5IE570 Law and Economics
Course title in Czech: Ekonomická analýza práva
Lecturer: Libor Dušek
Aims of the course:
The course covers key concepts and tools of Law and Economics. The basic premise of Law and
Economics is that law shapes the incentives that people and firms face in many aspects of their
market and non-market behavior: whether to buy a house, what to write in a contract, how carefully
to drive a car, or whether to kill an accidental witness (a problem faced occasionally by criminals). The
course employs a standard toolbox of economic theory to analyze how legal rules affect the behavior
of people and firms, how they affect market outcomes, and how they compare in terms of economic
efficiency. Among other things, the course will compare selected Continental and American legal
concepts and explore the new Czech Civil Code from an economic perspective.
Learning outcomes and competences:
Upon the completion of the course, the students should:
- understand the key concepts (e.g., how law affects incentives, the Coase theorem, allocation of
- risk in contracts, economics of liability, optimal punishment, etc)
- apply those concepts to predict the effects of legal rules on economic outcomes
- compare the efficiency properties of alternative legal rules
- be familiar with several empirical findings in Law and Economics
- Introduction to Law and Economics: methodology, efficiency concepts
- Coase theorem and nuisance law
- Contracts: formation, breach, allocation of risk
- Tort law
- Value of life
- Economics of crime: theory of optimal punishment and applications
- Illegal markets
- Procedure: criminal and civil
- Macro Law and Economics
Assessment methods and criteria
- homework – 2 short problem sets 10%
- term paper 30 %
- term paper presentation 10%
- final test 60 %
Learning activities, teaching methods and workload (hours):
- participation in lectures 26h
- readings for lectures 26h
- preparation of term paper 26hpreparation of presentation 2h
- homework 8h
- preparation for final test 16h
- TOTAL 104h (4 ECTS credits)
- Cooter, R. and Ulen, T: Law and Economics, 6th edition, Prentice Hall 2011 (editions 3rd-5th are also sufficient)
- Schaffer, H.B. and Ott, C.: The Economic Analysis of Civil Law, Edward Elger 2004.
- Friedman, David D: Law’s Order, Princeton University Press 2000
- Polinsky, M.A. and Shavell, S.: Handbook of Law and Economics Volume 1, North-Holland 2007.
- Course lecture notes
- Adelstein, R., and Miceli, T.: Toward a Comparative Economics of Plea Bargaining, European Journal of Law and Economics, 11:1; pp 47-67, 2001
- Becker, G.S.: Crime and Punishment: An Economic Approach, Journal of Political Economy, Vol. 76, No.2, 1968.
- Coase, R. H.: The Problem of Social Costs, Journal of Law and Economics (1960), 3: 1-44.
- Djankov S., O. Hart, C. McLiesh, A. Shleifer: Debt Enforcement Around the World, J of Political Economy 2008.
- Garoupa, N. and Stephen, F.H.: Law and Economics of Plea Bargaining, working paper 2006
- Levitt, S. D. and Miles T.J.: Empirical Study of Criminal Punishment, in: Polinsky, A. M. and Steven Shavell (eds.): HLE, Chapter 7, 455-495.
- Levitt, S. and Venkatesh, S.: An economic analysis of a drug-selling gang’s finances, Quarterly Journal of Economics, Vol. 115 (3), 2000: 755-789.
- Medema, S.: The Coase Theorem Lessons for the Study of the History of Economic Thought, Journal of the History of Economic Thought, 33, pp 1-18
- Miron, J. and Zwiebel, J.: The economic case against drug prohibition, Journal of Economic Perspectives, Autumn 1995.
- Shleifer A., R. LaPorta, F. Lopez-de-Silanes: The economic consequences of legal origins, J of Economic Literature 2008
- Viscussi, K: The Value of Risks to Life and Death, Journal of Economic Literature, Vol. 31, No. 4. (Dec., 1993), pp. 1912-1946.