Economic Analysis of Law
November 2005
A. Mitchell Polinsky Stanford Law School Steven Shavell Harvard Law School

Stanford Law School John M. Olin Program in Law and Economics Working Paper No. 316 Harvard Law School John M. Olin Center for Law, Economics, and Business Discussion Paper No. 536

This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection: http://ssrn.com/abstract=859406

To appear in: Lawrence Blume and Steven Durlauf (Editors), The New Palgrave Dictionary of Economics (Second Edition, forthcoming).

November 2005

Economic Analysis of Law
A. Mitchell Polinsky and Steven Shavell*

Abstract: This entry for the forthcoming The New Palgrave Dictionary of Economics (Second Edition) surveys the economic analysis of five primary fields of law: property law; liability for accidents; contract law; litigation; and public enforcement and criminal law. It also briefly considers some criticisms of the economic analysis of law.

Keywords: law and economics; property law; liability for accidents; contract law; litigation; public enforcement; criminal law JEL classification: D02; D23; D63; H23; J28; K11; K12; K13; K14; K32; K41; K42; P14; P48 ____________________________________________________________

_______________ * Stanford Law School and Harvard Law School, respectively. Both authors also are affiliated with the National Bureau of Economic Research. Polinsky’s research was supported by the John M. Olin Program in Law and Economics at Stanford Law School, and Shavell’s research was supported by the John M. Olin Center for Law, Economics, and Business at Harvard Law School.

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Economic analysis of law seeks to identify the effects of legal rules on the behavior of relevant actors and whether these effects are socially desirable. The approach employed is that of economic analysis generally: the behavior of individuals and firms is described assuming that they are forward looking