Category Archives: Law and Economics
George Priest, ‘The Deep Contradiction between Product Liability and Market Share Liability’
ABSTRACT This essay discusses the conceptual bases of modern products liability and of market share liability. It attempts to show the vast difference – almost to the point of being contradictory – between these two mechanisms for apportioning liability for injuries from product use. Because of the substantial relative dominance of products liability law in […]
Baumann and Rasch, ‘Product Liability and Reasonable Product Use’
ABSTRACT A monopolist offers different variants of a possibly dangerous product to heterogeneous customers who choose among product variants that are distinguished by different safety levels. Customers’ choice of product use codetermines expected harm. We find that even when customers are perfectly informed about product variants’ safety, product liability can increase welfare by limiting the […]
Malone and Skiba, ‘Installment Loans’
ABSTRACT Installment loans have increasingly replaced traditional payday loans in the short-term, small-dollar credit market. Installment loans, often offered by the same lenders who provide payday loans, have larger principal amounts, longer repayment periods, and lower interest rates relative to payday loans. Installment loan advocates and some regulators contend that these differences make the loans […]
Prescott and Starr, ‘Subjective Beliefs about Contract Enforceability’
ABSTRACT This article assesses the content, role, and adaptability of subjective beliefs about contract enforceability in the context of postemployment covenants not to compete (noncompetes). We demonstrate that employees tend to believe that even clearly unenforceable noncompetes are enforceable, including their own. We provide evidence for both supply- and demand-side stories that explain employees’ persistently […]
Jeong-Yoo Kim, ‘Seller Liability versus Platform Liability: Optimal Liability Rule and Law Enforcement in the Platform Economy’
ABSTRACT In this paper, we examine whether the platform as well as the sellers violating the intellectual property right (IPR) should be liable. We first show that platform liability is socially better if the number of potential victims is very large. This is mainly due to the general enforcement effect of the platform’s monitoring activity. […]
Glick, Lozada and Bush, ‘Law and Economics Fallacies: What Modern Economics Really Says About the Definition of Efficiency and the Measurement of Welfare’
ABSTRACT The fundamental originating principle of law and economics (‘L&E’) is that legal decisions should be (and are) based on maximizing efficiency. But L&E proponents do not define ‘efficiency’ as Pareto Efficiency – the way agreed to by most economists. A Pareto optimal condition is obtained when no one can be made better off without […]
Kristelia García, ‘Selective Enforcement’
ABSTRACT Private rights holders frequently engage in selective enforcement-that is, they elect to enforce against some wrongdoers, and not to enforce against others, under different, or even under similar, circumstances. The conventional wisdom assumes that when we observe enforcement, there has been an economic loss, whereas when we observe nonenforcement, there either hasn’t been an […]
Bar-Gill and Hayashi, ‘Present Bias and Debt-Financed Durable Goods’
ABSTRACT It has become common to view credit as problematic for present-biased consumers, who are tempted to incur too much debt because of its deferred costs. But while this view is generally valid when debt is used to finance current consumption, the picture becomes much more nuanced when credit is used to fund the purchase […]
Andrew Woodhouse, ‘Commodity-form theory of law, the climate crisis, and the European Union’
ABSTRACT This essay reflects on how the Marxist commodity-form theory of law can inform approaches to EU climate law. The commodity-form theory understands law as a central social relation in the capitalist mode of production. The essay combines this theory with a Marxist analysis of the relationship between capitalism and nature, arguing that the inherent […]
Halonen-Akatwijuka and Pafilis, ‘Who Should Own the Past?’
ABSTRACT We analyze ownership and location of cultural goods, modelled as public goods. We show that cross spillovers can give a rationale for removing one part of the cultural good to lower valuation host country under their ownership. We examine when restitution is optimal and what form it should take, ie whether restitution should be […]