Chapter 10 discusses the interplay between national climate legislation and international efforts to combat climate change. The chapter outlines the key implications of the Paris Agreement for domestic law making and assesses the consistency of domestic mitigation efforts by the G20 group of countries with the Paris objectives. To be consistent with their nationally determined contributions (NDCs) to the Paris Agreement countries will need to adjust not just the level, but also the time frame and scope of their domestic climate targets. The majority of countries have yet to adopt a domestic emission target that is consistent with their NDCs. For Paris to be successful, countries also need to put more emphasis on ensuring the credibility and faithful implementation of their commitments. Success also demands a more systematic assessment of the adequacy of domestic efforts and improved national processes for monitoring, reporting and verification. Monitoring progress should focus not only on whether targets are being met, but also on their consistency with the 1.5–2°C pathway agreed in Paris.
Alina Averchenkova and Sini Matikainen
Michal Nachmany, Achala Abeysinghe and Subhi Barakat
Chapter 4 describes the unique challenges of least developing countries (LDCs) in climate policy and traces their growing engagement on climate change. The motivations and challenges of LDCs are very different from those of industrialized economies, due both to their low emissions profile and their high vulnerability to climate impacts. As energy-related emissions are low, the transition to a low-carbon economy of LDCs simultaneously serves mitigation, adaptation and development objectives. However, integrating climate change into general development plans remains a challenge, and fewer than half of the LDCs have done so. Other focus areas are disaster risk reduction, climate resilience, land use change and access to international climate finance, although there is less legislative activity in these areas. A growing number of countries are contemplating dedicated climate laws, but climate action is still predominantly pursued through policies and executive instruments, rather than formal acts of parliament.
Isabella Neuweg and Alina Averchenkova
Chapter 3 contains an in-depth analysis of climate policy in the world’s largest greenhouse gas emitters – China, the European Union and the USA. The chapter details how they each face their unique challenges and how they have taken different routes in developing and implementing climate policy. China’s approach to climate policy reflects a governance system that is driven more by executive orders than acts of parliament. Accordingly, China has chosen to embed its climate change objectives in successive Five-Year-Plans. In the EU, policy making requires agreement across member states. Member states have decided to make climate policy an EU matter, setting binding EU-wide targets on carbon emissions, renewable energy and energy efficiency, and setting up a pan-European emissions trading scheme. US policy makers have taken a regulatory approach, with federal action based on an existing piece of legislation, the 1990 Clean Air Act. This reflects the contested nature of climate change policy, which has made it difficult to pass meaningful climate change legislation at the federal level. However, many states have moved ahead of the federal level, often enacting world-leading climate legislation.
Jeffrey S. Parker
The economic analysis of civil procedure can be enriched by a more thorough consideration of the productive functions of civil adjudication, in particular the production of new knowledge, as distinguished from the revelation or use of pre-existing knowledge. As adjudicative facts often involve the particulars of time and place, their production through litigation has some of the same properties noted by Hayek in the determination of prices by the market system. Most importantly, the determination of adjudicative facts may reflect investment decisions made both before and after litigation has arisen, and those decisions have consequences for productive activity. Therefore, decisions to invest in litigation are not merely “rent-seeking,” but also embody some element of innovation. They are analogous to other investments in new knowledge, such as research and development, or exploration for natural resources. Rules of civil adjudication can affect the supply and price of new knowledge, and thereby affect welfare, through their influence on the timing and nature of investments in new knowledge. The implications of these factors range across a variety of topics in civil procedure.
The Subsidisation of Heavy Polluters under Emissions Trading Schemes
Elena de Lemos Pinto Aydos
Chapter 2 discusses the theory of carbon leakage and competitiveness concerns in relation to emissions-intensive and trade-exposed sectors participating in ETSs. Two measures are often considered as alternatives to avoid competitiveness issues and carbon leakage from the implementation of ETSs, that is, border carbon adjustments (BCA) and the free of cost allocation of permits. While BCAs are not very popular, it is possible that, due to the adoption of free allocation of permits, carbon-pricing schemes have been failing to implement the polluter pays principle. Keywords: emissions trading – carbon leakage – free allocation – polluter pays principle
Todd J. Zywicki and Shruti Rajagopalan
In this chapter we provide an explanation for why the Chapter 11 reorganization process cannot accurately value and reorganize an insolvent firm. Due to the information and incentive vacuum of the reorganization process, Chapter 11 places the bankruptcy judge in the same institutional setting as a central planner. Therefore, the bankruptcy judge is given the impossible task of economic calculation without the relevant market data to calculate the same. Given the inability to make market allocations, Chapter 11 allocations are prone to rent-seeking and interest group capture.
Todd J. Zywicki and Edward P. Stringham
Is the common law efficient? Neoclassical economists debate whether our inherited systems of judge-made law maximize wealth whereas Austrian economists typically adopt much different standards. The chapter reviews neoclassical and Austrian arguments about efficiency in the common law. After presenting Hayek’s views on the common law as a spontaneous order it concludes that the common law can indeed be viewed as a spontaneous order only when judges provide their services in a free and competitive system.
Michael E. DeBow
This chapter provides a history of the expanding domain of tort law in the United States, with a particular focus on the spread of the concept of strict liability and a consonant erosion of contractual liability in favor of torts. It then surveys differing Austrian viewpoints on the moral standard underlying torts, the merits of the common law, intentional and unintentional torts, and product liability. It concludes that Austrian scholars who are comfortable with the normative standard of “individual freedom from domination” should conduct research countering the case for the ever-growing expansion of tort law.
Peter G. Klein and Thomas A. Lambert
This chapter applies Austrian insights relevant to analysis of American business law. Modern corporation and partnership law, perhaps surprisingly, largely coheres with an Austrian theory of the firm, although recent regulations affecting corporate conduct and securities offerings, enacted in the wake of financial scandals, undermine these principles. On the other hand, antitrust law operates under a static view of markets that is inconsistent with Austrian principles, although recent antitrust decisions have been more consistent. We set forth aspects of Austrian thought most relevant to an analysis of American business law. We have shown that this rich body of thought that has proven so useful in analyses of institutions (e.g., the Socialist Calculation debate) and monetary and fiscal policies (e.g., Austrian business cycle theory) has much to offer in the economic analysis of specific legal rules.
Donald J. Boudreaux
Austrian economics identifies three reasons, any one of which invalidates antitrust as a mechanism for ensuring competition. The first is the political economy realization that antitrust cannot be administered without political cronyism, which will blunt its effectiveness. The second is the problem of knowledge; no antitrust judge or regulator can know all the relevant facts for rendering a decision that improves the operation of markets. Either of these is fatal to the arguments for antitrust. This chapter will focus on the third objection: antitrust is premised on a flawed, static model of competition. By not recognizing that competition is a dynamic process involving innovation, antitrust actually thwarts competition, achieving the opposite of its intended effect.