IDEAS home Printed from https://ideas.repec.org/p/zbw/csledp/200606.html
   My bibliography  Save this paper

Territoriality of Law and the International Trade Game: Towards a New Institutional Economics of International Transactions

Author

Listed:
  • Schmidt-Trenz, Hans-Jörg
  • Schmidtchen, Dieter

Abstract

The conventional theory of international trade is dominated by a model presupposing a legal order that is perfect in its specifications and controllability, binding for all economic agents, no matter their nationality. World order appears to be cosmopolitan in the sense of Kant. An international private law community such as this, however, does not exist. In fact, there is a multitude of legal orders and a territoriality of law, leading to problems largely neglected in the traditional theory of international trade. They are at the heart of what we would like to call the New Institutional Economics of International Transactions (NIEIT) – a research program which started from a monograph published in 1990 (see Schmidt-Trenz 1990). This paper addresses two questions: Which specific problems emerge in contracts and the contracting process because of factors such as the multitude of legal orders and the territoriality of law? What solutions are there to these problems a) on the level of the law, and b) in the shadow of the law or completely independent of it (?private ordering?)? How do they work from an efficiency point of view? We restrict attention to the international exchange of goods. However, the insights gained can be transferred to other types of transactions, such as international finance transactions, direct investment, and investment agreements.

