Private order under dysfunctional public order

Michigan Law Review

Volumn 98, Issue 8, 2000, Pages 2421-2458

  McMillan, John ^b   Woodruff, Christopher ^a  

^a UNIVERSITY OF CALIFORNIA   (United States)

^b NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0000026333     PISSN: 00262234     EISSN: None     Source Type: Journal    
DOI: 10.2307/1290349     Document Type: Article

References (127)

1. DAVID HUME, A TREATISE ON HUMAN NATURE 546 (Oxford University Press, 1978 & 1739).
2. Even in countries where the legal system works well, there is still often a need for private order, as we discuss later. For example, market players may prefer private-order mechanisms to the courts, either because certain kinds of agreement are not susceptible to court enforcement or because the transaction costs of using private order are smaller than those of using the courts.
3. The surveys in Eastern Europe and the former Soviet Union were done in collaboration with Simon Johnson. They are described in more detail in Simon Johnson et al., Entrepreneurs and the Ordering of Institutional Reform: Poland, Slovakia, Romania, Russia, and Ukraine Compared. 8:1 ECON. TRANSITION 1 (2000) [hereinafter Johnson et al., Entrepreneurs].
4. We asked our survey respondents (managers of recently started firms) whether they believed they could use the courts to enforce contracts with customers or suppliers. In Vietnam, just 9% said they could. In Romania, 87% said the courts were usable, in Poland 73%, in Slovakia 68%, in Russia 56%, and in Ukraine 55%.
5. See Telecommunications Policy Review 8 October 1995, p. 9.
6. See ROBERT C. ELLICKSON, ORDER WITHOUT LAW (1991).
7. See Yao Souchou, The Fetish of Relationships: Chinese Business Transactions in Singapore, SOJOURN 2, 1, 89-111 (1987).
8. RONALD DORE, TAKING JAPAN SERIOUSLY 173 (1987).
9. See David Charny, Nonlegal Sanctions in Commercial Relationships, 104 HARV. L. REV. 373, 415-17 (1990). There are, of course, good reasons why certain kinds of evidence are inadmissible. A cost of achieving the economic efficiencies that, on average, such probabilistic evidence produces is that sometimes in specific instances the outcome is unjust. The law is designed to avoid specific injustices more than to produce outcomes that on average promote efficiency.
10. For example, a finding of liability in one lawsuit may not have the same far-reaching effects of a boycott by other market players, or of consequently restrained or narrowly tailored dealings with a party found guilty of breach.
11. See infra Part IV.
12. See Rachel Kranton, Reciprocal Exchange: A Self-Sustaining System, 89 AM. ECON. REV. 830 (1996) for a model of the effects of lock-in on cooperation.
13. See Avner Greif, Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders' Coalition, 83 AM. ECON. REV. 525 (1993) [hereinafter Greif, Contract Enforceability]; Avner Greif, Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies, 102 J. POL. ECON. 912 (1994); Michihiro Kandori, Social Norms and Community Enforcement, 59 REV. ECON. STUD. 63 (1992).
14. See Avner Greif, Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders' Coalition, 83 AM. ECON. REV. 525 (1993) [hereinafter Greif, Contract Enforceability]; Avner Greif, Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies, 102 J. POL. ECON. 912 (1994); Michihiro Kandori, Social Norms and Community Enforcement, 59 REV. ECON. STUD. 63 (1992).
15. See Avner Greif, Contract Enforceability and Economic Institutions in Early Trade: The Maghribi Traders' Coalition, 83 AM. ECON. REV. 525 (1993) [hereinafter Greif, Contract Enforceability]; Avner Greif, Cultural Beliefs and the Organization of Society: A Historical and Theoretical Reflection on Collectivist and Individualist Societies, 102 J. POL. ECON. 912 (1994); Michihiro Kandori, Social Norms and Community Enforcement, 59 REV. ECON. STUD. 63 (1992).
16. We posit here that organized private order arises when market characteristics foreclose effective functioning (or even development) of spontaneous order. Of course, there are situations where organized private order exists but may be dysfunctional, see infra Section II.A, and market players therefore revert to (or maintain) spontaneous order as the primary mechanism for enforcing contracts. This phenomenon is unsurprising when one considers the existence of private order in the face of an existing but dysfunctional formal legal system.
