Choice of Law and Legal Evolution: Rethinking the Market for Legal Rules

43 Pages Posted: 3 Sep 2007 Last revised: 14 Jul 2009

Francesco Parisi

University of Minnesota - Law School; University of Bologna

Emanuela Carbonara

University of Bologna - Department of Economics

Date Written: August 1, 2007

Abstract

We consider the impact of different choice-of-law regimes on the evolution of formal law. We follow an evolutionary approach to explain possible patterns of legal harmonization and competition. Some of them predict the universal diffusion of a single rule, even though not necessarily efficient. Permissive choice-of-law may lead countries to keep inefficient legal rules and firms to opt out of domestic law, leading to a dichotomy between the rules existing in the books and those utilized in commercial relationships. The emergence of such lex mercatoria may further undermine the legislative incentives to switch to more efficient rules.

Keywords: Choice of Law, Transnational Business Law, Legal Harmonization, Legal Competition, Network Effects

JEL Classification: K10, K33, D70

Suggested Citation

Parisi, Francesco and Carbonara, Emanuela, Choice of Law and Legal Evolution: Rethinking the Market for Legal Rules (August 1, 2007). Minnesota Legal Studies Research Paper No. 07-38; Public Choice, Vol. 139, No. 3, pp. 461-492, 2009. Available at SSRN: https://ssrn.com/abstract=1011376

Francesco Parisi (Contact Author)

University of Minnesota - Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

University of Bologna ( email )

Piazza Scaravilli 1
40126 Bologna, fc 47100
Italy

Emanuela Carbonara

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy
+39 051 2098149 (Phone)
+39 051 2098040 (Fax)

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