RePEc: Research Papers in Economics · 2002 · 334 citations · 0 references
BusinessEconomicsContract TheoryIndustrial OrganizationPublic ProcurementContract DesignOptimal ContractingProcurementTransaction Cost EconomicsContract Incomplete-nessIncomplete Contract TheoryIndustrial Organization AnalysisInstitutional Analysis And Development FrameworkOptimal Contracting TheoryPublic Utilities Administration
Contracts are agreements that coordinate reciprocal commitments, and over the past three decades economists have developed incentive, incomplete‑contract, and transaction‑cost theories that reshape micro‑ and macro‑economic analyses of firms, regulation, and institutional design. This 2002 book surveys the evolution of these theoretical frameworks, outlines their key features, and suggests new directions for researchers and practitioners. Drawing on leading scholars, the authors compile and synthesize the main analytical currents, present their components, and propose expanded horizons for theory and practice.
A contract is an agreement under which two parties make reciprocal commitments in terms of their behavior to coordinate. As this concept has become essential to economics in the last 30 years, three main theoretical frameworks have emerged: 'incentive theory', 'incomplete-contract theory' and 'transaction-costs theory'. These frameworks have enabled scholars to renew both the microeconomics of coordination (with implications for industrial organization, labor economics, law and economics, organization design) and the macroeconomics of 'market' (decentralized) economies and of the institutional framework. These developments have resulted in new analyses of a firm's strategy and State intervention (regulation of public utilities, anti-trust, public procurement, institutional design, liberalization policies, etc.). Based on contributions by the leading scholars in the field, this 2002 book provides an overview of developments in these analytical currents, presents their various aspects, and proposes expanding horizons for theoreticians and practitioners.