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The goal of the course is to understand the emergence of different laws and legal systems and their major implications for economic activity. We apply microeconomic models to understand the positive and normative implications of certain legal rules, and complement them with various empirical studies from different countries. At the end of the course, the participant will have an overview of the major differences in legal systems (common versus civil law) and laws in several areas such as property, contract, constitutional law, criminal law. Furthermore, the participant will understand the implications of these differences for growth, the wealth of a nation as well as the incentives for redistribution. Finally, the course also provides a deeper understanding of the mechanisms that are needed to foster development of efficient laws and institutions.
While we build on one of the best known textbooks in Law and Economics (Cooter & Ullen), latest research on Law & Economics is incorporated in the course as well.
Required courses: Econometria I, Econometria II, Teoria Economia I, Teoria Economia II.
Main Textbook: Robert Cooter & Thomas Ulen, Law & Economics, 5th edition.
1. Comparative Legal Systems (Common Law and Civil Law) and an Economic Analysis of the Legal Process
The Laws of many countries are heavily influenced by either the English common Law or the French civil Law. What explains why different countries adopted different legal systems, and which consequences result for the development of economic activity? We will also analyze how to optimally design the different stages of the legal process and compare it to the existing rules in Europe and the United States.
Selected Literature
Cooter & Ullen: "Law & Economics", Chapter: An Introduction to Law and Legal Institutions.
Cooter & Ullen: "Law & Economics", Chapter: An Economic Theory of the Legal Process
La Porta, Lopez-de-Silanes & Shleifer: "The Economic Consequences of Legal Origins (2007)", Journal of Economic Literature.
2. An Economic Theory of Property
Protection of property rights is considered crucial for economic development. We compare different ways to secure property rights with respect to efficiency and redistribution. We also try to understand why different countries have different degrees of property right protection and which conditions favor a change towards more property rights protection. We will also study the particular case of intellectual property rights (patents, trademarks and copyrights)
Selected Literature
Cooter & Ullen: "Law & Economics", Chapter: An Economic Theory of Property
Cooter & Ullen: "Law & Economics", Chapter: Topics in the Economics of Property Law
Roland Coase (1960): The Problem of Social Cost, Journal of Law and Economics.
3. An Economic Theory of Contract
We analyze which types of promises should be enforced by law and what remedy should be used for breaking enforceable promises. Empirically, we compare the effects of property rights institutions and contracting institutions on economic growth, investment and financial development.
Selected Literature
Cooter & Ullen: "Law & Economics", Chapter: An Economic Theory of Contract
Cooter & Ullen: "Law and Economics", Chapter: Topics in the Economics of Contract Law
4. An Economic Theory of Tort Law (Accident Law)
This chapter studies the area of law that that governs the rights of victims of accidents and their rights to sue and collect payments from the ones who caused the accident. In particular, we compare the different liability rules to determine which one induces the most efficient level of care.
Selected Literature
Cooter & Ullen: "Law & Economics", Chapter: An Economic Theory of Tort Law"
Cooter & Ullen: "Law and Economics", Chapter: Topics in the Economics of Tort Liability"
5. An Economic Analysis of Crime and Punishment
How much can economics contribute to understanding crime? This class reviews the classical economic analysis of crime and contrasts it with theories from other disciplines, mostly sociological theories. The models are taken to the data to see how well policies as suggested by economists work.
Selected Literature
Becker, Gary (1968): An Economic Theory of Crime and Punishment. Journal of Political Economy.
Cooter & Ullen: "Law & Economics", Chapter: An Economic Theory of Crime and Punishment
Ehrlich, Isaac (1973): "Participation in Illegitimate Activities: A Theoretical and Empirical Investigation", Journal of Political Economy.
Levitt Steven (1997): "Using Electoral Cycles in Police Hiring to Estimate the Effect of Police on Crime", The American Economic Review.
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