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Full-Text Articles in Law
On Firms, Sanjukta Paul
On Firms, Sanjukta Paul
Law & Economics Working Papers
This paper is about firms as an instance of economic coordination, and about how we think about them in relation to other forms of coordination as well as in relation to competition and markets. The dominant frame for thinking about firms--which has strongly influenced contemporary competition law as well as serving as a vital adjunct to the fundamental concepts of neoclassical price theory that guide many areas of law and policy--implicitly or explicitly explains and justifies the centralization of both decision-making rights and flows of income from economic activity on productive efficiency grounds. We have very good reasons to doubt …
Subjective Beliefs About Contract Enforceability, Jj Prescott, Evan Starr
Subjective Beliefs About Contract Enforceability, Jj Prescott, Evan Starr
Law & Economics Working Papers
This article assesses the content, role, and adaptability of subjective beliefs about contract enforceability in the context of postemployment covenants not to compete (“noncompetes”). We show that employees tend to believe that their noncompetes are enforceable, even when they are not. We provide evidence for both supply- and demand-side stories that explain employees’ persistently inaccurate beliefs. Moreover, we show that believing that unenforceable noncompetes are enforceable likely causes employees to forgo better job options and to perceive that their employer is more likely to take legal action against them if they choose to compete. Finally, we use an information experiment …