Relational Contracts and Property Rights

34 Pages Posted: 14 Jul 2003

See all articles by Matthias Blonski

Matthias Blonski

J.W. Goethe University

Giancarlo Spagnolo

Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

Multiple version iconThere are 2 versions of this paper

Date Written: July 2002


We propose a general framework for analyzing and comparing ownership structures with respect to creating incentives for co-operative behavior (e.g. efficient investment) in long-run relationships. We generalize models by Garvey (1995), Halonen (2002), and Baker, Gibbons and Murphy (2002) and compare their results in the light of our theory, going in depth into the issue of renegotiation of ownership and strategies. We show that when agents are not restricted in their strategy choice, the short-term efficient ownership structure identified by Hart and Moore (1990) is not relational efficient - i.e. does not maximize the set of discount factors under which efficient investment can be supported in equilibrium of the repeated game. Moreover, the relational efficient ownership structure is independent of what can be renegotiated: ownership, strategies, both or none.

Keywords: Theory of the firm, implicit contracts, incomplete contracts, vertical integration, non-contractual relations, ownership structures, supply relations

JEL Classification: D23, L22

Suggested Citation

Blonski, Matthias and Spagnolo, Giancarlo, Relational Contracts and Property Rights (July 2002). Available at SSRN:

Matthias Blonski

J.W. Goethe University ( email )

Economics Department
Frankfurt am Main, 60054

Giancarlo Spagnolo (Contact Author)

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501

HOME PAGE: http://

Centre for Economic Policy Research (CEPR)

United Kingdom

University of Rome 'Tor Vergata' ( email )

Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133

EIEF ( email )

Via Due Macelli, 73
Rome, 00187


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