Comparative law and economics applies – as the name already suggests – principles from the area of law and economics to issues of comparative law. It is a relatively recent method that was developed by economists camp and not by comparative lawyers.
How does Comparative Law and Economics Work?
Comparative law and economics rests on three premises: (1) there is a market for legal rules; (2) the convergence of laws (or legal transplants) is driven by efficiency; (3) the main obstacles to efficiency-driven legal transplants are parochialism, culture and ideology. In its normative form, comparative law and economics follows a three step process: (1) formulation of efficient rules, (2) comparison of existing laws and explanation why they are inefficient; (3) suggestion of policy change.
More recently, a quantitative form of comparative law and economics emerged. According to this method, legal provisions are quantified in order to be able to draw conclusions on their quality – the idea being that this allows for a truly objective comparison. (I reserve a more in-depth discussion of quantitative comparative law for a later post.)
Assessment of Law and Economics
Comparative law and economics in its original form has long been on the sidelines. The more recent emergence of quantitative comparative law has found popularity mainly among economists. As a first reaction, comparative lawyers have criticized especially the quantitative method as being too simplistic. There seems, however, a steady shift towards acknowledging comparative law and economics as an accepted method for certain comparative law questions and studies.
- Oliver Brand, Conceptual Comparisons: Towards a Coherent Methodology of Comparative Legal Studies, 30 BROOK. J. INT’L L. 405, 421-428 (2007).
- Raffaele Caterina, Comparative Law and Economics, in ELGAR ENCYCLOPEDIA OF COMPARATIVE LAW 161-171 (Jan Smiths ed., 2006).
- Ugo Mattei, Efficiency in Legal Transplants: An Essay in Comparative Law and Economics, 14 INT’L REV. L. & ECON. 3-19 (1994).
- Ralf Michaels, The Second Wave of Comparative Law and Economics?, 59 UNIV. TORONTO L.J. 197-213 (2009).