Odious Debt, Odious Credit, Economic Development, and Democratization

When a country signs an international treaty, it is not the government but the state that is bound, and the obligation will stand until a subsequent government formally exits the treaty. Exit is presumed to be costly: a government that repudiates earlier treaty obligations will suffer reputational harm in its international relations. Moreover, this general background norm of international law applies as well to debt: a government can announce that it is renouncing debt, but it will suffer severe reputational harm in the debt marketplace, much as a government that repudiates public international law obligations suffers a reputational harm. Here, Ginsburg and Ulen talks about the odious debt and odious credit in relation to economic development and democratization

The Growing Pains of Behavioral Law and Economics

We are at the beginning of behavioral law and economics. We now see only dimly the outlines of the elaborate theory of decision making that is to come. We are like the independent scholars who examined the various parts of a very large animal and then tried to put together their reports to describe that animal; we each have bits and pieces of the elephant but no clear image of the entire beast. But we should not despair. We must remember that this behavioralist discipline is, as scholarly developments go, young. Indeed, the conventional law and economics model, to which behavioral law and economics is, in large part, a reaction, is itself relatively new. Law and economics has only recently established itself as a vigorous area of scholarship, as evidenced by regular courses within law schools, multiple textbooks, scholarly conferences, professional organizations, an AALS section, and so on. For instance, the American Law and Economics Association held its first annual meeting in May, 1991. Therefore, we should not be surprised if behavioral law and economics exhibits a degree of awkwardness, lack of focus, some fumbling, and other characteristics of youthfulness. In mitigation, I hasten to add that there are very strong reasons to believe that this particular youth will grow to a vigorous adulthood. Nor should anyone be discouraged by the perfectly sensible criticisms that others make of behavioral theories. They are right to be critical and skeptical, and we should be, too. We must undertake the difficult task of persuading them of the value of the behavioral model

A Crowded House: Socioeconomics (and Other) Additions to the Law School and Economics Curricula

In this Article, the author remarks on two developments in the teaching of law and economics in the North American legal academy. First, a paradoxical trend: as law and economics becomes more firmly accepted among legal scholars, the need for separate courses on law and economics may decline. Second, the legal academy is developing important independent literature in law and economics. Ulen argues that as law and economics has become more influential and pervasive, the popularity of separate courses has declined, and the difficulty of fitting more into the curriculum has increased

The Efficiency of Specific Performance: Toward a Unified Theory of Contract Remedies

The purpose of this essay is to begin the development of an integrated theory of contract remedies by delineating the circumstances under which courts should simply enforce a stipulated remedy clause or grant relief to the innocent party in the form of damages or specific performance. The conclusion, in brief, is that in the absence of stipulated remedies in the contract that survive scrutiny on the usual formation defenses, specific performance is more likely than any form of money damages to achieve efficiency in the exchange and breach of reciprocal promises. If specific performance is the routine remedy for breach, there are strong reasons for believing, first, that more mutually beneficial exchanges of promises will be concluded in the future and that they will be exchanged at a lower cost than under any other contract remedy, and, second, that under specific performance postbreach adjustments to all contracts will be resolved in a manner most likely to lead to the promise being concluded in favor of the party who puts the highest value on the completed performance and at a lower cost than under any alternative. In Part I the notion of an efficient breach is explained and the theoretical literature on the efficiency aspects of remedies for breach other than specific performance are explored. In Part II, I discuss the role of certain nonlegal, market forces (such as reputation) in obtaining efficient breach, the efficacy of self-help measures such as bonding, arbitration, and liquidated damages, and then, in Part III, the traditional measures of money damages - restitution, reliance, and expectation. Part IV makes the case for specific performance as the routine remedy for breach by discussing its effect on contract formation costs and on post-breach negotiation costs. I also discuss what defenses a promisor might be allowed to mount against specific performance and, therefore, under what circumstances courts should award money damages rather than grant equitable relief to the nonbreaching party

The Market for Legal Innovation: Law and Economics in Europe and the United States

