We provide evidence that long-term relationships between trading parties emerge endogenously in the absence of third party enforcement of contracts and are associated with a fundamental change in the nature of market interactions. Without third party enforcement, the vast majority of trades are initiated with private offers and the parties share the gains from trade equally. Low effort or bad q...

Lemma A1: If a contract {wt} is self-enforcing, then there is another self-enforcing contract {w′ t} such that: (i) w′ t is nondecreasing in t, (ii) the no-shirking conditions, Ut − U1 ≥ ĉ for all t ≥ 2, do not bind for any t ≥ 2, (iii) firms’expected (discounted) profits are the same under two contracts, V1 = V ′ 1 . Proof. The proof is by construction. We show it in several steps. Step (1) (c...

We provide evidence that long-term relationships between trading parties emerge endogenously in the absence of third party enforcement of contracts and are associated with a fundamental change in the nature of market interactions. Without third party enforcement, the vast majority of trades are initiated with private offers and the parties share the gains from trade equally. Low effort or bad q...

More companies have realized that IT outsourcing, once viewed as a cost reduction tool, could facilitate and even enable the transformation of their core business processes. The benefits from a potential outsourcing relationship expansion have strategic implications for relational incentive provision. Modeling ―information poaching‖ in IT outsourcing as an incentive problem with contractibility...

THE relationship between legal rules and the strategies that commercial parties use to deal with risk is among the most important and least understood topics in law and economics. Organizational theorists have generally confined their analyses to the nature of the firm and other permanent relationships.' Academic commercial lawyers, in turn, have been far less venturesome than their corporate c...

In this paper, a formal rent-seeking theory of the …rm is developed. The main idea is that integration (compared to non-integration) facilitates rentseeking for the integrating party, but makes it harder for the integrated one. In a one-period model, this implies that the rent-seeking contest becomes more uneven and the parties rent-seek less. Here, integration is optimal. In the in…nitely-repe...

The advent of social media platforms has brought various opportunities, and among them is commerce. have created a great avenue for users business owners to interact. This study empirically tests the influence extraversion, commerce satisfaction, relational contracts, word-of-mouth intention on users’ decisions towards purchases. data was collected using structured questionnaire, 210 valid resp...

Abstract We present a public procurement model in which contractual flexibility and political tolerance for deviations determine renegotiations. In the model, allows adaptation without formal renegotiation, while decreases with competition. then compare renegotiation rates of contracts procurer is either administration or private corporation. find robust evidence consistent predictions: public-...