Investments to Make Threats Credible, Rent-Seeking, and Duress

9 Pages Posted: 25 Oct 2015 Last revised: 24 Nov 2016

See all articles by Murat C. Mungan

Murat C. Mungan

George Mason University - Antonin Scalia Law School, Faculty

Mark Seidenfeld

Florida State University College of Law

Date Written: October 23, 2015

Abstract

Existing literature on the contract law doctrine of duress identifies a number of tests to determine conditions under which a contract can be voided. No article provides a specific and formal economic analysis on the link between rent-seeking and the conditions under which allowing a defense of duress is wealth enhancing. This article shows that commitments made as a result of ex-ante investments by threatening parties made solely for the purpose of transferring, rather than creating wealth, ought to be voidable. We discuss cases in which a test based on rent-seeking enhances efficiency where previously proposed tests do not.

Keywords: Duress, rent-seeking, wealth-transfer, credible threat

JEL Classification: K00, K12

Suggested Citation

Mungan, Murat C. and Seidenfeld, Mark, Investments to Make Threats Credible, Rent-Seeking, and Duress (October 23, 2015). 23 Supreme Court Economic Review 341 (2015); FSU College of Law, Public Law Research Paper No. 778; FSU College of Law, Law, Business & Economics Paper No. 15-23. Available at SSRN: https://ssrn.com/abstract=2679206

Murat C. Mungan (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Mark Seidenfeld

Florida State University College of Law ( email )

425 W. Jefferson Street
Tallahassee, FL 32306
United States
850-644-3059 (Phone)
850-644-5487 (Fax)

HOME PAGE: http://www.law.fsu.edu/faculty/mseidenfeld.html

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