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Adjudication as a Private Good

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  • William M. Landes
  • Richard A. Posner

Abstract

This paper examines the question whether adjudication can be viewed as a private good, i.e., one whose optimal level will be generated in a free market. Part I focuses on private courts, noting their limitations as institutions for dispute resolution and rule creation but also stressing the important role that the private court, in its various manifestations, has played both historically and today. Part II discusses a recent literature which has argued that the rules generated in the public court system, in areas of the law where the parties to litigation are private individuals or firms and the rules of law are judge-made, are the efficient products of purely private inputs. Our analysis suggests that this literature has overstated the tendency of a common law system to produce efficient rules, although areas can be identified where such a tendency can indeed be predicted on economic grounds. Viewed as a contribution to the emergent literature on the positive economic theory of law, our finding that the public courts do not automatically generate efficient rules is disappointing, since it leaves unexplained the mechanisms by which such rules emerge as they seem to have done in a number of the areas of Anglo-American judge-made law. However, our other major finding, that the practices and law governing private adjudication appear to be strongly influenced by economic considerations and explicable in economic terms, is evidence that economic theory has a major role to play in explaining fundamental features of the legal system.

Suggested Citation

  • William M. Landes & Richard A. Posner, 1978. "Adjudication as a Private Good," NBER Working Papers 0263, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0263 Note: LE
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    Cited by:

    1. Ashenfelter, O. & Bloom, D., 1990. "Lawyers As Agents Of The Devil In A Prisoner'S Dilemma Game," Papers 57, Princeton, Woodrow Wilson School - Discussion Paper.
    2. Suri Ratnapala, 2001. "Eighteenth-Century Evolutionary Thought and its Relevance in the Age of Legislation," Constitutional Political Economy, Springer, vol. 12(1), pages 51-75, March.
    3. Dennis W. Carlton & Randal C. Picker, 2014. "Antitrust and Regulation," NBER Chapters,in: Economic Regulation and Its Reform: What Have We Learned?, pages 25-61 National Bureau of Economic Research, Inc.
    4. Martin Schneider, "undated". "Erfolgsmessung in Gerichten," German Working Papers in Law and Economics 2004-1-1103, Berkeley Electronic Press.
    5. Orley Ashenfelter & David Bloom, 1981. "Models of Arbitrator Behavior: Theory and Evidence," Working Papers 526, Princeton University, Department of Economics, Industrial Relations Section..
    6. Stefan Voigt, 2009. "Does Arbitration Blossom when State Courts are Bad?," MAGKS Papers on Economics 200906, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    7. Bruce Benson, 1999. "To Arbitrate or To Litigate: That Is the Question," European Journal of Law and Economics, Springer, vol. 8(2), pages 91-151, September.
    8. Martin Schneider, 2002. "Judicial Lawmaking in a Civil Law System: Evidence from German Labor Courts of Appeal," IAAEG Discussion Papers until 2011 200202, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    9. Steven Shavell, 1981. "The Social versus the Private Incentive to Bring Suit in a Costly Legal System," NBER Working Papers 0741, National Bureau of Economic Research, Inc.
    10. Michael Mitsopoulos & Theodore Pelagidis, 2010. "Greek appeals courts’ quality analysis and performance," European Journal of Law and Economics, Springer, vol. 30(1), pages 17-39, August.
    11. Field, Barry C., 1985. "The Evolution Of Individual Property Rights In Massachusetts Agriculture, 17th-19th Centuries," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 14(2), October.
    12. Adam Smith & David Skarbek & Bart Wilson, 2012. "Anarchy, groups, and conflict: an experiment on the emergence of protective associations," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 38(2), pages 325-353, February.
    13. Jahn, Elke J. & Wagner, Thomas, 2001. "Labour's law?," Discussion Papers 6, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    14. George Halkos & Nicholas Kyriazis, 2003. "Property Rights and Game-Theory Implications of Satellite Communications: The Bilateral Case of Greece and Russia," European Journal of Law and Economics, Springer, vol. 15(3), pages 233-250, May.
    15. Edward Stringham & Todd Zywicki, 2011. "Rivalry and superior dispatch: an analysis of competing courts in medieval and early modern England," Public Choice, Springer, vol. 147(3), pages 497-524, June.

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