One-Sided Contracts in Competitive Consumer Markets

Authors

Lucian A. Bebchuk, Harvard Law SchoolFollow
Richard A. Posner, U.S. Court of Appeals for the Seventh CircuitFollow

Abstract

The usual assumption in economic analysis of law is that in a competitive market without informational asymmetries, the terms of contracts between sellers and buyers will be optimal-that is, that any deviation from these terms would impose expected costs on one party that exceed benefits to the other. But could there be cases in which "one-sided" contracts containing terms that impose a greater expected cost on one side than benefit on the other-would be found in competitive markets even in the absence of fraud, prohibitive information costs, or other market imperfections? That is the possibility we explore in this Article.

Recommended Citation

Lucian A. Bebchuk & Richard A. Posner, One-Sided Contracts in Competitive Consumer Markets, 104 Mich. L. Rev. 827 (2006).
Available at: https://repository.law.umich.edu/mlr/vol104/iss5/1