Abstract
Parties often regulate their relationships through “continuing” contracts that are not fixed term but roll over: employment is a leading example. Our premise is that parties apply fairness when they revise a continuing contract and that prior terms, together with market information, will be a reference point. A continuing contract can reduce (re)negotiation costs relative to a short-term or long-term contract. However, fair bargaining makes adjusting to outside options difficult and may cause inefficient outcomes. An implicit promise of a long-term relationship, as in employment, can improve matters.
| Original language | English |
|---|---|
| Pages (from-to) | 284-313 |
| Number of pages | 30 |
| Journal | Journal of Law, Economics, and Organization |
| Volume | 36 |
| Issue number | 2 |
| DOIs | |
| Publication status | Published - 29 Jan 2020 |
Research Groups and Themes
- ECON Microeconomic Theory
Keywords
- short-term contracts
- long-term contracts
- continuing contracts
- fair bargaining
- employment
- at-will
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Dr Maija Halonen-Akatwijuka
- School of Economics - Associate Professor
- Centre for Market and Public Organisation
Person: Academic , Member