Relational Contracts and the Theory of the Firm

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ID: 291377
2002
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Abstract
Relational contracts—informal agreements sustained by the value of future relationships—are prevalent within and between firms. We develop repeated-game models showing why and how relational contracts within firms (vertical integration) differ from those between (nonintegration). We show that integration affects the parties' temptations to renege on a given relational contract, and hence affects the best relational contract the parties can sustain. In this sense, the integration decision can be an instrument in the service of the parties' relationship. Our approach also has implications for joint ventures, alliances, and networks, and for the role of management within and between firms.
Reference Key
openalex_W3124719057 Use this key to autocite in the manuscript while using SciMatic Manuscript Manager or Thesis Manager
Authors George P. Baker, Robert Gibbons, Kevin J. Murphy
Journal the quarterly journal of economics
Year 2002
DOI
10.1162/003355302753399445
URL
https://doi.org/10.1162/003355302753399445
Keywords Keywords not found

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