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Transaction Costs and Incentive Theory

Author

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  • Eric Malin
  • David Martimort

Abstract

[fre] Cet article propose de réconcilier la théorie des incitations et la théorie des coûts de transaction. Nous rappelons dans un premier temps les hypothèses fondamentales sous-tendant le Principe de Révélation utilisé dans la théorie des mécanismes incitatifs. Nous montrons comment des incomplétudes contractuelles et certaines externalités induites par ces coûts de transaction affectent l'arbitrage entre efficacité allocative et rentes informationnelles. Nous proposons alors des formes réduites permettant de décrire précisément l'impact de ces coûts de transaction dans un certain nombre de contextes contractuels. [eng] This paper tries to reconcile incentive theory with transaction costs theory. We first discuss the fundamental assumptions underlying the use of the Revelation Principle in the standard mechanism design literature and show how various contractual incompletenesses and externalities induced by transaction costs affect the basic trade-off between allocative efficiency and informational rents highlighted by this literature. We then propose reduced form formula to precisely describe the impact of these transaction costs in various contexts.

Suggested Citation

  • Eric Malin & David Martimort, 2000. "Transaction Costs and Incentive Theory," Revue d'Économie Industrielle, Programme National Persée, vol. 92(1), pages 125-148.
  • Handle: RePEc:prs:recind:rei_0154-3229_2000_num_92_1_1043
    Note: DOI:10.3406/rei.2000.1043
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    Cited by:

    1. Raul V. Fabella, 2016. "Why Fixed Rent Contracts are Less Prevalent: Weak Third Party Enforcement and Endogenous Principal Type," UP School of Economics Discussion Papers 201606, University of the Philippines School of Economics.
    2. Yannis Karagiannis, 2007. "Foundational Economic Theories for Political-Scientific Inter-Branch Studies," RSCAS Working Papers 2007/16, European University Institute.
    3. Müller, Daniel & Schmitz, Patrick W., 2016. "Transaction costs and the property rights approach to the theory of the firm," European Economic Review, Elsevier, vol. 87(C), pages 92-107.
    4. Yannis Karagiannis, 2007. "Economic Theories and the Science of Inter-Branch Relations," RSCAS Working Papers 2007/04, European University Institute.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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