Contractual form and market thickness in trucking

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61 Scopus citations


A central proposition of the transaction costs literature is that firms will substitute more complicated contractual arrangements for simple spot arrangements when transactions involve relationship-specific investments. I investigate this proposition by testing whether simple spot arrangements are less common when local trucking markets are thin. I find that doubling the thickness of the market increases the likelihood that simple spot arrangements govern transactions by about 30% for long hauls. I find weaker evidence of relationships between local market thickness and contractual form for short hauls - hauls for which quasi-rents are particularly small. Contracts protect quasi-rents over a surprisingly large range, but they play a less important role as quasi-rents decrease.

Original languageEnglish (US)
Pages (from-to)369-386
Number of pages18
JournalRAND Journal of Economics
Issue number2
StatePublished - 2001

ASJC Scopus subject areas

  • Economics and Econometrics


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