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Common Law and Civil Law as Pro-Market Adaptations

Washington University Journal of Law & Policy, 26, pp. 81-130, 2008

UPF Economics and Business Working Paper Series No. 1098

35 Pages Posted: 4 Jul 2008 Last revised: 1 Aug 2011

Benito Arruñada

Pompeu Fabra University

Veneta Andonova

Universidad de los Andes, Colombia

Date Written: June 30, 2008

Abstract

We argue that in the development of the Western legal system, cognitive departures are the main determinant of the optimal degree of judicial rule-making. Judicial discretion, seen here as the main distinguishing feature between both legal systems, is introduced in civil law jurisdictions to protect, rather than to limit, freedom of contract against potential judicial backlash. Such protection was unnecessary in common law countries, where free-market relations enjoyed safer judicial ground mainly due to their relatively gradual evolution, their reliance on practitioners as judges, and the earlier development of institutional checks and balances that supported private property rights. In our framework, differences in costs and benefits associated with self-interest and lack of information require a cognitive failure to be active.

Keywords: Legal systems, judiciary, institutional development, behavior, enforcement

JEL Classification: K40, N40, O10

Suggested Citation

Arruñada, Benito and Andonova, Veneta, Common Law and Civil Law as Pro-Market Adaptations (June 30, 2008). Washington University Journal of Law & Policy, 26, pp. 81-130, 2008. Available at SSRN: https://ssrn.com/abstract=1154533 or http://dx.doi.org/10.2139/ssrn.1154533

Benito Arruñada (Contact Author)

Pompeu Fabra University ( email )

Ramon Trias Fargas 25-27
Department of Economics and Business
Barcelona, 08005
Spain
+34 93 542 25 72 (Phone)
+34 93 542 17 46 (Fax)

HOME PAGE: http://www.econ.upf.edu/~arrunada

Veneta Andonova

Universidad de los Andes, Colombia ( email )

Carrera Primera # 18A-12
Bogota, D.C. 110311
Colombia

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