INTRODUCTION Recent litigation against cigarette manufacturers,(1) software companies for potential computer problems in 2000,(2) and a fast food restaurant to serve coffee allegedly too hot(3) remind us of the importance and dynamics of tort law in the United States. Judging by the continued coverage of newspapers and television, tort law is worthy of interest. However, as with other legal issues, much of the debate is about the social benefits of the various tort rules and their reform, as with other legal issues. In this debate, law and business exert a great influence. « Since the 1970s, the modern movement of economic analysis has been in full swing. This analysis highlighted the deterrent function of tort law. In fact, even in the work of traditional scholars, deterrence has now assumed the role of the main justification for the rules of responsibility for criminal acts. (4) An example of this influence is Impac. This article, which will appear as a chapter in the next Handbook of Law and Economics (A.M. Polinsky & S. Shavell, eds.), examines the most important issues arising from the economic analysis of contract law. It begins with an introductory discussion on scope and methodology, and then addresses four thematic areas that correspond to the main doctrinal subdivisions of contract law.
These areas include freedom of contract (i.e. the scope of the private power to create binding obligations), the formation of contracts (both the procedural mechanics of exchanges and the rules governing pre-contractual conduct), the interpretation of contracts (the consequences of agreements being ambiguous or incomplete) and the performance of contractual obligations. For each of these sections, we deal with the economic analysis of certain legal rules and institutions and, where appropriate, the links between legal agreements and related issues of microeconomic theory, including the economics of well-being and the theory of. The purpose of this book is to give the reader a non-technical but scientifically rigorous overview of the most important topics in regulatory economics. This is a very ambitious goal for at least two reasons. First, regulation is pervasive. It is practically impossible not to be confronted with regulation on a typical day in our lives. Second, the regulation of different activities raises different issues.
While economic explanations and regulatory justifications may be designed in certain categories, they interact very differently depending on the specific activity in which individuals and companies are engaged. A few examples can help clarify these two points. We all use electricity, gas and water on a daily basis; Most of us use transportation and telecommunications services with the same frequency. The provision of these services is largely regulated, and the main reason for this is that parts of the supply chain of these services have natural monopoly characteristics. Natural monopoly implies that the provision of a particular service or part of it is economically viable only in the presence of a monopolist, which raises a number of problems. The most obvious difficulty for consumers lies in high prices and limited supply, both of which are being combated by regulation. However, other problems can only be more subtle. They are usually industry specific.
Water, for example, is an important safety issue. In the case of electricity, there are problems of efficient production and impact on the environment. These and similar problems suggest that keeping prices low in industries that cannot be fully exposed to competition may not be the sole objective of regulation. Equally important is the fact that regulation does not only work in the present or near a natural monopoly. Going back to the examples of our daily lives, we all drive safer cars than they were 20 years ago. This is mainly due to safety rules. Cars also pollute less, which depends on environmental regulations. Cars have become more expensive for these reasons. This raises two additional questions.
First of all, it is questionable whether it is economically efficient for individuals to pay for safety and respect for the environment when ÐÐ3/4лÑÑÐ ̧ÑÑ Ð¿ÐμÑаÑÐ1/2ÑÑ Ð²ÐμÑÑÐ ̧Ñ ÑÑÐ3/4й кÐ1/2Ð ̧гР̧ Distinguished by its brevity, clear wording and well-chosen examples, An Introduction to Law and Economics, now focuses on a number of core topics in its fourth edition, including property, contracts, tort, criminal law, and litigation. Polinsky avoids jargon and mathematics and teaches students how to think like an economist and understand legal issues from an economic perspective. Clear, concise and authoritative, An Introduction to Law and Economics Features:.