Showing papers in "European Journal of Law and Economics in 1995"

Anthropological approaches to property law and economics.

Abstract: This paper confronts law and economics approaches to property with empirical and theoretical insights from legal anthropology. It is argued that law and economics scholars have given little attention to the elaboration of a comparative analytical framework with which to describe and analyze property rights systems. Property is dealt with mainly in the sphere of private law and in the synchronic dimension. Consequently, little attention is given to the political nature of (public) property rights and to processes of inheritance. Moreover, its methodological (individualist) assumptions leave little room for the analysis of the interrelations between individual interactions and social change, in particular in plural legal property systems. The normative and teleological orientation of law and economics are quite different from legal anthropology, an academic specialism primarily devoted to description, analysis and cautious theoretical generalization. It is concluded that law and economics is more an ‘economic jurisprudence’ than a social scientific study of law in society.

Economic models of compensation for damage caused by nuclear accidents: Some lessons for the revision of the Paris and Vienna Conventions

Abstract: In this paper the economic analysis of accident law is used to examine the liability for nuclear accidents. It is argued that the classic system of individual liability of a nuclear power plant operator with a financial cap on compensation and individual insurance by national pools is not effective. The current system leads to a too low compensation for victims and lacks an adequate internalization of the nuclear risk. Hence, it is argued that the economic analysis of law can provide useful insights for the revision of the Paris and Vienna Conventions on the liability for nuclear accidents. It is also argued that higher amounts of compensation can be generated only if the idea is accepted that all plants share the costs of an accident wherever it occurs. This could be realized through a mutual pooling system. Such a system could also be fitted into the revision of the Paris and Vienna Conventions.

The sociology of the sociology of law: A view from economics

Abstract: The sociology of law appears to be a weak field in the United States, in comparison to other indisciplinary fields of legal study, notably economic analysis of law. Although American legal sociologists have done important empirical work, particularly on the litigation process and on the legal profession, the focus of American sociology of law has been narrow, theoretically limited, and, empirically, limited in both scope and method. These deficiencies may reflect the methodological limitations of Max Weber, the most influential figure in the history of sociology in general and sociology of law in particular. The failure of legal sociologists to borrow theoretical and empirical tools from sociologically minded economists such as Gary Becker is especially regrettable, and may be due to inaccurate perceptions of the political valence of economic analysis of law, sociology's traditional skepticism about the knowledge claims of other disciplines, professional envy, and misunderstanding of the economists' conception of rational choice.

Explaining the process of change taking place in legal rules and social norms: The cases of institutional economics and new institutional economics

Abstract: This paper deals with the phenomenon of institutional change and has been conceived as an attempt to answer the following question: Can we retain theimage of institutional change contained in a theory when we replace a methodological foundation on which the theory was built by a different and alternative one? For an answer to be developed, special attention is paid to the contributions made by institutional economists (IE) and those made by transaction cost—new institutional economists (NIE). The question clearly shows that it is a paper on applied methodology rather than a survey on institutional change contributions. Because of that, its main purpose is not to increase our knowledge about the characteristics of real changes in legal rules and social norms, their causes, their processes, or their effects, though several examples are given of those institutionalist and new institutionalist contributions that analyze those changes. Our purpose is to investigate the way in which these two groups of economists approach the object of analysis already mentioned. Our conclusion will be that institutionalist and new institutionalist contributions are built on two different and mutually exclusive approaches because their respective methods of analysis (holism versus methodological individualism) are different and, above all, because they build their respective analyses on some concepts that are mutually exclusive (concepts showing power or nonvoluntary influences versus concepts showing voluntary transactions). Their analyses contain different and mutually exclusiveimages of the changes taking place in legal rules-formal institutions and social norms-informal institutions. Some comments about the limitations of the holist method of analysis are made in the paper.

Private property and social costs

Abstract: This article discusses the widely cherished theme of property rights and externalities, surveying the legal and economic literature that developed around Coase's 1960 article, The Problem of Social Cost. It identifies and appraises the most notable attacks to the Coase theorem and offers an insightful examination of the state of legal and economic scholarship in the wake of Coase's postulate. In revisiting familiar passages, this article shows the pervasive methodological implications of the Coasian approach to property rights and examines the normative and practical significance of the Coasian analysis in various situations of alleged market failure.

