Growth: The Measure of Law and Economics
by
Robert Cooter Bilkent University, Faculty of Law, Ankara, Turkey, 25-26 October, 2014
Two Enterprises
• Say what the law requires of people.
• Say what the law is.• Interpret laws.• Restate the law.• Offer legal reasons.• Determine the law’s
correct categories.
Legal ContentLegal Causes
• Prove the effects of laws.
• Find the empirical consequences of laws.
• Model responses to laws.
• Find what caused officials to make or repeal a law.
Pyramid of Law and Economics
cause enterprise
contententerprise
Year of Publication of Some Seminal Law and Economics Books and Articles
(some titles abbreviated)
General1960. Coase. “Social Cost.”1967. Demsetz. “Property Rights”. 1968. Becker. "Crime and Punishment”.
Textbooks 1972. Posner. Economic Analysis of Law. 1987. Cooter & Ulen. Law and Economics. 1989. Polinsky. Intro to Law and Economics.Torts
1970. Calabresi. Cost of Accidents.1973. Brown. “Economic Theory of Liability”.1987. Shavell. Econ Anlys of Accident Law. 1987. Landes & Posner. Econ Strctr of Tort Law.
Corporations1937.Coase. “The Nature of the Firm.1965. Manne. “Market for Corporate Control.
1972.Alchian & Demsetz. “Information & Organization”1975. Williamson. Markets & Hierarchies
1976. Jensen & Meckling. “Agency & Ownership.”
Major Law and Economics Associations By Date of First Meeting
AALS (American Association of Law School) Professors Teaching Law and Economics
AALS Professors Teaching Law and Economics and Law School’s Ranking
Law Professors Teaching L&E Compared to All Law Professors
2.0% 2.4%
Compound growth
• 2% =>7 times, • 5% => 130 times• 10% =>14,000 times
Liberalization Experience
Positive• China• India• Central European countries joining EU
Negative or Mixed• Central European countries not joining EU• Africa• Latin America (except Chile)
Examples of Double Trust Dilemma
• Boston bank
• EndNote
• SAP
Figure 2.1. Double Trust Dilemma
Innovator Investor
Ideas
Capital
Figure 2.3. Finance in Silicon Valley
Relational
Private
Public
Figure 2.4. Finance and Development
Relational
Relational + Private
Relational + Private + Public
Figure 2. Life Cycle of a Successful Venture
(Property, Contract, Business Law) + Liberalization => Growth
--Property Principle for Innovation: The creators of wealth should keep much of it.
--Contract Principle for Coordination: The law should enable people to commit to doing what they say.
--Organizational Principle for Liberty: People can freely enter most lines of business and choose their firm’s organization from a legal menu.
“Legalize Freedom” The Prescription for Growth
• Property Principle for Innovation: The creators of wealth should keep much of it.
• Contract Principle for Coordination: The law should enable people to commit to doing what they say.
• Organizational Principle for Liberty: People can freely enter most lines of business and choose their firm’s organization from a legal menu.
Legal Infrastructure:Three Principles of Law for Growth
END of SLIDE SHOW