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Full-Text Articles in Law
Market-Based Transfer Prices And Intracompany Discounts, Aaron S. Edlin, Tim Baldenius, Stefan Reichelstein
Market-Based Transfer Prices And Intracompany Discounts, Aaron S. Edlin, Tim Baldenius, Stefan Reichelstein
Aaron Edlin
No abstract provided.
Cadillac Contracts And Up-Front Payments: Efficient Investment Under Expectation Damages, Aaron S. Edlin
Cadillac Contracts And Up-Front Payments: Efficient Investment Under Expectation Damages, Aaron S. Edlin
Aaron Edlin
This article shows that up-front payments can eliminate the overinvestment effect identified by Shavell (1980), by controlling which party breaches a contract. At the same time, "Cadillac" contracts (contracts for a very high quality or quantity) can protect against underinvestment due to Williamsonian holdups. This combination provides efficient investment incentives when courts use expectation damages as a remedy for breach. The expectation damages remedy is therefore well-suited to multidimensional but one-sided investment problems, in contrast to specific performance, which is well-suited to two-sided but unidimensional investment problems.