Showing papers in "European Journal of Law and Economics in 1994"
TL;DR: In this article, the authors show that there are agency problems in the legal political system and that there is a need for auditing services that have to be delivered by the supreme audit institution.
Abstract: The analysis shows that there are agency problems in the legal political system. Thus there is a need for auditing services that have to be delivered by the supreme audit institution. There are considerable problems in motivating auditors to perform high-quality audits and there is an urgent need to develop effective performance and effectiveness technologies. However, even if these problems could be solved perfectly, an important problem remains: how to ensure that politicians really use the audit results.
45 citations
TL;DR: The authors argued that the concern with administrative rationality overlooks costs elsewhere (Section 2), budgetary aspects are overvalued compared to other issues (Section 3); incentives-oriented behavior is suppressed (Section 4); and the evaluation is biased by concentrating on minor, instead of major, aspects of inefficiency (Section 5).
Abstract: While the beneficial aspects of a public accounting office's activity are not disputed here, it is argued in this article that four major distortions are produced: the concern with administrative rationality overlooks costs elsewhere (Section 2); budgetary aspects are overvalued compared to other issues (Section 3); incentives-oriented behavior is suppressed (Section 4); and the evaluation is biased by concentrating on minor, instead of major, aspects of inefficiency (Section 5). Section 6 considers alternatives to public accounting offices and makes some suggestions for new institutional arrangements particularly for constitutional rules.
35 citations
TL;DR: In this paper, the authors use behavioral economics insights into how distribution affects productivity of labor and realization of joint gains in order to predict the performance of alternative laws in high exclusion-cost situations.
Abstract: Behavioral economics provides one of the foundation for institutional law and economics (ILE). Improvement in predicting the performance of alternative laws will be built on ILE insights into how distribution affects productivity of labor and realization of joint gains. Our understanding of obedience to law as well as other categories of failure to be opportunistic (such as in high exclusion-cost situations) will be better understood from an ILE perspective that investigates learning to supplement specific sanctions.
26 citations
TL;DR: The Italian Court of Accounts has a long and well documented history, but its functions are limited and not clearly revealed from analysis of the historical record as mentioned in this paper, however, the institutional background of the Italian case is vital for understanding the notion that an agent due to the function he has been assigned, is in search of his principal.
Abstract: The Italian Court of Accounts has a long and well documented history, but its functions are limited and not clearly revealed from analysis of the historical record. However, the institutional background of the Italian case is vital for understanding the notion that an agent due to the function he has been assigned, is in search of his principal. This article offers historical and institutional documentation on which a theoretical analysis can be built.
12 citations
TL;DR: Law and economics in the United States and Europe focus on private law as discussed by the authors, and with the exception of work on antitrust and corporate finance, public law has been largely ignored. But economics is central to the understanding of social problems, such as environmental protection and occupational health and safety.
Abstract: Law and economics in the United States and Europe focuses on private law. With the exception of work on antitrust and corporate finance, public law has been largely ignored. Yet economics is central to the understanding of social problems, such as environmental protection and occupational health and safety. Lawyer-economists need to study the relationship between government structure and policy outcomes. Economists must consider goals, such as democratic accountability and participation, which do not fit an efficiency framework.
12 citations
TL;DR: In this paper, the authors reviewed the arguments for performance auditing in the public sector along the lines of the public-choice approach and concluded that the BelgianRekenhof-Cour des Comptes lags behind, lacking a mandate for performing auditing.
Abstract: The article is organized as follows. In Section 2 the arguments for performance auditing in the public sector are reviewed along the lines of the public-choice approach. An international comparison of the functions of supreme auditing institutions (Section 3) reveals that the BelgianRekenhof-Cour des Comptes lags behind, lacking a mandate for performance auditing. In Section 4 the notions of efficiency and effectiveness are clarified. Section S compares the concept of the best-practice frontier with a standard production function. In the public sector one is often confronted with a weak knowledge of the underlying technology. This poses problems of specification for a parametric estimation. Therefore a nonparametric frontier may be recommended. In Section 6 the Farrell method and the free disposal hull are presented. Moreover, when several inputs are transformed into a multiple output (instead of one single homogeneous output), data-envelopment analysis offers a solution (Section 7). These latter methods are also illustrated by an international empirical comparison of the efficiency of public enterprises: postal services in Section 6 and railway companies in Section 7. Some conclusions are reported in the final Section 8.
9 citations
TL;DR: In this article, the authors present an alternative public-choice-based procedure for assessing public enterprises' performance, which is critical of the best-practiceapproach and offers an alternative alternative.
Abstract: Recent advances in the theory of public enterprises have led to the development of criteria for assessing their performance. The underlying idea is to determine the “best practice” of a particular enterprise and assess other public enterprises in the same industry against that “best practice.” This article is critical of the best-practice-approach and offers an alternative public-choice-based procedure.
