ABSTRACT
While economic approaches to contract law often presume that private ordering yields efficient outcomes and concentrates on crafting optimal remedies to support voluntary exchange and promise-keeping, regulatory contract law starts from a different perspective, recognizing that the core assumptions of the standard economic paradigm break down when contracts produce externalities, are built around information asymmetries, or exacerbate collective-action problems. This chapter discusses the market-failure rationale for regulatory contract law, positioning it within the broader architecture of public law. Our analysis identifies when and how regulatory intervention can enhance welfare and preserve the integrity of contractual dealings. This framework offers an efficiency-based economic justification for regulatory contract law grounded on the correction of market failures.
Parisi, Francesco and Bix, Brian, The Limits of Efficiency in Regulatory Contract Law (August 13, 2025), Minnesota Legal Studies Research Paper No 2025-44.
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