Methodology of Law and Economics
Alessio M. Pacces
Erasmus School of Law, Erasmus University Rotterdam - Rotterdam Institute of Law and Economics; European Corporate Governance Institute
Louis T. Visscher
Erasmus University Rotterdam (EUR) - Erasmus School of Law; Erasmus University Rotterdam (EUR) - Rotterdam Institute of Law and Economics
Bart van Klink and Sanne Taekema (Eds.), Law and Method. Interdisciplinary research into Law (Series Politika, nr 4), Tübingen: Mohr Siebeck 2011, pp. 85-107
In this chapter, written for the book 'Law and Method. Interdisciplinary Research info Law', we describe the methodology of Law and Economics. We start by discussing the mainstream economic approach to law, including the topics of rationality, the use of (sometimes unrealistic) assumptions, the distinction between positive and normative Law and Economics,and the concept of efficiency. Subsequently we describe the viewpoint that law can be seen as a way to correct different types of market failures (market power, externalities, collective goods and information asymmetry). Then we analyze the case for regulatory intervention and its limits, spending attention to the Coase theorem and the importance of transaction costs. Next we discuss insights from Behavioural Law and Economics and in our conclusion state why Law and Economics is useful to lawyers.
Number of Pages in PDF File: 16
Keywords: Law and Economics, Methodology, Rational Choice Theory, Behavioural Economics, Efficiency, Market Failure
JEL Classification: B00, B40Accepted Paper Series
Date posted: May 3, 2013
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