IDEAS home Printed from https://ideas.repec.org/a/kap/ejlwec/v38y2014i2p185-209.html
   My bibliography  Save this article

The color of law: an economic theory of legal boundaries

Author

Listed:
  • Thomas Miceli

Abstract

This paper presents an economic theory of property, tort, and contract law based on the goal of efficiently governing economic exchange relationships. In the theory, legal boundaries emerge endogenously in response to exogenous differences in the nature of the underlying transaction concerning the possible existence of unforeseen or non-contractible contingencies, and/or the desire of one of the parties to make non-salvageable investments prior to trade. The analysis asks whether, in this context, the transaction is best governed by property, tort, or contract principles. The conclusions are illustrated by a discussion of several cases that occupy the “boundaries” between the various areas. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Thomas Miceli, 2014. "The color of law: an economic theory of legal boundaries," European Journal of Law and Economics, Springer, vol. 38(2), pages 185-209, October.
    • Handle: RePEc:kap:ejlwec:v:38:y:2014:i:2:p:185-209
    DOI: 10.1007/s10657-014-9452-1
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s10657-014-9452-1
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10657-014-9452-1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Douglas W. Allen & Dean Lueck, 1993. "Transaction Costs and the Design of Cropshare Contracts," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 78-100, Spring.
    2. Patrick Bolton & Mathias Dewatripont, 2005. "Contract Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025760, December.
    3. William P. Rogerson, 1984. "Efficient Reliance and Damage Measures for Breach of Contract," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 39-53, Spring.
    4. Thomas Miceli, 2011. "Free riders, holdouts, and public use: a tale of two externalities," Public Choice, Springer, vol. 148(1), pages 105-117, July.
    5. Polinsky, A Mitchell, 1980. "On the Choice between Property Rules and Liability Rules," Economic Inquiry, Western Economic Association International, vol. 18(2), pages 233-246, April.
    6. Eswaran, Mukesh & Kotwal, Ashok, 1985. "A Theory of Contractual Structure in Agriculture," American Economic Review, American Economic Association, vol. 75(3), pages 352-367, June.
    7. Thomas J. Miceli & Kathleen Segerson, 2012. "Land Assembly and the Holdout Problem Under Sequential Bargaining," American Law and Economics Review, Oxford University Press, vol. 14(2), pages 372-390.
    8. Friedmann, Daniel, 1989. "The Efficient Breach Fallacy," The Journal of Legal Studies, University of Chicago Press, vol. 18(1), pages 1-24, January.
    9. White, Michelle J, 1988. "Contract Breach and Contract Discharge Due to Impossibility: A Unified Theory," The Journal of Legal Studies, University of Chicago Press, vol. 17(2), pages 353-376, June.
    10. Miceli, Thomas J. & Segerson, Kathleen, 2012. "Holdups and holdouts: What do they have in common?," Economics Letters, Elsevier, vol. 117(1), pages 330-333.
    11. A. Mitchell Polinsky & William P. Rogerson, 1983. "Products Liability, Consumer Misperceptions, and Market Power," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 581-589, Autumn.
    12. Craswell, Richard, 1989. "Performance, Reliance, and One-Sided Information," The Journal of Legal Studies, University of Chicago Press, vol. 18(2), pages 365-401, June.
    13. Steven Shavell, 1980. "Damage Measures for Breach of Contract," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 466-490, Autumn.
    14. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    15. Michael Spence, 1977. "Consumer Misperceptions, Product Failure and Producer Liability," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 561-572.
    16. Sykes, Alan O, 1990. "The Doctrine of Commercial Impracticability in a Second-Best World," The Journal of Legal Studies, University of Chicago Press, vol. 19(1), pages 43-94, January.
