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Contract enforceability and economic institutions in early trade: The Maghribi Traders' Coalition
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TL;DR: In this article, the authors present an economic institution which enabled traders to benefit from employing overseas agents despite the commitment problem inherent in these relations. And they use a simple game-theoretical model to examine the interaction between social and economic institutions, the determinants of business practices, and the nature of the merchants' law.
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Abstract: This paper presents an economic institution which enabled eleventh-century traders to benefit from employing overseas agents despite the commitment problem inherent in these relations. Agency relations were governed by a coalition--an economic institution in which expectations, implicit contractual relations, and a specific information-transmission mechanism supported the operation of a reputation mechanism. Historical records and a simple game-theoretical model are used to examine this institution. The study highlights the interaction between social and economic institutions, the determinants of business practices, the nature of the merchants' law, and the interrelations between market and nonmarket institutions. Copyright 1993 by American Economic Association.
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References
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TL;DR: The Economic Institutions of Capitalism as mentioned in this paper is a seminal work in the field of economic institutions of capitalism. Journal of Economic Issues: Vol. 21, No. 1, pp. 528-530.
17K
The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration
Sanford J. Grossman,Oliver Hart +1 more
TL;DR: In this paper, a theory of costly contracts is presented, which emphasizes the contractual rights can by of two types: specific rights and residual rights, and when it is costly to list all specific rights over assets, it may be optimal to let one party purchase all residual rights.
Efficiency Wage Models of the Labor Market: Equilibrium Unemployment as a Worker Discipline Device
Carl Shapiro,Joseph E. Stiglitz +1 more
TL;DR: In this article, the authors show that the information structure of employer-employee relationships, in particular the inability of employers to costlessly observe workers' on-the-job effort, can explain involuntary unemployment as an equilibrium phenomenon.
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Structure and Change in Economic History
Douglass C. North
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TL;DR: The Structure and Change in Economic History as mentioned in this paper investigates the question of property rights in the context of economic systems, and outlines an economic theory of the state and the ideologies that undergird various modes of economic organization.
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The Role of Market Forces in Assuring Contractual Performance
Benjamin Klein,Keith B. Leffler +1 more
TL;DR: The conditions under which transactors can use the market (repeat-purchase) mechanism of contract enforcement are examined in this article, where increased price is shown to be a means of assuring contractual performance.