Firms, Courts, and Reputation Mechanisms: Towards a Positive Theory of Private Ordering

@article{Richman2004FirmsCA,
  title={Firms, Courts, and Reputation Mechanisms: Towards a Positive Theory of Private Ordering},
  author={Barak D Richman},
  journal={Law \& Economics},
  year={2004}
}
This paper formulates a positive model that predicts when parties will employ private ordering to enforce their agreements. The typical enforcement mechanism associated with private ordering is the reputation mechanism, when a merchant community punishes parties in breach of contract by denying them future business. The growing private ordering literature argues that these private enforcement mechanisms can be superior to the traditional, less efficient enforcement measures provided by public… 

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