To invest or screen efficiently: a potential conflict in relationships governed by incomplete contracts

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dc.citation.epage588en_US
dc.citation.issueNumber3-4en_US
dc.citation.spage567en_US
dc.citation.volumeNumber19en_US
dc.contributor.authorBac, M.en_US
dc.date.accessioned2016-02-08T10:35:47Z
dc.date.available2016-02-08T10:35:47Z
dc.date.issued2001en_US
dc.departmentDepartment of Economicsen_US
dc.description.abstractWe consider a dynamic trade relationship where quality is not contractible and potential sellers retain quality-relevant private information. We show that the presence of an investment technology to improve the incumbent seller's innate quality may impair the efficiency of the screening process. If the conflict is effective, the buyer has to induce an inefficient screening process or reduce the productivity of the investment technology. This conflict suggests that the hold-up problem may be more severe than predicted by models of incomplete contracts that assume complete information. © Elsevier Science B.V.en_US
dc.identifier.doi10.1016/S0167-7187(99)00019-3en_US
dc.identifier.issn0167-7187
dc.identifier.urihttp://hdl.handle.net/11693/24890
dc.language.isoEnglishen_US
dc.publisherElsevier BVen_US
dc.relation.isversionofhttp://dx.doi.org/10.1016/S0167-7187(99)00019-3en_US
dc.source.titleInternational Journal of Industrial Organizationen_US
dc.subjectBayesian equilibriumen_US
dc.subjectIncomplete contractsen_US
dc.subjectRelationship-specific investmentsen_US
dc.subjectScreeningen_US
dc.titleTo invest or screen efficiently: a potential conflict in relationships governed by incomplete contractsen_US
dc.typeArticleen_US

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