17. In the telephone game, a long sentence is whispered from one person to another in a group. The second person repeats the sentence to a third, the third to a fourth, and so on, until everyone has heard the sentence. The last member then repeats what he or she heard, usually uttering a sentence entirely unrelated to the original. On the idea that a formal organizational structure reduces the likelihood of mistakes, see Joel Sobel, How to Count to One Thousand, 102 ECON. J. 1 (1992).
18. This problem with the transmission of information provides another explanation for the inability of relational contracting to be effective in larger groups.
19. See Ronald J. Mann, Verification Institutions in Financing Transactions, 87 GEO. L.J. 2225, 2267-69 (1999); Paul R. Milgrom et al., The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs, 2 ECON. & POL 21 (1990) reprinted in REPUTATION 243 (Daniel B. Klein ed., 1994).
20. See Ronald J. Mann, Verification Institutions in Financing Transactions, 87 GEO. L.J. 2225, 2267-69 (1999); Paul R. Milgrom et al., The Role of Institutions in the Revival of Trade: The Law Merchant, Private Judges, and the Champagne Fairs, 2 ECON. & POL 21 (1990) reprinted in REPUTATION 243 (Daniel B. Klein ed., 1994).
21. See infra notes 74 to 80 and accompanying text.
22. See Gary Biglaiser & James Friedman, Middlemen as Guarantors of Quality, 12 INT'L J. INDUS. ORG. 509 (1994).
23. See Gary Biglaiser & James W. Friedman, Adverse Selection with Competitive Inspection, 8 J. ECON. & MGMT. STRATEGY 1 (Spring 1999).
24. See Alessandro Lizzeri, Information Revelation and Certification Intermediaries, 30 RAND J. ECON. 214 (1999).
25. See Dilip Abreu, On the Theory of Infinitely Repeated Games with Discounting, 56 ECONOMETRICA 383 (1988).
26. Clifford Geertz, The Bazaar Economy: Information and Search in Peasant Marketing, 90 AM. ECON. REV. 28, 28-30 (1978).
27. See Ammar Siamwalla, Farmers and Middlemen: Aspects of Agricultural Marketing in Thailand, 29 ECON. BULL. FOR ASIA & PAC 38, 41-44 (1978).
28. See id. at 44.
29. See John McMillan & Christopher Woodruff, Dispute Prevention Without Courts in Vietnam, 15 J.L. ECON. & ORG. 637 (1999) [hereinafter McMillan & Woodruff, Dispute Prevention].
30. Id. at 640.
31. Id.
32. Id.
33. See id. at 641.
34. See id.
35. Id. at 649.
36. See supra text accompanying note 5.
37. See John McMillan & Christopher Woodruff, Interfirm Relationships and Informal Credit in Vietnam, 114 Q.J. ECON. 1285 (1999) [hereinafter McMillan & Woodruff, Interfirm Relationships].
38. See id. at 1299.
39. McMillan & Woodruff, Dispute Prevention, supra note 26, at 652.
40. See McMillan & Woodruff, Interfirm Relationships, supra note 34, at 1306.
41. See McMillan & Woodruff, Dispute Prevention, supra note 26, at 644-48.
42. ELLICKSON, supra note 6, at 48.
43. See Karen Clay, Trade without Law: Private-Order Institutions in Mexican California, 13 J.L. ECON. & ORG. 202 (1997). Arguably the fact that trade was based on the missions facilitated this process by limiting the number of sites for trade.
44. See Brian Uzzi, The Sources and Consequences of Embeddedness for the Economic Performance of Organizations: The Network Effect, 61 AM. SOC. REV. 674 (1996).
45. See McMillan & Woodruff, Interfirm Relationships, supra note 34, at 1298.
46. See McMillan & Woodruff, Interfirm Relationships, supra note 34, at 1306.
47. Marcel Fafchamps, Ethnicity and Credit in African Manufacturing, 61 J. DEV. ECON 205, 229 (2000).
48. See Greif, Contract Enforceability, supra note 13, at 535-41.
49. See generally JANET TAI LANDA, TRUST, ETHNICITY, AND IDENTITY (1994); Fafchamps, supra note 44.
50. See generally JANET TAI LANDA, TRUST, ETHNICITY, AND IDENTITY (1994); Fafchamps, supra note 44.
51. Clifton A. Barton, Trust and Credit: Some Observations Regarding Business Strategies of Overseas Chinese Traders in South Vietnam, in 1 THE CHINESE IN SOUTH VIETNAM 53, 49 (Lim & Gosling eds., 1983).
