Dipartimento di Diritto, Economia e Finanza Internazionale

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ECONOMICS AND LAW

 

Prof. Pietro A. Vagliasindi

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2010-2011

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COURSE CONTENT:

 

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The Economics & Law course examines the legal behaviours and juridical norms in the broadest context of socio-economic and political institutions to assess through social cost benefit analysis of institutional and regulatory options.

It aims at preparing lawyers to better understand how legal and insti-tutional contexts modify incentives and affect socio-economic beha-viours, as well as to assess legislations and institutions (for example within the context of international organization, such as the World Bank, IMF, EBRD, etc.).

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The effectiveness of standards, laws and regulations necessarily depend on the socio-economic behaviour of citizens, influenced by the incentives created by implemented policies (e.g. their enforcement). The course will provide an in-depth analysis of public institutions, devoting special attention to efficiency and equity issues. Ample space will also be given to property law, contracts, corporate theory and other legal questions. The course is not very technical in its nature and is designed to provide all the needed background information for a full understanding of the economic issues covered

   

COURSE SYLLABUS: (main topics)

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1.       INTRODUCING LEGAL AND INSTITUTIONAL ECONOMIC ANALYSIS

2.       EFFICIENCY EQUITY AND WELFARE.

3.       EXTERNALITIES AND REGULATION

4.       RISK ADVERSION AND LAW ENFORCEMENT

5.       STRATEGIC BEHAVIOURS, RISK ALLOCATION AND INFORMATION

6.       THE ECONOMIC VALUE OF LIFE

7.       PROPERTY, INTELLECTUAL PROPERTY AND RESEARCH

8.       CONTRACTS, INCENTIVE, FIRM REGULATION AND CORPORATE THEORY.

9.       COMPETITION AND ANTITRUST

10.    TORT LAW AND FAMILY LAW

11.    CRIME

12.    OTHER LEGAL ISSUES

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The lectures cover the entire course content and are supplemented by practical exercises.

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The course syllabus and exam will be also tailored for advanced students.

A supplementary seminar course is coordinated by Dr. Tiziana Ficarelli.

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If you have any question, please do not hesitate to ask Dr. Roberta Cardani on economics or Paolo Casali for general issues, or Pietro A. Vagliasindi for brainy ones.

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To test your understanding

 

Questions and Answers

 

To increase marks you may  write a 6 pages Essay (tesina).  

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MAIN SUGGESTED REFERENCES:

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COOTER R., T. ULEN 2007 Introduction to Law and Economics (4th ed), or 2000 (3rd ed)

FRIEDMAN D. 2000 Law's Order: What Economics Has to Do with Law and Why It Matters, Princeton University Press, online and in word, Law's Order 1999 (L'Ordine del diritto, il Mulino, 2004 can be found at the Library, 2th floor above Aula D or elsewhere, e.g Pubblico 4th floor).

POSNER, R.A. 2011 Economic Analysis of Law, 8th edition, Woters Kluwer; or 7th ed. 2007

VELJANOVSKI C.  2006 The Economics of Law and Economic principles of law

You may also be interested to: Sen Amartya (2009) The Idea of Justice, Oxford University Press; (1992-7) On Economic Inequality (Radcliffe Lectures), Clarendon Press; (1996) Inequality Reexamined Russell Sage Foundation, (1988) On Ethics and Economics, Blackwell, to examine topics related to Equity and Justice and to write an essay.

You may also find useful the Encyclopedia of Law & Economics, the Encyclopedia Britannica and Merriam-Webster's Dictionary

NB All references should be critically scrutinized. Other useful suggestions for further reading are available below. Obviously, I am not responsible for links, over which I have no control.

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“Proud of yourself, little man? … I thought you were supposed to be good. Aren't you the... "good" man? …

Show me ... what you're made of.   Quite an experience to live in fear, isn't it?  That's what it is to be a slave!” B.R.

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The appraisal (in terms of efficiency and equity) of social systems or their rules and rulers has a long tradition, as well as cheating attempts. In ancient Egypt, in his path to the afterlife even the King (the living god, supreme judge and lawmaker), led by the god Anubis,  was judged in the presence of Osiris. He had to swear that he had not committed any of the 42 sins (including “24. I have not transgressed the Law”) . His heart, to bear witness, was weighed on a pair of scales, against a feather, standing for Ma'at, goddess of truth, order, balance and universal justice (also individual consciousness, inspiration and aim of life). Hence, slaves excluded,  each person, is viewed as equal under the law, regardless of wealth or social position. Females enjoyed extensive rights under the law (could own and bequeath property, file lawsuits, be witnesses in court and file for divorce) and even basic human rights were maintained. The guilty violated Ma'at, and would suffer failure, poverty, sickness, awaiting afterlife final settlement.

