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Discussion Paper Details

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Title: Contract Enforcement in Transition

Author(s): Simon Johnson, John McMillan and Christopher Woodruff

Publication Date: February 1999

Keyword(s): courts, relational contracting and Transition

Programme Area(s): Transition Economics

Abstract: The mix of formal and informal mechanisms for contract enforcement is examined using survey data from Russia, Ukraine, Romania, Poland, and Slovakia. Using the size of trade credit to quantify the success of contracting, we ask: Do the courts have a perceptible effect on contracting? When can a firm rely on its customer to repay trade credit voluntarily? Which is more effective, the courts or relational contracting? Do trade associations play a role in contract enforcement? Does relational contracting entail inefficiencies? Is the reliance on relation contracting merely a transitory phenomenon, reflecting the inadequacy of these countries' legal systems?

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Bibliographic Reference

Johnson, S, McMillan, J and Woodruff, C. 1999. 'Contract Enforcement in Transition'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2081