TY  - JOUR
AU  - Anderson,James E.
TI  - Does Trade Foster Contract Enforcement?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14045
PY  - 2008
Y2  - May 2008
UR  - http://www.nber.org/papers/w14045
L1  - http://www.nber.org/papers/w14045.pdf
N1  - Author contact info:
James E. Anderson
Department of Economics
Boston College
Chestnut Hill, MA 02467
Tel: 617/552-3691
Fax: 617/552-2308
E-Mail: james.anderson.1@bc.edu
AB  - Contract enforcement is probabilistic, but the probability depends on rules and processes.  A stimulus to trade may induce traders to alter rules or processes to improve enforcement. In the model of this paper, such a positive knock-on effect occurs when the elasticity of supply of traders is sufficiently high. Negative knock-on is possible when the elasticity is low. Enforcement strategies in competing markets are complements (substitutes) if the supply of traders is sufficiently elastic (inelastic). The model provides a useful structure of endogenous enforcement that gives promise of explaining patterns of institutional development.
ER  -