Law and Economics

Prior to 1960, most North American law schools paid attention only to anti-trust, public utility regulation, and perhaps tax policy from a law and economics perspective (sometimes referred to as the old law and economics). However, beginning in the early 1960\u27s with pioneering articles by Guido Calabresi on tort law and Ronald Coase (the 1991 recipient of the Nobel Prize in Economics) on property rights, followed by prolific writings and a comprehensive text by Richard Posner on a vast range of legal issues, the field of law and economics has burgeoned with many lawyers and economists around the world now exploring the economic implications of almost every aspect of the legal system. The new law and economics is often as much interested in non-market as market behaviour to which the old law and economics largely confined itself. This development has been accompanied by the initiation of a number of specialized law and economics oriented scholarly journals, and the appointment or cross-appointment of professional economists to the faculties of many North American law schools. The law schools at the University of Chicago, Harvard, Yale, Virginia, Stanford, George Mason, Northwestern, and Berkeley have particularly strong concentrations of scholars in various aspects of law and economics. In Canada, the Law and Economics Programme at the University of Toronto Law School was founded in 1976. Currently six scholars in the Law School have major interests in law and economics, and four economists are cross-appointed to the Faculty

Critiques of the Limits of Freedom of Contract: A Rejoinder

This rejoinder to the foregoing critiques of the author\u27s book, The Limits of Freedom of Contract, focuses on several themes: a) what range of contractually-related issues do courts possess the requisite institutional competence to address? b) whether problematic normative issues in contract law are amenable to rational analysis and at least provisional resolution, or are inherently indeterminate, contingent, and political? c) what the value of individual autonomy implies in terms of the type of transactions parties should be permitted to engage in? d) whether an internal rather than consequentialist theory of contract law is conceivable? and e) whether autonomy values are inconsistent with welfare values in women\u27s participation in market activities

The Social Insurance-Deterrence Dilemma of Modern North American Tort Law: A Canadian Perspective on the Liability Insurance Crisis

This Article surveys the trends in the United States and Canadian tort systems and discusses how they have impacted American and Canadian liability insurance markets. A major thesis of this Article is that the changing complexion of the United States tort system, paralleled by similar trends in Canada, explains many of the recent problems in availability, affordability and adequacy of liability insurance. Changes in parameters of liability and quantum of damage have made it increasingly difficult for insurers to price various types of risks. In particular, the author argues that attempts to pursue deterrence objectives and compensation (social insurance) objectives simultaneously through the tort system entail irresolvable contradictions that have destabilized the system and its associated private insurance arrangements

Critiques of the Limits of Freedom of Contract: A Rejoinder

This rejoinder to the foregoing critiques of the author\u27s book, The Limits of Freedom of Contract, focuses on several themes: a) what range of contractually-related issues do courts possess the requisite institutional competence to address? b) whether problematic normative issues in contract law are amenable to rational analysis and at least provisional resolution, or are inherently indeterminate, contingent, and political? c) what the value of individual autonomy implies in terms of the type of transactions parties should be permitted to engage in? d) whether an internal rather than consequentialist theory of contract law is conceivable? and e) whether autonomy values are inconsistent with welfare values in women\u27s participation in market activities

The Efficacy of the Tort System and Its Alternatives: A Review of Empirical Evidence

This paper reviews the existing empirical evidence on the efficacy of the tort system and alternatives to it. The evidence is evaluated against three normative goals: deterrence, corrective justice, and distributive justice. Empirical evidence relating to five major categories of accidents is reviewed: automobile accidents, medical malpractice, product related accidents, environmental injuries, and workplace injuries. In each case, the paper proceeds by reviewing empirical evidence on the deterrence and compensatory properties of the tort system, and then reviews parallel bodies of evidence on regulatory or penal alternatives and on compensatory alternatives to the tort system. The paper concludes that the deterrent properties of the tort system seem strongest with respect to auto accidents and weakest with respect to environmentally related accidents. The incentive effects of the system are mixed in the case of medical malpractice and product related accidents, making net welfare judgments problematic. In the case of workplace accidents, workers\u27 compensation levies appear to have stronger deterrent effects than the tort system did have or might have if resurrected in this context. With respect to an expansive distributive justice perspective, the tort system appears to fail badly in all five areas, with the failure being most severe with respect to environmentally related injuries, product related injuries, and medically induced injuries. With respect to a corrective justice perspective, the tort system appears to perform reasonably well in the automobile accident context, but much less well with respect to medically induced injuries and environmentally related injuries. With respect to product related accidents, its performance is unclear. As to the alternatives to the tort system, regulatory achievements with respect to workplace safety, product related accidents, and medical malpractice appear to have been modest. In environmentally related accidents and, more qualifiedly, traffic related accidents, regulatory policies appear to have registered notable successes, although in some cases generating costs disproportionate to the benefits. As to compensatory alternatives to the tort system, these have so far played a marginal role with respect to medical, product, and environmentally related personal injuries. In the case of traffic related accidents, the empirical evidence suggests that various kinds of no-fault compensation systems can deliver compensatory benefits, at least for pecuniary losses, at lower administrative costs and with greater speed than the tort system. Even with substantial risk rating of premiums or contributions to such schemes, there is still a debate whether a significant loss in deterrence arises from curtailment or abolition of the tort system. With respect to workplace injuries or disabilities, workers\u27 compensation schemes appear to deliver relatively complete compensation for pecuniary losses (except for long term disability) at relatively low administrative costs and more expeditiously than the tort system, as well as achieving significant safety gains. In the case of medically related injuries, experience with programmes in New Zealand and Sweden suggests that no-fault compensation systems are viable alternatives to the tort system. Although they suffer from weak internalization of accident costs to wrongdoers, these no-fault systems hold out the promise of compensating a wider range of victims more expeditiously and at lower administrative cost than the tort system. In the case of product and environmentally related injuries, no general compensatory alternatives to the tort system for personal injuries readily suggest themselves. The paper expresses doubt as to whether a general social insurance alternative to the tort system, covering both injuries and disabilities, with non-risk rated financial contributions and high levels of income coverage, is a feasible alternative to tort law for personal injuries and disabilities at large

Towards a New Compact for University Education in Ontario

Over the past decade, a number of different industrialized democracies have critically examined the structure and performance of their postsecondary education systems. By and large, the focus of this attention has been on the capacity of the state to support the needs and aspirations of the traditional publicly funded research-intensive university. In the received model, the public research university receives significant levels of funding from the state to support its research and teaching activities, but is subject to some level of state oversight and control so as to render the activities of the institution congruent with the public interest. The level of state intervention in the affairs of the public research university (and its precise form) varies of course from jurisdiction to jurisdiction, but typically involves some regulation of programs (priority may be placed on education and research programs that are geared to the local economy), tuition fees (typically set at below market rates), student financial assistance, and admissions (preferential treatment for in-state versus out-of-state or out-of-country students). In contrast, privately funded research universities (to the extent that they are permitted to operate in jurisdictions supporting public university education) are not subject to the same degree of oversight, but also do not receive the same degree of public funding

The Political Economy of Rule of Law Reform in Developing Countries

In this paper, the authors briefly review the recent experience with rule of law reform initiatives in Latin America, Africa, and Central and Eastern Europe, drawing on more detailed case studies by the authors. The authors are currently working on a similar case study on rule of law reform experiences in Asia