New Institutional Econometrics: The Case of Contracting and Organizations Research

Abstract

New Institutional Economics is characterized by its real-word orientation and empirical focus. Nowhere is this broader scope more evident than in microeconomic theories of firms and markets. NIE has led researchers not only to crack open the black box of production known as the firm, but also the market itself, examining the structures of individual transactions and their implications for firm and market performance. The result is a burgeoning field of research on the causes and consequences of different modes for governing the allocation and coordination of resources in an economy. The broad array of questions addressed and data employed require NIE researchers to be flexible in their choice of econometric methods. The purpose of this paper is to provide an overview of econometric techniques appropriate to NIE research and some of the empirical and theoretical challenges facing scholars in this field.

Keywords: contracting, econometric methods, empirical research, new institutional economics, organization

JEL Classification: C0, D2, L1, L2