IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Credit Constraints and Contract Enforcement

  • Powers Dennis

    ()

    (University of St. Thomas)

Registered author(s):

    This paper demonstrates that credit constraints can lead to the inability to enforce contracts, thereby creating inefficiency. If time elapses between the contract period and the enforcement period, a credit constrained agent that uses the proceeds of trade to fund consumption faces a greater cost to enforce a contract than an unconstrained agent. This allows the other party to a contract to hold up the credit constrained agent, thereby creating inefficiency. This is demonstrated for two types of enforcement mechanisms; enforcement of a one-time trade via the courts, and enforcement of a long-term trade via a punishment strategy.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.degruyter.com/view/j/bejeap.2006.6.1/bejeap.2006.6.1.1156/bejeap.2006.6.1.1156.xml?format=INT
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

    Volume (Year): 6 (2006)
    Issue (Month): 1 (March)
    Pages: 1-27

    as
    in new window

    Handle: RePEc:bpj:bejeap:v:topics.6:y:2006:i:1:n:6
    Contact details of provider: Web page: http://www.degruyter.com

    Order Information: Web: http://www.degruyter.com/view/j/bejeap

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:topics.6:y:2006:i:1:n:6. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.