Research Handbook on Austrian Law and Economics
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Research Handbook on Austrian Law and Economics

Edited by Todd J. Zywicki and Peter J. Boettke

The original contributions to the Research Handbook provide an introduction to the application of Austrian economics to law. The book begins with chapters on the methodology of law and economics. Further chapters discuss key concepts in Austrian economics – dynamic competitive processes, spontaneous order, subjective value, entrepreneurship, and the limited nature of individual knowledge – as they relate to topics in evolutionary law (social rules, self-governance, dispute resolution) and basic law (torts, antitrust, civil procedure, business and family law).
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Chapter 16: Firms without boards: unleashing the Hayekian firm

M. Todd Henderson

Abstract

This chapter argues that a board of directors, a mandated feature of all public corporations in the United States, may not be consistent with the Hayekian notion of spontaneous order. A board of directors can be viewed as a form of central planning and suffer from the same defect of central planning: its inability to effectively harness dispersed knowledge for decision-making. The recent notorious failures of corporate governance, such as those of Enron, WorldCom, Lehman Brothers and AIG, suggest that boards of directors may, indeed, be a creature of government regulation and would not exist to the same degree, if at all, in a free market.

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