Economic Foundations of Law
Principles of microeconomics (I)A basic principle: the fungibility of moneyCostDemand curves and supply curvesThe equilibrium of a competitive marketPrice ceilingsThe market for lawyersThe factor marketThe effects of a taxThe effects of a subsidyElasticitiesIncome and substitution effectsPrinciples of microeconomics (II)Monopolies and cartelsRelation between marginal and average amountsCartelsGame theory and the prisoners’ dilemmaRent-seeking behaviorCapital; human capitalThe present value of future paymentsInterest ratesEfficient capital marketsExternalitiesAttitudes toward riskMarkets with incomplete informationPublic goodsAppendix 2.1: Continuous compoundingLitigation and the court systemPrecedents and the common lawDifferent standards of proofQuantifying the standard of proofThe U.S. ConstitutionThe division of jurisdiction between federal and state courtsProperty lawEfficiencyTransaction costsBilateral monopolyHow disputes are decided by lawThe Coase TheoremEminent domainSelf-assessmentHow the entitlement should be protectedHow to determine ownership of propertyIntellectual propertyProblems of incomplete property rightsInalienabilityProblems when there are no property rightsProblems when property rights are dividedProblems when property rights are uncertainLimits on the disposition of property at deathAppendix 5.1: When should a tree be harvested?Informal creation of property rightsProperty rights in surfingThe Gold RushSharecropping contractsWhaling customsThe division of profits in law firmsThe ShakersThe law of contractsThe economic functions of the law of contractsGeneral rules of contract lawThe common law of slaveryThe controversy concerning standard form contractsUnconscionabilityRemedies for breach of contractThe lost-volume or expansible sellerSpecific performanceLiquidated damages and penaltiesTortsNegligenceStrict liabilityThe Learned Hand ruleThe law of rescueThe collateral source ruleComparative negligenceMore on strict liabilityMedical malpracticeContributionDamagesSubrogationSubrogation and potential moral hazard of tort victimsThe economics of subrogationMoral hazard arising from abolition of the collateral source ruleA note on trial strategy: should the jury know about insurance?Whether dangerous conduct should be controlled by tort law or regulationNo-fault automobile insuranceThe economics of litigationAn optimal judicial systemThe standard of proof for a preliminary injunctionThe economic model of litigationPre-trial discoveryProcedural rules which make litigation more efficientAgency problemsClass actionsPotential benefits of class actionsWaivers of the right to participate in class actionsThe English ruleCourt delayExpert witnessesDetermining the quality of a judge (or court)Whether the common law is efficientRules of collateral estoppelThe juryJuries in death penalty casesAnalyzing litigation with game theoryAn example involving Rule 68Deciding whether to file a lawsuitThe solution under the American ruleThe solution under the English ruleAn example with two playersAn example of subrogation, with no injury if tortfeasor takes careA. Under the American ruleB. Under the English ruleCriminal lawThe economic model of crime and punishmentThe optimal type of punishmentAn application: Megan’s LawsEvaluating the system of law enforcementMeasuring the determinants of crime and the benefits of law enforcementMarkets for crimeExternalities resulting from precautions taken against crime; LojackThe economics of gun ownership and useGun ownership and “hot” burglariesConcealed-carry and right-to-carry lawsLaws restricting access to firearmsA proposed tax on firearmsGun buyback programsChanging the design of firearmsRegulation of bulletsFactors affecting the quality of law enforcementPublic versus private enforcement of lawCorporations and financial marketsThe characteristics of the corporationCommon and preferred stockPotential conflicts between managers and stockholdersCompensation of investment advisorsThe competition to be the state of incorporationThe prohibition of insider tradingConflicts among shareholdersDeposit insurance and moral hazardBankruptcy lawThe economics of bank regulationTaxationThe effects of a death taxSocial securityThe effect on savings of tax rules concerning interestThe proposal for a tax on consumptionCharitable contributionsDepreciationPercentage depletionThe subsidy for residential housingThe social cost of the tax exemption of interest on municipal bondsLabor lawCovenants not to competeGeneral and firm-specific human capitalMaximum and minimum wagesEmployment protection lawsMarket adjustments to employment protection lawsRegulation of pensionsComparable worthGlossaryNotes
