Category Archives: Law and Economics

Scott Harrington, ‘Economic Perspectives on the Restatement of the Law on Liability Insurance Project’

Abstract: This paper provides perspectives on the Restatement of the Law, Liability Insurance (RLLI) project in view of theory and evidence on the economics of liability insurance and the operation and regulation of liability insurance markets. The RLLI project reflects prodigious effort by the Reporters over six years, and many revisions in response to feedback […]

Victor Goldberg, ‘The Lost Volume Seller, RIP’

Abstract: If the buyer breaches a sales contract, and if the seller can be characterized as a lost volume seller, courts and commentators have argued that the seller should be made whole by compensation for its lost profits. This paper argues that framing the problem in this way leads to an absurd result. The buyer […]

Polinsky and Shavell, ‘Subrogation and the Theory of Insurance When Suits Can Be Brought for Losses Suffered’

Abstract: The theory of insurance is considered here when an insured individual may be able to sue another party for the losses that the insured suffered — and thus when an insured has a potential source of compensation in addition to insurance coverage. Insurance policies reflect this possibility through so-called subrogation provisions that give insurers […]

‘The New Institutionalism in Contract Scholarship’

Matthew Jennejohn, The Private Order of Innovation Networks, 68 Stanford Law Review 281 (2016), available at SSRN. Relational contract scholarship is at a pivot point. On the one hand, the relationalist revival that has dominated contracts scholarship for almost half a century may be on the wane. Relational contract scholarship has evolved during this period […]

Posner and Sunstein, ‘Moral Commitments in Cost-Benefit Analysis’

Abstract: The regulatory state has become a cost-benefit state, in the sense that under prevailing executive orders, agencies must catalogue the costs and benefits of regulations before issuing them, and in general, must show that their benefits justify their costs. Agencies have well-established tools for valuing risks to health, safety, and the environment. Sometimes, however, […]

Stephen Bainbridge, ‘The Parable of the Talents’

Abstract: On its surface, Jesus’ Parable of the Talents is a simple story with four key plot elements: (1) A master is leaving on a long trip and entrusts substantial assets to three servants to manage during his absence. (2) Two of the servants invested the assets profitably, earning substantial returns, but a third servant […]

William Hubbard, ‘Quantum Economics, Newtonian Economics, and Law’

Abstract: Just as Newtonian mechanics breaks down when we look at the constituent pieces of our universe – subatomic particles – neoclassical economics breaks down when we look at the constituent pieces of our society – individual people. At the scale of subatomic particles, quantum mechanics provides new foundations for understanding the physical world; at […]

Qiao and Upham, ‘China’s Changing Property Law Landscape’

Abstract: This chapter provides an outline of the changing Chinese land regime, including the past, present, and future of land expropriation, small or informal property rights, and rural land reform. We argue that the evolution of Chinese land law exhibits three characteristics. First, law serves as the final confirmation of policy reforms, rather than the […]

Banerjee, Bose and Rath, ‘Explaining the Effect of Financial Development on the Quality of Property Rights’

Abstract: Recent empirical evidence suggests that financial development can catalyze property rights reforms, and for such effect to materialize financial development must cross a threshold. This paper offers a theory of financial markets to explain both stylized facts defining the relationship. The explanation is based on a simple trade-off between the costs and the benefits […]

Robert Merges, ‘Philosophical Foundations of IP Law: The Law and Economics Paradigm’

Abstract: This Chapter describes various philosophical perspectives on the law and economics paradigm in intellectual property. It begins with a description of utilitarianism, which is the philosophical foundation on which law and economics is built. It then describes an alternative way that law and economics can be understood: as a highly effective set of tools […]