The Contract and the Market: Towards a Broader Notion of Transaction?

Abstract

This paper seeks to extend the standard assumption concerning incomplete contracts (New Institutional Economics). It is based on a very specific market transaction, within which parties can not affect the market structure. Instead, referring to transaction as introduced by John R. Commons, we want to stress in an incomplete contract the impact of competition dynamics on parties "bargaining power and parties" incentives to influence market competition in order to enhance their bargaining power. This view leads to broader and (sometimes divergent) results with respect to standard literature on incomplete contract.