Those crazy transaction costs: on the irrelevance of the equivalence between monetary damages and specific performance

Gregory DeAngelo and Steven Medema ()

European Journal of Law and Economics, 2014, vol. 37, issue 2, 269-275

Abstract: The Coase theorem tells us that monetary damages and specific performance remedies for breach of contract have identical effects when transaction costs are zero. This has become a standard part of the literature on the economics of contract law. This note argues that the traditional view is somewhat misguided, as monetary damages and specific performance remedies are unnecessary in a zero transaction costs world. We go on to show how the presence of transaction costs impact the decisions of contracting parties as between the inclusion of liquidated damages clauses in contracts and resorting to litigation that could result in the application of either monetary damages or specific performance remedies. Copyright Springer Science+Business Media, LLC 2014

Keywords: Coase theorem; Specific performance; Monetary damages; K41; K12 (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/s10657-011-9285-0

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