Design of Production Contracts

In this book, the authors allow theory and practice to interact. They develop a holistic theoretical framework for contract analysis based on coordination theory, transaction cost theory and principal agent theory. This framework is used to analyze existing contracts. Actual contracts can be just as advanced as recent progress in contract theory. The ingenuity varies considerably between contracts, however, and contracts typically evolve through costly trial-and-error processes. Hence, learning from best practices and a theory-based approach, can improve contract design. The book is aimed at decision-makers, students and researchers. Decision-makers can use the analytical framework and the synthesis of contracting practices to evaluate contracts. Students can use the book as an introduction to applied contract theory. Researchers will be inspired by the interaction between contract theory and contracting.