Download or read book Relational Contracts in Competitive Markets written by Martin Brown and published by . This book was released on 2004 with total page 138 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Relational Contracts and the Nature of Market Interactions written by Martin Brown and published by . This book was released on 2013 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide evidence that long-term relationships between trading parties emerge endogenously in the absence of third party enforcement of contracts and are associated with a fundamental change in the nature of market interactions. Without third party enforcement, the vast majority of trades are initiated with private offers and the parties share the gains from trade equally. Low effort or bad quality is penalized by the termination of the relationship, wielding a powerful effect on contract enforcement. Successful long-term relations exhibit generous rent sharing and high effort (quality) from the very beginning of the relationship. In the absence of third-party enforcement, markets resemble a collection of bilateral trading islands rather than a competitive market. If contracts are third party enforceable, rent sharing and long-term relations are absent and the vast majority of trades are initiated with public offers. Most trades take place in one-shot transactions and the contracting parties are indifferent with regard to the identity of their trading partner.
Download or read book Transnational Business and Relational Contracting 2 0 written by Thomas Dietz and published by . This book was released on 2015 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: First, this article proposes that the rise of the Internet and further information and communication technologies (ICT) has facilitated the evolution of a new, virtual form of relational contracts. This hypothesis is developed inductively by drawing on the results of an explorative empirical study about cross-border software development contracts. Although virtual social ties and networks do not promote the type of high-trust relations that are central to traditional relational contract theory, they reduce information asymmetries between transaction partners and facilitate the evolution of almost unrestricted virtual reputational networks. Relational contracts 2.0 emerge on the basis of ICT enabled transparency, controls and sanctioning tools. Second, the article discusses these results in the light of the wider theoretical debate about the institutional foundations of modern markets. Most importantly, it will be argued that modern ICT has significantly improved the economic performance of relational contracts. Relational contracts 2.0 are no longer restricted to small communities and long-term relationships, but are also able to allow exchange between unknown actors within competitive markets. Relational contracts 2.0 therefore do not oppose market expansions, but become mechanisms that actively promote such economic modernisation processes. The virtual society promotes the evolution of virtual relational contracts.
Download or read book Relational Contracts and Competitive Screening written by Giacomo Calzolari and published by . This book was released on 2009 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Contracting in the New Economy written by David Frydlinger and published by Springer Nature. This book was released on 2021-05-24 with total page 327 pages. Available in PDF, EPUB and Kindle. Book excerpt: Today’s business environment is constantly evolving, filled with volatility, uncertainty, complexity and ambiguity and driven by digital transformation, globalization, and the need to creating value through innovation. These shifts demand that organizations view contracting through a different lens. Since it is impossible to predict every what-if scenario in a transactional contract, organizations in strategic and complex partnerships must shift to a mindset of shared goals and objectives built upon a strong foundation of transparency and trust, working together to mitigate risk much better than merely shifting risk to the weaker party. Contracting in the New Economy helps you to not only develop this mindset – but also offers the practical tools needed to embrace the social side of contracting, enabling your organization to harness the value creating potential of formal relational contracts. Briefly sharing the theoretical foundations that prove relational contracting works, it goes well beyond theory by providing powerful examples of relational contracting principles in practice. In addition, the authors provide a practical and proven approach for helping you to put relational contracting theory into practice for your own relationships. First by providing a framework for approaching any contracting situation and helping organizations finding the best contract model for each situation. And then by sharing five proven steps you can take to create an effective relational contract for you own strategic and complex business relationships. For anyone involved in developing contracts —lawyers, in-house counsels, contract managers, C-level managers, procurement officers, and so on — this book will empower you to create powerful cooperative alliances that will help you reach —and surpass — your business goals in today’s dynamic new environment.
