ECO 2005H: Economics & the Law

Abstract

Why take a course in Economics and the Law Economics is the most advanced of the social sciences, and the legal system contains many parallels to and overlaps with the systems that economists have studied successfully. The interaction of economics and the law since the early 1960s has changed the nature of legal scholarship, the common understanding of legal rules and institutions, and even the practice of law. Legal theory has assimilated many economic concepts, such as incentive effects, opportunity costs, risk aversion, transaction costs, free-riding, the prisoner’s dilemma and other game theoretic tools (such as Nash equilibrium and dominant strategy), asymmetric information, collective choice, open-access resource, median rule, regulatory capture, rent-seeking, credible commitment, moral hazard and adverse selection, market failure, monopoly power, price discrimination, Pareto efficiency, cost-benefit and, and so forth. As knowledge of quantitative methods diffuses, we foresee increasing use and sophistication of statistical methods in legal scholarship. More recently, economists have realized that effective property and contract economics to an infusion of legal concepts, such as litigation costs, property rules, liability rules, default rules, strict liability, independent judges, third-party enforcers, corruption, judgment-proof injurers, reliance damages, priority in bankruptcy, inside-trading, public firms, non-government organizations, customs, norms, internalized values, reasonable actors, and non-monetary sanctions. The concepts in this course will benefit both, the students who will have future careers in law and those with future careers in economics. Prerequisite: ECO 1011/1041 Objectives of the Course: To study the relationship of legal institutions and laws to economic efficiency and social goals, such as justice. Economics of property rights, environmental control, administrative processes, contracts, and liability; public utility and antitrust regulation; individual rights and discrimination.