Does Trade Foster Contract Enforcement?

James Anderson

No 14045, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Contract enforcement is probabilistic, but the probability depends on rules and processes. A stimulus to trade may induce traders to alter rules or processes to improve enforcement. In the model of this paper, such a positive knock-on effect occurs when the elasticity of supply of traders is sufficiently high. Negative knock-on is possible when the elasticity is low. Enforcement strategies in competing markets are complements (substitutes) if the supply of traders is sufficiently elastic (inelastic). The model provides a useful structure of endogenous enforcement that gives promise of explaining patterns of institutional development.

JEL-codes: F10 O17 O19 O24 (search for similar items in EconPapers)
Date: 2008-05
New Economics Papers: this item is included in nep-int
Note: ITI LE
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Citations: View citations in EconPapers (2)

Published as James Anderson, 2009. "Does trade foster contract enforcement?," Economic Theory, Springer, vol. 41(1), pages 105-130, October.

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Journal Article: Does trade foster contract enforcement? (2009)
Working Paper: Does Trade Foster Contract Enforcement? (2007)
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