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The evolution of contracting: evidence from the US freight rail industry

Author

Listed:
  • Jeffrey T Macher
  • John W Mayo
  • David E M Sappington

Abstract

Although they lie at the very foundation of economic exchange, the primal questions of whether and when economic actors employ contracts and how the propensity to contract evolves over time have received relatively little empirical attention. We address these lacunas using an extensive database of spot market and contract shipments in the US freight rail industry. We find that the evolution of contracting is driven by many factors, including legislative changes, contracting experience, the extent and nature of prevailing competition, transaction complexity, asset specificity, and technological change (JEL L22, L24, L51, L92).

Suggested Citation

  • Jeffrey T Macher & John W Mayo & David E M Sappington, 2025. "The evolution of contracting: evidence from the US freight rail industry," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 41(1), pages 316-347.
    • Handle: RePEc:oup:jleorg:v:41:y:2025:i:1:p:316-347.
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    File URL: http://hdl.handle.net/10.1093/jleo/ewad022
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    More about this item

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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