This paper distinguishes between governance structure and contractual form. The basic premise is that researchers often confuse these two concepts when they develop or empirically test models within the transaction cost framework. In the paper I utilize a simple principal-agent model to show that transaction cost factors affect both contractual form and governance structure, but not identically...

Procurement contracts are often renegotiated because of changes that are required after their execution. Using highway paving contracts we show that renegotiation imposes significant adaptation costs. Reduced form regressions suggest that bidders respond strategically to contractual incompleteness and that adaptation costs are an important determinant of their bids. A structural empirical model...

This paper reviews the use of performance monitoring in the UK public sector, excluding its use in health care. Our focus is on finding robust evidence that evaluates the success of the introduction of performance monitoring in terms of its impact both on behaviour and on final outcomes. We begin with a general discussion of performance monitoring (hereafter PM), before considering the nature o...

This paper studies the dynamics by which populations with heterogeneous preferences for local public good provision sort themselves into communities. I conduct laboratory experiments to consider which institutions may best facilitate efficient self-organization when residents are able to move freely between locations. I find that institutions requiring all residents of a community to pay equal ...

Aim: In this paper, it is argued that in complex financial systems private goods, important for the creation of a market, have to be considered multiple differing property rights structures necessary functioning system. This may lead high transaction costs and adverse incentives different players, threatening sustainability The aim article create explore framework assessing fragilities threats ...

ABSTRACT Cross-border alliances expose firms to heightened risks, posing different governance and control challenges than domestic alliances. We examine the impact of differences in alliance partner countries' institutional environments. Analysis survey data supports our contention that cross-border involve a greater reliance on formal controls, particularly when collaborate with partners count...

In a typical procurement setup, several recent papers have shown that when complete contracting is not possible, simple, noncontingent contracts may suffice to solve the under-investment problem. This paper points out that a noncontingent contract offer such as a fixed-price contract may induce the seller to acquire information on the future course of costs and only to accept the offer if the c...

According to the convergence hypothesis, different economies are bound to converge to one supposedly superior system under the uniformating pressure of globalisation. Consequently, also organisational structures converge. Contrary to what the convergence hypothesis maintains, globalisation does not originate nor requires the convergence to a unique, best economic system and organisational struc...

There is a small but growing literature on the theory of the firm based around the “reference point” theory of (incomplete) contracts formulated in Hart and Moore (2008). The reference point approach has been applied to the theory of the firm in Hart (2008, 2009), Hart and Moore (2007) and Hart and Holmström (2010). This introduction reviews the main theoretical aspects of each of these papers....

Mounting evidence suggests that the outcomes of laboratory public goods games, and collective action in firms, communities, and polities, reflect the presence in most groups of individuals having differing preferences and beliefs. We designed a public goods experiment with targeted punishment opportunities to (a) confirm subject heterogeneity, (b) test the stability of subjects’ types and (c) t...