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Review of Law & Economics

Editor-in-Chief: Parisi, Francesco

Ed. by Cooter, Robert D. / Gómez Pomar, Fernando / Kornhauser, Lewis A. / Parchomovsky, Gideon / Ulen, Thomas

3 Issues per year

SCImago Journal Rank (SJR) 2014: 0.179
Source Normalized Impact per Paper (SNIP) 2014: 0.610
Impact per Publication (IPP) 2014: 0.311



Transaction Costs, Neighborhood Effects, and the Diffusion of the Uniform Sales Act, 1906-47

Donald J. Smythe1

1California Western School of Law

Citation Information: Review of Law & Economics. Volume 4, Issue 1, Pages 341–372, ISSN (Online) 1555-5879, DOI: 10.2202/1555-5879.1126, October 2008

Publication History

Published Online:

The Uniform Sales Act was a precursor to Article 2 of the Uniform Commercial Code. Between 1906 and 1947 it was adopted in 34 states. Transaction cost theory suggests that states’ adoption decisions should have been influenced by “neighborhood effects” – the adoption decisions of their neighbors. This paper uses hazard analysis to test various hypotheses about the factors that influenced states’ adoption decisions. The results indicate that neighborhood effects were among the most important factors in the diffusion of the Act. Manufacturing interests also played an important role, especially in a small number of states that adopted the Act early. Subsequent to these early adoptions, the Act gradually diffused across most of the country, except the south. Its diffusion was driven primarily by neighborhood effects and manufacturing interests, although the legal profession and transportation systems may also have played a role. It appears that the Act ultimately failed to achieve complete uniformity largely because the neighborhood effects that drove its adoption in most of the country were not present in the south.

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