Relational Contracts and Property Rights

University of Mannheim Working Paper

31 Pages Posted: 14 Feb 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: June 2002

Abstract

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 to grim trigger strategies, 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 reletional efficient ownership structure is independent of what can be renegotiated, ownership, strategies, both or none.

JEL Classification: D23, L22

Suggested Citation

Blonski, Matthias and Spagnolo, Giancarlo, Relational Contracts and Property Rights (June 2002). University of Mannheim Working Paper, Available at SSRN: https://ssrn.com/abstract=340502 or http://dx.doi.org/10.2139/ssrn.340502

Matthias Blonski (Contact Author)

J.W. Goethe University ( email )

Economics Department
Frankfurt am Main, 60054
Germany

Giancarlo Spagnolo

Stockholm School of Economics (SITE) ( email )

P.O. Box 6501
Stockholm
Sweden

HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Rome 'Tor Vergata' ( email )

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

EIEF ( email )

Via Due Macelli, 73
Rome, 00187
Italy

HOME PAGE: http://WWW.EIEF.IT

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
495
Abstract Views
2,902
rank
59,400
PlumX Metrics