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Concepts in Law and EconomicsA Guide for the Curious$
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Jim Leitzel

Print publication date: 2015

Print ISBN-13: 9780190213978

Published to Oxford Scholarship Online: September 2015

DOI: 10.1093/acprof:oso/9780190213978.001.0001

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The Sixty-Minute Law School

The Sixty-Minute Law School

(p.28) 2 The Sixty-Minute Law School
Concepts in Law and Economics

Jim Leitzel

Oxford University Press

Economic efficiency offers a measuring stick for what constitutes a desirable law: laws that promote efficiency are better than laws that do not. This measuring stick can be deployed to identify appropriate rules in all areas of the law, including contracts, torts (accidents), crime, and property, without requiring three years (or even any years) of studying law. Laws that induce you to consider all of the social costs and benefits of your decisions—laws that internalize externalities, in economics jargon—will tend to promote economic efficiency. In tort law, either strict liability (where injurers must compensate any harms suffered by victims) or a negligence regime (where injurers only compensate victims if the injurer’s actions were unreasonably dangerous) can successfully internalize externalities and promote economic efficiency.

Keywords:   efficiency, property, contracts, torts, crime, externalities, strict liability, negligence

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