Governance of Adjustments
Name
4412-03.pdf
Size
221.01 KB
Format
Adobe PDF
Checksum (MD5)
14a99d7afb1d1fe1eac849f3e888bdb5
Author(s)
Wernerfelt, Birger
Date Issued
March 14, 2003
Series/Report no.
MIT Sloan School of Management Working Paper;4412-03
Abstract
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.
Subjects
Theory of the Firm
Employment Relationship
Contracts
Persistent DSpace Link
