Contract Enforcement in the Early Transition to a Market Economy
AbstractHow were contracts among firms enforced in the early phase of a transition economy when firms lacked experience with commercial contracts or legal procedures? What were their views of their new business environment? We interviewed a sample of Bulgarian firms, including private, state-owned and cooperative firms in 1994. Consistent with Williamson’s (1994) theories, complex contracts were quite limited, sometimes implying the breakdown of important markets, but we also found that even spot-market contracts had severe problems of bilateral dependency. Having been "burned" in previous transactions, firms were very cautious in dealing with new potential trading partners and tried to work closely with trustworthy counterparts. These results are consistent with Klein, Crawford and Alchian’s (1978) theory.
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Bibliographic InfoPaper provided by University of Delaware, Department of Economics in its series Working Papers with number 05-11.
Length: 55 pages
Date of creation: 2005
Date of revision:
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More information through EDIRC
Bulgaria; contract enforcement; contract institutions; contract law; legal institutions;
Find related papers by JEL classification:
- P5 - Economic Systems - - Comparative Economic Systems
- P48 - Economic Systems - - Other Economic Systems - - - Political Economy; Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
- I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
- K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-12 (All new papers)
- NEP-HIS-2005-11-12 (Business, Economic & Financial History)
- NEP-LAW-2005-11-12 (Law & Economics)
- NEP-TRA-2005-11-12 (Transition Economics)
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