Download or read book Networked Markets and Relational Contracts written by Matthew Elliott and published by . This book was released on 2017 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: Empirical studies of commercial relationships between firms reveal that (i) suppliers encounter situations in which they can gain in the short run by acting opportunistically--for example, delivering a lower quality than promised after being paid; and (ii) good conduct is sustained not exclusively by formal contracts but through informal relationships and the expectation of future business. In such relationships, the need to offer each supplier a large enough share of future business to deter cheating limits the number of supply relationships each buyer can sustain. The market thus becomes networked, with trade restricted to durable relationships. We propose and analyze a simple dynamic model to examine the structure of such overlapping relational contracts in equilibrium. Due to exogenous stochastic shocks, suppliers are not always able to make good on their promises even if they wish to, and so links are constantly dissolving and new ones are forming to take their place. This induces a Markov process on networks. We study how the stationary distribution over networks depends on the parameters--most importantly, the value of trade and the probability of shocks. When the rate at which shocks hit increases, as might happen during an economic downturn, maintaining incentive compatibility with suppliers requires promising each more future business and this necessitates maintaining fewer relationships with suppliers. This results in a destruction of social capital, and even if the rate of shocks later returns to its former level, it can take considerable time for social capital to be rebuilt because of search frictions. This creates a novel way for shocks to be persistent. It also suggests new connections between the theory of relational contracting, on the one hand, and the macroeconomic analysis of recessions, on the other.
Download or read book Competition and Relational Contracts in the Rwanda Coffee Chain written by Rocco Macchiavello and published by . This book was released on 2019 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: How does competition affect market outcomes when formal contracts are not enforceable, and parties' resort to relational contracts? Difficulties with measuring relational contracts and dealing with the endogeneity of competition have frustrated attempts to answer this question. We make progress by studying relational contracts between upstream farmers and downstream mills in Rwanda's coffee industry. First, we identify salient dimensions of their relational contracts (unenforceable provision of services in both directions before, during and after harvest) and measure them through an original survey of mills and farmers. Second, we take advantage of an engineering model for the optimal placement of mills to construct an instrument that isolates geographically determined variation in competition. Conditional on the suitability for mills within the catchment area, we find that mills surrounded by more suitable areas: (i) face more competition from other mills; (ii) use fewer relational contracts with farmers; and (iii) exhibit worse performance. In contrast to conventional wisdom, an additional competing mill also (iv) makes farmers worse off; (v) reduces the aggregate quantity of coffee supplied to mills by farmers; and (vi) conditional on the farmer's distance from the mill, lowers relational contracts more for farmers close to the competing mill, suggesting that competition directly alters farmers temptation to renege on the relational contract. The finding that increased competition downstream leaves all producers -- including upstream producers -- no better-off suggests a potential role for policy in a second-best environment in which contracts are hard to enforce.
Download or read book Relational Contracts and the Roots of Sustained Competitive Advantage written by Rebecca M. Henderson and published by . This book was released on 2013 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Relational Contracts written by Rocco Macchiavello and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Relational contracts -- informal self-enforcing agreements sustained by repeated interactions -- are ubiquitous both within and across organizational boundaries. This review highlights recent empirical contributions in selected areas. We begin by reviewing some recent work that explicitly takes the dynamic incentive compatibility constraints that underpin relational contract models to the data. We then discuss the relationship between relational contracting and firms' performance. We conclude pointing in directions that we consider to be particularly ripe for future work.
Download or read book Relational Supply Contracts written by Michaela Isabel Höhn and published by Springer Science & Business Media. This book was released on 2009-10-03 with total page 134 pages. Available in PDF, EPUB and Kindle. Book excerpt: Supply relations are often governed by so-called relational contracts. These are informal agreements sustained by the value of future cooperation. Although relational contracts persist in practice, research on these types of contract is only emerging in Operations and Supply Chain Management. This book studies a two-firm supply chain, where repeated transactions via well-established supply contracts and continued quality-improvement efforts are governed by a relational contract. We are able to characterize an optimal relational contract, i.e., to develop policies for supplier and buyer that structure investments in quality and flexibility in a way that no other self-enforcing contract generates higher expected joint surplus. A second goal is to compare the performance of different returns mechanisms in the context of relational contracting (quantity flexibility and buy-back contracts). Industry studies motivate the presented model.
