search query: @freeterm Renegotiation / total: 5
reference: 5 / 5
« previous | next »
| Author: | Holden, S. |
| Title: | Renegotiation and the efficiency of investments |
| Journal: | RAND Journal of Economics
1999 : SPRING, VOL. 30:1, p. 106-119 |
| Index terms: | Economic theory Efficiency Investments Models |
| Freeterms: | Renegotiation |
| Language: | eng |
| Abstract: | In a long-term relationship btw. two parties, one party's threat of unilateral violation of an initial contract may induce renegotiation of the contract. As a renegotiation may result in one party capturing some of the return from the other's investments, this possibility may lead to underinvestment. It is shown that if there is uncertainty associated with the outcome of renegotiation, and if players are risk averse, there will be an interval for the initial contract, underinvestment can thus be avoided. |
« previous | next »
SCIMA