Private Ordering Triumphs: Firms and Reputation Outshine Inefficient Courts
The article discusses how businesses decide to enforce their agreements using private methods like reputation, rather than relying on public courts. It compares private enforcement, public courts, and firms as enforcement mechanisms. The study suggests that private ordering is preferred when agreements are hard to enforce, market incentives are strong, and entry barriers are low. The research shows that private ordering can be more efficient than public courts in certain situations.