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Contractual nullification of economically-detrimental state-made laws

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  • Bruce Benson

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Abstract

An economy may remain robust in the face of efficiency-inhibiting state-made rules if individuals are able to establish effective sources of credibility that do not rely on the state. After explaining how non-state sources of trust and private recourse evolve to enhance credibility, examples of contracting around undesirable rules in United States are discussed. The potential for contractual nullification varies considerably, however, in part because of state action that limits civil-society and/or market activities. In many less robust economies, there are even more significant barriers to building private sources of trust and recourse, undermining the potential for contractual nullification. Copyright Springer Science + Business Media, Inc. 2006

Suggested Citation

  • Bruce Benson, 2006. "Contractual nullification of economically-detrimental state-made laws," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 19(2), pages 149-187, June.
  • Handle: RePEc:kap:revaec:v:19:y:2006:i:2:p:149-187
    DOI: 10.1007/s11138-006-7346-3
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    References listed on IDEAS

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    1. Smith, Adam, 1776. "An Inquiry into the Nature and Causes of the Wealth of Nations," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number smith1776.
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    3. Bernstein, Lisa, 1992. "Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry," The Journal of Legal Studies, University of Chicago Press, vol. 21(1), pages 115-157, January.
    4. Bruce L. Benson, 2001. "Law and economics," Chapters,in: The Elgar Companion to Public Choice, chapter 26 Edward Elgar Publishing.
    5. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-540, September.
    6. Diamond, Douglas W, 1989. "Reputation Acquisition in Debt Markets," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 828-862, August.
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    8. Nelson, Philip, 1974. "Advertising as Information," Journal of Political Economy, University of Chicago Press, vol. 82(4), pages 729-754, July/Aug..
    9. Benson, Bruce L, 1995. "An Exploration of the Impact of Modern Arbitration Statutes on the Development of Arbitration in the United States," Journal of Law, Economics, and Organization, Oxford University Press, vol. 11(2), pages 479-501, October.
    10. Benson, Bruce L, 1994. "Are Public Goods Really Common Pools? Considerations of the Evolution of Policing and Highways in England," Economic Inquiry, Western Economic Association International, vol. 32(2), pages 249-271, April.
    11. Benson, Bruce L, 1999. "An Economic Theory of the Evolution of Governance and the Emergence of the State," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 12(2), pages 131-160, November.
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