The transaction cost approach to the organization of firms has been among the most significant advances in industrial organization in the last twenty-five years. Much of this work has taken the Transaction Cost Economics view of Williamson (1975, 1979, 1985) and Klein, Crawford, and Alchian...

This chapter presents an overview of advances in the structural analysis of contracting in vertical markets over the past fifteen years. We provide a discussion of theoretical models of contracting and bargaining that form the basis of recent empirical work, and then present common approaches...