Edited by John B. Davis and Wilfred Dolfsma
David Campbell and Matthias Klaes Introduction Iudex non calculat: before the 1960s, legal doctrine, in the common law tradition at least, had developed largely innocent of insights from economics. But during the subsequent half-century, the use of such insights to elucidate legal doctrine has become so widespread, albeit far more so in the USA than in other jurisdictions (Landes and Posner, 1993; Ogus, 1995; Symposium, 1991), that ‘law and economics’ is now one of the principal forms of jurisprudence, as is evidenced by the large number of existing introductions to the subject (Bowles, 1982; Cooter and Ulen, 2004; Hirsch, 1988; Malloy, 1990b; Mercuro and Medema, 1997; Mercuro and Ryan, 1984; Polinsky, 1989; Posner, 2007; Shavell, 2004; Veljanovski, 1982, 2006). Much of the intellectual substance of modern law and economics derives from the application of microeconomic principles to legal reasoning, informed by what the main currents of economic analysis have argued since the time of Ricardo: compared to alternative institutional arrangements, properly functioning markets yield superior allocative outcomes in terms of aggregate wealth. Law and economics largely accepts the depiction of markets in neoclassical welfare economics, and uses perfect markets as the basic yardstick with which to compare alternative forms of allocating goods. There is, of course, a serious and well-known problem in doing this. With suitably restrictive assumptions on how individuals and markets behave, the economic eﬃciency of perfect markets can be established with great rigour in modern welfare economics. But there is no hope that those assumptions can...
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