Reducing the cost of resolving intellectual property disputes

Abstract: An important reason why intellectual property is far less effective for generating innovation than it could be is the excessively high cost of resolving disputes. This largely reflects the use of ordinary court arrangements to determine what are essentially technical issues. Compulsory expert arbitration, with legal aid for the party that doesnot appeal to the court from a ruling, is proposed as an alternative. A full-scale working model of such a system is shown to exist in the interference procedure of the United States Patent and Trademark Office. That no more than 4 percent of court appeals from decisions in this are even partially successful augurs well for the potential value of the arrangements proposed.

On the desirable degree of detail in the law

Abstract: The desirable degree of detail in the law has not been previously discussed. The point of this article is to begin the discussion by raising a number of problems. The first deals with the fact that a highly detailed law cannot, of course, be remembered and, in fact, may be very hard even to discover. Second, if the law is not highly detailed, it is apt to be uncertain in marginal cases, of which there should be many. Detail can be added to the law either by judicial decision or legislation or by some kind of special body as in France. In any event, however, there will certainly be cases in which it is not clear what the law is and there will be at least some obscurities in the law. These problems are discussed and not solved in this paper. It is intended to start the discussion, not finish it.

The economics of crime and criminal law: An antithesis to sociological theories?

Abstract: The relationship between sociology and economics of crime has been dominated by mutual prejudice and misunderstanding. This paper tries to contribute to a change of this stale of affairs by showing that, on the one hand, the economics of crime does not as a method imply politically conservative policy recommendations and, on the other hand, that insights of the sociology of crime may enrich the economic approach considerably. This is done via a brief survey of the economics of enforcement, the literature on the relation of income distribution and unemployment on crime, and the literature relating sociological theories of crime to methodological individualism.

Fraud in courtship: Annulment and divorce

Abstract: The possibility of fraud exists in any contract. Courts and custom allow some amount of fraud before voiding the contract. The same principles hold for marriage. This paper provides a comparative analysis of annulment and divorce, shows that there exists a socially optimal amount of fraud in marriage, and demonstrates how changes in the locale's divorce regime result in changing demand for annulments. While substitutability between annulment and divorce is limited, annulment is shown to become more valuable for introducing fault when the divorce regime shifts to no fault. As European nations harmonize their family laws, they should be conscious of this substitutibility.

The ethics of competition

Abstract: This paper analyzes the ethics of market competition with reference to sport games. The metaphor of games suggests that different games represent three elements or models that are related to man and society: record, struggle, and cooperation. Record-type games pursue excellence or virtue; struggle-type games determine winners in zero-sum games; and the idea of cooperation or teamwork demands the just rules of competition based on solidarity. Moral criticism of market competition is sometimes in confusion with regard to the targets of criticism. Distinction should be made between the aims, rules, and motives of competition. A free society based on self-interest should be maintained by improving the aims and rules of competition, which are often defective and degraded. Thus the ethics of competition should consist of the ethics of virtue, of justice, and of freedom.

Normative and rational choice accounts of human social behavior

Abstract: Two approaches to the problem of explaining social order are compared: the rational choice approach (as represented in Coleman'sFoundations of Social Theory) and the normative or social control approach, in which rules and rule-following play the central role. Considered in terms of Coleman's own criteria for social theory, only the social control approach seems plausible. In particular, the rational choice approach is circular in that it necessarily presupposes the existence of rules and rule-following, while its pretense is to be able to explain social order in non-normative terms. The social control approach accounts for social order in terms of the existence of social rules and the innate capacity of human beings to learn to follow such rules.

Contract discipline: In search of principles in the control of contracting power

Abstract: The justness and the efficiency of contracts will depend on the effectiveness of contract discipline This disciplin will be most effective when contractors have a good range of alternatives to choose from and when they ca make those choices on the basis of good information about the alternatives This notion of contract disciplin is used in this paper as the basis for reviewing the coherence and effectivenss of judicial attempts to control con tracting behavior in the United Kingdom It is suggested that the legal analysis of contract needs to be reorientate toward an exploration of the sources of contract indiscipline in the many highly imperfect markets in the real world

Sociological interpretations of legal development

Abstract: This paper seeks to outline some ways in which sociological inquiry has helped to interpret general processes of legal development. It comments on a few aspects of a vast subject. Furthermore, it was commissioned in a specific context of debate: as part of an agenda of discussion of the relative merits and potential of sociological and economic analyses of law. Hence, to provide a setting for what I try to argue about the character and value of sociological interpretations of legal change, it seems appropriate to preface those arguments with some general ideas about the nature of sociological inquiries in legal contexts and about perceived contrasts between the orientation of these inquiries and what I take to be certain orientations in economic analysis of law. Accordingly this paper is in two parts. The first offers a few prefatory remarks on the character of theoretically guided sociological inquiries about law (sociology of law). The second discusses various kinds of interpretation of legal development, which have been offered from the perspectives of sociology of law.

