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

  title={Firms, Courts, and Reputation Mechanisms: Towards a Positive Theory of Private Ordering},
  author={Barak D Richman},
  journal={Law \& Economics},
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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The extent to which labor economics, especially the literature on 'career concerns', and industrial organization theory can explain many of these projects' features is highlighted.

86 (observing growing academic focus on "phenomenon of user innovation communities" and noting subject's changing nature)

  • Innovation by User Communities: Learning from Open-Source Software
  • 2001

But see David McGowan, Legal Implications of Open-Source Software

    Predation, Reputation, and Entry Deterrence, 27

    • J. Econ. Theory
    • 1982