European Journal of Law and Economics

, Volume 34, Issue 3, pp 495–514

Incomplete contracts and competition: another look at fisher body/general motors?

Article

Abstract

In this paper we analyze the problem of the enforcement of incomplete contracts with endogenous outside options. Some of the equilibria we outline may reverse one of the main results presented in the standard literature. We then revisit the literature on the highly debated Fisher Body/General Motors merger and suggest an explanation based on GM’s need to control the Fisher brothers’ outside options.

Keywords

Incomplete contracts Hold-up problem Transaction costs Endogenous outside options Cross competition Vertical integration 

JEL Classification

D23 L12 L14 L21 L22 L42 

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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Department of EconomicsUniversity Of SienaSienaItaly
  2. 2.University of ArizonaJames E. Rogers College of LawTucsonUSA

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