A referenciapont-elmélet mint a hiányos információjú szerződések gondolatkörének új irányzata (The concept of ‘reference points’ as a new direction in the ‘incomplete contract’ theory)

A cikk az alig több mint öt éve született referenciapont-elméletet mutatja be, ismerteti és értékeli a témában eddig megjelent cikkeket és a nagyobb horderejű munkaanyagokat. A referenciapont-elmélet arra a kérdésre keresi a választ, hogy mi a vállalat optimális mérete, és mikor érdemesebb a termelési kooperációt nem a vállalaton belül, a különböző egységek koordinációjával megoldani, hanem külső vállalatok segítségével, a piacon keresztül megvalósítani. A referenciapont-elmélet az azonos kérdések megválaszolására törekvő hiányos szerződések elméletét ért kritika hatására született meg, és saját, újonnan megfogalmazott feltételrendszerét számos ponton ötvözi a hiányos szerződések hipotéziseivel, ugyanakkor bizonyításai során felhasználja a standard közgazdasági irányzat több eszközét is. A cikk a friss eredmények bemutatása mellett megkísérli előre becsülni a referenciapont-elmélet várható jövőbeli fejlődési irányait is. ____ The concept of reference points was established slightly more than five years ago, and it deals with the same boundary of firm related questions as the incomplete contract theory. The present review shows the most important journals and research papers in this field. Reference point theory arose out of a criticism of some of the elements of incomplete contract theory. Reference point theory combines newly- formulated hypotheses with some of the assumptions of incomplete contracts. The theory also uses some of the proving tools of standard economics. The author’s study not only shows the main results of the reference point theory, but it also tries to predict some possible future developments within the theory.

Less Risk, More Effort : Demand Risk Allocation in Incomplete Contracts

This article investigates the allocation of demand risk within an incomplete contract framework. We consider an incomplete contractual relationship between a public authority and a private provider (i.e. a public-private partnership), in which the latter invests in non-verifiable cost-reducing efforts and the former invests in non-verifiable adaptation efforts to respond to changing consumer demand over time. We show that the party that bears the demand risk has fewer hold-up opportunities and that this leads the other contracting party to make more effort. Thus, in our model, bearing less risk can lead to more effort, which we describe as a new example of âeuro~counter-incentivesâeuro?. We further show that when the benefits of adaptation are important, it is socially preferable to design a contract in which the demand risk remains with the private provider, whereas when the benefits of cost-reducing efforts are important, it is socially preferable to place the demand risk on the public authority. We then apply these results to explain two well-known case studies.

Three essays in incomplete contracts

General Introduction These three chapters, while fairly independent from each other, study economic situations in incomplete contract settings. They are the product of both the academic freedom my advisors granted me, and in this sense reflect my personal interests, and of their interested feedback. The content of each chapter can be summarized as follows: Chapter 1: Inefficient durable-goods monopolies In this chapter we study the efficiency of an infinite-horizon durable-goods monopoly model with a fmite number of buyers. We find that, while all pure-strategy Markov Perfect Equilibria (MPE) are efficient, there also exist previously unstudied inefficient MPE where high valuation buyers randomize their purchase decision while trying to benefit from low prices which are offered once a critical mass has purchased. Real time delay, an unusual monopoly distortion, is the result of this attrition behavior. We conclude that neither technological constraints nor concern for reputation are necessary to explain inefficiency in monopolized durable-goods markets. Chapter 2: Downstream mergers and producer's capacity choice: why bake a larger pie when getting a smaller slice? In this chapter we study the effect of downstream horizontal mergers on the upstream producer's capacity choice. Contrary to conventional wisdom, we find anon-monotonic relationship: horizontal mergers induce a higher upstream capacity if the cost of capacity is low, and a lower upstream capacity if this cost is high. We explain this result by decomposing the total effect into two competing effects: a change in hold-up and a change in bargaining erosion. Chapter 3: Contract bargaining with multiple agents In this chapter we study a bargaining game between a principal and N agents when the utility of each agent depends on all agents' trades with the principal. We show, using the Potential, that equilibria payoffs coincide with the Shapley value of the underlying coalitional game with an appropriately defined characteristic function, which under common assumptions coincides with the principal's equilibrium profit in the offer game. Since the problem accounts for differences in information and agents' conjectures, the outcome can be either efficient (e.g. public contracting) or inefficient (e.g. passive beliefs).

