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Pareto improvements by in-kind-transfers

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  • Stähler, Frank

Abstract

This paper shows that in-kind-transfers are an effective instrument to stabilize agreements when compliance cannot be guaranteed. It demonstrates the weak superiority of in-kind-transfers for a unilateral relationship between two agents. In particular, it proves that, under conditions of perfect knowledge and necessary selfenforcement of contracts, both agents are at least not worse off by in-kind-transfers compared to monetary payments when no selfenforcing contract exists which,is based on monetary payments. This result holds for finitely and for infinitely repeated games.

Suggested Citation

  • Stähler, Frank, 1992. "Pareto improvements by in-kind-transfers," Kiel Working Papers 541, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:541
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    File URL: https://www.econstor.eu/bitstream/10419/47022/1/256767629.pdf
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    References listed on IDEAS

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    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. Kreps, David M. & Milgrom, Paul & Roberts, John & Wilson, Robert, 1982. "Rational cooperation in the finitely repeated prisoners' dilemma," Journal of Economic Theory, Elsevier, vol. 27(2), pages 245-252, August.
    3. Bruce, Neil & Waldman, Michael, 1991. "Transfers in Kind: Why They Can Be Efficient and Nonpaternalistic," American Economic Review, American Economic Association, vol. 81(5), pages 1345-1351, December.
    4. Jonathan Thomas & Tim Worrall, 1994. "Foreign Direct Investment and the Risk of Expropriation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(1), pages 81-108.
    5. Atkeson, Andrew, 1991. "International Lending with Moral Hazard and Risk of Repudiation," Econometrica, Econometric Society, vol. 59(4), pages 1069-1089, July.
    6. Bulow, Jeremy & Rogoff, Kenneth, 1989. "A Constant Recontracting Model of Sovereign Debt," Journal of Political Economy, University of Chicago Press, vol. 97(1), pages 155-178, February.
    7. Jonathan Thomas & Tim Worrall, 1988. "Self-Enforcing Wage Contracts," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(4), pages 541-554.
    8. Steven Shavell, 1984. "The Design of Contracts and Remedies for Breach," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(1), pages 121-148.
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    Cited by:

    1. Stähler, Frank, 1993. "On the economics of international environmental agreements," Kiel Working Papers 600, Kiel Institute for the World Economy (IfW Kiel).
    2. Frank Stähler, 1996. "On International compensations for environmental stocks," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 8(1), pages 1-13, July.
    3. Heister, Johannes & Stähler, Frank, 1994. "Globale Umweltpolitik und joint implementation: Eine ökonomische Analyse für die Volksrepublik China," Kiel Working Papers 644, Kiel Institute for the World Economy (IfW Kiel).
    4. Stähler, Frank, 1994. "Some reflections on multilateral environmental agreements," Kiel Working Papers 647, Kiel Institute for the World Economy (IfW Kiel).

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