Economic analysis of contract law : incomplete contracts and asymmetric information / Sugata Bag.
2018
K840 .B35 2018 (Map It)
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Details
Author
Title
Economic analysis of contract law : incomplete contracts and asymmetric information / Sugata Bag.
Published
Cham, Switzerland : Palgrave Macmillan, [2018]
Copyright
©2018
Call Number
K840 .B35 2018
ISBN
9783319652672 acid-free paper
3319652672 acid-free paper
9783319652689 ebook
3319652680
3319652672 acid-free paper
9783319652689 ebook
3319652680
Description
xvi, 203 pages : illustrations ; 22 cm
System Control No.
(OCoLC)1039685538
Note
"This book examines the main issues arising in economic analysis of contract law, particularly those relating to incomplete contracts. It discusses both the main features of contract law as they relate to the problem of economic exchange, and how the relevant legal rules and the institutions can be analysed from an economic perspective. Chapters evaluate the welfare impacts, analyse the effects and desirability of different breach remedies and examine the optimal incentive structure of party-designed liquidated damages under the different dimensions of informational asymmetry. This book contributes to the legal debate over the adoption of the specific breach remedies when the breach victim’s expectation interest is difficult to assess, and to the debate over courts' reluctance to implement large penalties in the event of breach of contracts."--Back cover.
Bibliography, etc. Note
Includes chapter bibliographies, general bibiography (pages 199-200) and index.
Record Appears in
Portion of Title
Incomplete contracts and asymmetric information
Table of Contents
1.
Introduction
1
1.1.
Basic Premise: Contracts and Contract Law
2
1.1.1.
Economic Aspect of Contract -- A Mechanism for Exchange
2
1.1.2.
Legal Perspective of a Contract -- A Law Enforcing Mechanism
3
1.1.3.
Contractual Incompleteness: Economic and Legal Views
4
1.2.
Tradition of Civil and Common Laws
9
1.2.1.
Unified Approach to Contract Laws
10
1.3.
Economic Analysis of (Contract) Law
12
1.3.1.
Normative and Positive Analyses
13
1.4.
Analytical Framework: Welfare, Efficiency and the Principal-Agent Paradigm
14
1.5.
Specific Research Objectives
17
References
21
2.
Basics of Economic Theory of Contract
23
2.1.
Introduction
23
2.1.1.
Why a Contract?
25
2.1.2.
What Type of Contract? Bounded Rationality and Contractual Incompleteness
28
2.1.3.
Different Market Modes and Associated Incentives: No Contract, Spot Contract, Simple Incomplete Contract, Complex Contract
29
2.2.
Multi-Task Model: Modes of Contracting, Incomplete Information, Incentives, Hold-Up
31
2.2.1.
Competitive Market Solution
33
2.2.2.
Bilateral Relations
36
2.3.
Arm's-Length Transactions and Incentives
39
2.3.1.
Spot Contract (Ex Post Bargaining)
39
2.3.2.
Simple Incomplete Contract (Fixed Price Contract)
46
2.3.3.
Complex Incomplete Contracts
50
2.3.4.
Issues Related to Uncertain Product Specifications
51
2.4.
Conclusion
52
References
56
3.
Economics of Damage Remedies I: Unilateral Reliance, One-Sided Information Asymmetry
59
3.1.
Introduction
59
3.1.1.
Hold-Ups: Divergent Economic and Legal Views
61
3.1.2.
Where the Present Analysis Stands
64
3.2.
Model: Unilateral Reliance and One-Sided Private Information
66
3.2.1.
General Setting
66
3.2.2.
First Best: Efficient Breach and Efficient Investment
68
3.3.
Court-Imposed Remedies for Breach of Contract
72
3.3.1.
Restitution Damages (No Explicit Damage Liability)
73
3.3.2.
Reliance Damages
75
3.3.3.
Expectation Damages
76
3.3.4.
Comparison of Court-Imposed Damages
78
3.4.
Restoring Efficiency in the Contracts
81
3.4.1.
Liquidated Damage (Party-Designed Damage)
81
3.5.
Conclusion
86
References
88
4.
Economics of Damage Remedies II: Bilateral Reliance, One-Sided Information Asymmetry
91
4.1.
Introduction
91
4.2.
Model: Bilateral Reliance and One-Sided Private Information
92
4.2.1.
General Setting
92
4.2.2.
Analysis: First Best
94
4.3.
Court-Imposed Remedies for Breach
95
4.3.1.
Reliance and Restitution Damage Measures
95
4.3.2.
Expectation Damage
100
4.4.
Party Designed Liquidated Damage
103
References
110
5.
Economics of Damage Remedies III: Incentives Under Expectation Damage With One-Sided Private Information -- A Mechanism Design Approach
111
5.1.
Introduction
111
5.2.
Model
114
5.2.1.
General Setting
114
5.2.2.
First Best
116
5.3.
Mechanisms Under the Shadow of Expectation Damages
122
5.3.1.
Seller Obtains Private Information
123
5.3.2.
Buyer Obtains Private Information
137
5.4.
Conclusion
141
References
145
6.
Economics of Damage Remedies IV: Incomplete Contracts, Bilateral Reliance, Two-Sided Asymmetric Information
147
6.1.
Introduction
147
6.2.
Model Setting
154
6.2.1.
Technical Assumption
156
6.2.2.
Model Analysis
157
6.3.
Court Imposed Damages
162
6.3.1.
Restitution Damages
162
6.3.2.
Reliance Damages
165
6.3.3.
Expectation Damage: Three Cases
167
6.4.
Party Designed Liquidated Damages
178
6.4.1.
Parties Appoint a Mediator
179
6.5.
Conclusion
183
References
186
7.
Concluding Notes
191
References
198
Bibliography
199
Index
201