This paper studies alternative contract damage measures in the presence of specific investments that generate a direct benefit to the investor's trading partner (referred to as "cooperative investments"). We find that, both with and without the possibility of ex post renegotiation, (i) the...

We study alternative breach remedies in the presence of specific investments that generate a direct benefit to the investor's trading partner (referred to as "cooperative investments"). We find that (i) expectation damages perform very poorly, inducing no cooperative investment; (ii) privately...