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Articles (2017), RAND Journal of Economics, 48 (3), pp. 733-748

An Offer You Can't Refuse: Early Contracting With Endogenous Threat

Jullien Bruno, POUYET Jerome, SAND-ZANTMAN Wilfried

A seller has private information on the future gains from trade with a buyer, but the buyer has the option to invest to produce the good internally. Both the buyer and the seller can efficiently trade ex post under complete information. Despite the lack of information, the buyer sometimes gains by making an early contract offer to the seller. The early contract divides the different types of sellers according to their information, which renders the threat of producing the good in‐house credible and enables the buyer to extract a larger share of the gains from trade. Several extensions are investigated. Lien vers l'article

JULLIEN, B., POUYET, J. and SAND-ZANTMAN, W. (2017). An Offer You Can't Refuse: Early Contracting With Endogenous Threat. RAND Journal of Economics, 48(3), pp. 733-748.