Un partenariat public-privé rigide ou flexible ? Théorie et application aux concessions routières à péage

In this article, we explore the contractual design of toll road concession contracts. We highlight the fact that contracting parties try to sign not only complete rigid contracts in order to avoid renegotiations but also flexible contracts in order to adapt contractual framework to contingencies and to create incentives for cooperative behavior. This gives rise to multiple toll adjustment provisions and to a tradeoff between rigid and flexible contracts. Such a tradeoff is formalized using an incomplete contract framework - including ex post maladaptation and renegotiation costs - and propositions are tested using an original database of 71 concession contracts. Our results suggest an important role for economic efficiency concerns, as well as politics, in designing such public-private contracts. Codes JEL : D23, H11, H54, L14, L9.

Financial Markets and Real Ecinomy: Four Essays in International Trade

Financial markets play an important role in an economy performing various functions like mobilizing and pooling savings, producing information about investment opportunities, screening and monitoring investments, implementation of corporate governance, diversification and management of risk. These functions influence saving rates, investment decisions, technological innovation and, therefore, have important implications for welfare. In my PhD dissertation I examine the interplay of financial and product markets by looking at different channels through which financial markets may influence an economy.My dissertation consists of four chapters. The first chapter is a co-authored work with Martin Strieborny, a PhD student from the University of Lausanne. The second chapter is a co-authored work with Melise Jaud, a PhD student from the Paris School of Economics. The third chapter is co-authored with both Melise Jaud and Martin Strieborny. The last chapter of my PhD dissertation is a single author paper.Chapter 1 of my PhD thesis analyzes the effect of financial development on growth of contract intensive industries. These industries intensively use intermediate inputs that neither can be sold on organized exchange, nor are reference-priced (Levchenko, 2007; Nunn, 2007). A typical example of a contract intensive industry would be an industry where an upstream supplier has to make investments in order to customize a product for needs of a downstream buyer. After the investment is made and the product is adjusted, the buyer may refuse to meet a commitment and trigger ex post renegotiation. Since the product is customized to the buyer's needs, the supplier cannot sell the product to a different buyer at the original price. This is referred in the literature as the holdup problem. As a consequence, the individually rational suppliers will underinvest into relationship-specific assets, hurting the downstream firms with negative consequences for aggregate growth. The standard way to mitigate the hold up problem is to write a binding contract and to rely on the legal enforcement by the state. However, even the most effective contract enforcement might fail to protect the supplier in tough times when the buyer lacks a reliable source of external financing. This suggests the potential role of financial intermediaries, banks in particular, in mitigating the incomplete contract problem. First, financial products like letters of credit and letters of guarantee can substantially decrease a risk and transaction costs of parties. Second, a bank loan can serve as a signal about a buyer's true financial situation, an upstream firm will be more willing undertake relationship-specific investment knowing that the business partner is creditworthy and will abstain from myopic behavior (Fama, 1985; von Thadden, 1995). Therefore, a well-developed financial (especially banking) system should disproportionately benefit contract intensive industries.The empirical test confirms this hypothesis. Indeed, contract intensive industries seem to grow faster in countries with a well developed financial system. Furthermore, this effect comes from a more developed banking sector rather than from a deeper stock market. These results are reaffirmed examining the effect of US bank deregulation on the growth of contract intensive industries in different states. Beyond an overall pro-growth effect, the bank deregulation seems to disproportionately benefit the industries requiring relationship-specific investments from their suppliers.Chapter 2 of my PhD focuses on the role of the financial sector in promoting exports of developing countries. In particular, it investigates how credit constraints affect the ability of firms operating in agri-food sectors of developing countries to keep exporting to foreign markets.Trade in high-value agri-food products from developing countries has expanded enormously over the last two decades offering opportunities for development. However, trade in agri-food is governed by a growing array of standards. Sanitary and Phytosanitary standards (SPS) and technical regulations impose additional sunk, fixed and operating costs along the firms' export life. Such costs may be detrimental to firms' survival, "pricing out" producers that cannot comply. The existence of these costs suggests a potential role of credit constraints in shaping the duration of trade relationships on foreign markets. A well-developed financial system provides the funds to exporters necessary to adjust production processes in order to meet quality and quantity requirements in foreign markets and to maintain long-standing trade relationships. The products with higher needs for financing should benefit the most from a well functioning financial system. This differential effect calls for a difference-in-difference approach initially proposed by Rajan and Zingales (1998). As a proxy for demand for financing of agri-food products, the sanitary risk index developed by Jaud et al. (2009) is used. The empirical literature on standards