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Case Law versus Statute Law: An Evolutionary Comparison

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  • Giacomo A. M. Ponzetto
  • Patricio A. Fernandez

Abstract

Case law develops gradually through the rulings of appellate judges who have heterogeneous preferences but are partially bound by stare decisis. We show that its evolution converges toward more efficient and predictable legal rules. Since statutes do not share this evolutionary property, case law is the best system when the efficient rule is time invariant, even if the legislature is more democratically representative than individual judges are. In the presence of social change, the ideal legal system includes both legislation and judicial decisions as complementary sources of law. Our model thus explains the modern history of common law and the observed cross-country correlation between legal origins and economic outcomes. It also predicts the gradual convergence of civil law and common law toward a mixed system. (c) 2008 by The University of Chicago. All rights reserved.

Suggested Citation

  • Giacomo A. M. Ponzetto & Patricio A. Fernandez, 2008. "Case Law versus Statute Law: An Evolutionary Comparison," The Journal of Legal Studies, University of Chicago Press, vol. 37(2), pages 379-430, June.
  • Handle: RePEc:ucp:jlstud:v:37:y:2008:i:2:p:379-430
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    References listed on IDEAS

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    Cited by:

    1. Nicola Gennaioli & Enrico Perotti, 2009. "Standardized enforcement: Access to justice vs contractual innovation," Economics Working Papers 1329, Department of Economics and Business, Universitat Pompeu Fabra, revised Jun 2012.
    2. Luca Anderlini & Leonardo Felli & Alessandro Riboni, 2014. "Why Stare Decisis?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 726-738, October.
    3. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, pages 285-332.
    4. Andrei Shleifer, 2010. "Efficient Regulation," NBER Chapters,in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 27-43 National Bureau of Economic Research, Inc.
    5. Leonardo Felli & Alessandro Riboni & Luca Anderlini, 2007. "Statute Law or Case Law?," 2007 Meeting Papers 952, Society for Economic Dynamics.
    6. Eric Hilt, 2009. "Wall Street's First Corporate Governance Crisis: The Panic of 1826," NBER Working Papers 14892, National Bureau of Economic Research, Inc.
    7. Guerriero, C., 2009. "Democracy, Judicial Attitudes and Heterogeneity: The Civil Versus Common Law Tradition," Cambridge Working Papers in Economics 0917, Faculty of Economics, University of Cambridge.
    8. Giri Parameswaran, 2012. "Ruling Narrowly: Learning and Law Creation," Working Papers 1419, Princeton University, Department of Economics, Econometric Research Program..
    9. Nicola Gennaioli & Giacomo A. M. Ponzetto, 2015. "Optimally vague contracts and the law," Economics Working Papers 1410, Department of Economics and Business, Universitat Pompeu Fabra, revised Jan 2017.
    10. Nicola Gennaioli & Andrei Shleifer, 2008. "Judicial Fact Discretion," The Journal of Legal Studies, University of Chicago Press, pages 1-35.
    11. von Wangenheim Georg, 2011. "Evolutionary Theories in Law and Economics and Their Use for Comparative Legal Theory," Review of Law & Economics, De Gruyter, vol. 7(3), pages 737-765, December.
    12. repec:bla:ecinqu:v:55:y:2017:i:3:p:1511-1537 is not listed on IDEAS
    13. Gennaioli, Nicola & Ponzetto, Giacomo AM, 2015. "Legal Evolution and Contract Evolution under Imperfect Enforcement," CEPR Discussion Papers 10700, C.E.P.R. Discussion Papers.
    14. James B. Ang & Per G. Fredriksson, 2017. "Statehood Experience, Legal Traditions, And Climate Change Policies," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1511-1537, July.
    15. Anthony Niblett, 2013. "Case-by-Case Adjudication and the Path of the Law," The Journal of Legal Studies, University of Chicago Press, vol. 42(2), pages 303-330.
    16. Nicola Gennaioli & Giacomo A. M. Ponzetto, 2015. "Contract Innovation and Legal Evolution under Imperfect Enforcement," Working Papers 836, Barcelona Graduate School of Economics.
    17. Robin Christmann, 2014. "No Judge, No Job! Court errors and the contingent labor contract," European Journal of Law and Economics, Springer, vol. 38(3), pages 409-429, December.
    18. Guerriero, Carmine, 2016. "Endogenous legal traditions," International Review of Law and Economics, Elsevier, vol. 46(C), pages 49-69.
    19. repec:kap:ejlwec:v:43:y:2017:i:3:d:10.1007_s10657-015-9520-1 is not listed on IDEAS

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