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The contract state, trust distortion, and efficiency

McMaster, R., and Sawkins, J.W. (1996) The contract state, trust distortion, and efficiency. Review of Social Economy, 54 (2). pp. 145-167. ISSN 0034-6764 (doi:10.1080/00346769600000034)

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Publisher's URL: http://dx.doi.org/10.1080/00346769600000034

Abstract

In this paper we challenge the Public Choice-Agency Theory approach, which characterizes economic transactions as a series of discrete, unique events. We argue that the policy implications flowing from this view of the world are flawed, as they ignore the role of trust in contract formation and execution. Evidence is drawn from health, local authority, and water service sectors of the economy to illustrate the way in which the efficiency-enhancing properties of contract-based provision may be attenuated if trust is distorted by institutional change.

Item Type:Article
Status:Published
Refereed:Yes
Glasgow Author(s):McMaster, Prof Robert
Authors: McMaster, R., and Sawkins, J.W.
College/School:College of Social Sciences > Adam Smith Business School > Management
Journal Name:Review of Social Economy
ISSN:0034-6764
ISSN (Online):1470-1162
Published Online:28 July 2006

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