and norms show high costs of compliance, both variable and fixed, for high-value food products (Garcia-Martinez and Poole, 2004; Maskus et al., 2005). The sanitary risk index reflects the propensity of products to fail health and safety controls on the European Union (EU) market. Given the high costs of compliance, the sanitary risk index captures the demand for external financing to comply with such regulations.The prediction is empirically tested examining the export survival of different agri-food products from firms operating in Ghana, Mali, Malawi, Senegal and Tanzania. The results suggest that agri-food products that require more financing to keep up with food safety regulation of the destination market, indeed sustain longer in foreign market, when they are exported from countries with better developed financial markets.Chapter 3 analyzes the link between financial markets and efficiency of resource allocation in an economy. Producing and exporting products inconsistent with a country's factor endowments constitutes a serious misallocation of funds, which undermines competitiveness of the economy and inhibits its long term growth. In this chapter, inefficient exporting patterns are analyzed through the lens of the agency theories from the corporate finance literature. Managers may pursue projects with negative net present values because their perquisites or even their job might depend on them. Exporting activities are particularly prone to this problem. Business related to foreign markets involves both high levels of additional spending and strong incentives for managers to overinvest. Rational managers might have incentives to push for exports that use country's scarce factors which is suboptimal from a social point of view. Export subsidies might further skew the incentives towards inefficient exporting. Management can divert the export subsidies into investments promoting inefficient exporting.Corporate finance literature stresses the disciplining role of outside debt in counteracting the internal pressures to divert such "free cash flow" into unprofitable investments. Managers can lose both their reputation and the control of "their" firm if the unpaid external debt triggers a bankruptcy procedure. The threat of possible failure to satisfy debt service payments pushes the managers toward an efficient use of available resources (Jensen, 1986; Stulz, 1990; Hart and Moore, 1995). The main sources of debt financing in the most countries are banks. The disciplining role of banks might be especially important in the countries suffering from insufficient judicial quality. Banks, in pursuing their rights, rely on comparatively simple legal interventions that can be implemented even by mediocre courts. In addition to their disciplining role, banks can promote efficient exporting patterns in a more direct way by relaxing credit constraints of producers, through screening, identifying and investing in the most profitable investment projects. Therefore, a well-developed domestic financial system, and particular banking system, would help to push a country's exports towards products congruent with its comparative advantage.This prediction is tested looking at the survival of different product categories exported to US market. Products are identified according to the Euclidian distance between their revealed factor intensity and the country's factor endowments. The results suggest that products suffering from a comparative disadvantage (labour-intensive products from capital-abundant countries) survive less on the competitive US market. This pattern is stronger if the exporting country has a well-developed banking system. Thus, a strong banking sector promotes exports consistent with a country comparative advantage.Chapter 4 of my PhD thesis further examines the role of financial markets in fostering efficient resource allocation in an economy. In particular, the allocative efficiency hypothesis is investigated in the context of equity market liberalization.Many empirical studies document a positive and significant effect of financial liberalization on growth (Levchenko et al. 2009; Quinn and Toyoda 2009; Bekaert et al., 2005). However, the decrease in the cost of capital and the associated growth in investment appears rather modest in comparison to the large GDP growth effect (Bekaert and Harvey, 2005; Henry, 2000, 2003). Therefore, financial liberalization may have a positive impact on growth through its effect on the allocation of funds across firms and sectors.Free access to international capital markets allows the largest and most profitable domestic firms to borrow funds in foreign markets (Rajan and Zingales, 2003). As domestic banks loose some of their best clients, they reoptimize their lending practices seeking new clients among small and younger industrial firms. These firms are likely to be more risky than large and established companies. Screening of customers becomes prevalent as the return to screening rises. Banks, ceteris paribus, tend to focus on firms operating in comparative-advantage sectors because they are better risks. Firms in comparative-disadvantage sectors finding it harder to finance their entry into or survival in export markets either exit or refrain from entering export markets. On aggregate, one should therefore expect to see less entry, more exit, and shorter survival on export markets in those sectors after financial liberalization.The paper investigates the effect of financial liberalization on a country's export pattern by comparing the dynamics of entry and exit of different products in a country export portfolio before and after financial liberalization.The results suggest that products that lie far from the country's comparative advantage set tend to disappear relatively faster from the country's export portfolio following the liberalization of financial markets. In other words, financial liberalization tends to rebalance the composition of a country's export portfolio towards the products that intensively use the economy's abundant factors.