If the scales balanced, he had led a good life and had a place in the afterlife. If not Ammit (the devourer: head of a crocodile, shoulders of a lion and rump of a hippopotamus) set a early unpleasant end to his afterlife (a heart as light as a feather still means care-free, and heavy-hearted sadness). Thoth, god of wisdom and writing, record what happens. In theory, without a commendable and ethical existence, there was no hope. However, it is suggested that the negative confession was a protecting spell, and the “weighing” depended also on the mystical knowledge of judges. Hence, the precious Books of the Dead help owners (social elite, initially only Royals) to succeed. See: A. Dollinger Law and order in ancient Egypt,  J. Watson An overview of ancient Egyptian religion, M. Andrews Law and Legal System in Ancient Egypt, M. Karenga Maat, the moral ideal in ancient Egypt, and more in general B.J. Hibitts Ancient Law  (see also Papyrus of Ani & translation by W. Budge; J.R. Black Amenemope Instruction)

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The law does not consider “replicants” human and therefore accords them no rights nor protection. B.R.

 

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A few suggestions to pass the exam

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§  Look at the slides and notes on this web page, for each main topic; if you understand them it’s fine (if not read again the textbook).

§  Prepare very well one topic and its exposition in English (so you know what to answer if asked about a topic you would like to discuss?)

§  Organize to discuss additional material on that topic, apart from what you find in the textbook. (there is plenty of it in this web page)

§  Follow regularly lectures, participate actively, make slides to expose during the seminar slots. Here two examples (14, 15) of best practice

§  Test yourself with: Questions and Answers

§  Write an essay (at least 6 pages) among the ones proposed (it may bring you two points). Here two examples of best practice (14, 15).

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Some Law and Economics Journals

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§  American Law and Economics Review

§  Asian Journal of Law and Economics

§  Economic Analisys of Law Review 

§  Erasmus Law and Economics Review (open access)

§  European Journal of Law and Economics

§  Review of Law and Economics

§  International Review of Law and Economics

§  Journal of Law, Economics, and Organization

§  Journal of Law, Economics & Policy

§  Journal of Law and Economics

§  Journal of Legal Studies

§  Supreme Court Economic Review

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The University of Chicago Law School produces several series of academic papers, including the Public Law and Legal Theory Working Papers, the John M. Olin Program in Law & Economics Working Papers, the Maurice and Muriel Fulton Lectures, and a series of occasional papers.   See also Harvard University Law  Olin Center

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Other useful material and information for the exam

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For who has not followed the course (slides and recordings):

If you desire to improve the understanding of the issues (in English) you may want to follow the full course of Economic Analysis of Law held by Professor David D. Friedman at Santa Clara University School of Law in 2009 following his slides and quite complete recordings of 2009 classes: 

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First Week, Class 1 first partSecond partClass 2 (2011)

Second Week(Externalities), : Class 1 Class 2

Third Week (Coase) Class 1 Class 2

Fourth Week (Risk, Ex post/Ex ante) Class 2

Fifth Week (Game theory) Class 1 Class 2 

Sixth Week (Review)  Class

Seventh Week (property)  Class Class 1

Eighth Week and Ninth (Contract) Class 1 Class 2

Tenth Week: (Family Law) Class 1 Class 2

Eleventh Week (Tort) Class

Twelfth Week (Crime) Class1 Class2 (some antitrust)

Thirteenth Week (Antitrust) Class

Fourteenth Week (Other Paths)  Class Class

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These and additional material from Professor David D. Friedman (Lecture Notes and Articles for the course of Economic Analysis of Law 1997) should be critically scrutinized.

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Finally, you may want to review with the Midterm and the final questions with answers (as well as 1995 the midterm and final texts) and Questions & Answers.

 

 

 

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 Additional reading material, also on Economic Methods

"Mechanism design and other areas of game theory have contributed to a fundamental change in the scope of economics. Once the scope of economics was defined by the allocation of material goods, but now economists study all kinds of questions about incentives in social institutions. Our theoretical framework now is broad enough to analyze competitive incentive problems in both markets and politics. In the quest for a better analytical understanding of how the wealth of nations may depend on their institutions, economic analysis has returned to the breadth of vision that characterized the ancient Greek social philosophers who first gave economics its name."

 

 

0. INTRODUCING ECONOMIC ANALYSIS

Here you find all the needed Economic background, starting from the following slides, more or less followed in the course. (For some economic data see WB database) other  links 

For those of you that feel to need more background, it would be useful to have a look to introductory economic chapter in COOTER R. & T. ULEN - especially if you do not understand the class slides or Friedman ones.

 

A. For the micro foundation a starting point may be David D. Friedman Price Theory: An Intermediate Text
In particular you may want to look with some attention at Chapter 15 and Chapter 18 (If you need a real new start Chapter 1 and Chapter 2 present a general introduction to economics)

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Michio Morishima

B. An excellent reference text may be Michio Morishima (1984) Economics of Industrial Society (L'ECONOMIA DELLA SOCIETA’ INDUSTRIALE Zanichelli), or online J. D Hey, C. Petraglia, 2007 People are Different (Microeconomia,  by Aracne Editrice), with slides (Italian) and exercises (Italian) and nice tests

 

C. Other useful links on Economics: Basic Microeconomics and Economics at MIT, e.g. Economic Analysis for Business Decisions (time and uncertainty) or more advanced Microeconomic Theory (Three general areas: Decision Theory, Game Theory, and Behavioral Economics.) and David Zilberman