Working Paper: NBER ID: w7347
Authors: Thomas N. Hubbard
Abstract: How far do the contractual implications of hold-up-based theories (Klein, Crawford, and Alchian (1978), Williamson (1979, 1985)) extend? I investigate this in the context of trucking. Quasi-rents in trucking are generally smaller than in the contexts studied in the previous empirical literature. They vary with hauls' distance and the thickness of local markets. 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' role as protectors of quasi-rents becomes less important as quasi-rents decrease, but exists over a surprisingly large range.
Keywords: No keywords provided
JEL Codes: L22; L42
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Local market thickness (D40) | Use of simple spot arrangements (long hauls) (L93) |
| Local market thickness (D40) | Use of long-term contracts (long hauls) (L90) |
| Doubling local market thickness (D40) | Use of simple spot arrangements (long hauls) (L93) |
| Local market thickness (D40) | Use of simple spot arrangements (short hauls) (R41) |
| Local market thickness (D40) | Use of long-term contracts (short hauls) (L90) |
| Quasirents (R33) | Choice of contractual arrangements (L14) |