Bargaining over beauty: The economics of contracts in Renaissance art markets

This paper argues that concerns over opportunism affected the content and structure of Renaissance art contracts. Building on insights from the economic analysis of contracts, we first show that opportunism threatened the relationship between buyer—the patron—and seller—the painter—in Renaissance Italy. We then test the effect of opportunism on the contracting process for paintings against a novel data set on the content and structure of ninety documents corresponding to as many commissions. Our results provide evidence that concerns over opportunism had a systematic effect on the trading parties’ choice of how much and what to include in the contract governing their ex-change.

Economics of contracts in African food systems: evidence from the malt barley sector in Ethiopia

Foreign direct investment (FDI) facilitates modernization of domestic agri-food systems in emerging economies through increased use of vertical coordination. This paper sheds lights on how international brewer investments in African food systems affect smallholder market participation and value chain development. In particular, we analyze the impact of contracts among malt barley producers in Ethiopia. Using cross-sectional survey data, we employ inverse probability-weighted regression adjustment (IPWRA) and propensity score matching (PSM) techniques to analyze the economic impact of contracting. We find that contrary to popular belief, contracting has positive and significant impact on malt barley production, intensification, commercialization, quality improvement, and farm gate prices, ultimately resulting in increased net income and spillover into the productivity of other food crops.

Is Ex-Post Fiscal Support to PPPs Sustainable? Analysis of Government Loans Granted to Shadow-Toll Roads in Spain: A Case Study

Budgetary constraints are prompting many governments to encourage private financing of transport infrastructure through public–private partnerships (PPPs). Fiscal support measures are often used to improve the financial feasibility of PPPs and to rebalance the economics of contracts to compensate for government-imposed changes. In the latter case, information asymmetry, political haste, and lack of competition may lead to poor government decisions in establishing support measures. Furthermore, lack of government support may lead to early termination of contracts and non-implementation of projects with high potential social benefits. This paper analyzes the awarding of subordinated public participation loans (SPPLs) to 10 brownfield shadow-toll highway PPPs in Spain after the government imposed additional works. It is hypothesized that, given the political importance of the projects and the viability problems they soon experienced, the government may not have set out the terms of SPPLs efficiently. This paper evaluates the financial and social impacts of awarding these loans to three of these projects to assess whether the government’s decision to support them was justified from a sustainable perspective. The results show that, while the government’s decision was reasonable, the design of the SPPL and its awarding conditions should be improved to ensure the public interest.

Smart Contracts: Reducing Risks in Economic Exchange with No-Party Trust?

Our study on smart contracts, self-executing agreements based on blockchain technology, can be placed in the field of inquiry within law and economics of contracts which explores new modes of contract enforcement as sources of market creation. We lay the foundations by characterising contract enforcement and trust mechanisms underlying contracts. Considering that trust reduces risks in economic exchange, we explain how the particular trust mechanism underlying smart contracts’ enforcement (no-party trust) provides opportunities for creating new markets and changing existing ones. We explore, among other things, whether using smart contracts could be a path to increasing the autonomy of consumers and offering a solution for democratising trade.

The Insight and the Legacy of the Theory of Share Tenancy

The Theory of Share Tenancy by Steven Cheung, first published as a PhD thesis 50 years ago, was an important watershed study on the economics of contracts. It contained the first formal demonstration of the Coase Theorem, linked the concepts of property rights and transaction costs, laid early foundations for the future economics of contracts, and can even lay claim to originating the idea of a risk/incentive tradeoff in contract design. This essay examines Cheung's key contributions in Share Tenancy, and considers reasons for its somewhat limited legacy outside of China.

Jonathan Levin: 2011 John Bates Clark Medalist

Jonathan Levin, the 2011 recipient of the American Economic Association's John Bates Clark Medal, has established himself as a leader in the fields of industrial organization and microeconomic theory. Jon has made important contributions in many areas: the economics of contracts and organizations; market design; markets with asymmetric information; and estimation methods for dynamic games. Jon's combination of breadth and depth is remarkable, ranging from important papers in very distinct areas such as economic theory and econometric methods to applied work that seamlessly integrates theory with data. In what follows, we will attempt to do justice not only to Jon's academic work, but also try to sketch a broader portrait of Jon's other contributions to economics as a gifted teacher, dedicated advisor, and selfless provider of public goods.