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Cafaggi, Fabrizio --- "Contractual Networks and Contract Theory: A Research Agenda for European Contract Law" [2011] ELECD 280; in Cafaggi, Fabrizio (ed), "Contractual Networks, Inter-Firm Cooperation and Economic Growth" (Edward Elgar Publishing, 2011)

Book Title: Contractual Networks, Inter-Firm Cooperation and Economic Growth

Editor(s): Cafaggi, Fabrizio

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781848448896

Section: Chapter 4

Section Title: Contractual Networks and Contract Theory: A Research Agenda for European Contract Law

Author(s): Cafaggi, Fabrizio

Number of pages: 43

Extract:

4. Contractual networks and contract
theory: a research agenda for
European contract law
Fabrizio Cafaggi

Contractual networks are created to coordinate activities by legally inde-
pendent parties who cooperate to achieve a common objective without
creating a new corporate entity.1 They emerge when there is a high degree
of uncertainty2 about the output of the common project, a high level
of specific investment is necessary, and knowledge produced during the
contractual relationship cannot be easily appropriated by individual
enterprises. By ensuring a higher level of peer monitoring they contribute
to solving observability problems concerning contractual performance.
They often constitute an alternative to the fragmentation of ownership


1 Contractual networks are hybrid forms of organizations located between

markets and hierarchies. See F. Cafaggi, `Contractual Networks and the Small
Business Act: Towards European Principles?', (2008) 4 European Review of
Contract Law 49, 495. See also O. Williamson, Markets and Hierarchies: Analysis
and Antitrust Implications (New York: Free Press, 1979); O. Williamson, `The
Economics of Governance', (2005) American Economic Review 1; W.W. Powell,
`Neither Markets nor Hierarchy: Network Forms of Organization', in L.L.
Cummings and B. Shaw (eds), Research in Organizational Behaviour (Greenwich:
JAI Press, 1990); C. Menard, `The Economics of Hybrid Organizations', (2004)
3 Journal of Institutional and Theoretical Economics 345; D. Campbell, H.
Collins and J. Wightman, Implicit Dimensions of Contract: Discrete Relational
and Network Contracts (Oxford: Hart, 2003); A. Schwartz and R.E. Scott,
`Contract Theory and the Limits of Contract Law', (2003) Yale Law Journal 541;
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