Law and economics

The economic analysis of law is in addition to sociological, philosophical and philological approaches another method of analysis of the objectives of the starting point are assumptions about the behavior and motives of people who were removed from the economic theory. Hence statements about the effects of certain legal norms are derived. Moreover, in a further step, the results obtained from positive analysis to be normatively assessed with the aid of the efficiency concept.

Terminologically the economic analysis of law is not uniformly defined. These products range from definitions such as " verifying the right to its economic impact " or the " exploration of decision effects and distribution effects of law-making " to definitions, according to which the economic analysis of law " to the understanding and appreciation of a past, present or proposed right area taking into account economic and language models and hypotheses based on it "is dedicated.

• 2.1 sequence determination
• 2.2 Subsequent measurement

History

Origins

The origins of the economic analysis of law go back to the modern economics classics: Even Smith described in "An Inquiry into the Nature and Causes of the Wealth of Nations ", the incentive effect of laws. His contemporary Hume saw laws in a world of scarce resources as an ensemble of principles that follow the economic agents in order to enable collaborations. Even Bentham examined how actors behave in the face of regulatory incentives and evaluated the results by the criterion of social welfare. All these studies, however, led to no systematic legal analysis with the help of economic behavioral assumptions.

First Wave

Since the 19th century take specific legal considerations which have recourse to the preparatory work of the classics, too: First of all, Marx criticized the then prevailing view that property rights are given natural law unalterable. His approach led to the realization that property rights are allocated to the economic and social conditions in accordance with the individual and can therefore be changed by the (re) design of the law.

Second Wave

The breakthrough research direction, also known as law and economics approach only succeeded with the "second wave" in the 1960s. The second wave was initiated by the paper by Coase, " The Problem of Social Cost", which deals with the inefficiencies of government intervention. Are property rights associated freely transferable and clear and there are no transaction costs, the market forces will bring about an efficient redistribution regardless of the initial allocation of resources.

Subject of economic analysis are mainly civil and criminal economic issues in the German law (such as the use of general terms and conditions or use of criminal compared to lawful conduct ), although the public right is involved in recently.

Method

Methodologically, serves the economic analysis of law of the economic model as an instrument of sequence determination and welfare economic efficiency criteria as a tool of regulatory impact assessment.

Sequence determination

The economic model of behavior describes a rational and selfish people acting model, the so-called homo economicus. This behavior is rooted in the neoclassical model, as it was assumed that economic agents behave rationally, are fully informed, property rights are fully defined and there are no transaction costs.

Subsequent measurement

The main advantage of the economic model is that it makes the behavior predictable. Therefore, the consequences of the change in the law may be determined by the prognosis of individual behavior. In the next step, this change in the law is then evaluated. This is done with the criterion of efficiency, where efficiency mostly under the Pareto efficiency, or the efficiency is understood in the sense of Kaldor / Hicks.