On the Optimal Number of Contract Types
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Oren Bar-Gill
Abstract
The theoretical availability of an infinite number of contract types suggests that there may be an optimal quantity from which contractual parties could make a selection. In this Article, we emphasize the difficulty of identifying that optimal number, given information costs and other transaction costs related to the production of a contract type. We argue that standard market failures might cause markets to produce a suboptimal number of contract types. We then consider whether government should intervene to remedy any market failure. We conclude that government would generally lack the access to information necessary to identify the optimal number of contract types. Moreover, we argue that issues of political economy would impede the ability of government to achieve the optimal number of contract types, even if it were able to identify that number. Government, that is, may tend to either oversupply or undersupply contract types. Perhaps the best that government can do is to provide “soft” interventions that reflect appropriate defaults or safe harbors.
© 2019 by Theoretical Inquiries in Law
Articles in the same Issue
- Frontmatter
- Introduction
- Contract as Promise: Lessons Learned
- Contract Law and the Liberalism of Fear
- Contract Law in a Just Society
- Voluntary Obligation and Contract
- Parol Evidence Rules and the Mechanics of Choice
- On the Optimal Number of Contract Types
- Money Talks: Institutional Investors and Voice in Contract
- Unity and Multiplicity in Contract Law: From General Principles to Transaction-Types
- Plural Values in Contract Law: Theory and Implementation
- Freedom, Choice, and Contracts
Articles in the same Issue
- Frontmatter
- Introduction
- Contract as Promise: Lessons Learned
- Contract Law and the Liberalism of Fear
- Contract Law in a Just Society
- Voluntary Obligation and Contract
- Parol Evidence Rules and the Mechanics of Choice
- On the Optimal Number of Contract Types
- Money Talks: Institutional Investors and Voice in Contract
- Unity and Multiplicity in Contract Law: From General Principles to Transaction-Types
- Plural Values in Contract Law: Theory and Implementation
- Freedom, Choice, and Contracts
