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Standards and the Form of Agreement

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  • Yoram Barzel

Abstract

Contract stipulations tend to be subject to commodity standards. Standards make it clearer what transactors have agreed upon. They also bring stipulations from different contracts under a common denominator. The lower the cost of measuring an attribute and the wider the range of its application, the higher the likelihood that the attribute will become subject to new standards. New standards are predicted to increase the role of contracts in agreements and to reduce that of long-term relations; to lower the prices of the commodities that use the standards; to increase the rate of theft of these commodities; and, by making it clearer what it is that parties exchange, to reduce the level of vertical integration. Finally, new standards propel markets toward perfect competition. (JEL D23, L14, L15, L22) Copyright 2004, Oxford University Press.

Suggested Citation

  • Yoram Barzel, 2004. "Standards and the Form of Agreement," Economic Inquiry, Western Economic Association International, vol. 42(1), pages 1-13, January.
  • Handle: RePEc:oup:ecinqu:v:42:y:2004:i:1:p:1-13
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    File URL: http://hdl.handle.net/10.1093/ei/cbh040
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    Cited by:

    1. Bougherara, Douadia & Grolleau, Gilles & Mzoughi, Naoufel, 2009. "Buy local, pollute less: What drives households to join a community supported farm?," Ecological Economics, Elsevier, vol. 68(5), pages 1488-1495, March.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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