52. Id.
53. Id.
54. See McMillan & Woodruff, Dispute Prevention, supra note 26, at 651.
55. See id. at 650-51.
56. In an open network with no pre-screening, a trader will always be able to enter and cheat once. This could be prevented in two ways. First, there might be some profit from future trade within the network, giving an incentive for those who enter to remain after entering. Alternatively, it may be profitable for the network to use courts to sanction cheaters even when the cost of doing so exceeds the recovery. That is, business networks or trade associations may gain a reputation for punishing defectors as a means of preventing defections. This could explain why (as shown in Part IV infra) business networks complement, rather than replace, courts in Eastern Europe.
57. See James M. Acheson, The Social Organization of the Maine Lobster Market, in MARKETS AND MARKETING 105-51 (Stuart Plattner ed., 1990).
58. Id. at 128.
59. Id. at 117.
60. The GoFish story is on National Public Radio, Morning Edition, January 29, 1999, available at 〈http://npr.org/news/business/1999/Jan/990129.fish.html〉 (visited September 21, 2000).
61. See Christopher Woodruff, Contract Enforcement and Trade Liberalization in Mexico's Footwear Industry, 26 WORLD DEV. 979, 982 (1998). The associations were most effective when the market was closed to imports. For further discussion of this phenomenon , see id. at 984-86.
62. See Christopher Woodruff, Contract Enforcement and Trade Liberalization in Mexico's Footwear Industry, 26 WORLD DEV. 979, 982 (1998). The associations were most effective when the market was closed to imports. For further discussion of this phenomenon , see id. at 984-86.
63. Using the courts in Mexico is possible, but problematic, according to manufacturers. First, the action must be filed in the city where the retailer does business. This makes delay tactics used by retailers' lawyers more costly. Second, judgments may be difficult to collect. One manufacturer recounted that he had been awarded the retailer's automobile by the court. However, since automobile titles were not registered electronically, there was no way to put a lien on the car. The retailer sold the car before he could take possession of it. The association representative reported that the most important role of the courts was to provide certification of the loss for tax purposes.
64. See ULRIKE SCHAEDE, COOPERATIVE CAPITALISM: SELF-REGULATION, TRADE ASSOCIATIONS, AND THE ANTIMONOPOLY LAW IN JAPAN at chs. 5 & 7 (2000).
65. See id. at ch. 7.
66. See generally Daniel B. Klein, Promise Keeping in the Great Society: A Model of Credit Information Sharing, 4 ECON. & POL. 117 (1992).
67. You-tien Hsing, Trading Companies in Taiwan's Fashion Shoe Networks, 48 J. INT'L ECON. 101, 106 (1998). Hubert Schmitz describes a similar role for wholesalers in Brazil's footwear industry. See Hubert Schmitz, Small Shoemakers and Fordist Giants: Tales of a Supercluster, 23 WORLD DEV. 9, 14 (1995).
68. You-tien Hsing, Trading Companies in Taiwan's Fashion Shoe Networks, 48 J. INT'L ECON. 101, 106 (1998). Hubert Schmitz describes a similar role for wholesalers in Brazil's footwear industry. See Hubert Schmitz, Small Shoemakers and Fordist Giants: Tales of a Supercluster, 23 WORLD DEV. 9, 14 (1995).
69. Banks appear to operate in a similar manner in the market for Letters of Credit ("LOCs"). According to Ronald Mann, sellers rarely comply strictly with the terms of LOCs. The buyer's bank, however, will pressure the buyer to pay so long as the breach is not material. Thus, payment through LOCs rests on the reputation of the bank rather than on the formal legal system. See Ronald J. Mann. The Role of Letters of Credit in Payment Transactions, 98 MICH. L. REV. 2494, 2525 (2000).
