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Economics 
department

 Law, business, and the economy are increasingly intertwined. This course introduces the economic analysis of law, one of the fastest-growing areas of applied microeconomics. Beginning with an overview of legal institutions and the debate over the efficiency of the law, the course moves on to a detailed analysis of property law (including patents, trademarks, and intellectual property), contracts, bargaining and negotiation, criminal law (including white-collar crimes such as "insider trading"), and torts (including products liability). Students will serve as jury members for a business lawsuit argued by the law school’s mock trial team. 

Law and economics is part of the new economics of contracts, organizations, and institutions. As such, it is a companion course to Economics 4650/6650, "Economics of Organization and Management." This branch of economics uses standard microeconomic tools and concepts--scarcity, choice, preferences, incentives, supply and demand, and so on--to explain legal and political rules, social conventions and norms, firms and contracts, government organizations, and other institutions. We will study all these, with particular attention to legal institutions, property rights, and contracts. Our perspective will be that of the economist, trying to understand these institutions by reference to purposeful human choice. 

We begin with a general study of property rights and transaction costs, the nature of "efficiency," and the difference between law and legislation. Next, we turn to legal institutions such as the laws of civil procedure, the debate over the efficiency of the common law, and the theory of social cost. We also look at two specific examples of legal institutions: tort law and criminal law. We conclude by looking at contracts and their enforcement. 

Please note that this course assumes a strong working background in microeconomics. (ECON 4010 or ECON 8910 is a prerequisite.) See below for a hint on brushing up on your intermediate micro. 

The final grade will be based on two midterm exams, a comprehensive final exam, class participation, and four small writing assignments. Each midterm will count for 20 percent of the final grade; the final exam will count for 30 percent; the writing assignments will count for 5 percent each; and the remaining 10 percent will be determined by class participation. There will also be an extra credit assignment. Toward the end of the quarter each student will give a brief in-class presentation of his or her third writing assignment. The final will be given Tuesday, May 9 at 8:00 a.m. There will be no makeup exams of any kind. If you miss a midterm exam and have a University-approved absence, I will apply the weight of that midterm to your remaining assignments. If you know now that you cannot take the final on the assigned date, you should not take this course. 

The textbook is Robert Cooter and Thomas Ulen, Law and Economics, third edition (Reading, Mass.: Addison-Wesley, 1999). It is available in all the usual places. There is also a required course reader, available at Bel-Jean Copy Center. Finally, you are required to subscribe (if you don't already) to the Wall Street Journal and to read it daily. Special discounted, fifteen-week subscriptions are available through the instructor. 

Hint: Chapter 2 of Cooter and Ulen contains a good review of the relevant parts of intermediate micro. We will not be covering this chapter in class, but it will be assumed that you know that material well. If it's been a while since you had intermediate micro, take a few hours and review the chapter. It will be a big help throughout the course.