Publication
Courts and Relational Contracts

Post-communist countries offer new evidence on the relative importance of courts and relationships in enforcing contracts. Belief in the effectiveness of courts has a significant positive effect on the level of trust shown in new relationships between firms and their customers. Well-functioning courts also encourage entrepreneurs to try out new suppliers. A major role of the courts is to support the development of new relationships. While relationships can sustain existing interactions, workable courts help new interactions to start and develop.
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Publication Date
November, 2000