Towards win-win: Evidence from commercial dispute resolution in India (joint with Umer Sohail, Sandhya Seetharaman and Raghav Pandey) NEW PAPER
Type: Working Paper, 2025
Courts are central in contract enforcement, and yet we know very little about how they function and their impact in the context of low state capacity. We leverage random assignment of commercial and contractual cases to judges in newly created commercial courts in India to examine the impact of mediation-led settlement on litigating firms profits. The resolution of a case through mutual reconciliation (settlement) rather than a full-length trial is negatively correlated with its duration and its pending status. We estimate a large, positive effect on the profitability of plaintiff firms and negative effects among defendant firms. However, the negative effects among defendants are driven by the timing of suing rather than from settlement. We find suggestive evidence that settlement, in fact, stems the loss, suggesting a Pareto improvement.
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