7 citations
TL;DR: The Limits of Freedom of Contract as mentioned in this paper examines crucial and controversial social issues within the rigorous framework of the law and economics of contract, and examines strengths and weaknesses of competing views, affording the reader a balanced position from which to conclude for herself, by illustrating the practical implications of various approaches.
Abstract: This essay reviews Michael J. Trebilcock's book,The Limits of Freedom of Contract (Cambridge, MA: Harvard University Press, 1993), examining crucial and controversial social issues within the rigorous framework of the law and economics of contract. The idea that private markets are the primary institutions for the allocation of limited resources is central to any private ordering model of contract law. Yet such a premise leaves a number of fundamental questions unanswered. Trebilcock is critical of the insufficiency and ambiguity of current contract theory in addressing fundamental legal issues relating to the limits of freedom of contract. Pushing the frontiers of current legal theory, Trebilcock revisits the slippery notion of freedom of contract and tests the actual reach of economic analysis in providing a coherent answer to compelling social questions. The author pursues his ambitious task by examining the conclusions reached by competing paradigms of analysis. In spite of his declared trust in the economic approach to law, Trebilcock pays close attention to alternative analytical traditions, comparing the conclusions of various intellectual perspectives with those suggested by an economic framework of private ordering. The book objectively examines strengths and weaknesses of competing views, affording the reader a balanced position from which to conclude for herself, by illustrating the practical implications of the various approaches. In a number of instances, Trebilcock shows how different theoretical premises may indeed be conducive to similar institutional outcomes.
6 citations
5 citations
TL;DR: In this article, game theory is used to suggest that regulatory agencies actually have a range of enforcement options at their disposal and these enforcement options can have quite different cost-benefit ratios, depending on the resources of the enforcement agency, the nature of its connection to principals, and the strategies adopted by opportunistic actors.
Abstract: Regulatory agencies responsible for preventing misuse of public funds do not all operate in the same fashion. Some carefully weigh the costs and benefits associated with various enforcement policies, but others do not. We use game theory to suggest that (1) regulatory agencies actually have a range of enforcement options at their disposal and (2) these enforcement options can have quite different cost-benefit ratios, depending on the resources of the enforcement agency, the nature of its connection to principals, and the strategies adopted by opportunistic actors. We conclude that enforcement organizations must be flexible in order to be effective.
4 citations
TL;DR: In this paper, the authors demonstrate the potential and importance of central auditing in Austria in section 2.1 before identifying the causes of public-sector inefficiency and then outline the organizational structure in section 3 and describe the need for return in section 4.2.
Abstract: The purpose of this article is fivefold: First, we demonstrate the potential and importance of central auditing in Austria in section 2.1 before identifying the causes of public-sector inefficiency in section 2.2. Then we outline the organizational structure in section 3 and describe the need for return in section 4. We develop proposals for improving the central auditing system in section 5. In so doing, we endeavor not to succumb to the pervasive influence of the well-established, yet objectionable Austrian status quo, realizing that our proposals may be rejected by politicians and bureaucrats as being unrealistic.
TL;DR: In this article, the authors try to find answers for three questions: which functions are exercised by the Court of Audit in the Netherlands, and what kinds of empediments does it confront? Why are these functions exercised, and why do the impediments appear? Is it possible to improve the fulfillment of these functions?
Abstract: In this article I try to find answers for three questions: Which functions are exercised by the Court of Audit in the Netherlands, and what kinds of empediments does it confront? Why are these functions exercised, and why do the impediments appear? Is it possible to improve the fulfillment of these functions?
TL;DR: The authors assesses the imputation to the judiciary of economic reasoning in determining the standard of care in torts and argues that since the courts consider only the actual damage that occurred, they cannot be using, even implicitly, the economic concept of expected damage.
Abstract: The paper assesses the imputation to the judiciary of economic reasoning in determining the standard of care in torts. The author argues that since the courts consider only the actual damage that occurred, they cannot be using, even implicitly, the economic concept of expected damage. In general judges do not use “risk” or “probability” to weight the level of damage but use the concepts nonmultiplicatively in a manner similar to that implied in Shackle's criteria for decision making in the absence of certainty. Shackle's theory attempts to be descriptive, and it may well fit the rule employed by Judge Learned Hand.
TL;DR: The Audit Board of the Accounts of Castile as mentioned in this paper is one of the earliest supreme state auditing institutions of which we have a documentary record, and it has been studied extensively in the literature.
Abstract: TheContaduria Mayor de Cuentas of Castile—that is, the Audit Board of the Accounts of Castile—is one of the earliest supreme state auditing institutions of which we have a documentary record. This article discusses what we know about the organization and functions of theContaduria Mayor de Cuentas of Castile on the threshold of the modern age, in the hopes of finding some elements that can be incorporated into, and so enrich, our theoretical approach to the economic functions of supreme auditing institutions.