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This article shows that up-front payments can eliminate the overinvestment effect identified by Shavell (1980) , by controlling which party breaches a contract. At the same time, "Cadillac" contracts (contracts for a very high quality or quantity) can protect against underinvestment due to Williamsonian holdups. This combination provides efficient investment incentives when courts use expectation damages as a remedy for breach. The expectation damages remedy is therefore well-suited todoi:10.1093/oxfordjournals.jleo.a023363 fatcat:fi7ucl3gdrdvtli3pbhwynxsjq