free to walk away from the contract after observing the signal. The optimal regime from an economic efficiency point-of-view depends on the informativeness of the signal.