Law and Economics for Civil Law Systems
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Law and Economics for Civil Law Systems

Ejan Mackaay

Ejan Mackaay offers a comprehensive look at the essential points of economic reasoning, the Coase Theorem, and legal institutions such as intellectual property, extra-contractual civil liability and contracts. The book’s structure mirrors the way law is taught in civil law countries, with structured presentations, references to civil code articles paired with non-technical explanations, and limited reliance on graphs. This English-language version builds on the success of the author’s 2008 French-language textbook on law and economics from a civil law perspective.
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Chapter 4: The market order

Ejan Mackaay


Exchange – transferring a good or providing a service against payment in kind or in money – is one of the essential relationships human beings may establish between themselves.1 The ability to exchange is a distinctive feature setting humans apart from animal species. Exchange is one of the foundations of life in society: without exchange, no society. Why do we exchange? The answer must surely lie in the gains we can make through exchange by comparison with self- sufficiency, where individuals rely entirely on themselves to look after their own needs. To understand the source of these gains, let us take a simple example. You can mow your lawn in one hour and prepare a meal in half an hour. Your neighbour takes two hours to mow his lawn (the same size as your own), but only takes a quarter of an hour to prepare a meal (let us assume as good as your own). Let us assume moreover that the lawns need to be mown every day. You therefore spend 2.5 hours a day mowing your lawn and preparing meals, your neighbour spends 2.75 hours.

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