There is another reason that a rule of automatic performance does not introduce major inefficiency in the market. The cartel has the ability to fix the price of the rough that it sells. It also has a standard practice of announcing the magnitude of the price increase at each sight. Together, these two controls keep the difference between the prices that two manufacturers are willing to pay small relative to the aggregate benefit of avoiding the deadweight cost of dispute resolution. As an additional benefit, a high level of contractual performance in the sale of rough promotes efficient reliance decisions such as hiring skilled diamond cutters in advance to cut and polish the rough. In aggregate, the magnitude of the inefficiencies introduced through a high level of contractual performance of executory promises to delivery rough stones is likely to be small, particularly since contracts for future delivery of a stone are uncommon and possession is typically transferred at the time of contracting. Thus, while it cannot be claimed that the rule of automatic performance in the sale of rough diamonds will always lead to the theoretically efficient outcome, the dynamics of the market suggest that the customary solution may well be the efficient solution when the imperfections brought on by positive transaction costs are taken into account.

Lisa Bernestein, Opting out of the Legal Sys…, loc. 224