Contracting in the Absence of Specific Investments and Moral Hazard: Understanding Carrier-Driver Relations in U.S. Trucking / Francine Lafontaine, Scott E. Masten.

Format:

Book

Author/Creator:

Lafontaine, Francine.

Contributor:

National Bureau of Economic Research.

Masten, Scott E.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8859.

NBER working paper series no. w8859

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Contracting in the Absence of Specific Investments and Moral Hazard

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

This paper considers functions of contracting other than the protection of relationship-specific investments and the provision of marginal incentives, and applies the theory to explain variation in the form of compensation of over-the-road truck drivers in the U.S. Specifically, we argue that contracts in this industry serve to economize on the costs of price determination for heterogeneous transactions. We show that the actual terms of those contracts vary systematically with the nature of hauls in a way that is consistent with the theory. By contrast, we find that vehicle ownership, which defines a driver's status as an owner operator or company driver, depends on driver, but not trailer or haul, characteristics.

Notes:

Print version record

March 2002.