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Incomplete contract and international trade : a literature review
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TitleIncomplete contract and international trade : a literature review  
AuthorLiu Wenge,Xiao Yuanyuan and Zhou Fangzhao  
OrganizationThe School of Economics of Zhejiang Gongshang University;The School of Business of Jiangnan University; 
Key WordsIncomplete Contract; International Trade; FDI; Enterprise Boundary 
AbstractThe research on the relationship between incomplete contract and international trade has become a momentous theoretical issue. In the institutional economics, as the research of transaction cost and property rights moves along, the theory of incomplete contract has developed. The incomplete contract leads to that: Specific investment can't be written in contract in advance, and the earnings distribution are only through "renegotiation", and this renegotiation leads to bilateral lock. In addition, incomplete contract also influence the execution of the contract, then the quality of institution. These characteristics of incomplete contract impact on international trade and international investment. This paper analyses the theory that the incomplete contract influences comparative advantage and trade volume, and explain the development; we will estimate the theory that the incomplete contract is the determinant of multinational corporation’s choice, vertical integration or outsourcing. 
Serial NumberWP949 
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