All Rights Reserved
AccessEcon LLC 2006, 2008.
Powered by MinhViet JSC
ralph lauren polo

 
Concepción Peñarrubia and Gonzalo Olcina
 
''Specific investments and coordination failures''
( 2002, Vol. 3 No.2 )
 
 
This note presents a new result on incomplete contracts. We show that if the different degrees of relation-specificity of the partnerts' investments determines their ex post bargaining position (what Williamson (1985) calls “the fundamental transformation”), it will appear a potential coordination failure. Under plausible conditions, the parties will coordinate in the more inefficient but less risky equilibrium, that is, in the risk-dominant equilibrium in the sense of Harsanyi and Selten (1988).
 
 
Keywords:
JEL: C7 - Game Theory and Bargaining Theory:General
 
Manuscript Received : Nov 20 2001 Manuscript Accepted : Feb 18 2002

  This abstract has been downloaded 769 times                The Full PDF of this paper has been downloaded 87705 times