In a stylized model of biopharmaceutical contract manufacturing, this paper shows how the potential for renegotiation … conditions to purchase more. We show that renegotiation can greatly increase the firms' investments and profits, provided that … the contracts are designed correctly. Failing to anticipate renegotiation leads to contracts that allow too much …

of having a lower cost. Renegotiation is another concern with the optimal mechanism: Because it does not minimize the … that the potential gain from renegotiation is relatively small with either the optimal or our simple mechanisms. We … performance, simplicity, and robustness to renegotiation. …

how the firms share the gain from renegotiation, and hence how the firms make investments ex ante. The firms may also … engage in renegotiation design, inserting simple clauses into the supply contract to shape the outcome of renegotiation. For … bargaining, the manufacturer captures the gain from renegotiation. "Tradable options," which grant buyers the right to trade …

This paper proves the renegotiation-proofness principle for a dynamic LEN (linear contracts, exponential utility …, normal distributions) model and examines the impact of repeated renegotiation on incentives and managerial tenure when …