Review of Economic Studies Vol. 57 No. 4 1990
Adverse Selection and Renegotiation in Procurement
Abstract
As was shown by Dewatripont, optimal long-term contracts under asymmetric information are generally not time-consistent. This paper fully characterizes the equilibrium of a two-period procurement model with commitment and renegotiation. It also analyzes whether renegotiated long-term contracts yield outcomes resembling those under either unrenegotiated long-term contracts or a sequence of short-term contracts, and links the analysis with the multiple unit durable good monopoly problem.
- DOI
- 10.2307/2298088
- Volume
- 57
- Issue
- 4
- Pages
- 597
- Sources
- bibtex:phds-export.bib openalex crossref