Toward an integration of economic and sociological approaches

Abstract: This article answers the question whether sociology of law and law and economics can be unificd into one integrated science. First, it is argued that an integration process inside law and economics has taken place, integrating most schools and partial analyses into one mainstream law and economics. Second, it is argued that there are no natural barriers against an integration of sociology and economics. Purely economic theories cannot and do not exist. What is calledeconomic analysis of law is basically a mixture of, for instance, 70 percent economics, 10 percent sociology, 10 percent psychology, and 10 percent other sciences. In addition, there is no such a thing as a purely sociological concept; concepts are sociological only in the sense that they are invented by people who call themselves sociologists.

Comment on Roger Cotterrell “Sociological interpretations of legal development”

Abstract: In this comment I try to point to some connections between law and society research on the one hand and law and economics work on the other. In emphasizing general similarities, I am trying to connect different bodies of literature that stem from different disciplinary backgrounds but in complementing each other might be fruitfully combined in interdisciplinary law and economics-law and society projects.

Comment on Franz Von Benda-Beckmann, “anthropological approaches to property law and economics”

Abstract: This comment deals with criticisms of law and economics analysis as they can be formulated from the point of view of an anthropologist. These criticisms are taken seriously. The author first addresses so-called defects of law and economics analysis which should be considered underdeveloped areas of the approach. Secondly, and more specifically, weaknesses of the property rights approach are taken up. In the author's view, they should be dealt with in future law and economics work. Finally, methodological issues are being addressed which, if not considered with circumspection, could impair the scientific integrity of the law and economics approach.

Techniques for evaluating regulatory change

Abstract: This paper demonstrates the applicability of two empirical techniques—the Heckman two-stage switching regression and the event study methodology—for evaluating regulatory or legislative change relating to companies and in particular to the regulation of company reporting. These techniques measure the impact of regulatory changes once they have happened. They could be used in practice if regulatory changes were subject to a review procedure. The availability of these relatively sophisticated techniques should encourage the quantitative analysis of regulatory changes. Comparisons of effects across member states of the European Union would be interesting but would obviously need care.

Income transfers, entrepreneurial effort, and the Coase theorem: The case for efficiency reconsidered

Abstract: The Coase theorem asserts that private bargaining can overcome the difficulties posed by an externality situation and lead to a first-best allocative solution. For such idealized efficiency to be achieved, however, it is generally recognized that certain very special conditions must be met—including the assumption of zero transaction costs. In opposition to this view, the paper argues that the special simplifying conditions usually specified in the literature are not sufficient. Unless stringent supplementary conditions are introduced, private bargaining will not bring about a first-best solution. Indeed, if the standard assumptions are met but the supplementary conditions of the paper are not, government intervention in the externality case can be expected to produce a solution that is Pareto superior to the one generated by private bargaining.

Thinking about thought

Abstract: The law is essentially an intellectual activity, and our understanding of the thinking processes are important. This article presents a discussion not of pure logic or what psychologists have worked out by experiments on rats, but a general description of how we actually think in problems such as those faced by lawyers.

Security of tenure in conventional and flexible employment regimes: A neoinstitutional perspective

Abstract: Security of tenure is discussed in this paper by contrasting conventional and recent hybrid so-called flexible employment regimes. These regimes will be analyzed in a neoinstitutional perspective—that is, within transaction cost and agency theory frameworks, including public choice considerations.

Comment on Francis van Loon, stephane delrue, and wim van wambeke, "sociological research on litigation: perspectives and examples"

Abstract: The sociology of law has a long-standing tradition and indeed produced a vast literature in the area of litigation. Meanwhile, a complementary perspective has been presented which we discuss with the following four perspectives: the relationship between legal economists and legal sociologists; the project of Van Loon, Delrue, and Van Wambeke; an overview of law and economics research with respect to the legal process; and the question of whether both approaches are complementary.