Multilateral reputation mechanisms and contract law in agriculture : complement or substitutes

The enforcement of contracts is necessary for efficient exchange in economic activities. The predominance in agriculture of informal contracts leads in many countries to the implementation of specific legal rules for contract law. This article emphasises the complementarities between public and private ordering when contracts are informal. We analyse the role of private contract-enforcement institution (CEI) as a support for multilateral reputation mechanisms. Our case study is focusing on interprofessional organisations, which are usually analysed as cartels having a negative impact on welfare. We demonstrate that under specific conditions, they can improve contract enforcement and thus efficiency.

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 Record created 2017-04-01, last modified 2018-01-22

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