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6 - Exchange, Contracts, and Contract Choice

Published online by Cambridge University Press:  17 August 2023

Yoram Barzel  and
Douglas W. Allen
Yoram Barzel
Affiliation:
University of Washington
Douglas W. Allen
Affiliation:
Simon Fraser University, British Columbia
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Summary

Output is higher when individuals cooperate and combine their inputs in some type of production. This exposes the attributes of their inputs to other people. Since contracts and agreements cannot prevent overuse of someone elses attributes, transaction costs arise in every form of human production interaction. Specific contracts are designed to mitigate this problem.

Keywords

Wage contractsshare contractsfixed rent contractscollaborationrestricted property rightsreputationsole ownership
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Chapter
Information
Economic Analysis of Property Rights , pp. 81 - 109
Publisher: Cambridge University Press
Print publication year: 2023

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