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dc.contributor.author | Ellman, Matthew |
dc.contributor.other | Universitat Pompeu Fabra. Departament d'Economia i Empresa |
dc.date.accessioned | 2017-07-26T10:50:46Z |
dc.date.available | 2017-07-26T10:50:46Z |
dc.date.issued | 2004-11-01 |
dc.identifier | https://econ-papers.upf.edu/ca/paper.php?id=799 |
dc.identifier.citation | Journal of Law Economics and Organization, Vol. 22, No. 1, 2006 |
dc.identifier.uri | http://hdl.handle.net/10230/705 |
dc.description.abstract | Previous analysis has shown that traders may opt for specific technologies with no joint productivity advantage as a way to commit themselves to trading jointly, but only when long-term contracting is infeasible. This paper proves that speciÞcity can also be optimal (by relaxing the budget-balance constraint) in settings with long-term contracting. Traders will opt for specificity when one trader makes a cross-investment and either (1) this cross-investment has a direct externality on the other trader, (2) both parties invest, or (3) private information is present. The specificity (e.g. from non- salvageable investments, specific assets and technologies, narrow business strategies, and exclusivity restrictions) is equally effective regardless of which trader's alternative trade payoff is reduced. Specificity supports long-term contracts in a broad range of settings - both with and without renegotiation. The theory also offers a novel perspective on franchising and vertical integration. |
dc.format.mimetype | application/pdf |
dc.language.iso | eng |
dc.relation.ispartofseries | Economics and Business Working Papers Series; 799 |
dc.rights | L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons |
dc.rights.uri | http://creativecommons.org/licenses/by-nc-nd/3.0/es/ |
dc.title | Specificity revisited: The role of cross-investments |
dc.type | info:eu-repo/semantics/workingPaper |
dc.date.modified | 2017-07-23T02:08:56Z |
dc.subject.keyword | specificity |
dc.subject.keyword | hostages long-term contracting |
dc.subject.keyword | cross-investments |
dc.subject.keyword | budget-balance |
dc.subject.keyword | renegotiation |
dc.subject.keyword | Management and Organization Studies |
dc.rights.accessRights | info:eu-repo/semantics/openAccess |