Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94090
Authors: 
Stremitzer, Alexander
Year of Publication: 
2008
Series/Report no.: 
SFB/TR 15 Discussion Paper 242
Abstract: 
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 first 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 (exogenously given) quality threshold. In order to implement this regime, no more information needs to be verifiable than is implicitly assumed in Che and Hausch (1999).
Subjects: 
breach remedies
imcomplete contracts
cooperative investments
JEL: 
K12
L22
J41
C70
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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