Economic Analysis of International Law
Joel P. Trachtman
Tufts University - The Fletcher School of Law and Diplomacy
Jeffrey L. Dunoff
Temple University - James E. Beasley School of Law
Yale Journal of International Law, Winter 1999
The law and economics revolution has, with few exceptions, bypassed international law, perhaps for some of the same reasons that realist political scientists ignore international law, or perhaps because of a concern that economic analysis is somehow less useful in the international context than in the domestic context.
First, we identify three reasons why international lawyers have not, to date, extensively used economic analysis, and explain why none of these reasons is persuasive. Second, we provide a reason to believe that economic analysis will enrich our understanding of international law by outlining the analogy between the market of international relations and traditional markets for goods. Subsequent sections explore the applicability of economic analysis to three important international law topics: the allocation of prescriptive jurisdiction, the law of treaties, and the competences of international organizations. We identify certain methodologies of the new institutional economics and the public choice branch of economics, such as game theory and transaction cost economics, as having much greater promise than other economic approaches, including price theory used without reference to transaction costs and strategic considerations. Finally, we outline some of the problems associated with economic analysis of international law and set forth some ideas for a research program.
Date posted: June 2, 1999