Question: Relational contracting develops between firms when institutions are weak. Compare the efficiency of these informal institutions with formal institutions using the material discussed in this

Relational contracting develops between firms when institutions are weak. Compare the efficiency of these informal institutions with formal institutions using the material discussed in this chapter and in Chapter 8.

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Feature Relational contracting Formal institutions Enforcement Selfenforced through reputation and social norms Enforced by courts or other legal authorities Flexibility Can be easily adapted to chang... View full answer

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