Resolutions, recoveries and relationships: The evolution of payment disputes in Central and Eastern Europe

In this article, we use a survey of small and medium-sized manufacturing enterprises in three Central and East European countries to investigate the resolution of commercial disputes and the ability of aggrieved parties to recover damages. The evidence suggests that the spatial relationship of the disputants and the claimant's membership in a business association are important to the outcomes. These findings complement results regarding the costs of transacting and market evolution in other contexts. Specifically, greater geographic distance between trade partners is associated with greater transaction costs that can be attenuated by non-public institutions that facilitate information exchange. Journal of Comparative Economics 34 (2) (2006) 317-337.