As part of a continuing series on Spring 2019 semester courses that relate to innovation and business, this post spotlights Law and Economics.
You might not have heard of Ronald Coase, but his 1960 law review article, “The Problem of Social Cost,” can explain the world. “In a dispute between parties, if you can reduce transactions’ costs to something close to zero, the parties will settle at an economically efficient solution,” Professor Robert Miller explained, summarizing what is now known as the Coase Theorem. “If for some reason you can’t reduce transactions’ costs low enough, the argument is that the law should create the solution the parties would have reached if transactions’ costs had been zero.” In Law and Economics, Miller teaches students how the Coase Theorem works and how applying it can lead to better legal outcomes.
Coase initially applied his analysis to property law, but the economic analysis of law can apply to any field of law. In this course, Miller focuses on the first year private law subjects: property, contracts, and torts. “We read cases, but not to pull out the legal doctrine. Instead we take the facts of the case and discuss what the outcome should be using the law and economics analysis,” said Miller.
Miller enjoys teaching the course because of the connections it draws between seemingly unrelated policy issues. “Law and economics is about recognizing the right question,” Miller explained. “For example, patents and undersea salvage rights both suffer from an inefficient over-investment problem. Once you realize you’re facing the same question in both areas – how to respond to inefficient over-investment – you can often find answers to patent problems by looking at how the law solved it in undersea salvage and vice versa.”
This course provides an introduction to the economic analysis of law, exploring how economic reasoning is used to explain and predict the effects of legal rules, concentrating on such fundamental areas of American law as property, contracts, torts, and criminal law. The course also explores the use of economic efficiency as a normative criterion for evaluating legal rules, comparing efficiency to various moral concepts also used to evaluate such rules. No prior knowledge of economics is required.