The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Law, Economic Analysis of

  • A. Mitchell Polinsky
  • Steven Shavell
Reference work entry


This article surveys the economic analysis of five primary fields of law: property law; liability for accidents; contract law; litigation; and public enforcement and criminal law. It also briefly considers some criticisms of the economic analysis of law.


Adverse possession Asymmetric information Becker, G. Bentham, J. Bona fide purchase rule Coase, R. Collective action Compensated takings Contract formation Contractual interpretation Copyright Corrective tax Criminal law Damage measures Demsetz, H. Deterrence Direct regulation Disclosure of information Due care Eminent domain Expectation measure of damages Fairness Fault-based liability Finders-keepers rule Fines First-party insurance Good title Hold-out problem Imprisonment Incapacitation Incomplete contracts Injunction Justice Labels Land registries Law and economics Liability Liability insurance Litigation Moral hazard Negligence rule Original ownership rule Patents Posner, R. Possessory rights Product liability Property rights Public enforcement of law Public property Punishment Risk Risk aversion Risk-bearing Settlement vs trial Social norms Social welfare Specific performance Strict liability Suit Takings Tort law Trade secret law Trademarks Unilateral accident model Utilitarianism 

JEL Classifications

D02 D23 D63 H23 J28 K11 K12 K13 K14 K32 K41 K42 P14 P48 
This is a preview of subscription content, log in to check access.


