Comparative Law and Economics
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Comparative Law and Economics

Edited by Theodore Eisenberg and Giovanni B. Ramello

Contemporary law and economics has greatly expanded its scope of inquiry as well as its sphere of influence. The extension to many idiosyncratic topics and issues that sometime lie outside the traditional domain of the discipline have fostered the emergence of a new consciousness better grasped by a comparative approach. The original contributions to this Research Handbook provide a glimpse of the new perspectives that enrich the law and economics methodology.
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Chapter 5: Principles, tolerance and institutional torpor

Enrico Colombatto


Institutions play a decisive role in determining economic behaviour: they influence individual preferences, they affect the intensity and the goals of cooperation and, more generally, they explain a great deal about the prosperity of a community. Economic historians and economists have devoted considerable attention to the features of the institutional environment, generally regarded as a system of incentives to which individuals respond, frequently influenced by habits, traditions, and moral standards. Nonetheless, conceiving how the existing laws evolve has often turned out to be an elusive exercise. To be fair, the public choice school and the so-called new institutional approach have persuasively illustrated that the different concentrations of costs and benefits ensure that pieces of legislation are approved and upheld even when the public at large considers them undesirable, and that such pieces of legislation are likely to trigger self-perpetuating processes. Still, it is also true that objectionable institutional frameworks frequently fail to elicit much opposition, and are tolerated even when a community is offered a chance to vote against them.

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