Dispute prevention without courts in Vietnam

Vietnam's firms contract without the shadow of the law and onlypartly in the shadow of the future. Although contracting restsin part on the threat of loss of future business, firms oftenare willing to renegotiate following a breach, so the retaliationis not as forceful as in the standard repeated-game story andnot as effective a sanction. To ensure agreements are kept,firms rely on other devices to supplement repeated-game incentives.Firms scrutinize their trading partners. Community sanctionsare occasionally invoked. Transactions with greater risk ofreneging are supported by more elaborate governance structures.