Are Public Private Partnerships that Rigid ? And Why ? : Evidence from Toll Road Concession Contracts

Transport concession contracts are commonly said to be standardized and too rigid. They would not allow public authorities to adapt them to evolving context and circumstances. This paper aims at challenging this view and, more particularly, the view that contractual rigidity for transport concessions is exogenous. Using a transaction cost framework, we disentangle between three main determinants of contractual rigidity: traffic uncertainty; connivance between contracting parties; quality of the institutional environment. Using an original database of toll road concession contracts, we observe a great variety of provisions for toll adjustment. We find that these exogenous determinants significantly influence contractual choices.

Toward a Political Theory of Environmental Policy.

This paper makes some steps toward a formal political economy of environmental policy. Economists' quasi-unanimous preferences for sophisticated incentive regulation is reconsidered. First, we recast the question of instrument choice in the general mechanism literature and provide an incomplete contract approach to political economy. Then, in various settings, we show why constitutional constraints on the instruments of environmental policy may be desirable, even though they appear inefficient from a purely standard economic viewpoint.

O comitê operacional como mecanismo de governança dos consórcios para exploração e produção do pré-sal

Este trabalho objetiva analisar aspectos jurídicos relacionados ao consórcio e ao Comitê Operacional que deverão ser constituídos no âmbito do novo modelo regulatório criado para a exploração e produção das reservas do pré-sal – o contrato de partilha de produção. Para esse fim, será feita uma análise do histórico do setor de petróleo e gás no Brasil, com o objetivo de contextualizar o novo modelo. Em seguida, serão analisados os principais aspectos presentes na doutrina e na legislação societária a respeito do consórcio, enfatizando-se as peculiaridades previstas na legislação do pré-sal. Passa-se, então, à análise de problemas relacionados à tomada de decisão no consórcio exigido pela lei do pré-sal e, consequentemente, no Comitê Operacional que o administrará. Para isso, serão examinados: (i) a teoria dos contratos incompletos; (ii) o modelo do principal-agente; (iii) os problemas de governança em uma sociedade de economia mista; e (iv) a teoria da dependência de recursos. Tendo por base o estudo realizado, a última parte buscará mostrar a necessidade de implementação de mecanismos de governança na execução dos contratos de partilha de produção, de modo a beneficiar todos os envolvidos.

Trade Credits under Imperfect Enforcement: A Theory with a Test on Chinese Experience

It is widely recognized that trade credit is an important financial mechanism, particularly in developing economies and transition economies where institutions are weak. This paper documents theoretical analysis and empirical accounts on what facilitates an effective supply of trade credit based on original surveys conducted in P.R. of China. Our theory predicts that trade volume and trade credit are increasing function of cash held by the buyer and enforcement technology of the seller. Furthermore, if the state sector’s enforcement technology is high, it has positive external effect to expand the volumes of trade credit and trades in the whole economy. From the data, we found that government made active commitment in enforcement of trade credit contract and the government owned firms are main supplier and receivers of trade credit, which suggest that enforcement by government and state sector were effective against presumptions in the previous literatures.

Financial Aspects of Transactions with FDI: Trade Credit Provision by SMEs in China

This paper will document financial aspects of transactions, and trade credit supply behavior with FDI among small and medium-sized enterprises(SMEs) based on two original surveys, conducted in four cities in China in 2003. The survey was designed to capture the nature of inter-firm transactions, trade credit and other financial conditions. Literature on FDI mainly refers to technology transfer, employment or investment. This paper focuses on the role and significance of FDI in the supply of trade credit due to its trade credit enforcement technology. Yanagawa, Ito and Watanabe [2006] developed a model which indicates that when a seller has higher enforcement technology or a buyer has richer liquidity, both trade credit and transaction volume will be increased. In this paper, we confirmed that FDI and G contributed to the provision of trade credit and had a positive external effect on trade credit enforcement towards China’s economy. (1) Sales towards FDI customers have the power to increase the trade credit ratio,even when controlling other factors such as choice of payment instrument, competitiveness, and expost default management. This implies that FDI does provide trade credit, not only because it has superior liquidity, but because it is also superior in terms of enforcement of trade credit repayment.(2) Cash constraints of the buyer influence the decisions concerning trade credit provided by the seller, as a model in Yanagawa, et al. [2006] predicted, and this implies that strategic default is a serious concern among SMEs in China. (3) Spillover effect exists in payment enforcement technology in transactions with FDI customers.

