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Economic Analysis of Law

Economic analysis of law seeks to answer two basic questions about legal rules. Namely, what are the effects of legal rules on the behavior of relevant actors? And are these effects of legal rules socially desirable? In answering these positive and normative questions, the approach employed in economic analysis of law is that used in economic analysis generally: the behavior of

individuals and firms is described assuming that they are forward looking and rational, and the framework of welfare economics is adopted to assess social desirability.

The field of economic analysis of law may be said to have begun with Bentham (1789, 1827, 1830), who systematically examined how actors would behave in the face of legal incentives and who evaluated outcomes with respect to a clearly stated measure of social welfare (utilitarianism). Bentham=s writings contain significant and extended analysis of criminal law and law enforcement, some analysis of property law, and a substantial treatment of the legal process.

His work was left essentially undeveloped until the 1960s and early 1970s, when interest in economic analysis of law was stimulated by four important contributions: Coase's article on externalities and legal liability (Coase, R.H., 1960), Becker's article on crime and law enforcement (Becker, G.S.,1968), Calabresi's articles and culminating book on accident law (Calabresi, G., 1970), and Posner's (1972) general textbook on economic analysis of law and his establishment of the Journal of Legal Studies (Posner, R.A.,1972).

The Economic Analysis of Law: Presupposing the Truth?

Finding or resolving simple rules that define how actions take place can be extremely valuable. But lest we put the cart before the horse, laws are sometimes enacted to demarcate certain actions as economically unfair to the general populace. At the very least laws define a societal boundary beyond which we go at our own individual risk. By deduction, an...

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Economic Analysis of Law. (1969, December 31). In LotsofEssays.com. Retrieved 06:40, March 19, 2024, from https://www.lotsofessays.com/viewpaper/1712912.html