Download or read book Relational Contracts and the Nature of Market Interactions written by Martin Brown and published by . This book was released on 2003 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Economics of Relational Contracts written by W. Bentley MacLeod and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Organizational Contract written by Professor Fabrizio Cafaggi and published by Ashgate Publishing, Ltd.. This book was released on 2013-12-28 with total page 619 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book introduces and develops the paradigm of the organisational contract in European contract law. Suggesting that a more radical distinction should be made between contracts which regulate single or spot exchanges and contracts that organize complex economic activities without creating a new legal entity, the book argues that this distinction goes beyond that between spot and relational contracts because it focuses on the organizational dimension of contracting and its governance features. Divided into six parts, the volume brings together a group of internationally renowned experts to examine the structure of long-term contractual cooperation; networks of contracts; knowledge exchange in long-term contractual cooperation; remedies and specific governance rules in long-term relationships; and the move towards legislation. The book will be of value to academics and researchers in the areas of private law, economic theory and sociology of law, and organizational theory. It will also be a useful resource for practitioners working in international contract law and international business transaction law.
Download or read book Relational Contracts and Supplier Turnover in the Global Economy written by Fabrice Defever and published by . This book was released on 2015 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Headquarters and their specialized component suppliers have a vital interest in establishing long-term collaborations. When formal contracts are not enforceable, such efficiency-enhancing cooperations can be established via informal agreements, but relational contracts have been largely ignored in the literature on the international organization of value chains. In this paper, we develop a dynamic property rights model of global sourcing. A domestic headquarter collaborates with a foreign input supplier and makes two decisions in every period: i) whether to engage in a costly search for a better partner, and ii) whether to make a non-binding offer to overcome hold-up problems. Our key result is that the possibility to switch partners crucially affects the contractual nature of buyer-supplier relationships. In particular, some patient firms do not immediately establish a relational contract, but only when they decide to stop searching and thus launch a long-term collaboration with their supplier. From our model, we develop an instrumental variable estimation strategy that we apply using transaction-level data of fresh Chinese exporters to the US. We obtain empirical evidence in line with the theoretical prediction of a positive causal effect of match durations on relational contracting.
Download or read book Essays on Relational Contracts written by Akifumi Ishihara and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation contains three essays on self-enforcing implicit contracts in economic transactions and politics. Chapter 2 studies a repeated agency model with two tasks where the agent has private information on the first task and there is no verifiable performance signal for the second task. The equilibrium level of the first task is determined so as to guarantee the credibility of the relational contracts to provide incentives for the second task. It implies interesting economic results including non-monotonic relation between the discount factor and the total surplus, social desirability of unverifiability, and implications for organization design. Chapter 3 studies a model of political contribution of dynamic common agency where state-contingent agreements must be self-enforced. First, we investigate the punishment strategy for supporting the self-enforcing mechanism. The most severe punishment strategy on the principals takes the form of a two-phase scheme in general. Second, we characterize the payoff set of the equilibria on which the same decision is chosen by the agent through implicit agreements and examine whether it can achieve the same payoff as in the standard static menu auction model. It implies that there could be an equilibrium outcome in a static menu auction that cannot be supported in our model for any discount factor. Chapter 4 studies repeated political competition with policy-motivated citizen candidates. The dynamic relationship could cause strategic candidacy in two-candidate competition, such as in circumstances where two candidates stand for election and one of them has no chance to win. The candidate can choose her implementing policy depending on the set of the rival candidates in the election and the rival candidate actually has an incentive to stand even with no chance to win since it can induce policy compromises from the winning candidate.
Download or read book The Relational Theory of Contract written by Ian R. MacNeil and published by . This book was released on 2001 with total page 412 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Relational Contracts and Development written by Rocco Macchiavello and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This article reviews an emerging body of evidence on relational contracts, defined as informal arrangements sustained by the value of future interactions. We focus on developing and international markets, which are often characterized as contexts with weak formal contract enforcement. We introduce relational contracting between firms as a governance form alternative to both firms and markets. We then review evidence on the prevalence of long-term relationships between firms and discuss why this governance form might be particularly common in developing countries. After introducing a simple framework, we discuss the measurement of relational contracting between firms. We review an approach that takes dynamic incentive compatibility constraints to the data to quantify the value of future interactions and illustrate how different types of shocks can be used to uncover the inner functioning of relational contracting. We also review structural models and conclude with policy implications and promising avenues for future research.
