Contract Enforcement in Transition

Woodruff, Christopher M.; McMillan, John; Johnson, Simon

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Contract Enforcement in Transition

CEPR Discussion Paper Series Number 2081,

53 Pages Posted: 17 Jun 2001

See all articles by Christopher M. Woodruff

Christopher M. Woodruff

University of California, San Diego (UCSD) - Graduate School of International Relations and Pacific Studies (IRPS)

John McMillan

CESifo (Center for Economic Studies and Ifo Institute)

Simon Johnson

Massachusetts Institute of Technology (MIT) - Entrepreneurship Center; National Bureau of Economic Research (NBER)

Date Written: November 1999

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?

JEL Classification: D89

Suggested Citation: Suggested Citation

Woodruff, Christopher and McMillan, John and Johnson, Simon, Contract Enforcement in Transition (November 1999). CEPR Discussion Paper Series Number 2081,, Available at SSRN: https://ssrn.com/abstract=155096