Efficient priority rules under default: the case of traditio versus contract principle-Reference-Cited by-同舟云学术

Efficient priority rules under default: the case of traditio versus contract principle

Published:2020-09-24 Issue:1 Volume:51 Page:97-128
ISSN:0929-1261
Container-title:European Journal of Law and Economics
language:en
Short-container-title:Eur J Law Econ

Author:

Andreasson Jens,Faber Wolfgang,Gangopadhyay Shubhashis,Martinson Claes,Sjögren Stefan^ORCID

Abstract

AbstractWe investigate the economic consequences of the traditio and the contract principle—differing in how they determine the priority rights for an item sold but not delivered. Our results suggest that the two principles are equivalent in terms of the net utilities enjoyed by involved actors. For example, a lower price paid for a forward transaction under a traditio principle can be compensated by better credit terms, implying there is no competitive advantage for either the seller or buyer under any principle. We demonstrate how market prices, incorrectly used, may misleadingly favour a contract principle, and discuss how fraudulent behaviour better supports a traditio regime. We also contribute to the legal discussion on priority regimes of undelivered items basing our discussion on bankruptcy priority laws instead of distribution of ownership.

Funder

University of Gothenburg

Publisher

Springer Science and Business Media LLC

Subject

Law,Economics and Econometrics,Business and International Management

Link

https://link.springer.com/content/pdf/10.1007/s10657-020-09668-0.pdf

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