Transcript The Market for Legal Innovation: Law and Economics in

The Market for Legal Innovation:
Law and Economics in Europe and
the United States
Nuno Garoupa
Universidade Nova de Lisboa & CEPR
Tom Ulen
University of Illinois at UC College of Law
Motivation
• This is a CLEF paper, started in the 2003
Berkeley meeting.
• Cooter and Gordley, 1991, IRLE; Posner,
1997, IRLE: The prospects for the future of
Law and Economics in Europe are
excellent… unfortunately predictions have
largely failed.
General Question
• Our subject in this paper is legal
innovations, specifically innovations in the
legal academy, in how scholars think and
write about the law.
General Question
• We are looking at “big” legal innovations,
those that change the manner in which we
look at the law and the legal system, that
alter our perceptions of how the law works
or is able to accomplish its ends.
General Question
• Therefore, law and economics is
innovative in the same sense in which
critical legal studies or critical race theory
is innovative—that is, it provides a new
method or point of view from which to look
at all areas of the law.
What is Law and Economics?
• “Law and Economics” is the application of economic
analysis to any area of the law except those areas where
its application would be obvious. So, for example,
applying this definition, “law and economics” would not
include antitrust or competition law, regulated industries,
and taxation.
• Minor Question 1: What about corporate and business
law?
• Minor Question 2: Is the JLE a Law and Economics
journal?
General Question
• We believe that law and economics has
become a prominent and perhaps
predominant part of the tool set of the
majority of law professors in the United
States, regardless of their field of
professional specialization.
General Question
• In contrast, law and economics has been
given a relatively cold shoulder in
European law schools, and pretty much
elsewhere.
General Question
• We do not want to leave the impression
that the problem is one peculiar to law and
economics. It is, rather, a pervasive failure
to recognize any scholarly innovation from
outside law as worthwhile.
Possible Reasons for These
Differences
• Explanations:
– Political Ideology
– Money and the Success of Law and
Economics
– Common vs. Civil Law: UK, Israel.
– The Structure of Legal Education
• 1. Law as Graduate or Undergraduate Education
• 2. Competition in Higher Education
Possible Reasons for These
Differences
• Explanations:
– The Treatment of Legal Professoriate
• 1. Tenure and Legal Publications
• 2. Compensation for Law Professors
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Utilitarianism vs. Kantianism
Legal Realism
The Great Man/Woman Theory
Legal Culture/The Influence of the Legal Profession
Informational and Reputational Cascades
Formalization of Our Thesis
• A Model of the Market for Legal Innovation
– Demand determinants: lawyers, judges,
legislators.
– Supply determinants: mobility of law
professors, compensation for excellence,
tenure review, law reviews, increase in the
number of law professors.
– Market structure determinants: government
regulations, organization of law schools,
funding, use of law as national symbol.
Conclusion
• Higher and Legal Education Competitiveness
seems to us a more plausible explanation than
others.
• In particular, we find the following very
unconvincing:
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Ideological biases among faculty;
The impact of commitment to utilitarianism;
Differences between common and civil law;
Whether legal education is graduate or
undergraduate.