Incomplete Contracts and Competition - Another Look at Fisher Body/General Motors?
University of Siena - Department of Economics
Simone M. Sepe
University of Arizona - James E. Rogers College of Law; Northwestern University - School of Law; IAST - Fondation Jean-Jacques Laffont - TSE ; University of Toulouse 1 - Industrial Economic Institute (IDEI)
34 Eur. J. L. & Econ. 495 (2012)
In this paper we analyze the problem of the enforcement of incomplete contracts with endogenous outside options. Some of the equilibria we outline may reverse one of the main results presented in the standard literature. We then revisit the literature on the highly debated Fisher Body/General Motors merger and suggest an explanation based on GM’s need to control the Fisher brothers’ outside options.
Keywords: incomplete contracts, competition, FIsher Body/General Motors
JEL Classification: D23, L12, L14, L21, L22, L42
Date posted: April 29, 2010 ; Last revised: February 7, 2013
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