70. K. Done & G. Tett, Peace Move in European Motor Industry, FIN. TIMES, Apr. 13, 1994, at 2.
71. Id.
72. Id.
73. See supra Section I.B.2(a).
74. McMillan & Woodruff, Dispute Prevention, supra note 26, at 643.
75. Id.
76. Id. at 644.
77. See Milgrom et al., supra note 17.
78. See J. Mark Ramseyer, Legal Rules in Repeated Deals: Banking in the Shadow of Defection in Japan, 20 J. LEGAL STUD. 91, 110-11 (1991); Marc Ryser, Sanctions without Law: The Japanese Financial Clearinghouse Guillotine and Its Impact on Default Rates, in REPUTATION 225 (Daniel B. Klein ed., 1997). Ramseyer views the role of the clearinghouse as providing a commitment that the banks would actually carry out the prescribed punishments (that is, in our terms, its role is coordination). Ryser views it as a repository of data about defaulters (that is, its role is information). As we have noted, the two roles are not mutually exclusive.
79. See J. Mark Ramseyer, Legal Rules in Repeated Deals: Banking in the Shadow of Defection in Japan, 20 J. LEGAL STUD. 91, 110-11 (1991); Marc Ryser, Sanctions without Law: The Japanese Financial Clearinghouse Guillotine and Its Impact on Default Rates, in REPUTATION 225 (Daniel B. Klein ed., 1997). Ramseyer views the role of the clearinghouse as providing a commitment that the banks would actually carry out the prescribed punishments (that is, in our terms, its role is coordination). Ryser views it as a repository of data about defaulters (that is, its role is information). As we have noted, the two roles are not mutually exclusive.
80. In its early days, the New York Stock Exchange certified the creditworthiness of traders on the exchange and judged disputes involving members and suspended members found at fault, according to Stuart Banner. It also filled a gap in the formal laws. Traders frequently engaged in "time bargains," or futures contracts, even though, until 1858, contracts for the sale of stock that the seller did not own on the contract date were legally void in the state of New York, so these futures contracts were unenforceable in New York courts. The stock exchange took on the role of forcing traders to comply with their futures contracts, with the penalty for breach being suspension or expulsion of members. See generally Stuart Banner, The Origin of the New York Stock Exchange, 1791-1860, 27 J. LEGAL STUD. 113 (1998).
81. The association's activities are discussed in United States v. Fur Dressers' & Fur Dyers' Ass'n, 5 F.2d 869 (1925). This, and other similar cases, are also discussed in GEORGE P. LAMB & SUMNER S. KITTELLE, TRADE ASSOCIATION LAW AND PRACTICE 96-105 (1956).
82. The association's activities are discussed in United States v. Fur Dressers' & Fur Dyers' Ass'n, 5 F.2d 869 (1925). This, and other similar cases, are also discussed in GEORGE P. LAMB & SUMNER S. KITTELLE, TRADE ASSOCIATION LAW AND PRACTICE 96-105 (1956).
83. See LAMB & KITTELLE, supra note 74, at 100.
84. In this case, the manufacturer could make no ex post claim even if it were legitimate.
85. In a closed community, norms might be used to overcome problems with proper enforcement by members of the group. In Shasta County, Ellickson notes that "persons who respond [to transgressions] with excessive force" are themselves punished by the community. ELLICKSON, supra note 39, at 253.
86. See Woodruff, supra note 57, at 986.
87. See Popular Priced Dress Mfg. Group. Inc., 47 F.T.C. 1608 (1951). The association "employed and now employ[s], investigators to investigate the return by retailers of all ladies' dresses to the manufacturers thereof and to ascertain whether or not said returns are in accordance with the rules and regulations promulgated by . . . [the] Popular Priced Dress Manufacturers Group. Inc. . . ." Id. at 1612.
88. See Popular Priced Dress Mfg. Group. Inc., 47 F.T.C. 1608 (1951). The association "employed and now employ[s], investigators to investigate the return by retailers of all ladies' dresses to the manufacturers thereof and to ascertain whether or not said returns are in accordance with the rules and regulations promulgated by . . . [the] Popular Priced Dress Manufacturers Group. Inc. . . ." Id. at 1612.
89. In re Nat'l Coat & Suit Recovery Bd. 47 F.T.C. 1552 (1950). The Film Board of Trade carried out similar monitoring of their members. See United States v. First Nat'l Pictures, Inc., 34 F.2d 815 (S.D.N.Y. 1929), rev'd, 282 U.S. 44 (1930). The monitoring of members in these cases may have extended beyond that needed for contract enforcement. Actions by these and other associations allowed under the National Industrial Recovery Act were later deemed to constitute restraint of trade.
