Short-term or long-term contracts? - A rent-seeking perspective
نویسنده
چکیده
In this paper, rms engage in rent seeking in order to be assigned a governmental contract. We analyze how a change in the contract length a¤ects the rms rent-seeking behavior. A longer contract leads to more rent seeking at a contract assignment stage, as the rms value the contract higher. On the other hand, the contract has to be assigned less often, which of course leads to less rent seeking. Finally, a longer contract makes a possible cooperation between the rms solving the rent-seeking problem more di¢ cult to sustain. Key words: Contract length, rent seeking, cooperation, relational contract JEL classi cation: D 72, D 74 I would like to thank Matthias Kräkel, Sanghack Lee and Johannes Münster for helpful comments. Financial support by the Deutsche Forschungsgemeinschaft (DFG), SFB-TR 15 (Governance and the e¢ ciency of economic systems), is gratefully acknowledged. Oliver Gürtler, Department of Economics, BWL II, University of Bonn, Adenauerallee 24-42, D-53113 Bonn, Germany. Tel.:+49-228-739214, Fax:+49-228-739210; E-mail: [email protected]
منابع مشابه
The Impact of EU’s Competition Laws on the Long-Term Gas Contracts
Competion laws follow varions goals including economic targets such as increase of economic efficiency and consumers' welfare. This branch of law has resisted against agreements and contracts which endanger the consumers' or public welfare and has tried to prevent such contracts and processes. European Union is among the greatest consumers and importer of energy in the world. The most part of t...
متن کاملLag vacancy, effective rents and optimal lease term
This paper analyses the choice of the optimal lease term of office property in relation to expected lag vacancy, periods of rent-free and expected rental income growth. The optimal lease term is the one that minimizes the expected costs of contract negotiation from the perspective of landlords. Specifically, it presents an analysis of how to estimate effective rents based on the lease term, exp...
متن کاملExecutive Compensation and Short-Termist Behaviour in Speculative Markets
We present a multiperiod agency model of stock-based executive compensation in a speculative stock market, where investors have heterogeneous beliefs and stock prices may deviate from underlying fundamentals and include a speculative option component. This component arises from the option to sell the stock in the future to potentially overoptimistic investors. We show that optimal compensation ...
متن کاملContract renegotiation and rent re-distribution Who gets raked over the coals?
Policy shocks affect the rent distribution in long-term contracts, which can lead to such contracts being renegotiated. We seek an understanding of what aspects of contract design, in the face of a substantial policy shock, affect the propensity to renegotiate. We test our hypotheses using data on U.S. coal contracts after the policy shock of the 1990 Clean Air Act Amendments. Contracts are div...
متن کاملEffect of Short and Long-Term Treatment with Omega-3 Fatty Acids on Scopolamine-Induced Amnesia
Two omega-3 fatty acids including docosahexaenoic acid (DHA) and eicosapentaenoic acid (EPA) are essential for the physiologic function of neuronal cell membrane. Normal function of neuronal cell membrane requires appropriate composition of fatty in its structure. Present study was designed to compare the effect of short-term and long-term pretreatment with omega-3 fatty acids on scopolamine...
متن کامل