Contractual Intermediaries

Garey Ramey and Joel Watson

University of California at San Diego, Economics Working Paper Series from Department of Economics, UC San Diego

Abstract: This paper analyzes the role of third party intermediaries, such as courts and arbitrators, in contract enforcement. In our model, intermediaries compel contracted transfers and resolve disputes when requested to do so by the contracting agents. When the verifiability of information is limited, successful enforcement requires that dispute resolution costs be sufficiently great. Optimal enforcement systems economize on dispute resolution and information costs, and may involve establishment of specific systems tailored to particular groups. We show further that the "holdup problem" may be resolved via an appropriately designed dispute resolution sytem.

Keywords: third party intermediaries; dispute resolution (search for similar items in EconPapers)
Date: 1999-08-01
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Citations: View citations in EconPapers (1)

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Journal Article: Contractual Intermediaries (2002)
Working Paper: Contractual Intermediaries (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:cdl:ucsdec:qt49p1c23g

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