The Effect of Repeated Interaction on Contract Choice: Evidence from Offshore Drilling
We argue that repeated interaction and high-powered formal contracts can be either substitutes or complements, depending on the relative impact of repeated interaction on incentive problems and contracting costs. In the offshore drilling industry, we find that oil and gas companies are less likely to choose fixed-price contracts as the frequency of their interaction with a driller increases. This supports the conclusion that repeated interaction and high-powered formal contracts are substitutes in this setting, indicating that repeated interaction reduces incentive problems more than contracting costs. In addition, we find that using instrumental variables to account for the endogenous matching of drillers to projects strengthens our results. Copyright 2004, Oxford University Press.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Volume (Year): 20 (2004)
Issue (Month): 1 (April)
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Fax: 01865 267 985
Web page: http://jleo.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
When requesting a correction, please mention this item's handle: RePEc:oup:jleorg:v:20:y:2004:i:1:p:230-260. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.