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Rheinische Friedrich-Wilhelms-Universität Bonn >
Bonn Graduate School of Economics (BGSE), Universität Bonn >
Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/22970
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Full metadata record
| DC Field | | Value | | Language |
| dc.contributor.author | | Ohlendorf, Susanne | | en_US |
| dc.date.accessioned | | 2009-01-29T15:11:30Z | | - |
| dc.date.available | | 2009-01-29T15:11:30Z | | - |
| dc.date.issued | | 2006 | | en_US |
| dc.identifier.uri | | http://hdl.handle.net/10419/22970 | | - |
| dc.description.abstract | | We consider a bilateral trade setting with costless renegotiation and investment by both the buyer and the seller. Whether first best levels of relationship-specific investment can be induced by a simple contract depends on available breach remedies. As demonstrated by Edlin and Reichelstein (1996), a contract specifying an up-front transfer, a quantity and a per-unit price is in general not able to achieve the first best when the breach remedy is expectation damages. We show that this result is due to the linearity of the cost function in their counterexample, and does not extend beyond the linear case. If marginal cost is increasing, then at intermediate prices both parties face the risk of breaching, and the first best becomes attainable. | | en_US |
| dc.language.iso | | eng | | en_US |
| dc.publisher | | | | en_US |
| dc.relation.ispartofseries | | Bonn econ discussion papers 2006,25 | | en_US |
| dc.subject.jel | | D86 | | en_US |
| dc.subject.jel | | K12 | | en_US |
| dc.subject.jel | | L14 | | en_US |
| dc.subject.ddc | | 330 | | en_US |
| dc.subject.keyword | | expectation damages | | en_US |
| dc.subject.keyword | | breach remedies | | en_US |
| dc.subject.keyword | | renegotiation | | en_US |
| dc.subject.keyword | | hold-up | | en_US |
| dc.title | | Expectation Damages, Divisible Contracts, and Bilateral Investment | | en_US |
| dc.type | | Working Paper | | en_US |
| dc.identifier.ppn | | 525236449 | | en_US |
| dc.rights | | http://www.econstor.eu/dspace/Nutzungsbedingungen | | - |
| Appears in Collections: | | Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn
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