This paper discusses the literature on the enforcement of incomplete contracts. It compares legal enforcement to enforcement via relationships and reputations. A number of mechanisms, such as the repeat purchase mechanism (Klein and Leffler (1981)) and efficiency wages (Shapiro and Stiglitz (1984)), have been offered as solutions to the problem of enforcing an incomplete contract. It is shown t...

This paper discusses the literature on the enforcement of incomplete contracts. It compares legal enforcement to enforcement via relationships and reputations. A number of mechanisms, such as the repeat purchase mechanism (Klein and Le er (1981)) and e ciency wages (Shapiro and Stiglitz (1984)), have been o ered as solutions to the problem of enforcing an incomplete contract. It is shown that t...

I use the first-time enforcement of insider trading laws in sixteen countries as a shock to enforcement and examine its influence on timely loss recognition (TLR). Consistent with greater enforcement increasing the usefulness of accounting information in contracts and thereby the demand for higher quality reporting, insider trading enforcement is associated with a significant increase in TLR. N...

We analyze the evolution of economic institutions during the process of industrialization. In particular, we focus on the institution of contract enforcement. Empirically, we show that, during the process of industrialization, countries tend to shift their manufacturing production towards industries that require more relationship-specific investment. Theoretically, we build a dynamic model with...

Protection of intellectual property embedded in potentially reproducible living organisms presents some unique and difficult challenges. Biological innovations like genetically modified (GM) seed are self-replicating, and as a result, represent a form of durable good with a potential product life extending far into the future. This gives rise to two problems: the need for copy protection of int...

This paper studies the relation between firm size, leverage, exit and growth in an environment of incomplete markets and lack of enforcement. In the data large firms have lower growth and exit rates yet higher leverage. The idea of the paper is that high productivity firms will be larger and have a greater degree of enforcement because their outside option relative to the value of their product...

Consider a society in which the production and enforcement of law is entirely private. Individuals contract with rights enforcement firms to protect their rights and arrange for the settlement of legal disputes to which they are a party. Each pair of enforcement firms contracts with an arbitration agency, a private court, to settle disputes between their customers, agreeing to accept and enforc...