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The Market for Legal Innovation: Law and Economics in Europe and the United States. Nuno Garoupa Universidade Nova de Lisboa & CEPR Tom Ulen University of Illinois at UC College of Law. Motivation. This is a CLEF paper, started in the 2003 Berkeley meeting.

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The Market for Legal Innovation:Law and Economics in Europe andthe United States

Nuno Garoupa

Universidade Nova de Lisboa & CEPR

Tom Ulen

University of Illinois at UC College of Law

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  • This is a CLEF paper, started in the 2003 Berkeley meeting.

  • Cooter and Gordley, 1991, IRLE; Posner, 1997, IRLE: The prospects for the future of Law and Economics in Europe are excellent… unfortunately predictions have largely failed.

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General Question

  • Our subject in this paper is legal innovations, specifically innovations in the legal academy, in how scholars think and write about the law.

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General Question

  • We are looking at “big” legal innovations, those that change the manner in which we look at the law and the legal system, that alter our perceptions of how the law works or is able to accomplish its ends.

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General Question

  • Therefore, law and economics is innovative in the same sense in which critical legal studies or critical race theory is innovative—that is, it provides a new method or point of view from which to look at all areas of the law.

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What is Law and Economics?

  • “Law and Economics” is the application of economic analysis to any area of the law except those areas where its application would be obvious. So, for example, applying this definition, “law and economics” would not include antitrust or competition law, regulated industries, and taxation.

  • Minor Question 1: What about corporate and business law?

  • Minor Question 2: Is the JLE a Law and Economics journal?

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General Question

  • We believe that law and economics has become a prominent and perhaps predominant part of the tool set of the majority of law professors in the United States, regardless of their field of professional specialization.

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General Question

  • In contrast, law and economics has been given a relatively cold shoulder in European law schools, and pretty much elsewhere.

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General Question

  • We do not want to leave the impression that the problem is one peculiar to law and economics. It is, rather, a pervasive failure to recognize any scholarly innovation from outside law as worthwhile.

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Possible Reasons for These Differences

  • Explanations:

    • Political Ideology

    • Money and the Success of Law and Economics

    • Common vs. Civil Law: UK, Israel.

    • The Structure of Legal Education

      • 1. Law as Graduate or Undergraduate Education

      • 2. Competition in Higher Education

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Possible Reasons for These Differences

  • Explanations:

    • The Treatment of Legal Professoriate

      • 1. Tenure and Legal Publications

      • 2. Compensation for Law Professors

    • Utilitarianism vs. Kantianism

    • Legal Realism

    • The Great Man/Woman Theory

    • Legal Culture/The Influence of the Legal Profession

    • Informational and Reputational Cascades

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Formalization of Our Thesis

  • A Model of the Market for Legal Innovation

    • Demand determinants: lawyers, judges, legislators.

    • Supply determinants: mobility of law professors, compensation for excellence, tenure review, law reviews, increase in the number of law professors.

    • Market structure determinants: government regulations, organization of law schools, funding, use of law as national symbol.

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  • Higher and Legal Education Competitiveness seems to us a more plausible explanation than others.

  • In particular, we find the following very unconvincing:

    • Ideological biases among faculty;

    • The impact of commitment to utilitarianism;

    • Differences between common and civil law;

    • Whether legal education is graduate or undergraduate.