Rethinking the theory of efficient breach: An approach based in industrial organization.

Abstract

This paper applies industrial organization principles to efficient breach theory. Discordant with the contemporary literature, the results of this paper deviate from several prior theories concerning contracts in competitive markets and otherwise challenge the value of common law principles regarding expectancy damages. The paper consists of seven chapters. Chapters one through three provide background information to the reader concerning common law remedies, the state of the literature on point and the relationship of industrial organization to contracts. Chapters four through six confront the literature by analyzing contractual breach in competitive and non-competitive markets. Chapter seven aggregates the analysis of the paper by forming positive and normative conclusions regarding the evaluation of efficient breach theory under the common law. This analysis suggests that the current system is inefficient, but that extensions of specific performance to all cases of welfare-based breach of contract could improve pareto and market efficiency.