    17. Thomas J. Miceli & Kathleen Segerson, 2011. "Sequential Bargaining, Land Assembly, and the Holdout Problem," Working papers 2011-13, University of Connecticut, Department of Economics, revised Jan 2012.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Thomas J. Miceli, 2013. "The Color of Law: An Economic Theory of Legal Boundaries," Working papers 2013-17, University of Connecticut, Department of Economics.
    2. Thomas J. Miceli, 2014. "Transaction-Specific Investments and Organizational Choice: A Coase-to-Coase Theory," Working papers 2014-06, University of Connecticut, Department of Economics.
    3. Mehrdad Vahabi, 1999. "From Walrasian General Equilibrium to Incomplete Contracts: Making Sense of Institutions," Post-Print halshs-03704424, HAL.
    4. Thomas J. Miceli & Kathleen Segerson, 2014. "Opportunism in Sequential Investment Settings: On Holdups and Holdouts," Working papers 2014-08, University of Connecticut, Department of Economics.
    5. De Geest, Gerrit, 2013. "N problems require N instruments," International Review of Law and Economics, Elsevier, vol. 35(C), pages 42-57.
    6. Portillo, Javier E., 2019. "Land-assembly and externalities: How do positive post-development externalities affect land aggregation outcomes?," Regional Science and Urban Economics, Elsevier, vol. 77(C), pages 104-124.
    7. Miceli, Thomas J., 1995. "Contract modification when litigating for damages is costly," International Review of Law and Economics, Elsevier, vol. 15(1), pages 87-99, January.
    8. Bebchuk, Lucian Arye & Png, I. P. L., 1999. "Damage measures for inadvertant breach of contract," International Review of Law and Economics, Elsevier, vol. 19(3), pages 319-331, September.
    9. Alessandro De Chiara, 2018. "Courts' Decisions, Cooperative Investments, and Incomplete Contracts," CEU Working Papers 2018_5, Department of Economics, Central European University.
    10. Steven Shavell, 2003. "Economic Analysis of Contract Law," NBER Working Papers 9696, National Bureau of Economic Research, Inc.
    11. Deborah Minehart & Zvika Neeman, 1999. "Termination and Coordination in Partnerships," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(2), pages 191-221, June.
    12. Thomas J. Miceli, 2020. "Packaging Deals in the Entertainment Industry: A Bargaining Approach," Working papers 2020-21, University of Connecticut, Department of Economics.
    13. Matthias Kräkel, 2010. "Double-Sided Moral Hazard, Efficiency Wages, and Litigation," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 26(2), pages 337-364.
    14. Lewis A. Kornhauser & W. Bentley MacLeod, 2012. "Contracts between Legal Persons [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    15. Simon Schropp, Kornel Mahlstein, 2007. "The Optimal Design of Trade Policy Flexibility in the WTO," IHEID Working Papers 27-2007, Economics Section, The Graduate Institute of International Studies, revised Dec 2007.
    16. Eric Helland & Darius Lakdawalla & Anup Malani & Seth A Seabury, 2020. "Unintended Consequences of Products Liability: Evidence from the Pharmaceutical Market [“An Economic Analysis of Mary Carter Settlement Agreements,”]," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 36(3), pages 598-632.
    17. Donald Vandegrift, 1997. "Decision Costs, Contract Excuse, and the Westinghouse Commercial Impracticability Case," European Journal of Law and Economics, Springer, vol. 4(1), pages 41-54, January.
    18. Ola Kvaløy & Trond E. Olsen, 2009. "Endogenous Verifiability and Relational Contracting," American Economic Review, American Economic Association, vol. 99(5), pages 2193-2208, December.
    19. Zillante, Artie & Read, Dustin C. & Seiler, Michael J., 2020. "Assembling land for urban revitalization in the presence of linchpin parcels and information asymmetries: An experimental investigation," Land Use Policy, Elsevier, vol. 99(C).
    20. Edlin, Aaron S & Reichelstein, Stefan, 1996. "Holdups, Standard Breach Remedies, and Optimal Investment," American Economic Review, American Economic Association, vol. 86(3), pages 478-501, June.

    More about this item

    Keywords

    Property; Torts; Contracts; Legal boundaries; K10; K11; K12; K13;
    All these keywords.

    JEL classification:

    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:ejlwec:v:38:y:2014:i:2:p:185-209. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.