BANERJEE, TANMOYEE; RAYCHAUDHURI, AJITAVA - In: The Singapore Economic Review (SER) 56 (2011) 01, pp. 113-144
In a principal-agent framework under moral hazard, when the monopolist can pass on the liability of any defect of the … renegotiation, when the monopolist is taking the entire risk of replacing the defective product, he will profitably choose high … investment level and serves high quality product. But the results show that the monopolist will choose to renegotiate the …