Procurement and Renegotiation
Bibliographic Data
| ID | 10180237 |
|---|---|
| Authors | Jean Tirole (corresponding author) |
| Year | 1986 |
| Volume | 94 |
| Issue | 2 |
| Pages | 235-259 |
| Publication date | 1986-04-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Political Economy (JOURNAL) |
| Journal identifiers | ISSN: 0022-3808 • E-ISSN: 1537-534X |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/261372 |
| OpenAlex | W2005785293 |
| Language | EN |
| Citations received | 22 |
| References cited | 8 |
Parties bound by an incomplete contract have an incentive to renegotiate after acquiring new information. The issue of the parties' investment in the relationship before renegotiation is analyzed in a simple two-period procurement model. The firm invests in the first period. It then learns its production cost, and the sponsor learns its value for the project. Williamson's underinvestment presumption is shown to hold under very general assumptions about bargaining and about the ex post asymmetry of information as long as the firm's investment is not observable by the sponsor. The introduction of a cancellation fee may well lead to even less investment contrary to what is sometimes argued. The role of ex ante price fixing as an alternative way to reintroduce some form of commitment and the problem of cost overruns are discussed. Last, it is shown that if investment is observable by the sponsor andthus may become a joint decision variable, the two parties may choose to under- or overinvest
Business · Economics · Ex-ante · Incentive · Incomplete contracts · Information asymmetry · Investment (military · Microeconomics · Presumption · Procurement · Auction Theory and Applications · Law, Economics, and Judicial Systems · Public Procurement and Policy
The Changing Geography of Banking and Finance
Organizational Preferences and Their Consequences
Firms, Contracts, and Financial Structure
Incomplete Contracts and Renegotiation
Two-sided markets
Information Avoidance
Contract Remedies and Search Efforts
What triggers public-private partnership (PPP) renegotiations in the United States
Grand Corruption In Utilities
Pouvoir de marché, stratégies et régulation
Contract Theory in the Spotlight
Heterogeneities, Information and Conflict Resolution
The Importance of Reputation in Awarding Public Contracts
Competition and co-operation
Over-investment in marriage-specific capital
Effets de réputation dans un problème de hold-up
Information Design in the Holdup Problem
Promises, Threats and Fairness
Regulation with wage bargaining
Endogenous Determinants for Renegotiating Concessions
Flexibility or Stability? Analyzing Proposals to Reform the Separation of Powers
Economic Incentives and the Defense Procurement Process
| Unique citing works | 22 |
|---|---|
| Citations per year | 0,58 |
| Citation span | 1988 - 2026 (39) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 21 |