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The Evolution of a Legal Rule

  • Anthony Niblett
  • Richard A. Posner
  • Andrei Shleifer

Efficient 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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File URL: http://www.jstor.org/stable/pdfplus/10.1086/652908
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File URL: http://www.jstor.org/stable/full/10.1086/652908
Download Restriction: Access to the online full text or PDF requires a subscription.

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Article 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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Handle: RePEc:ucp:jlstud:doi:10.1086/652908
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLS/

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  1. Dari-Mattiacci, Giuseppe & Schafer, Hans-Bernd, 2007. "The core of pure economic loss," International Review of Law and Economics, Elsevier, vol. 27(1), pages 8-28, March.
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  3. Robert Cooter & Lewis Kornhauser & David Lane, 1979. "Liability Rules, Limited Information, and the Role of Precedent," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 366-373, Spring.
  4. Shavell, Steven, 1996. "Any Frequency of Plaintiff Victory at Trial Is Possible," The Journal of Legal Studies, University of Chicago Press, vol. 25(2), pages 493-501, June.
  5. Gennaioli, Nicola & Shleifer, Andrei, 2007. "The Evolution of Common Law," Scholarly Articles 3451305, Harvard University Department of Economics.
  6. Goldberg, Victor P, 1994. "Recovery for Economic Loss following the Exxon Valdez Oil Spill," The Journal of Legal Studies, University of Chicago Press, vol. 23(1), pages 1-39, January.
  7. Theodore Eisenberg & Henry S. Farber, 1996. "The Litigious Plaintiff Hypothesis: Case Selection and Resolution," NBER Working Papers 5649, National Bureau of Economic Research, Inc.
  8. George L. Priest & Benjamin Klein, 1984. "The Selection of Disputes for Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 1-56, January.
  9. Gomez, Fernando & Schafer, Hans-Bernd, 2007. "The law and economics of pure economic loss: Introduction to the special issue of the International Review of Law and Economics," International Review of Law and Economics, Elsevier, vol. 27(1), pages 1-7, March.
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