Institutional Support of the Firm: A Theory of Business Registries
AbstractRegistering originative business contracts allows entrepreneurs and creditors to choose, and courts to enforce market-friendly contract rules that protect innocent third parties when adjudicating disputes on subsequent contracts. This reduces information asymmetry for third parties, which enhances impersonal trade. It does so without seriously weakening property rights, because it is rightholders who choose or activate the legal rules and can, therefore, minimize the cost of any possible weakening. Registries are essential not only to make the chosen rules public but to ensure rightholders commitment and avoid rule-gaming, because independent registries make rightholders choices verifiable by courts. The theory is supported by comparative and historical analyses.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 508.
Date of creation: Sep 2010
Date of revision:
Property rights; theory of the firm; business registries; formalization; starting a business; impersonal transactions;
Other versions of this item:
- Benito Arruñada, 2010. "Institutional support of the firm: A theory of business registries," Economics Working Papers 1195, Department of Economics and Business, Universitat Pompeu Fabra, revised Sep 2010.
- 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
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