Expensive to draft and negotiate. Many contingencies and they may be unclear or unpredictable. High cost of monitoring and arbitraging. Litigation is expensive or simply not possible. High ex post cost of under performance and political bargaining.
Cost is moderate due to competitive check.
Low ex post search cost. Low cost of drafting employment contract, and adapting uncertainty. High cost of administrating, monitoring, processing information, training employees. High cost of shirking and political efforts. Competitive check is weakened.