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Contract theory in economics began with 1991 Nobel Laureate Ronald H. Coase's 1937 article "The Nature of the Firm". Coase notes that "the longer the duration of a contract regarding the supply of goods or services due to the difficulty of forecasting, then the less likely and less appropriate it is for the buyer to specify what the other party should do."
Birmingham approaches contracts and damage measures from a law and economics standpoint. The first systematic statement of the efficiency of expectation damages to appear in the legal literature was that of Professor Birmingham, in his article Breach of Contract, Damage Measures, and Economic Efficiency, 24 Rutgers L. Rev. 273 (1970). [6]
In economics, implicit contracts refer to voluntary and self-enforcing long term agreements made between two parties regarding the future exchange of goods or services. Implicit contracts theory was first developed to explain why there are quantity adjustments ( layoffs ) instead of price adjustments (falling wages) in the labor market during ...
Malcomson was a lecturer, then senior lecturer, at the University of York (1972–85), Professor of Economics at the University of Southampton (1985–1999) and then statutory Professor of Economics at the University of Oxford and Fellow of All Souls College (1999–2013).
In modern contract theory, the “theory of the firm” is often identified with the “property rights approach” that was developed by Sanford J. Grossman, Oliver D. Hart, and John H. Moore. [ 45 ] [ 46 ] The property rights approach to the theory of the firm is also known as the “Grossman–Hart–Moore theory”.
In economic theory, the field of contract theory can be subdivided in the theory of complete contracts and the theory of incomplete contracts. In contract law, an incomplete contract is one that is defective or uncertain in a material respect. A complete contract in economic theory means a contract which provides for the rights, obligations and ...
The nexus of contracts theory is an idea put forth by a number of economists and legal commentators (most notably Michael Jensen and William Meckling as well as Frank Easterbrook) which asserts that corporations are a collection of contracts between different parties – primarily shareholders, directors, employees, suppliers, and customers.
Law and economics, or economic analysis of law, is the application of microeconomic theory to the analysis of law. The field emerged in the United States during the early 1960s, primarily from the work of scholars from the Chicago school of economics such as Aaron Director , George Stigler , and Ronald Coase .