Law and economics

Law and economics or economic analysis of law is the application of economic theory (specifically microeconomic theory) to the analysis of law that began mostly with scholars from the Chicago school of economics. Economic concepts are used to explain the effects of laws, to assess which legal rules are economically efficient, and to predict which legal rules will be promulgated.

History

The historical origins of law and economics can be traced back to the classical economists, who were interested in the legal frameworks that support the market economy and the state. This field was largely ignored by mainstream economists and legal scholars until Ronald Coase published "The Problem of Social Cost" (1960).

Methodology

The economic analysis of law applies microeconomic principles to the legal sphere. It involves the use of economic models, primarily price theory, to identify the effects and efficiency of legal rules. These models are then tested empirically.

Sub-disciplines

Law and economics has become a central course in U.S. legal education, with over 40 law schools offering a course in the subject today. The field is broadly divided into two sub-disciplines: the economic analysis of law and the legal analysis of economics.

Economic analysis of law

Economic analysis of law applies economic theory to the doctrine of the law. It includes the use of economic analysis to describe, predict the effects of, and prescribe solutions for changes to law.

Legal analysis of economics

Legal analysis of economics involves the use of legal philosophy, legal theory, and the social sciences to examine the role of law in society.

Criticisms

Critics of law and economics, including scholars from the critical legal studies movement, have argued that the theory reduces justice to a system of economic efficiency.

See also

• Law and society
• Sociology of law
• Legal realism
• Critical legal studies