Efficient Reliance and Damage Measures for Breach of Contract
This article considers a situation where the buyer or the seller of a good must engage in expenditures on specific capital before the exchange either to prepare to use the product or to prepare to sell it. It is assumed that postbreach bargaining is possible and carried out in a cooperative fashion,...
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| Veröffentlicht in: | The Rand journal of economics 1984-04, Vol.15 (1), p.39-53 |
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| container_title | The Rand journal of economics |
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| creator | Rogerson, William P. |
| description | This article considers a situation where the buyer or the seller of a good must engage in expenditures on specific capital before the exchange either to prepare to use the product or to prepare to sell it. It is assumed that postbreach bargaining is possible and carried out in a cooperative fashion, and that buyers and sellers form expectations about the outcome of such bargaining in a specific way. Without enforceable contracts, the potential appropriability of specific rents results in inefficiently low levels of investment. Three damage measures commonly used to enforce contracts are shown to produce inefficiently high levels of investment and to be Pareto-ranked from best to worst as follows: specific performance, expectation damages, and reliance damages. |
| doi_str_mv | 10.2307/3003668 |
| format | Article |
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It is assumed that postbreach bargaining is possible and carried out in a cooperative fashion, and that buyers and sellers form expectations about the outcome of such bargaining in a specific way. Without enforceable contracts, the potential appropriability of specific rents results in inefficiently low levels of investment. Three damage measures commonly used to enforce contracts are shown to produce inefficiently high levels of investment and to be Pareto-ranked from best to worst as follows: specific performance, expectation damages, and reliance damages.</abstract><cop>Mount Morris, Ill</cop><pub>The Rand Corporation</pub><doi>10.2307/3003668</doi><tpages>15</tpages></addata></record> |
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| identifier | ISSN: 0741-6261 |
| ispartof | The Rand journal of economics, 1984-04, Vol.15 (1), p.39-53 |
| issn | 0741-6261 1756-2171 |
| language | eng |
| recordid | cdi_proquest_journals_236567267 |
| source | Jstor Complete Legacy; RePEc; Business Source Complete; Periodicals Index Online |
| subjects | Breach of contract Buyers Capital costs Contract breaches Contract negotiations Contracts Economic theory Efficiency Efficiency metrics Expectations Expected returns Expenditures Mathematical analysis Negotiations Production efficiency Scrap value Sellers surplus Specific performance |
| title | Efficient Reliance and Damage Measures for Breach of Contract |
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