There have been a large number of innovations in legal scholarship in the U.S. legal academy over the past twenty-five or so years and very few from legal scholars in other parts of the world. For instance, because both of us work in the area of law and economics, we are both acutely aware of the large differences in the receptivity to law and economics as between the United States and Europe. The U.S. legal academy has generously embraced law and economics (and some other legal innovations), while Europe (and the rest of the world) has not. Why has the United States led the world in the production and adoption of legal scholarly innovations? This Article seeks to answer that question generally and with particular reference to law and economics. In Part II we deal with two definitional issues--what we mean by a legal innovation and what counts as law and economics. The scholarly innovations on which we focus are new methods of looking at many areas of the law, such as feminist jurisprudence, or the articulation of the principles and boundaries of an entire new area of law, such as elder law. By law and economics we mean the application of economic analysis to any of the area to which its application would not be obvious. Then in Part III we offer a series of anecdotes and empirical studies designed to show that law and economics is much more prominent in U.S. legal scholarship than in European legal scholarship. We then seek, in Part IV, explanations for the differences between the United States and European legal academies in their production and adoption of legal scholarship innovations generally and with respect to law and economics particularly. Our central claim is that it is the competitiveness of higher and legal education in the United States that is the principal explanation for the scholarly innovativeness of the United States and the lack of competition (and the consequent lack of an incentive to innovate) in European higher and legal education that explains the differences. We further hypothesize that the production and adoption of law and economics are attractive only to those who have experienced a prior legal scholarly innovation--legal realism. We draw a clear line of intellectual heritage from legal realism to law and economics. Before settling on competition and legal realism as the principal explanations for the production and adoption of legal scholarship innovations, we canvass (and reject) a large number of alternative explanations, such as political ideology, money, the differences between common and civil law systems, the structure of legal education, and more. In Part V we draw a connection between the standard economic theory of innovation and diffusion and our observations in the prior four parts of the Article. That economic theory of innovation and diffusion identifies three factors--demand, supply, and market structure--as determining the presence and pace of innovation and diffusion. We relate each of those factors to observable differences between the United States and Europe, showing that our explanation of the production and adoption of legal scholarly innovations follows the same factors as does the economic theory of innovation in production techniques

The Market for Legal Innovation: Law and Economics in Europe and the United States

There have been a large number of innovations in legal scholarship in the U.S. legal academy over the past twenty-five or so years and very few from legal scholars in other parts of the world. For instance, because both of us work in the area of law and economics, we are both acutely aware of the large differences in the receptivity to law and economics as between the United States and Europe. The U.S. legal academy has generously embraced law and economics (and some other legal innovations), while Europe (and the rest of the world) has not. Why has the United States led the world in the production and adoption of legal scholarly innovations? This Article seeks to answer that question generally and with particular reference to law and economics. In Part II we deal with two definitional issues--what we mean by a legal innovation and what counts as law and economics. The scholarly innovations on which we focus are new methods of looking at many areas of the law, such as feminist jurisprudence, or the articulation of the principles and boundaries of an entire new area of law, such as elder law. By law and economics we mean the application of economic analysis to any of the area to which its application would not be obvious. Then in Part III we offer a series of anecdotes and empirical studies designed to show that law and economics is much more prominent in U.S. legal scholarship than in European legal scholarship. We then seek, in Part IV, explanations for the differences between the United States and European legal academies in their production and adoption of legal scholarship innovations generally and with respect to law and economics particularly. Our central claim is that it is the competitiveness of higher and legal education in the United States that is the principal explanation for the scholarly innovativeness of the United States and the lack of competition (and the consequent lack of an incentive to innovate) in European higher and legal education that explains the differences. We further hypothesize that the production and adoption of law and economics are attractive only to those who have experienced a prior legal scholarly innovation--legal realism. We draw a clear line of intellectual heritage from legal realism to law and economics. Before settling on competition and legal realism as the principal explanations for the production and adoption of legal scholarship innovations, we canvass (and reject) a large number of alternative explanations, such as political ideology, money, the differences between common and civil law systems, the structure of legal education, and more. In Part V we draw a connection between the standard economic theory of innovation and diffusion and our observations in the prior four parts of the Article. That economic theory of innovation and diffusion identifies three factors--demand, supply, and market structure--as determining the presence and pace of innovation and diffusion. We relate each of those factors to observable differences between the United States and Europe, showing that our explanation of the production and adoption of legal scholarly innovations follows the same factors as does the economic theory of innovation in production techniques