ECO320 Midterm 1 Review Notes
Lecture 1- ECO Law Introduction
The “central problem” is optimality in the economic analysis of law:
The “problem” for “lawmakers” is to maximize social surplus:
What does one mean b
...
ECO320 Midterm 1 Review Notes
Lecture 1- ECO Law Introduction
The “central problem” is optimality in the economic analysis of law:
The “problem” for “lawmakers” is to maximize social surplus:
What does one mean by a law?
A law is a rule that may or may not have economic consequences for an individual person or a
group
Where do “laws” actually come from?
Custom
Judicial Precedent (Common Law)
Statutory Legislation
Executive Decision – Making
So some forms of economic analysis of laws use:
markets without private goods (Intellectual Property)
markets with “bads” (crime)
markets without prices (marriage, domestic contracts)
Private Goods
Property Rights
o Right To Pollute
o Right To Enjoy Property Free of Pollution
o Right To Contract on Property Rights
o Right To Damages and/or an
o Injunction for Breach of Contract
Private Bads
o Torts
o Intentional
o Pollution
o Assault
o Fraud
o Unintentional
o Negligence
Economics concerns questions like:
Will a reduction in the capital gains tax make the stock market rise?
Will higher tariffs make consumers better off?
Will increased prison terms reduce crime?
Will easier divorce improve the status of women?
Do stronger copyright laws promote creativity?
Will a high-price (meaning low volume of sales) strategy lead to more profit for a firm than a
low-price strategy?October 12, 2018
In each area of the course, the following questions arise?
Does a law (rule), over time, become
o More Efficient?
o More Competitive?
o More Optimal?
Market Demand
Market Demand is less reactive to legal changes
o (i) motivation of black markets or illegal markets
o (ii) behavioural changes tend to be long term
o (iii) population and income changes – both slope and positional shifts – economic
analysis of criminal law
economic analysis of family law
In the simplest approach – one could choose the “benchmark” perfectly competitive market
Only “price is considered”
Example – A law that enhances the quality, safety or attractiveness of a good?
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