The Evolution of a Legal Rule
AbstractEfficient legal rules are central to efficient resource allocation in a market economy. But the question whether the common law actually converges to efficiency in commercial areas has remained empirically untested. We create a data set of 461 state court appellate decisions involving the economic loss rule in construction disputes and trace the evolution of this law from 1970 to 2005. We find that the law did not converge to any stable resting point and evolved differently in different states. Legal evolution is influenced by plaintiffs’ choice of which legal claims to make, the relative economic power of the parties, and nonbinding federal precedent.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal The Journal of Legal Studies.
Volume (Year): 39 (2010)
Issue (Month): 2 ()
Pages: 325 - 358
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Web page: http://www.journals.uchicago.edu/JLS/
Other versions of this item:
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
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