Transaction Cost Economics and Vertical Market Restrictions—Evidence

Abstract

We examine the empirical research on interfirm contracts that has been inspired by Oliver Williamson's work on transaction costs. We eschew the vast and supportive empirical literature on the make-or-buy decision, covered elsewhere, focusing instead on vertical market restrictions. We organize our discussion around specific restrictions, emphasizing the evidence concerning restrictions, such as contract duration and adjustment clauses, that have been studied most through transaction cost lenses, but also the findings from studies of vertical restraints, namely those restrictions that have been the focus of antitrust policy. We conclude with some general thoughts about how what one can learn from these studies can inform antitrust policy regarding vertical market restrictions.