Contract Adaptation under Legal Constraints

Zanarone, Giorgio

doi:10.1093/jleo/ews005

Cited by 27 publications

(16 citation statements)

References 31 publications

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“…Similarly, European auto manufacturers sometimes reward auto dealers by increasing the discounts that they offer to dealers on sales of cars. Such manufacturers also provide subsidies to dealers who undertake costly upgrades to store layouts, and forgive minor contractual breaches by dealers who otherwise perform well (Zanarone, ). As another example, major airlines often informally reward those regional partners who give up their landing slots to the major when the weather is poor (Gil, Kim, & Zanarone, ).…”

Section: Discussionmentioning

confidence: 99%

The role of relationship scope in sustaining relational contracts in interfirm networks

Argyres

Bercovitz

Zanarone

2019

Strategic Management Journal

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Research summary:A key strategic decision for many firms is the scope of their relationships with partners. Existing theories of relationship scope are limited in that they disregard the facts that: (a) most firms transact within networks of multiple partners, and (b) these partnerships often involve two-sided moral hazard. We develop a theory of partnership scope in interfirm networks that addresses these deficiencies. We show how, by broadening the scope of business it conducts with its partners, a firm can reduce externalities between them, and thereby sustain selfenforcing exchange relationships ("relational contracts") in /journal/smj them. We discuss how our model applies to franchising, supply chains, and platform-based ecosystems. K E Y W O R D Sinterfirm cooperation, interfirm networks, interorganizational relationships, relational contracts, relationship scope

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Section: Discussionmentioning

confidence: 99%

The role of relationship scope in sustaining relational contracts in interfirm networks

Argyres

Bercovitz

Zanarone

2019

Strategic Management Journal

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“…Nuestro documento también contribuye a la literatura que estudia la interacción entre contratos formales e informales (e.g., Klein, 2000;Poppo y Zenger, 2002;Baker, Gibbons y Murphy, 1994Battigalli y Maggi, 2008;Kvaløy y Olsen, 2009Ryall y Sampson, 2009Zanarone, 2013). 4 En esta literatura, las partes recurren a acuerdos informales dado que escribir, verificar o hacer cumplir los contratos formales resulta costoso.…”

Section: Relación Con La Literaturaunclassified

Gestión de los costos de comparación social en las organizaciones

Contreras¹,

Zanarone²

2018

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This paper studies how organizations manage the social comparisons that arise when their employees' pay and tasks, and hence their status vis-à-vis peers, differ. We show that under a "pay transparency policy", the organization may compress pay and distort the employees' tasks to minimize social comparison costs. We subsequently show that if the organization can credibly commit to informal agreements, it may remove social comparisons by implementing a "pay secrecy" policy. Under such a policy, the organization makes employees "officially equal" by granting them similar formal terms, while optimally differentiating their pay through self-enforcing informal adjustments.

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“…Section 4 analyzes the State and compares it to private 2 Exogenous State enforcement is assumed by most works on incentive contracts (e.g., Holmstrom 1979;Holmstrom and Milgrom 1991), incomplete contracts (e.g., Hart and Moore 1988;Battigalli and Maggi 2002), and property rights (e.g., Grossman and Hart 1986;Arruñada 2003;Libecap and Lueck 2011). 3 Self-enforcing agreements have been used to study employment contracts (MacLeod and Malcomson 1989;Baker et al 1994;Levin 2002Levin , 2003, inter-firm contracts (Klein 2000;Zanarone 2013), the structure and boundaries of firms (Baker et al 1999(Baker et al , 2002, property rights (Ellickson 1991), and enforcement by markets and communities (Klein and Leffler 1981;Bendor and Mookherjee 1990;Milgrom et al 1990;Greif et al 1994;Dixit 2003aDixit , 2003bMasten and Prüfer 2011;Weingast 2012a, 2012b). See Dixit (2004), Greif (2006), andMacLeod (2007) for comprehensive reviews of these literatures.…”

Section: Introductionmentioning

confidence: 99%

Endogenous enforcement institutions

Aldashev

Zanarone

2017

Journal of Development Economics

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Better legal institutions favor economic development, but only in States with sufficiently constrained executive power. We document this novel pattern across developing countries, and build a simple model that illustrates how power, and the institutions that constrain or complement it, may affect development. We show that there is a tradeoff between the two facets of power-enforcement and expropriation. As a ruler's power grows, his temptation not to enforce diminishes while the temptation to expropriate grows. As a consequence, private enforcement optimally evolves into State enforcement, and legal institutions, which relax the ruler's incentive constraint on enforcement, lose economic importance vis-à-vis political institutions, which limit the executive's ability to expropriate. Our results are consistent with the observed crosscountry patterns, as well as with historical evidence on the transition from the "Law Merchant" private enforcement system to the State.

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Contract Adaptation under Legal Constraints

Cited by 27 publications

References 31 publications

The role of relationship scope in sustaining relational contracts in interfirm networks

The role of relationship scope in sustaining relational contracts in interfirm networks

Gestión de los costos de comparación social en las organizaciones

Endogenous enforcement institutions

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