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Resolutions, Recoveries and Relationships: The Evolution of Payment Disputes in Central and Eastern Europe

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  • William Pyle

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Abstract

What 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.

Suggested Citation

  • William Pyle, 2005. "Resolutions, Recoveries and Relationships: The Evolution of Payment Disputes in Central and Eastern Europe," Middlebury College Working Paper Series 0523, Middlebury College, Department of Economics.
  • Handle: RePEc:mdl:mdlpap:0523
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    File URL: http://www.middlebury.edu/services/econ/repec/mdl/ancoec/0523.pdf
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • 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

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