Stanford University

Courts and Relational Contracts

Email address: mcmillan_john@gsb.stanford.edu

Abstract:
Post-communist countries offer new evidence on the relative importance of courts and relationships in enforcing contracts. Belief in the effectiveness of courts has a significant positive effect on the level of trust shown in new relationships between firms and their customers. Well-functioning courts also encourage entrepreneurs to try out new suppliers. A major role of the courts is to support the development of new relationships. While relationships can sustain existing interactions, workable courts help new interactions to start and develop.

PDF file of paper: mcmillan.pdf

Session: Law and Economics

Time: Saturday, 7 July, 2:15pm - 3:45pm

Room: A