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http://ssrn.com/abstract=300281
 
 

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Freedom of Contract and the Laws of Entropy


Francesco Parisi


University of Minnesota - Law School; University of Bologna


Supreme Court Economic Review, Annual 2002, pp. 65-90
George Mason Law & Economics Research Paper No. 02-02

Abstract:     
In this paper I consider the twofold relationship between freedom of contract and entropy in property. Recent literature on property fragmentation suggests that property is subject to a fundamental law of entropy, leading towards increasing property fragmentation. After considering the legal responses to the problem of entropy, I revisit the above debate considering the relevance of freedom of contract to achieve optimal outcomes in a world of imperfect information and positive transaction costs. In such a context, I discern two analytically distinct ways in which freedom of contract contributes to minimizing the problems of entropy. I conclude that entropy is not an ontological problem, but is often the byproduct of the uncoordinated use of institutional and legal constraints on free contractual arrangements.

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Date posted: February 14, 2002  

Suggested Citation

Parisi, Francesco, Freedom of Contract and the Laws of Entropy. Supreme Court Economic Review, Annual 2002, pp. 65-90; George Mason Law & Economics Research Paper No. 02-02. Available at SSRN: http://ssrn.com/abstract=300281 or http://dx.doi.org/10.2139/ssrn.300281

Contact Information

Francesco Parisi (Contact Author)
University of Minnesota - Law School ( email )
229 19th Avenue South
Minneapolis, MN 55455
United States
University of Bologna ( email )
Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy
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