Trade and Contract Enforcement PDF
39 Pages·2006·2.461 MB·English
Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.
Preview Trade and Contract Enforcement
Description:
We model imperfect contract enforcement when the victims of default resort to spot trading because the act of repudiation reveals a favorable outside option. We show that enforcement imperfection is essentially distinct from the contract incompleteness analyzed in the previous literature. Improved contract execution benefits traders on the excess side of the spot market by attracting potential counter-parties, but harms them by impeding their exit from unfavorable contracts. Multiple optima are possible, with anarchy a local optimum, perfect enforcement a local minimum and imperfect enforcement a global optimum. LDCs exhibit parameter combinations such that imperfect enforcement may often be optimal.
See more
The list of books you might like
Most books are stored in the elastic cloud where traffic is expensive. For this reason, we have a limit on daily download.
