| Summary: | The article proposes a research program to compare game forms in terms of their
ability to govern ex post adjustments to ex ante contracts. The comparisons can be
based on direct implementation-costs or the extent to which desirable adjustments are
not implemented. In several examples of the program, we compare three game forms:
Negotiation over each adjustment, ex ante price lists, and implicit contracts leaving the
stipulation of adjustments to one player. If the latter game form is defined as an
employment relationship, the theory of the firm becomes a special case of the program.
The article starts with a discussion of the nature and magnitude of adjustment-costs,
followed by an exposition of four examples. We then discuss the role of asset
ownership, review some empirical evidence, and look at broader implications.
|
|---|