90. In re Nat'l Coat & Suit Recovery Bd. 47 F.T.C. 1552 (1950). The Film Board of Trade carried out similar monitoring of their members. See United States v. First Nat'l Pictures, Inc., 34 F.2d 815 (S.D.N.Y. 1929), rev'd, 282 U.S. 44 (1930). The monitoring of members in these cases may have extended beyond that needed for contract enforcement. Actions by these and other associations allowed under the National Industrial Recovery Act were later deemed to constitute restraint of trade.
91. Lisa Bernstein, Opting Out of the Legal System: Extralegal Contractual Relations in the Diamond Industry, 21 J. LEGAL STUD. 115, 121 (1992).
92. According to Bernstein, the secrecy of the arbitration rulings enables a trader to ~ "minimize the reputation cost of his breach." Id. at 126. Thus the fine imposed by the arbitrator is the sanction against defecting. Traders are not doubly punished by reputation sanctions as well.
93. See generally id. Numerous other trade associations provide arbitration services to their members. These associations generally have memberships comprised of traders on both sides of the transaction. Among these are the American Spice Trade Association and the National Grain and Feed Association. See HANDBOOK, BY-LAWS, AND CONTRACT RULES OF THE AMERICAN SPICE TRADE ASSOCIATION (1936) . See also Lisa Bernstein, Merchant Law in a Merchant Court: Rethinking the Code's Search for Immanent Business Norms, 144 U. PA. L. REV. 1765, 1771 (1996).
94. See generally id. Numerous other trade associations provide arbitration services to their members. These associations generally have memberships comprised of traders on both sides of the transaction. Among these are the American Spice Trade Association and the National Grain and Feed Association. See HANDBOOK, BY-LAWS, AND CONTRACT RULES OF THE AMERICAN SPICE TRADE ASSOCIATION (1936) . See also Lisa Bernstein, Merchant Law in a Merchant Court: Rethinking the Code's Search for Immanent Business Norms, 144 U. PA. L. REV. 1765, 1771 (1996).
95. Private conversation with Donald C. Clarke, Professor of Law, University of Washington.
96. Id.
97. This survey asks questions similar to those asked in the Vietnam survey discussed above. See supra Part II.
98. See Simon Johnson et al., Courts and Relational Contracts (Sept. 2000) (unpublished manuscript, on file with authors) [hereinafter Johnson et al., Courts and Contracts].
99. See supra text accompanying notes 26 to 29.
100. The actual numbers, by country, were 44% in Romania, 21% in Poland, 23% in Slovakia, 60% in Russia, and 64% in the Ukraine.
101. The membership percentage for Vietnam given here differs from that given in Section II.A because we have included "information about new customers and suppliers" as contracting support. Just over 12% of the Vietnamese firms belong to a trade association providing information about new trading partners without providing the other contracting services.
102. For evidence of these countries' relative institutional development by a variety of criteria, see Johnson et al., Entrepreneurs, supra note 3, at 4-13.
103. See Johnson et al., Courts and Contracts, supra note 87.
104. See id. 94. Regardless of the initial source of information, 14% of the customers are identified as wholesalers. See id. 95. Word gets around. In 28% of the relationships for which we have complete data (618 of 2184), the manager said a customer's other suppliers would hear about a dispute. In 39% (854 of 2184), managers said they would hear about any transgressions of their customers.
105. Johnson et al., Courts and Contracts, supra note 87.
106. Whether the manufacturer is a member of a trade association might also be taken as an endogenous variable, dependent on the ability to use courts. Given that a trade association providing customer/supplier services exists in the manufacturer's industry, the manufacturer can choose whether to join or not. We find no significant relationship from belief in courts to membership in a trade association in the data (B= 0.019, t= 0.60, result not shown on table). It is also possible that belief in the effectiveness of courts is itself affected by membership in trade associations, or the use of business or social networks. We are unable to identify appropriate instruments in the survey to address this possibility. But the regressions do include controls for variables that affect the ability to use courts, including the size and age of the firm, the age and education of the manager, and the industry and country in which the firm is located.
