Essays on the Economics of Contracting and Institutional Choice

Résumé du livre

The essays that together make up this dissertation investigate the circumstances in which long term contracts and vertically integrated firm allocation are chosen to govern economic relationships. The analysis in the first essay evaluates a theory of efficient contractual adjustment to variations in either costs or revenues. Subjects endogenously choose contractual form in a market setting where quantity adjustment to cost or revenue variability and the competitiveness of pricing together determine the efficiency of contract. The analysis presented in the second essay uses experimental methods to investigate the choice between long term contracts and integrated firm allocation. Private information must be exchanged in these agreements, and the relative efficiency of these institutional forms depends on the incentives they provide for parties to reveal private information. In the third essay a theory of institutional choice in franchise systems is developed, and the predictions generated by the theory are then evaluated using field data collected from two contrasting industries.