A Reply to Alan Schwartz's 'a Contract Theory Approach to Business Bankruptcy'
Yale Law Journal, Vol. 109, No. 2, November 1999
26 Pages Posted: 8 Feb 2005
In his 1998 article, A Contract Theory Approach to Business Bankruptcy, 107 Yale Law Journal 1807, Alan Schwartz presented a model and proof purporting to show that contractual bankruptcy was superior to the state-supplied mandatory regime. This reply shows the proof to be incorrect on its assumptions in several respects. The reply also presents empirical evidence on the pattern of actual bankruptcy contracting. That evidence suggests that bankruptcy contracting is motivated principally by redistributional rather than efficiency concerns.
JEL Classification: K12, K29, K39
Suggested Citation: Suggested Citation