Breach Remedies Including Hybrid Investments

Arbeitspapier

We show that parties in bilateral trade can rely on the default common law breach remedy of '€˜expectation damages' to induce simultaneously ?rst-best relationship-speci?c investments of both the sel?sh and the cooperative kind. This can be achieved by writing a contract that speci?es a suffciently high quality level. In contrast, the result by Che and Chung (1999) that '€˜reliance damages' induce the ?rstbest in a setting of purely cooperative investments, does not generalize to the hybrid case. We also show that if the quality speci?ed in the contract is too low, '€˜expectation damages' do not necessarily induce the ex-post effcient trade decision in the presence of cooperative investments.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SFB/TR 15 Discussion Paper ; No. 282

Classification and Topics

• Classification: Wirtschaft
• Subject: breach remedies ; incomplete contracts ; hybrid investments ; cooperative investments ; sel?sh investments

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Göller, Daniel ; Stremitzer, Alexander
• Event: Veröffentlichung
• (who): Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
• (where): München
• (when): 2009

Further information

• DOI: doi:10.5282/ubm/epub.13272
• Handle: http://hdl.handle.net/10419/93816
• URN: urn:nbn:de:bvb:19-epub-13272-0
• Last update: 10.03.2025, 11:42 AM CET