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The Color of Law: An Economic Theory of Legal Boundaries

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  • Thomas J. Miceli

    (University of Connecticut)

Abstract

This paper presents an economic theory of property, tort, and contract law based on the goal of efficiently governing economic exchange relationships. In the theory, legal boundaries emerge endogenously in response to exogenous differences in the nature of the underlying transaction concerning the possible existence of unforeseen or non-contractible contingencies, and/or the desire of one of the parties to make non-salvageable investments prior to trade. The analysis asks whether, in this context, the transaction is best governed by property, tort, or contract principles. The conclusions are illustrated by a discussion of several cases that occupy the “boundaries” between the various areas.

Suggested Citation

  • Thomas J. Miceli, 2013. "The Color of Law: An Economic Theory of Legal Boundaries," Working papers 2013-17, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2013-17
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    References listed on IDEAS

    as
    1. Patrick Bolton & Mathias Dewatripont, 2005. "Contract Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025760, December.
    2. Friedmann, Daniel, 1989. "The Efficient Breach Fallacy," The Journal of Legal Studies, University of Chicago Press, vol. 18(1), pages 1-24, January.
    3. A. Mitchell Polinsky & William P. Rogerson, 1983. "Products Liability, Consumer Misperceptions, and Market Power," Bell Journal of Economics, The RAND Corporation, vol. 14(2), pages 581-589, Autumn.
    4. Michael Spence, 1977. "Consumer Misperceptions, Product Failure and Producer Liability," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 561-572.
    5. Douglas W. Allen & Dean Lueck, 1993. "Transaction Costs and the Design of Cropshare Contracts," RAND Journal of Economics, The RAND Corporation, vol. 24(1), pages 78-100, Spring.
    6. Miceli, Thomas J. & Segerson, Kathleen, 2012. "Holdups and holdouts: What do they have in common?," Economics Letters, Elsevier, vol. 117(1), pages 330-333.
    7. White, Michelle J, 1988. "Contract Breach and Contract Discharge Due to Impossibility: A Unified Theory," The Journal of Legal Studies, University of Chicago Press, vol. 17(2), pages 353-376, June.
    8. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Property; torts; contracts; legal boundaries;
    All these keywords.

    JEL classification:

    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability; Forensic Economics

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