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Boilerplate And Economic Power In Auto-Manufacturing Contracts, Omri Ben-Shahar, James J. White Jan 2007

Boilerplate And Economic Power In Auto-Manufacturing Contracts, Omri Ben-Shahar, James J. White

Book Chapters

This chapter examines the boilerplate contracts used by auto makers to procure parts from suppliers. It identifies drafting and negotiation techniques that are used to secure advantageous terms. It also explores some prominent specific arrangements as evidence that firms with bargaining power are exploiting their position to dictate self-serving but inefficient terms. Finally, it shows how standard contractual clauses solve the problem of ex-post hold-up by suppliers.