107. The regressions use data for only two of the manufacturer's customers. Other data from the survey support the role of wholesalers in long-distance trade as well. We find a very strong positive correlation between the percentage of the manufacturer's overall sales that are made to wholesalers and the percentage of overall sales that are made outside the manufacturer's city ( = 0.21, p < 0.0001).
108. The survey instrument used in Russia and the Ukraine does not allow us to determine whether the reported dispute was with a customer or a supplier. We therefore exclude the data from these two countries from the sample used in the regressions reported in Table 4.
109. The survey did not ask for what purpose courts were used. Thus, we do not know if courts helped resolve disputes, or simply certified losses.
110. The lack of a significant association between networks and the use of courts may reflect the indirectness of our measure. We do not know how the customer involved in the dispute was identified, or whether this customer is a wholesaler. We know only whether the surveyed manufacturer used social and business networks to identify his oldest and newest customer, and the percentage of his sales that is made to wholesalers. Thus, our measures provide a noisy indication of the interaction between use of courts on the one hand and networks and wholesalers on the other.
111. McMillan & vWoodruff, Interfirm Relationships, supra note 34, at 1308; Johnson et al., Courts and Contracts, supra note 87, at Table 6.
112. McMillan & vWoodruff, Interfirm Relationships, supra note 34, at 1308; Johnson et al., Courts and Contracts, supra note 87, at Table 6.
113. See Jean Tirole, A Theory of Collective Reputations (with Applications to the Persistence of Corruption and to Firm Quality), 63 REV. ECON. STUD. 1 (1996).
114. See Fafchamps, supra note 44, at 205.
115. See Alejandro Portes & Patrica Lanolt, The Downside of Social Capital, AM. PROSPECT, May-June 1996, at 18.
116. Id. at 20.
117. ADAM SMITH, 1 AN ENQUIRY INTO THE NATURE AND CAUSES OF THE WEALTH OF NATIONS 144 (1976).
118. See Schaede, supra note 59, at ch. 3 & ch. 5; John McMillan, Dango: Japan's Price-Fixing Conspiracies, 3 ECON. & POL. 201 (1991).
119. See Schaede, supra note 59, at ch. 3 & ch. 5; John McMillan, Dango: Japan's Price-Fixing Conspiracies, 3 ECON. & POL. 201 (1991).
120. See Milgrom et al., supra note 17.
121. See Hsing, supra note 62.
122. See Bernstein,supra note 81.
123. See Avner Greif et al., Coordination, Commitment, and Enforcement: The Case of the Merchant Guild, 102 J. POL. ECON. 745 (1994).
124. See generally DIEGO GAMBETTA, THE SICILIAN MAFIA (1993); Avner Greif & Eugene Kandel, Contract Enforcement Institutions: Historical Perspective and Current Status in Russia, in ECONOMIC TRANSITION IN EASTERN EUROPE AND RUSSIA: REALITIES OF REFORM (Edward P. Lazear ed., 1995); Ekaterina Zhuravskaya & Timothy Frye, The Rise of the Racket in Russia (1998) (unpublished manuscript) (on file with authors).
125. See generally DIEGO GAMBETTA, THE SICILIAN MAFIA (1993); Avner Greif & Eugene Kandel, Contract Enforcement Institutions: Historical Perspective and Current Status in Russia, in ECONOMIC TRANSITION IN EASTERN EUROPE AND RUSSIA: REALITIES OF REFORM (Edward P. Lazear ed., 1995); Ekaterina Zhuravskaya & Timothy Frye, The Rise of the Racket in Russia (1998) (unpublished manuscript) (on file with authors).
126. See generally DIEGO GAMBETTA, THE SICILIAN MAFIA (1993); Avner Greif & Eugene Kandel, Contract Enforcement Institutions: Historical Perspective and Current Status in Russia, in ECONOMIC TRANSITION IN EASTERN EUROPE AND RUSSIA: REALITIES OF REFORM (Edward P. Lazear ed., 1995); Ekaterina Zhuravskaya & Timothy Frye, The Rise of the Racket in Russia (1998) (unpublished manuscript) (on file with authors).
127. Curtis J. Milhaupt & Mark D. West, The Dark Side of Private Ordering: An Institutional and Empirical Analysis of Organized Crime, 67 U. CHI. L. REV. 41, 43 (2000).