Common Law and Economic Efficiency


This is an entry for the forthcoming Second Edition of the Encyclopedia of Law and Economics (2d ed., Francesco Parisi and Richard Posner eds.).

This essay reviews the origins and development of the debate over the “efficiency of the common law hypothesis.”  The essay begins with the earliest explanation for the observed tendency of the common law as proffered by Richard Posner.  It then examines the Rubin-Priest and contemporary models of demand-side models of common law efficiency and critiques thereof.  It then turns to a supply-side analysis of the efficiency of the common law hypothesis, focusing on the nature of the constraints imposed on common law judges and changes in those constraints over time.  This essay also examines public choice analysis of the efficiency of the common law and the Austrian economics critique of the standard neoclassical model of analysis.