Standard Breach Remedies, Quality Thresholds, and Cooperative Investments

Arbeitspapier

When investments are non-verifiable, inducing cooperative investments with simple contracts may not be as difficult as previously thought. Indeed, modeling “expectation damages” close to legal practice, we show that the default remedy of contract law induces the ?rst best. Yet, in order to lower informational requirements of courts, parties may opt for a "specific performance" regime which grants the breached-against buyer an option to choose "restitution" if the tender’s value falls below some (arbitrarily chosen) quality threshold. In order to implement this regime, no more information needs to be verifiable than is implicitly assumed in Che and Hausch (1999).

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bonn Econ Discussion Papers ; No. 4/2009

Classification and Topics

• Classification: Wirtschaft ; Contract Law ; Firm Organization and Market Structure ; Labor Contracts ; Game Theory and Bargaining Theory: General
• Subject: breach remedies ; incomplete contracts ; cooperative investments ; Investition ; Kooperation ; Vertragstheorie ; Vertragsrecht ; Rechtsökonomik ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Stremitzer, Alexander
• Event: Veröffentlichung
• (who): University of Bonn, Bonn Graduate School of Economics (BGSE)
• (where): Bonn
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/37037
• Last update: 10.03.2025, 11:42 AM CET