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.
Publication Information & Recommended Citation
White, James J. "Boilerplate and Economic Power in Auto-Manufacturing Contracts." O.Ben-Shahar, co-author. In Boilerplate: The Foundation of Market Contracts, edited by O. Ben-Shahar, 29-44. Cambridge: Cambridge Univ. Press, 2007.