  1. Ayres, I., and R. Gertner. 1989. Filling gaps in incomplete contracts: An economic theory of default rules. Yale Law Journal 99: 87–130.CrossRefGoogle Scholar
  2. Bebchuk, L. 1984. Litigation and settlement under imperfect information. RAND Journal of Economics 15: 404–415.CrossRefGoogle Scholar
  3. Bebchuk, L., and O. Ben-Shahar. 2001. Pre-contractual reliance. Journal of Legal Studies 30: 423–457.CrossRefGoogle Scholar
  4. Becker, G. 1968. Crime and punishment: An economic approach. Journal of Political Economy 76: 169–217.CrossRefGoogle Scholar
  5. Becker, G., and G. Stigler. 1974. Law enforcement, malfeasance, and compensation of enforcers. Journal of Legal Studies 3: 1–18.CrossRefGoogle Scholar
  6. Bentham, J. 1789. An introduction to the principles of morals and legislation, in the utilitarians. Garden City: Anchor Books, 1973.Google Scholar
  7. Blume, L., D. Rubinfeld, and P. Shapiro. 1984. The taking of land: When should compensation be paid? Quarterly Journal of Economics 99: 71–92.CrossRefGoogle Scholar
  8. Bolton, P., and M. Dewatripont. 2005. Contract theory. Cambridge, MA: MIT Press.Google Scholar
  9. Brown, J. 1973. Toward an economic theory of liability. Journal of Legal Studies 2: 323–349.CrossRefGoogle Scholar
  10. Calabresi, G. 1961. Some thoughts on risk distribution and the law of torts. Yale Law Journal 70: 499–553.CrossRefGoogle Scholar
  11. Calabresi, G. 1970. The costs of accidents: A legal and economic analysis. New Haven: Yale University Press.Google Scholar
  12. Calabresi, G., and A. Melamed. 1972. Property rules, liability rules, and inalienability: One view of the cathedral. Harvard Law Review 85: 1089–1128.CrossRefGoogle Scholar
  13. Coase, R. 1960. The problem of social cost. Journal of Law and Economics 3: 1–44.CrossRefGoogle Scholar
  14. Cooter, R., and T. Ulen. 2003. Law and economics. 4th ed. Reading, MA: Addison-Wesley.Google Scholar
  15. Craswell, R. 1996. Offer, acceptance, and efficient reliance. Stanford Law Review 48: 481–553.CrossRefGoogle Scholar
  16. Daughety, A. 2000. Settlement. In Encyclopedia of law and economics, ed. B. Bouckaert and G. De Geest, Vol. 5. Cheltenham: Edward Elgar.Google Scholar
  17. Daughety, A., and J. Reinganum. 2000. Appealing judgments. RAND Journal of Economics 31: 502–525.CrossRefGoogle Scholar
  18. Demsetz, H. 1967. Toward a theory of property rights. American Economic Review: Papers and Proceedings 57: 347–359.Google Scholar
  19. Diamond, P. 1974. Single activity accidents. Journal of Legal Studies 3: 107–164.CrossRefGoogle Scholar
  20. Diamond, P., and E. Maskin. 1979. An equilibrium analysis of search and breach of contract, I: Steady states. Bell Journal of Economics 10: 282–316.CrossRefGoogle Scholar
  21. Hadfield, G. 1994. Judicial competence and the interpretation of incomplete contracts. Journal of Legal Studies 23: 159–184.CrossRefGoogle Scholar
  22. Hart, O. 1987. Incomplete contracts. In The new palgrave: A dictionary of economics, ed. J. Eatwell, M. Milgate, and P. Newman, Vol. 2. New York: Macmillan.Google Scholar
  23. Hart, O., and J. Moore. 1988. Incomplete contracts and renegotiation. Econometrica 56: 755–758.CrossRefGoogle Scholar
  24. Hay, B., and K. Spier. 1998. Settlement of litigation. In The new palgrave dictionary of economics and the law, ed. P. Newman, Vol. 3. London: Macmillan.Google Scholar
  25. Innes, R. 1999. Remediation and self-reporting in optimal law enforcement. Journal of Public Economics 72: 379–393.CrossRefGoogle Scholar
  26. Jolls, C., C. Sunstein, and R. Thaler. 1998. A behavioral approach to law and economics. Stanford Law Review 50: 1471–1550.CrossRefGoogle Scholar
  27. Kaplow, L. 1986. An economic analysis of legal transitions. Harvard Law Review 99: 509–617.CrossRefGoogle Scholar
  28. Kaplow, L. 1994. The value of accuracy in adjudication: An economic analysis. Journal of Legal Studies 23: 307–401.CrossRefGoogle Scholar
  29. Kaplow, L., and S. Shavell. 1994a. Optimal law enforcement with self-reporting of behavior. Journal of Political Economy 102: 583–606.CrossRefGoogle Scholar
  30. Kaplow, L., and S. Shavell. 1994b. Why the legal system is less efficient than the income tax in redistributing income. Journal of Legal Studies 23: 667–681.CrossRefGoogle Scholar
  31. Kaplow, L., and S. Shavell. 2001. Any non-welfarist method of policy assessment violates the Pareto principle. Journal of Political Economy 109: 281–286.CrossRefGoogle Scholar
  32. Kaplow, L., and S. Shavell. 2002. Fairness versus welfare. Cambridge, MA: Harvard University Press.Google Scholar
  33. Katz, A. 1990. The strategic structure of offer and acceptance: Game theory and the law of contract formation. Michigan Law Review 89: 215–295.CrossRefGoogle Scholar
  34. Katz, A. 1996. When should an offer stick? The economics of promissory estoppel in preliminary negotiations. Yale Law Journal 105: 1249–1309.CrossRefGoogle Scholar
  35. Kronman, A. 1978. Mistake, disclosure, information, and the law of contracts. Journal of Legal Studies 7: 1–34.CrossRefGoogle Scholar
  36. Landes, W., and R. Posner. 1975. The private enforcement of law. Journal of Legal Studies 4: 1–46.CrossRefGoogle Scholar
  37. Landes, W., and R. Posner. 1987a. The economic structure of tort law. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  38. Landes, W., and R. Posner. 1987b. Trademark law: An economic perspective. Journal of Law and Economics 30: 265–309.CrossRefGoogle Scholar
  39. Landes, W., and R. Posner. 2003. The economic structure of intellectual property law. Cambridge, MA: Harvard University Press.Google Scholar
  40. Libecap, G. 1986. Property rights in economic history: Implications for research. Explorations in Economic History 23: 227–252.CrossRefGoogle Scholar
  41. Miceli, T. 1997. Economics of the law: Torts, contracts, property, litigation. New York: Oxford University Press.Google Scholar
