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Suppose the transaction costs of renegotiating partnerships so that both partners are satisfied are zero or trivial. Will there be more divorces under law A
Suppose the transaction costs of renegotiating partnerships so that both partners are satisfied are zero or trivial. Will there be more divorces under
law A or law B or will there be the same number of divorces under both laws? Hint: Keep in mind that a partnership should be maintained, from the
perspective of efficiency, if the partner who wants to maintain the partnership can sufficiently compensate the partner who wants to end it
More divorces under law A
More divorces under law B
The same number of divorces
Now assume that the transaction costs of renegotiating partnerships so that both partners are satisfied are significant that is not trivial Will there
be more divorces under law A or law B or will there be the same number of divorces under both laws?
More divorces under law B
The same number of divorces
More divorces under law A
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