We use transaction cost economics (TCE) to define the “digitization of transaction terms” shift parameter that describes the institutional changes associated with increased digitization in society. We then draw on legal scholarship to analyze how strong smart contracts, which refer to agreements with automatic execution and enforcement that are not reversible by courts, rely on a new level of digitization of transaction terms. Specifically, these contracts may rely on standard digital infrastructures such as blockchain systems that guarantee automatic execution and non-reversibility. Strong smart contracts represent a distinct mode of transaction governance compared to markets, hierarchies, or hybrids. This is because each classic governance mode is distinguished by how ex post adaptation is handled—through public courts, managerial fiat, or both. In contrast, strong smart contracts prevent ex post adaptation altogether. We propose that when strong smart contracts can be fully specified, they may dominate other governance modes based on certain trade-offs. These trade-offs include weighing the benefits of avoiding the holdup problem and lowering contract enforcement costs against the downsides of high ex ante specification costs and the elimination of flexibility to make ex post adjustments in a changing environment. Our discussion elaborates on which institutional conditions can further facilitate this institutional shift.

中文翻译：

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TCE内交易条款的数字化：强智能合约作为交易治理的新模式


我们使用交易成本经济学（TCE）来定义“交易条款数字化”转变参数，该参数描述了与社会数字化程度提高相关的制度变化。然后，我们利用法律学术来分析智能合约（指法院不可逆转的自动执行和执行协议）如何依赖交易条款数字化的新水平。具体来说，这些合约可能依赖于标准的数字基础设施，例如保证自动执行和不可逆性的区块链系统。与市场、层次结构或混合体相比，强大的智能合约代表了一种独特的交易治理模式。这是因为每种经典治理模式的区别在于如何处理事后适应——通过公共法院、管理法令或两者兼而有之。相比之下，强大的智能合约完全可以防止事后适应。我们建议，当强大的智能合约能够被充分指定时，它们可能会基于某些权衡来主导其他治理模式。这些权衡包括权衡避免套牢问题和降低合同执行成本的好处，以及事前规范成本高的缺点，以及消除在不断变化的环境中进行事后调整的灵活性。我们的讨论详细阐述了哪些制度条件可以进一步促进这种制度转变。