The Law of Impersonal Transactions
AbstractMost economic interactions happen in a context of sequential exchange in which innocent third parties suffer information asymmetry with respect to previous originative contracts. The law reduces transaction costs by protecting these third parties but preserves some element of consent by property right holders to avoid damaging property enforcemente.g., it is they, as principals, who authorize agents in originative contracts. Judicial verifiability of these originative contracts is obtained either as an automatic byproduct of transactions or, when these would have remained private, by requiring them to be made public. Protecting third parties produces a legal commodity which is easy to trade impersonally, improving the allocation and specialization of resources. Historical delay in generalizing this legal commoditization paradigm is attributed to path dependencythe law first developed for personal tradeand an unbalance in vested interests, as luddite legal professionals face weak public bureaucracies.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 500.
Date of creation: Sep 2010
Date of revision:
Property rights; formalization; impersonal transactions;
Other versions of this item:
- O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
- K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
- L59 - Industrial Organization - - Regulation and Industrial Policy - - - Other
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Henry Hansmann & Reinier Kraakman, 2000. "The Essential Role of Organizational Law," Yale School of Management Working Papers ysm147, Yale School of Management, revised 01 Nov 2001.
- Wallis, John Joseph, 2011. "Institutions, organizations, impersonality, and interests: The dynamics of institutions," Journal of Economic Behavior & Organization, Elsevier, vol. 79(1), pages 48-64.
- Wallis, John Joseph, 2011. "Institutions, organizations, impersonality, and interests: The dynamics of institutions," Journal of Economic Behavior & Organization, Elsevier, vol. 79(1-2), pages 48-64, June.
- Hoffman, Philip T. & Postel-Vinay, Gilles & Rosenthal, Jean-Laurent, 2001. "Priceless Markets," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226348018, May.
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