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By Francesco Parisi


The enlightened conception of separation of powers holds that law should be made by the legislature, interpreted by the judiciary, and enforced by the executive branch of government. Public choice theory provides a solid foundation for the appraisal of this traditional formula. The findings of public choice theory, while supporting much of the traditional wisdom, pose several challenges to the theoretical foundations of these constitutional principles. In the following pages, I shall revisit these important questions considering the issue of institutional design through the lens of public choice theory. I. Towards an Institutional Theory of Lawmaking According to a fundamental principle of constitutional design, powers should be allocated to the branch and level of government or society that can best exercise them. This principle can be applied to the question of lawmaking in order to select sources of law that will exploit the comparative advantage of different legal and social institutions in the production of legal rules. I consider three main criteria for evaluating the relative advantages of alternative sources of law, focusing on the political economy of production of ordinary (i.e., non-Constitutional in nature) law. These criteria are: minimization of agency problems; minimization of rulemaking costs; and th

Year: 2011
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