Summary: Law & Economics

Read the summary and the most important questions on law & economics

• property

  This is a preview. There are 31 more flashcards available for chapter 01/04/2015
  Show more cards here

• Normative Coase Theorem

  Structure the law so as to remove the impediments to private agreement ( lubricate bargaining)

• Normative Hobbes Theorem

  Structure the law so as to minimize the harm caused by failure in private agreement; The law should assign the rights to the party who values them the most

• What types of remedies exist?

  Legal remedy and equitable relief

• What rule applies when transaction costs are zero

  Damages and injuction are both equally efficient. 

• What rule applies when trascation costs are low?

  Injuction is the usual remedy, because parties can bargain with each other, when the rights are clearly defined

• What rule applies when transaction costs are high?

  Damages is the usual remedy, because it involve lower administrative costs.

• What are the remedies for an uregulated market which under supplies the efficient amount of information?

  the state should subsidize art and science; charitable contribution; trade secrets protection; intellectual property law`

• What are the principles of assigning property rights?

  first possession: first in time, first in right, it is cheap to apply, causes preemptive investment in order to obtain the right; tied ownership: ties fugitive property to settled property, it is expensive to administer and enforce

• Transfer of rights, US and Europe

  US: people can only transfer rights which they legitimately have. gives an extra incentive to the buyer to verify that the seller is the actual owner; Europe: the good faith requirements means that the buyer must truly believe that the seller actually owns the good. it gives an extra incentive to protect property against theft

• When is efficient to retain title against the good faith buyer?

  When the cost of the original owner to protect the good against theft is higher than the cost of the purchaser to verify that the seller is the owner