Do we need handshakes to cooperate in buyer-supplier relationships?

WP SMART-LERECO ; 10-13 Localisation du document : UMR 1302 UMR INRA / AGROCAMPUS OUEST : Structures et Marchés Agricoles, Ressources et Territoires, Centre de recherche de Rennes, 35011 RENNES CEDEX, FRA (SMART CG 25 CB 009913) 10-13Does formal contracting foster cooperation in a buyer-supplier relationship? In line with the literature, we find that a renegotiable contract with relationship-specific joint investments does not make it possible to reach the first-best. However, we show that a renegotiable contract may induce more cooperation than an informal arrangement. This result may help to understand how cooperation emerges in Japanese procurement practices, which typically involve relationship-specific joint investments and renegotiable contracts