parent nodes: Breach of Duty | Calabresi corollary | closely held corporation | Coase Theorem | Compensatory Damages | Criminal Law | Damages | Defense of Property | economic loss | Epstein restatement | ex ante hypothetical | fiduciary duty | information costs | judicial review | liability rule | limited liability | piercing the corporate veil | Private Neccessity | strict liability | Torts Theories | transaction costs | voting control
transaction costs
Examples of transaction costs that encourage liability rules are:- information costs
- physical/temporal limits to bargaining
- markets in which the costs do not fall on least cost avoiders
- "establishing the value of an initial entitlement by negotiation is so great that even though a transfer of the entitlement would benefit all concerned, such a transfer will not occur."
- owners and potential buyers may both be induced to hide their true preferences
- Holdouts may impair combining entitlements from multiple owners
- some entitlements may be difficult or unseemly to objectively value.
[alias: transaction cost]