Consumer Law

Marotta-Wurgler Study Finds Firms With Market Power Don't Impose One-Sided Terms on Consumers in Software License Agreements

By Jeff Sovern

Florencia Marotta-Wurgler  of NYU has written Competition and the Quality of Standard Form Contracts: The Case of Software License Agreements, 5 Journal of Empirical Legal Studies (2008).  Here's the abstract:

Standard form contracts are pervasive. Many legal academics believe that they are unfair. Some scholars and some courts have argued that sellers with market power or facing little competitive pressure may impose one-sided standard form terms that limit their obligation to consumers. This paper uses a sample of 647 software license agreements drawn from many distinct segments of the software industry to empirically investigate the relationship between competitive conditions and the quality of standard form contracts. I find little evidence for the concern that firms with market power, as measured by market concentration or firm market share, require consumers to accept particularly one-sided terms; that is, firms in both concentrated and unconcentrated software market segments, and firms with high and low market share, offer similar terms to consumers. The results have implications for the judicial analysis of standard form contract enforceability.

Full post as published by CL&P Blog on February 15, 2009 (boomark / email).