Dynamic relational contracts with consumption constraints

Research output: Working paperDiscussion paper

Abstract / Description of output

This paper considers a long-term relationship between two agents who undertake costly actions or investments which produce a joint benefit. Agents have an opportunity to expropriate some of the joint benefit for their own use. The question asked is how to structure the investments and division of the surplus over time so as to avoid expropriation. It is shown that investments may be either above or below the efficient level and that actions and the division of the surplus converges to a stationary solution at which either both investment levels are efficient or both are below the efficient level.
Original languageEnglish
Publisher Keele University
Number of pages37
Volume16
Publication statusPublished - 1 Jan 2007

Publication series

NameKeele economics research paper
ISSN (Print)1740-231X
ISSN (Electronic)1740-231X

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