Resolutions, Recoveries and Relationships: The Evolution of Payment Disputes in Central and Eastern Europe
AbstractWhat determines the mechanism chosen to resolve a commercial dispute? To what degree does the aggrieved recover damages? And does the relationship survive in the aftermath? The answers to these questions affect expectations as to the costs of transacting and, thereby, the development of markets. But they have received almost no attention in the economic literature on the post-socialist transition. This article exploits a rich survey of small and medium-sized manufacturing enterprises in three Central and East European countries to explain responses to an inter-firm payment dispute. The evidence suggests that behavior at successive stages is strongly influenced by the transaction costs associated with greater geographic distance between the firms. The evidence also strongly suggests that the costs of a dispute can be mitigated by membership in a business association.
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Bibliographic InfoPaper provided by Middlebury College, Department of Economics in its series Middlebury College Working Paper Series with number 0523.
Length: 57 pages
Date of creation: Sep 2005
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Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
- P37 - Economic Systems - - Socialist Institutions and Their Transitions - - - Legal
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-15 (All new papers)
- NEP-BEC-2005-10-15 (Business Economics)
- NEP-EEC-2005-10-15 (European Economics)
- NEP-SOC-2005-10-15 (Social Norms & Social Capital)
- NEP-TRA-2005-10-15 (Transition Economics)
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