Suggested Citation

  • Schmidt-Trenz, Hans-Jörg & Schmidtchen, Dieter, 2006. "Territoriality of Law and the International Trade Game: Towards a New Institutional Economics of International Transactions," CSLE Discussion Paper Series 2006-06, Saarland University, CSLE - Center for the Study of Law and Economics.
  • Handle: RePEc:zbw:csledp:200606
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/23084/1/2006-06_NIEIT.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Schnitzer, Monika, 1997. "Debt vs. Foreign Direct Investment: The Impact of Sovereign Risk on the Structure of International Capital Flows," CEPR Discussion Papers 1608, C.E.P.R. Discussion Papers.
    2. Kirstein, Roland & Schmidtchen, Dieter, 1997. "Judicial detection skill and contractual compliance," International Review of Law and Economics, Elsevier, vol. 17(4), pages 509-520, December.
    3. repec:bla:econom:v:69:y:2002:i:273:p:41-67 is not listed on IDEAS
    4. Kronman, Anthony T, 1985. "Contract Law and the State of Nature," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 1(1), pages 5-32, Spring.
    5. Pomery, John, 1984. "Uncertainty in trade models," Handbook of International Economics, in: R. W. Jones & P. B. Kenen (ed.), Handbook of International Economics, edition 1, volume 1, chapter 9, pages 419-465, Elsevier.
    6. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
    7. Cooter, Robert & Landa, Janet T., 1984. "Personal versus impersonal trade: The size of trading groups and contract law," International Review of Law and Economics, Elsevier, vol. 4(1), pages 15-22, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. DÖRRY Sabine, 2012. "Bridging Monopolies of Power: Foreign Tourism Trade Relations between Germany and Jordan and Constitutional Uncertainty," LISER Working Paper Series 2012-17, Luxembourg Institute of Socio-Economic Research (LISER).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kirstein, Roland & Schmidtchen, Dieter & Neunzig, Alexander R., 2004. "Conflict of law rules and international trade : a transaction costs approach," CSLE Discussion Paper Series 2004-01, Saarland University, CSLE - Center for the Study of Law and Economics.
    2. Schmidtchen, Dieter, 2007. "Vereinheitlichung des Vertragsrechts in Europa - eine Lösung auf der Suche nach dem Problem? Die Sicht der Neuen Institutionenökonomik," CSLE Discussion Paper Series 2007-01, Saarland University, CSLE - Center for the Study of Law and Economics.
    3. Schmidtchen, Dieter & Neunzig, Alexander R., 1997. "Trade, Trust And The Territoriality Of The Law," CSLE Discussion Paper Series 97-05, Saarland University, CSLE - Center for the Study of Law and Economics.
    4. Janet Landa, 2009. "Homogeneous middleman groups as superorganisms, endogamous ethnic groups, and trust networks: Reply to comments on Janet Landa’s target article, ‘The bioeconomics of homogeneous middleman groups as ad," Journal of Bioeconomics, Springer, vol. 11(2), pages 191-199, August.
    5. Janet Landa, 2008. "The bioeconomics of homogeneous middleman groups as adaptive units: Theory and empirical evidence viewed from a group selection framework," Journal of Bioeconomics, Springer, vol. 10(3), pages 259-278, December.
    6. Jain, Tarun & Sood, Ashima, 2017. "How does relationship-based governance accommodate new entrants? Evidence from the cycle-rickshaw rental market," Journal of Institutional Economics, Cambridge University Press, vol. 13(3), pages 673-697, September.
    7. Hodgson, Geoffrey M. & Knudsen, Thorbjørn, 2008. "The emergence of property rights enforcement in early trade: A behavioral model without reputational effects," Journal of Economic Behavior & Organization, Elsevier, vol. 68(1), pages 48-62, October.
    8. DÖRRY Sabine, 2012. "Bridging Monopolies of Power: Foreign Tourism Trade Relations between Germany and Jordan and Constitutional Uncertainty," LISER Working Paper Series 2012-17, Luxembourg Institute of Socio-Economic Research (LISER).
    9. Emily C. Schaeffer, 2008. "Remittances and Reputations in Hawala Money- Transfer Systems: Self-Enforcing Exchange on an International Scale," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 24(Fall 2008), pages 95-117.
    10. C. Rowley, 2009. "The curious citation practices of Avner Greif: Janet Landa comes to grief," Public Choice, Springer, vol. 140(3), pages 275-285, September.
    11. Ethan Bueno de Mesquita & Matthew Stephenson, 2006. "Legal Institutions and Informal Networks," Journal of Theoretical Politics, , vol. 18(1), pages 40-67, January.
    12. Janvier D. Nkurunziza, 2005. "Reputation and Credit without Collateral in Africa`s Formal Banking," Economics Series Working Papers WPS/2005-02, University of Oxford, Department of Economics.
    13. Karla Hoff & Mayuresh Kshetramade & Ernst Fehr, 2011. "Caste and Punishment: the Legacy of Caste Culture in Norm Enforcement," Economic Journal, Royal Economic Society, vol. 121(556), pages 449-475, November.
    14. Pyle, William, 2006. "Resolutions, recoveries and relationships: The evolution of payment disputes in Central and Eastern Europe," Journal of Comparative Economics, Elsevier, vol. 34(2), pages 317-337, June.
    15. Zakaria Babutsidze & Nobuyuki Hanaki & Adam Zylbersztejn, 2019. "Digital Communication and Swift Trust," Post-Print halshs-02409314, HAL.
    16. Yuheng Lin & Dooruj Rambaccussing & Yu Zhu, 2024. "The impact of international students in the UK on the cultural goods trade," French Stata Users' Group Meetings 2024 29, Stata Users Group.
    17. Konstantin Yanovsky & Ilia Zatcovetzky & Sergei Zhavoronkov & Ekaterina Reva, 2013. "Modern Anti-Capitalistic Ideologies," Working Papers 0059, Gaidar Institute for Economic Policy, revised 2013.
    18. Rajgopal Kannan & Lydia Ray & Sudipta Sarangi, 2007. "The structure of information networks," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 30(1), pages 119-134, January.
    19. M. Shahe Emran & Dilip Mookherjee & Forhad Shilpi & M. Helal Uddin, 2021. "Credit Rationing and Pass-Through in Supply Chains: Theory and Evidence from Bangladesh," American Economic Journal: Applied Economics, American Economic Association, vol. 13(3), pages 202-236, July.
    20. Mika Kallioinen, 2017. "Inter‐communal institutions in medieval trade," Economic History Review, Economic History Society, vol. 70(4), pages 1131-1152, November.

    More about this item

    Keywords

    conflict of law; international private law; transaction costs; enforcement of judgements; private ordering;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • F02 - International Economics - - General - - - International Economic Order and Integration

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:csledp:200606. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/fosaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.