However, once these costs are low enough that the threat to file claims with the Law Merchant is credible, they act only as a deterrent: These costs are never actually incurred at equilibrium in our model of the Law Merchant system.

DEFINE: Explains the economic mechanism by which credible legal threats function as pure deterrents at equilibrium.

PAUL R. MILGRO, PAUL R. MILGRO - THE ROLE O…, loc. 130