Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22879 
Authors: 
Year of Publication: 
2004
Series/Report no.: 
Bonn Econ Discussion Papers No. 2/2004
Publisher: 
University of Bonn, Bonn Graduate School of Economics (BGSE), Bonn
Abstract: 
While various liability rules of tort law provide efficient incentives to invest, breach remedies of contract law are claimed to be distortive. Since, at least in Germany, obligations law provides general rules for both contractual and tort relationships such discrepancy seems puzzling. The paper identifies a saddle point property as the driving force behind most efficiency results and it establishes that fault rules of a general type generate this property. The model is then confronted with important legal rules of the German law of obligations. The alleged inefficiency of expectation damages turns out to rest, not on a failure of breach remedies, but on the binary nature of delivery choice as imposed by the traditional analysis of contract law.
JEL: 
K12
K13
D62
Document Type: 
Working Paper

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