Standardized Enforcement: Access to Justice vs. Contractual Innovation

78 Pages Posted: 2 Jun 2014

See all articles by Nicola Gennaioli

Nicola Gennaioli

Bocconi University - Department of Finance; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Enrico C. Perotti

University of Amsterdam - Finance Group; Centre for Economic Policy Research (CEPR)

Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra

Multiple version iconThere are 2 versions of this paper

Date Written: February 2014

Abstract

We model the effect of contract standardization on the development of markets and the law. In a setting in which biased judges can distort contract enforcement, we find that the introduction of a standard contract reduces enforcement distortions relative to reliance on precedents, exerting two effects: i) it statically expands the volume of trade, but ii) it crowds out the use of open-ended contracts, hindering legal evolution. We shed light on the large-scale commercial codification undertaken in the nineteenth century in many countries (even common-law ones) during a period of booming commerce and long-distance trade.

Keywords: contracts, imperfect enforcement, legal evolution, precedents, standardization

JEL Classification: D86, K12, K40, K41

Suggested Citation

Gennaioli, Nicola and Perotti, Enrico C. and Ponzetto, Giacomo A. M., Standardized Enforcement: Access to Justice vs. Contractual Innovation (February 2014). CEPR Discussion Paper No. DP9836, Available at SSRN: https://ssrn.com/abstract=2444837

Nicola Gennaioli (Contact Author)

Bocconi University - Department of Finance ( email )

Via Roentgen 1
Milano, MI 20136
Italy

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Enrico C. Perotti

University of Amsterdam - Finance Group ( email )

Plantage Muidergracht 12
Amsterdam, 1018 TV
Netherlands
+31 20 525 4159 (Phone)
+31 20 525 5285 (Fax)

HOME PAGE: http://www.fee.uva.nl/fm/people/pero.htm

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Giacomo A. M. Ponzetto

CREI - Universitat Pompeu Fabra ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain
+34 93 542 2829 (Phone)
+34 93 542 2826 (Fax)

HOME PAGE: http://www.crei.cat/people/ponzetto

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
1
Abstract Views
541
PlumX Metrics