Various reformulations of the Coase theorem have developed normative corollaries on the choice of optimal remedies in the presence of positive transaction costs. In this article, we consider the extent to which these propositions are affected by the presence of asymmetric transaction costs, and...

In an economic perspective, punitive damages and class actions can be viewed as sharing a common economic function – creating optimal deterrence. Building on Parisi and Cenini (2010), we study the effect of alternative procedural regimes on the effectiveness of punitive damages and class...

The law and economics literature on the tragedy of the anticommons suggests that producers of complementary goods should integrate themselves. Recent decisions by the antitrust authorities seem to indicate that there is tradeoff between the “tragedy” and the lack of competition which might...

As Alicke and Govorun (2005, p. 85) observed, “most people are average, but few people believe it.” Optimism and other forms of inflated perception of the self lead parties to exercise suboptimal precautions when undertaking risky activities and often undermine the incentive effects of tort...

In the traditional formulation of rent-seeking games, increasing returns to effort are characterized by an exponent r 1. However,when the value of rent is normalized to 1, the players’ effort levels A and B will typically be less than 1. Thus, when A < 1 and r > 1, the value of Ar decreases as r...</1>

In a bilateral contract, should a breaching party be allowed to force the performance of his non-breaching counterpart? Should a breaching party be able to collect damages in contract if his counterpart was also in breach? In this paper we examine these interrelated questions. We consider...

We consider the impact of different choice-of-law regimes on the evolution of formal law. We follow an evolutionary approach to explain possible patterns of legal harmonization and competition. Some of them predict the universal diffusion of a single rule, even though not necessarily efficient....

Parties often exchange promises of future performance with one another. Legal systems frame and regulate contracts involving the exchange of bilateral promises of future performance differently from one another. Two conceptual and practical questions often arise in these bilateral situations....

In a recent article, Gersen and Posner (2007) examined the role of timing rules in promoting the optimal timing of legislative action. In this brief essay, we address the issue of optimal timing of lawmaking through the lens of option theory. We provide a formalization of seven alternative...

In this paper we analyze the factors that should be considered when allocating a given policy function at a particular level of government and how these factors affect the growth and evolution of multi-level governments. After discussing the interplay of economies of scale, economies of scope,...