Law and economics
Analysis of law using economic theory
Law and economics
Law and economics, or economic analysis of law, is the application of microeconomic theory to the analysis of legal rules and institutions. The field emerged in the United States in the early 1960s, primarily through the work of scholars from the Chicago school of economics, such as Aaron Director, George Stigler, and Ronald Coase, and jurists, including Guido Calabresi. The field uses economics concepts to explain the effects of laws, assess which legal rules are economically efficient, and predict which legal rules will be promulgated. There are two major branches of law and economics. One is based on applying the methods and theories of neoclassical economics to the positive and normative analysis of the law. The second branch focuses on an institutional analysis of law and legal institutions, with a broader focus on economic, political, and social outcomes, and overlapping with analyses of the institutions of politics and governance.
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