Contracting institutions and ownership structure in international joint ventures

Assche, Ari Van; Schwartz, Galina

doi:10.1016/j.jdeveco.2013.02.008

Cited by 17 publications

(1 citation statement)

References 28 publications

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“…The nature of the breach is not relevant in the model, and it might happen due to expropriation risks (Thomas & Worrall, ) or institutional hazards (Acemoglu & Johnson, ; Van Assche & Schwartz, ). As it is standard in this literature, the contract is enforced by the exporter or importer with probability

γ_{i}, γ_{j} \in false(0, 1 false)

, where γ is a country‐wide measure of contractual or legal quality (Antràs & Foley, ).…”

Section: The Modelmentioning

confidence: 99%

Trade law and trade flows

2019

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This paper develops and estimates a model to study the effect of improving the quality of commercial trade law on trade flows. We focus on improvements aimed to privately resolve disputes among trading partners: international commercial arbitration and conciliation. The main novelty of the model is to explicit the balance between the contractual quality of importer and exporter (contractual distance) in an environment with informational frictions (contractual noise). Using a structural gravity estimation with high‐dimensional fixed effects, the main contribution of the empirical exercise is to confirm previous results and unravel new traits that align with our theoretical results. Arbitration has a moderate and positive effect on exports that increases (decreases) with the contractual quality of the exporter (importer) and the remoteness of markets. The effects of conciliation are similarly positive, but only for similar trading partners with high levels of income. Results also suggest both domestic trade law reform and international treaties have a positive effect on trade, with a stronger effect of the latter.

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