The Inefficiency of the Judiciary and Alternative Forms of Social Control: A Case Study of Rental Contracts in Brazil

The main purpose of this study is to analyze how institutions, the legal system among them, affect the economic performance of a country. Specifically, a malfunctioning legal system creates uncertainties that might hamper the completion of new transactions, particularly those involving previously unfamiliar parties. As a result, by narrowing the scope of trades, it hinders specialization and the exploitation of economies of scale; it discourages investment; and it distorts the price system with the introduction of additional risk premiums. These issues are illustrated with the case of the rental markets in Brazil. Specifically, empirical tests are used to estimate the risk premium associated with the reliance on an inefficient judicial system. The magnitude of the premium found in the test indicates the relevance and the potential benefits of improving the legal system. Also presented is a survey of the literature on social control stressing the role of non-legal sources of ordering in a society. A special emphasis is given to the works of Robert Ellickson and Donald Black. Then, an empirical test of this theory is performed and the results obtained substantially support it in the context of rental contracts in Brazil.

Name thesis:degree_name

Ph.D.

Level thesis:degree_level

Dissertation

Discipline thesis:degree_discipline

Economics

Grantor

University of Illinois at Urbana-Champaign

Year dc:date

2015

Author dc:creator

• Rangel, Gustavo Borges

Contributors dc:contributor

• Lee Alston

• Political Science, Public Administration

Language dc:language

eng

Identifier

(MiAaPQ)AAI9990119

OAI identifier oai:identifier

oai:www.ideals.illinois.edu:2142/85679