  42. Mookherjee, D., and I. Png. 1992. Monitoring vis-à-vis investigation in enforcement of law. American Economic Review 82: 556–565.Google Scholar
  43. Png, I. 1986. Optimal subsidies and damages in the presence of judicial error. International Review of Law and Economics 6: 101–105.CrossRefGoogle Scholar
  44. Polinsky, A.M. 1980. Private versus public enforcement of fines. Journal of Legal Studies 9: 105–127.CrossRefGoogle Scholar
  45. Polinsky, A.M. 1983. Risk sharing through breach of contract remedies. Journal of Legal Studies 12: 427–444.CrossRefGoogle Scholar
  46. Polinsky, A.M., and S. Shavell. 1979. The optimal tradeoff between the probability and magnitude of fines. American Economic Review 69: 880–891.Google Scholar
  47. Polinsky, A.M., and S. Shavell. 2000. The economic theory of public enforcement of law. Journal of Economic Literature 38: 45–76.CrossRefGoogle Scholar
  48. Polinsky, A.M., and S. Shavell. 2001. Corruption and optimal law enforcement. Journal of Public Economics 81: 1–24.CrossRefGoogle Scholar
  49. Polinsky, A.M., and S. Shavell, ed. 2007. Handbook of law and economics. Vol. 1. Amsterdam: North-Holland.Google Scholar
  50. Posner, R. 1972. Economic analysis of law. Boston: Little, Brown and Company.Google Scholar
  51. Posner, R. 1985. An economic theory of the criminal law. Columbia Law Review 85: 1193–1231.CrossRefGoogle Scholar
  52. Posner, R. 2003. Economic analysis of law. 6th ed. New York: Aspen Publishers.Google Scholar
  53. Priest, G., and B. Klein. 1984. The selection of disputes for litigation. Journal of Legal Studies 13: 1–55.CrossRefGoogle Scholar
  54. Reinganum, J. 1988. Plea bargaining and prosecutorial discretion. American Economic Review 78: 713–728.Google Scholar
  55. Reinganum, J., and L. Wilde. 1986. Settlement, litigation, and the allocation of litigation costs. RAND Journal of Economics 17: 557–566.CrossRefGoogle Scholar
  56. Rogerson, W. 1984. Efficient reliance and damage measures for breach of contract. RAND Journal of Economics 15: 39–53.CrossRefGoogle Scholar
  57. Rose-Ackerman, S. 1999. Corruption and government: Causes, consequences and reform. New York: Cambridge University Press.CrossRefGoogle Scholar
  58. Schwartz, A. 1992. Relational contracts in the courts: An analysis of incomplete agreements and judicial strategies. Journal of Legal Studies 21: 271–318.CrossRefGoogle Scholar
  59. Schweizer, U. 1989. Litigation and settlement under two-sided incomplete information. Review of Economic Studies 56: 163–178.CrossRefGoogle Scholar
  60. Shavell, S. 1980a. Damage measures for breach of contract. Bell Journal of Economics 11: 466–490.CrossRefGoogle Scholar
  61. Shavell, S. 1980b. Strict liability versus negligence. Journal of Legal Studies 9: 1–25.CrossRefGoogle Scholar
  62. Shavell, S. 1981. A note on efficiency vs distributional equity in legal rulemaking: Should distributional equity matter given optimal income taxation? American Economic Review: Papers and Proceedings 71: 414–418.Google Scholar
  63. Shavell, S. 1982a. On liability and insurance. Bell Journal of Economics 13: 120–132.CrossRefGoogle Scholar
  64. Shavell, S. 1982b. The social versus the private incentive to bring suit in a costly legal system. Journal of Legal Studies 11: 333–339.CrossRefGoogle Scholar
  65. Shavell, S. 1985. Criminal law and the optimal use of nonmonetary sanctions as a deterrent. Columbia Law Review 85: 1232–1262.CrossRefGoogle Scholar
  66. Shavell, S. 1987a. Economic analysis of accident law. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  67. Shavell, S. 1987b. The optimal use of nonmonetary sanctions as a deterrent. American Economic Review 77: 584–592.Google Scholar
  68. Shavell, S. 1987c. A model of optimal incapacitation. American Economic Review: Papers and Proceedings 77: 107–110.Google Scholar
  69. Shavell, S. 1989. Sharing of information prior to settlement or litigation. RAND Journal of Economics 20: 183–195.CrossRefGoogle Scholar
  70. Shavell, S. 1991. Specific versus general enforcement of law. Journal of Political Economy 99: 1088–1108.CrossRefGoogle Scholar
  71. Shavell, S. 1993. The optimal structure of law enforcement. Journal of Law and Economics 36: 255–287.CrossRefGoogle Scholar
  72. Shavell, S. 1994. Acquisition and disclosure of information prior to sale. RAND Journal of Economics 25: 20–36.CrossRefGoogle Scholar
  73. Shavell, S. 1995. The appeals process as a means of error correction. Journal of Legal Studies 24: 379–426.CrossRefGoogle Scholar
  74. Shavell, S. 1997. The fundamental divergence between the private and the social motive to use the legal system. Journal of Legal Studies 26: 575–612.CrossRefGoogle Scholar
  75. Shavell, S. 2004. Foundations of economic analysis of law. Cambridge, MA: Harvard University Press.Google Scholar
  76. Shavell, S. 2006. On the writing and interpretation of contracts. Journal of Law, Economics, & Organization 22: 289–314.CrossRefGoogle Scholar
  77. Shleifer, A., and R. Vishny. 1993. Corruption. Quarterly Journal of Economics 108: 599–617.CrossRefGoogle Scholar
  78. Spier, K. 1992. The dynamics of pretrial negotiation. Review of Economic Studies 59: 93–108.CrossRefGoogle Scholar
  79. Spitzer, M., and E. Talley. 2000. Judicial auditing. Journal of Legal Studies 29: 649–683.CrossRefGoogle Scholar
  80. Umbeck, J. 1981. A theory of property rights with application to the California gold rush. Ames: Iowa State University Press.Google Scholar
  81. Wils, W. 1993. Who should bear the costs of failed negotiations? A functional inquiry into precontractual liability. Journal des Economistes et des Etudes Humaines 4: 93–134.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • A. Mitchell Polinsky
    • 1
  • Steven Shavell
    • 1
  1. 1.