TY  - JOUR
AU  - Acemoglu,Daron
AU  - Antràs,Pol
AU  - Helpman,Elhanan
TI  - Contracts and the Division of Labor
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11356
PY  - 2005
Y2  - May 2005
UR  - http://www.nber.org/papers/w11356
L1  - http://www.nber.org/papers/w11356.pdf
N1  - Author contact info:
Daron Acemoglu
Department of Economics
MIT, E52-380B
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/253-1927
Fax: 617/253-1330
E-Mail: daron@mit.edu

Pol Antràs
Department of Economics
Harvard University
1805 Cambridge Street
Littauer Center 207
Cambridge, MA 02138
Tel: 617/495-1236
Fax: 617/495-8570
E-Mail: pantras@fas.harvard.edu

Elhanan Helpman
Department of Economics
Harvard University
1875 Cambridge Street
Cambridge, MA 02138
Tel: 617-495-4690
Fax: 617-495-7730
E-Mail: ehelpman@harvard.edu
AB  - 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.
ER  -