The case for law and economics: beyond disciplinary nirvanas?
In recent years, as Mercuro and Medema (1997, pp ix–x) point out, “Law and Economics has developed from a small and rather esoteric branch within economics and law, to a substantial movement that has helped to both redefine the study of law and expose economics to the important implications of the legal environment.” Although the standard law and economics approach typically refers to legal rules (Friedman 1998), recent developments have focussed more on “institutional” rules, including informal and customary ones, and the wide range of institutions performing private orderings and enforcement.
Traditional “law and economics” is mainly identified with the Chicagoan tradition, starting in the 1950s, and covers a number of long-investigated topics (such as economic analysis of contract law, property law and torts, criminal law, competition law, and corporate governance). However, according to many researchers in the field, law and economics would now include also the theory of the firm, the analysis of institutions and regulations, and the evolution of norms and behaviour. The complexity surrounding current methods and approaches to law and economics involves the need to go beyond the Chicagoan tradition, and even beyond the important contribution of new institutional economics (NIE), in order to assess the full range of interdependencies among legal rules, economic behaviour, motivation, and institutional change.