• Corpus ID: 3571088

12 Contracts , Holdup , and Legal Intervention

  title={12 Contracts , Holdup , and Legal Intervention},
  author={Steven Shavell},
This article develops the point that the problems associated with contractual holdup may justify legal intervention in theory, and the article relates this conclusion to legal intervention in practice. Contractual holdup is considered for both fresh contracts and for modifications of contracts. The law can in principle alleviate the incentive and risk-bearing problems due to holdup in two ways. One approach is for the law simply to void agreements made in certain circumstances, since that will… 
1 Citations
The Demand for Tailored Goods and the Theory of the Firm
The transaction cost theory predicts that firms are inclined to vertically integrate transactions in response to the specificity of their required inputs. Yet, reality proves that some firms engage


The Demand for Immutable Contracts: Another Look at the Law and Economics of Contract Modifications
One of the most challenging questions in contract law is whether parties should be free to create contracts that limit their own freedom of contract and thereby, in effect, contract over the scope of
The L aw of Contract Modific ations: The U ncertain Quest for a Bench Mark of Enforceability
The law of contract modifications poses an analytical paradox: Modifications should be presumptively invalid because they may encourage extortionary, coercive, opportunistic or monopolistic
Gratuitous Promises in Economics and Law
  • R. Posner
  • Economics, Law
    The Journal of Legal Studies
  • 1977
THE economist tends to think of the making and enforcement of contracts as part of the process by which goods or services are shifted from less to more valuable uses-that is, as part of the process
Contracts as Bilateral Commitments: A New Perspective on Contract Modification
Contracts have traditionally been regarded as means of individual commitment. This article offers a broader vision, viewing contracts as potential means of bilateral commitment as well. Drawing on a
Contract Modification: An Economic Analysis of the Hold-up Game
The very foundation of our contract law is based upon the premise of the bilateral voluntary exchange. In a market economy, such exchanges involve a process in which the parties bargain voluntarily,
The Law and Economics of Costly Contracting
In most of the contract theory literature, contracting costs are assumed either to be high enough to preclude certain forms of contracting or low enough to permit any contract to be written.
Regulation and Administered Contracts
This paper explores the ramifications of introducing administered contracts -- long term, collective contractual relationships -- into economic analysis with attention being focused on the implicit
Remedies When Contracts Lack Consent: Autonomy and Institutional Competence
Autonomy-based theories hold that enforceable contracts require the knowing and voluntary consent of the parties. In defining "knowing" and "voluntary," however, autonomy theorists have paid little
The Limits Of Freedom Of Contract
Our Legal System is committed to the idea that private markets and the law of contracts that supports them are the primary institutions for allocating goods and services in a modern economy. Yet the
The Law of Duress and the Economics of Credible Threats
This paper argues that enforcement of an agreement, reached under a threat to refrain from dealing, should be conditioned solely on the threat's credibility. When a credible threat exists,