Contracts and Technology Adoption

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Contracts and Technology Adoption

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Title: Contracts and Technology Adoption
Author: Acemoglu, Daron; Antras, Pol; Helpman, Elhanan

Note: Order does not necessarily reflect citation order of authors.

Citation: Acemoglu, Daron, Pol Antras, and Elhanan Helpman. 2007. Contracts and technology adoption. American Economic Review 97(3): 916-943.
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Abstract: We develop a tractable framework for the analysis of the relationship between contractual incompleteness, technological complementarities, and technology adoption. In our model, a firm chooses its technology and investment levels in contractible activities by suppliers of intermediate inputs. Suppliers then choose investments in noncontractible activities, anticipating payoffs from an ex post bargaining game. We show that greater contractual incompleteness leads to the adoption of less advanced technologies, and that the impact of contractual incompleteness is more pronounced when there is greater complementary among the intermediate inputs. We study a number of applications of the main framework and show that the mechanism proposed in the paper can generate sizable productivity differences across countries with different contracting institutions, and that differences in contracting institutions lead to endogenous comparative advantage differences.
Published Version: http://dx.doi.org/10.1257/aer.97.3.916
Terms of Use: This article is made available under the terms and conditions applicable to Other Posted Material, as set forth at http://nrs.harvard.edu/urn-3:HUL.InstRepos:dash.current.terms-of-use#LAA
Citable link to this page: http://nrs.harvard.edu/urn-3:HUL.InstRepos:3199063

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  • FAS Scholarly Articles [6463]
    Peer reviewed scholarly articles from the Faculty of Arts and Sciences of Harvard University
 
 

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