Contracts and Technology Adoption

By Daron Acemoglu, Pol Antràs, E. Helpman. 2007

517 citations recorded by the source corpus.

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. (JEL D86, O33)

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/b680479423c6868a8250afbe9eccf5cb26d63f4c

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Economics and Econometrics

Citations in the corpus

Global Sourcing of Complex Production Processes (2014, methodology): “…value chain is sliced , i.e., how many di erent inputs are combined in the production process for a particular nal product, is a choice made by rms (Acemoglu et al., 2007): Some choose a setting with multiple highly specialized components and narrowly de ned tasks, while other rms from the same…”
The Margins of Global Sourcing: Theory and Evidence from U.S. Firms (2017, unknown): “We next briefly outline how our results extend and generalize to the case in which the final-good producer is allowed to choose the complexity of production, as captured by the measure of inputs used in production (see Acemoglu et al., 2007).”
Trade, FDI, and the Organization of Firms (2006, background): “Daron Acemoglu, Antràs, and Helpman (2006) propose a model in which Ricardian comparative advantage emerges from the interaction of contract incompleteness with the deliberate choice of technology by final good producers.”
Organizations and Trade (2009, background): “Acemoglu et al. (2007) build a micro-founded model of technology adoption (another organizational decision of rms) in the presence of incomplete contracting, and show that greater contractual incompleteness leads to the adoption of less advanced technologies, with the e¤ect being more pronounced…”
What Goods Do Countries Trade? A Quantitative Exploration of Ricardo's Ideas (2012, methodology): “Our analysis illustrates how tests of the Ricardian model, which have long been perceived as hopelessly ad-hoc, can be performed 3Matsuyama (2005), Acemoglu, Antras, and Helpman (2007), Levchenko (2007), Vogel (2007), Costinot (2009), and Cuñat and Melitz (2010) explicitly model the impact of…”
Total Factor Productivity (2010, background): “On the theory side, we have an increasing number of theories linking the adoption of technologies to the role of institutions (Acemoglu et al., 2006), financial markets( Alfaro et al. (2006) and Aghion et al., 2006), endowments (Caselli and Coleman, 2006) and policies (Holmes and Schmitz, 2001).”
Determinants of Global Value Chain Participation: Cross-Country Evidence (2020, unknown): “31 Firms that participate in GVCs face 26 A body of work establishes institutional quality as a comparative advantage factor in determining export patterns: Acemoglu, Antràs, and Helpman (2007), Levchenko (2007), Nunn (2007), Costinot (2009), and Chor (2010).”
An Elementary Theory of Comparative Advantage (2009, background): “It is at the heart, for example, of the recent literature on institutions and trade; see e.g. Acemoglu, Antras, and Helpman (2007), Costinot (2006), Cuñat and Melitz (2006), Levchenko (2007), Matsuyama (2005), Nunn (2007), and Vogel (2007).”