fresco of good government               _ Lady Justice
 EC 493-3
Law and Economics
Spring, 2017
Roger Congleton
Office:   405 B&E
Phone:   3-7866 
Office Hours: T, W, Th 2:25-3:25
Class room: B&E 441
Class time: 3:30-4:45
Optional Texts:

Tullock, G. (2005) Law and Economics. Volume 9 of the Collected Works of Gordon Tullock. Indianapolis: Liberty Fund.

Shavell, S. (2004) Foundations of Economic Analysis of Law. Cambridge: Harvard University Press.

Posner, R. (2011) Economic Analysis of Law. 8th Ed. Aspen Publishers.
Links to
other Law and Economics


Law and Economics is an area of study that uses economics to understand why laws look the way they do and how the laws that exist affect the choices of individuals and the society that emerges. 

This course provide students with the tools to think systematically about laws, law enforcement, and legal systems using rational choice models from economics, game theory, and public choice. 


The course begins with a short review of key tools from economics and game theory. Part A  focus on the logic and effects of law enforcement (economics of crime). Part B focuses on economic explanations of the origin and economic effects of basic civil laws (property, contract, and torts). Part C focuses on the logic and effects of public and regulatory law (antitrust and patents). Part D, if time allows, undertakes a short analysis of constitutional law, focusing, for the most part, on the commerce
and takings clauses.



Part A: A Short Overview of the Law, Rational Choice, and Crime

1/9 Preface. Introduction to Economics and the Law
A very short overview of the
Long History and Evolution of Laws.  Laws, norms, perfect law enforcement as an implicit assumption of neoclassical economics. Law and Economics as a relatively new field.
Shav: 1, 26
Tull: 1
1/11 - 1/25
I. Introduction: some basic economic tools for economics and the law, the net benefit maximizing model of rational choice, probabilities, expected penalties. Applications to criminal behavior and law enforcement. The prisoner's dilemma game. 
Shav: 1, 5
Tull: 1, 2

PART B: Civil and Criminal Law
1/30 - 2/6
II. Property Rights: Use and Exclusion Rights as Solutions to Conflict, Commons, and Externalities Problems Economic advantages of rights of exclusion and use. Two economic explanations for the origins and limits of property rights.  (Commons Worksheet: 123, WK4, XLS, pdf)
Shav: 1, 2, 5, 13, 20, 24
Tull: 1, 2, 4
2-8 - 2-15 III. Enforceable Promises and Economic Prosperity  Tradable rights and contracts as devices for  extending economic development. Importance of Law Enforcement: Enforcement, Morals, and the Extent of Crime.
Shav: 1, 2, 5, 13, 20, 24
Tull: 1, 2, 4
2/20 - 2/22
IV. Torts: On Rules for Dealing with Accidents and Externalities
Legal and ethical differences between crime and torts. Alternative rules for dealing with accidents and other externalities. Strict Liability and Contributory Negligence. Vaughan v Menlove.
Learned Hand Decision.
Shav: 8, 10
Tull: 6

Selected Tort Cases
2/27 Review for First Exam
3/1 Exam First Exam 

Spring Break

Review of First Exam

Part C: On the Public Law and Regulation

 3/15 - 3-27

VI. The Politics and Economics of Public Law: Civil proceedings and regulations as alternatives.Setting enforcment budgets and enforcement budgets. Voter and interest group interests in stronger regulations than provided by civil law.  The Coase Theorem with and without Transactions Costs--are tort and regulatory law really necessary?

Shav: 6
Tullock: Welfare and the Law
Median  voter model (RDC)

3/29 - 4/3
Applications: VII. Anti-Trust Law and Patents: On the economics and politics of reducing and creating monopoly power. Shav: 7
Standard Oil, Alcoa, ATT

Part D: Constitutional Law

4/5- 4/10
Applications: VIII. Constitutional Law and Economic Law: the commerce clause, takings clause, equality before the law, and civil liberties in the United States. Advantages and costs of judicial independence. (commerce clause cases, takings cases)
Shav: 2, 3, 19
RDC 2003 ch 7-10

 Study Guide II


4/19 Exam

Review for Second Exam
(no class on 4/17)
Second Exam
  (Comprehensive w. focus on most recent material)
Forest from the trees lecture / Paper Workshop  RDC and BS (2006: ch 11)
4/26 Review of Second Exam
5/3 Paper  Final Paper Due (by midnite via e-mail)