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Economic Theories on Law - Dictionary of Arguments

Parisi I 11
Law/economic theories/Miceli: The application of economic analysis to law has a long history, dating back at least to the criminal law theories of Beccaria (1986 [1764])(1) and Bentham (1969 [1789](2)). Surprisingly, however, the idea that laws could be interpreted as creating incentives for behavior did not seem to resurface again until the 1960s with the work of Coase (1960) on externalities, Calabresi (1961)(3) on accident law, and Becker (1968)(4) on criminal law. Since then, of course, the application of law to economics has blossomed into a major field in both law and economics.*
VsEconomic theories on law: Most critics of the economic approach to law argue that it is inappropriate to evaluate the law based on the norm of efficiency. The goal of the law should instead be to pursue justice or fairness, however those objectives are defined.
VsVs: Richard Posner, one of the founding fathers of law and economics, has responded to this criticism in two ways. >Economic theories/law/Posner, >Legal policy/Kaplow.
Parisi I 17
Economic models: (...) the law has converged on similar solutions (though often in different forms) to a common set of economic problems.** The value of economic models is that they reveal this common structure by isolating the essential elements of the problem. This conclusion naturally raises the question of where this underlying unity in the law came from. This is a central question in the positive economic theory of law, which asserts that the common law displays an inherent economic logic.
Efficiency of the law: [Some scholars] (...)have attempted to show that efficiency can emerge (...) on the argument that the common law, like the competitive market, is driven by invisible-hand type forces that propel it in the direction of efficiency. A large literature has arisen to evaluate the merits of this argument.***

* See Posner (2005)(5) and Pearson (1997)(6) for discussions of the early history of the law and economics movement, and Mercuro and Medema (1997)(7) for an overview of recent developments and perspectives.

** In addition to Cooter (1985)(8), see Posner (2003)(9), Shavell (2004)(10), Miceli (2009)(11), and Cooter and Ulen (2012)(12) for textbook treatments of law and economics that emphasize these unifying principles.

*** This literature began with the seminal papers by Rubin (1977)(13) and Priest (1977)(14). See also Gennaioli and Shleifer (2007)(15) and Miceli (2011)(16).


1. Beccaria, Cesare (1986) [1764]. On Crimes and Punishments, edited and translated by D. Young. Indianapolis, IN: Hackett Publishing Co.
2. Bentham, Jeremy (1966) [1789]. “An Introduction to the Principles of Morals and Legislation,” in The English Philosophers from Bacon to Mill, edited by E. Burtt, 789–852. New York: The Modern Library.
3. Calabresi, Guido (1961). “Some Thoughts on Risk Distribution and the Law of Torts.” Yale Law Journal 70: 499–553.
4 Becker, Gary (1968). “Crime and Punishment: An Economic Approach.” Journal of Political Economy 76: 169–217.
5. Posner, Richard (2005). “The Law and Economics Movement: From Bentham to Becker,” in F. Parisi and C. Rowley, eds., The Origins of Law and Economics, 328–349. Cheltenham: Edward Elgar.
6. Pearson, H. (1997). Origins of Law and Economics: The Economists’ New Science of Law, 1830–1930. New York: Cambridge University Press.
7. Mercuro, Nicholas and Steven Medema (1997). Economics and the Law: From Posner to Post-Modernism. Princeton, NJ: Princeton University Press.
8. Cooter, Robert (1985). “Unity in Tort, Contract, and Property: The Model of Precaution.” California Law Review 73: 1–51
9. Posner, Richard (2003). Economic Analysis of Law. 6th edition. New York: Aspen Law & Business.
10. Shavell, Steven (2004). Foundations of Economic Analysis of Law. Cambridge, MA: Belknap Press.
11. Miceli, Thomas J. (2009). The Economic Approach to Law. 2nd edition. Stanford, CA: Stanford University Press.
12,Cooter and Ulen 2012
13. Rubin, Paul (1977). “Why Is the Common Law Efficient?” Journal of Legal Studies 6: 51–63.
14. Priest, George (1977). “The Common Law Process and the Selection of Efficient Rules.” Journal of Legal Studies 6: 65–82.
15. Gennaioli, Nicola and Andrei Shleifer (2007). “The Evolution of the Common Law.” Journal of Political Economy 115: 43–68.
16. Miceli, Thomas J. (2011). “Legal Change and the Social Value of Lawsuits.” International Review of Law and Economics 30: 203–208.


Miceli, Thomas J. „Economic Models of Law“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press.


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Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Economic Theories
Parisi I
Francesco Parisi (Ed)
The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017


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