Végtelen sokszor ismételt kiszerződés (Infinitely repeated outsourcing)

A cikk a kormányzat és a vállalat közti végtelen sokszor ismételt kiszerződésekkel foglalkozik. Vizsgálati eszköztárát a nem teljes szerződések elméletéből kölcsönzi. A szakirodalmat felhasználva megmutatja, hogy létezik olyan fenyegetési stratégia, köznapi szóhasználattal az adott szabályok esetén mindkét fél számára saját érdekében betartandó stratégia, ahol mind a vállalat, mind a kormányzat beruházásának értéke a társadalmilag optimális nagyság. Bebizonyítja, hogy annál valószínűbb, hogy mind a kormányzat, mind a vállalat a társadalmilag optimális beruházási szintet valósítja meg, minél nagyobb annak az esélye, hogy az adott vállalat kapja meg a következő periódusban is az ismétlődő munkafeladatot. Felhívja a figyelmet a szabályozó felelősségére az újabb szerződés valószínűségének indirekt meghatározásában. ____ The paper analyses the in¯nitely repeated contracts between the government and a firm. Methods from the incomplete contract theory are used for this analysis. Based on the literature, it is shown that there exist a trigger strategy, when both the government and the firm deploy the socially optimal amount of investment. The paper proves that the greater the chance that an excellently accomplished firm receives a new contract the higher is the probability that both actors' investments are on the socially optimal level. The regulator has a great liability in establishing indirectly the chance of receiving a new contract opportunity.

Power and selection of contract terms: The case from the Brazilian orange juice sector

ABSTRACT We propose a model to explain how contract terms are selected in the presence of a form of economic power: contract power. The orange juice sector is used to illustrate an analysis that demonstrates the effects of contract power on the economic organization of the sector. We define contract power as the ability to exploit contractual gaps or failures of contractual provisions, which are strategically left incomplete. Empirical evidence from content analysis of antitrust documents supports the logic of contract power in the orange juice sector in three forms: avoiding changes to payment methods from weight to solid contents (quality); using information asymmetries to manipulate indexes that calculate the formula of orange prices; and deliberately harvesting oranges late in order to dehydrate the fruit, which consequently reduces weight and price. The paper contributes to understanding the selection of contract terms and the debate about how antitrust offices can deal with this issue.

Invitation to contractors and forms of contract, bond andcontractor's proposal for construction of a part of the ... Rapid transit railroad ... Form finaly adopted by the Commission ...

Some numbers have special subtitles, as follows: no. 5, sect. 8/11, "proposal for installation of cable feed pipes..." no. 16/18/36/37 [combined] "proposal for construction of signal towers..." no. 18 (180th street and 239th street yards)" proposal for furnishing and erecting structural steel for inspection sheds..." no. 19/22, sect. 2. "proposal for erection of structural steel..." no. 49, sect. 1/2, "proposal for construction of concrete track floors and platforms ..." no. 49, sect. 3, "proposal for the supply of structural steel ..."

Invitation to contractors, information for contractors and forms of contract, bond and contractor's proposal for construction of station finish for a part of the ... rapid transit railroad ... Form finally adopted by the Commission ...

No. 36/37 & 50, sect. 1-3. Queensboro subway.--No. 39, sect. 2. Broadway - Fourth avenue (New Utrecht avenue) - No. 43, 4/38, see no. 4/38, 43.--No. 48, sect. 1-2. Seventh avenue - Lexington avenue.--No. 50. Queensboro subway (Hunters Point avenue station

Exploring the dimensions and transactional outcomes of incomplete business contracts

With an increased emphasis on outsourcing and shortening business cycles, contracts between firms have become more important. Carefully written contracts contribute to the efficiency and longevity of inter-firm relationships as they may constrain opportunism and are often a less costly governance mechanism than maintaining complex social relationships (Larson 1992). This exploratory examination adds to our understanding of how incomplete contracts affect interorganizational exchange. First, we consider the multiple dimensions of contract constraints (safeguards). We also investigate the extent that constraints affect decisions to enforce the relationship by delaying payments, and whether the decision is efficient. Finally, we examine the extent the constraints are effective (and ineffective) at reducing transaction problems associated with enforcement. Based on 971 observations of transactions using explicit, written terms and other secondary data in the context of IT transaction in The Netherlands we test our research propositions.