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Law, Coercion, And Socioeconomic Equilibrium

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  • Soldatos, Gerasimos T.

Abstract

This paper investigates the economic conditions under which the performance of a Judiciary does not impede non-coercive fair socioeconomic allocations under “Strotz-myopia” regarding the law variable, i.e. under a static view of it in an otherwise dynamic context. The law, here, is the positive factor by which consumption volume is multiplied as a result of law introduction in an otherwise fully private social economy. Lexicographic preferences regarding the law is the keyword in establishing non-coercive equilibria either in the static context of a stone-age economy or in the dynamic context of a jungle economy, given in the latter the presence of farsightedness. Nevertheless, such equilibria are found here to exist even under myopia and regardless the presence of lexicographic preferences. We first detect them within a fully private social economy, and we next qualify them by introducing the Judiciary as state officials. The optimality regarding state finances imposes additional restrictions in establishing myopic non-coercive equilibria. In any case, an equilibrium will be stable if it is not influenced by the homotheticity or not of the preferences, i.e. by income distribution considerations. So, any suboptimal behaviour of the Judiciary should be attributed exclusively to the suboptimality of state finances: Macroeconomics does affect law administration.

Suggested Citation

  • Soldatos, Gerasimos T., 2015. "Law, Coercion, And Socioeconomic Equilibrium," MPRA Paper 68953, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:68953
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    File URL: https://mpra.ub.uni-muenchen.de/68953/1/MPRA_paper_68953.pdf
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    References listed on IDEAS

    as
    1. Kerstin Roeder, 2009. "Optimal taxes and pensions in a society with myopic agents," Working Papers 2009/28, Institut d'Economia de Barcelona (IEB).
    2. Magnus Hatlebakk, 2012. "Myopic preferences or subsistence income? Why do rickshaw cyclists rent the cycle?," CMI Working Papers 1, CMI (Chr. Michelsen Institute), Bergen, Norway.
    3. Mikael Priks, 2011. "Judiciaries in corrupt societies," Economics of Governance, Springer, vol. 12(1), pages 75-88, March.
    4. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
    5. Jain, Satish (ed.), 2010. "Law and Economics," OUP Catalogue, Oxford University Press, number 9780198067733.
    6. Svetozar Pejovich & Enrico Colombatto, 2008. "Law, Informal Rules and Economic Performance," Books, Edward Elgar Publishing, number 4198, June.
    7. Feldman, David, 1992. "Logarithmic Preferences, Myopic Decisions, and Incomplete Information," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(04), pages 619-629, December.
    8. Kannai, Yakar & Selden, Larry & Wei, Xiao, 2014. "Myopic separability," Journal of Economic Behavior & Organization, Elsevier, vol. 103(C), pages 125-144.
    9. Thomas J. Miceli, 2014. "Economic Models of Law," Working papers 2014-13, University of Connecticut, Department of Economics.
    10. Matthieu Chemin, 2007. "The Impact of the Judiciary on Economic Activity," Cahiers de recherche 0724, CIRPEE.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Myopic law preferences; Non-coercive allocations; Homotheticity; Judiciary;

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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