ECONOMIC ANALYSIS OF LAW
Learning outcomes of the course unit
Legal and Institutional Economic Analysis studies the legal behaviour and juridical-institutional codes and evaluates the social costs of institutional choices and regulations, preparing lawyers who will be able to comprehend how legal and institutional contexts modify incentive and affect socio-economic behaviour, and will also be able to evaluate legal codes and institutions (for example within the context of international bodies: WB, IMF). In fact, the efficacy of standards, laws and regulations necessarily depend on the approach of the socio-economic behaviour of citizens who are dependent on the incentives created by policy (enforcement).
The course will provide in-depth analysis of public sector institutions and budgetary policy, dedicating special attention to efficiency and equity. Ample space will also be given property law, contracts, corporate theory and other legal questions. The course is not technical in nature and provides information useful for full comprehension of the issues covered.
Course contents summary
1. INTRODUCTION TO LEGAL AND INSTITUTIONAL ECONOMIC ANALYSIS
Basic concepts, economy of well-being, national budget and public choices, public needs, motivations and limits to public intervention; fiscal stabilisation, deficit and debt Theory of expected utility, asymmetric information and games. Welfare state, inequality and poverty; dynamic microsimulations; evaluation of social security and tax reforms in Italy.
2. PROPERTY LAW AND NEW ECONOMY
Property law; purpose of private property; external effects and Coase’s theorem, public needs, motivations and limits to public intervention; economy of information, intellectual property; incentives for research and development; patents and well-being.
3. CONTRACTS, PROBLEMS OF INCENTIVE, REGULATION AND CORPORATE THEORY
Economic theory of the contract, public sector contracts, regulation and incentives; anti-trust and asymmetric information. Drawing up and implementing contracts, solutions and incentives. Nature of the company; incomplete contracts and transaction costs; hierarchies and in-house organisation; separation of property/control and stock market; ICT and the “new economy".
4. CIVIL RESPONSIBILITY AND OTHER LEGAL PROBLEMS
Traditional approach and economic nature of the problem; damage liquidation; responsibility. Issues of civil and penal law: crime, “enforcement” and punishment.
Recommended texts: D. FRIEDMAN, L'Ordine del diritto. Perche l'analisi economica puo servire al diritto, Il Mulino, Bologna, 2004 (Capitoli 7, 10, 12, 14-15, 19) e P. VAGLIASINDI, Effetti Redistributivi dell'Intervento Pubblico, Giappichelli, Torino, 2004. Other useful background text, especially for those not attending the course: COOTER, MATTEI, MONATERI, PARDOLESI, ULEN, Il mercato delle regole. Analisi economica del diritto civile, Collana Strumenti, Il Mulino, Bologna, 1999. Further information regarding recommended texts will be given during lectures.
A supplementary course has also been planned on the topic “Budget, taxes and economic theory regarding contracts and responsibility” to be given by Dott.ssa Tiziana Ficarelli.
The lectures cover the entire course content and are supplemented by practical exercises; individual help is provided during open office hours. The course syllabus and exam will be tailored for those students in the advanced Financial Sciences course.