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| Author: | Corts, K.S. Singh, J. |
| Title: | The effect of repeated interaction on contract choice: evidence from offshore drilling |
| Journal: | Journal of law, economics and organization
2004 : APR, VOL. 20:1, p. 230-260 |
| Index terms: | Contracts Interaction Offshore industry Oil industry |
| Language: | eng |
| Abstract: | The authors 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, it is found 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. |
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