The law and the economy interact in many ways. Whereas private law assists individuals and groups who are willing to enter into agreements in a free market, public law seeks to correct the outcomes of a free market system by means of economic and social regulation. Economists themselves should be informed about the legal environment in which economic activities must be conducted, while lawyers should be aware of the economic effects of current legal rules and the expected outcome under a different legal regime. Law & Economics meshes together two of society’s fundamental social constructs into one subject, allowing a multi-faceted study of significant problems which exist in each subject.
What can Law & Economics do?
Law & Economics, with its positive economic analysis, seeks to explain the behaviour of legislators, prosecutors, judges, and bureaucrats. The model of rational choice, which underlies much of modern economics, proved to be very useful for explaining (and predicting) how people act under various legal constraints. This positive analysis informs the normative branch of the discipline about possible outcomes. If effects of divergent legal rules and institutions are known, the normative analyst will be able to discern efficient rules from those that are inefficient and formulate reform proposals to increase the efficiency of the law. Also, Law & Economics has the ability to improve the quality of the legal system. In the last decades, an impressive literature has developed, showing the strength of both positive and normative economic analysis in various areas of law.
History of Law & Economics
Law & Economics began its synthesis as a discipline through the theories of the Chicago School, and received guidance and influence from such pioneers as Guido Calabresi and Nobel Prize winners Ronald Coase and Gary Becker. Richard Posner’s book ‘Economic Analysis of Law’ became one of the classics of the discipline. Recently, other methods have moved to the fore, including the Property Rights approach, the Austrian School and the Neo-Institutionalist approach. Finally, the Public Choice School, with Nobel Prize winner James Buchanan as an outstanding author, focuses more specifically on the political context of the law-making process.
History of EMLE
The European Master Programme in Law and Economics started in 1990 at the Universities of Ghent, Paris IX, Oxford and Rotterdam with 20 students from different European countries. From the very beginning, the Programme received recognition and financial support of the ERASMUS Bureau of the European Community. Awards were granted every year for student mobility and the development of an international curriculum. In the first three years, the possibility to choose among different teaching centres only existed in the third term. From 1993 onwards, the network has offered a choice also in the second term, and since 2002, students have been able to choose between different universities for each of the three terms. The number of partner universities has increased rapidly and the network now comprises seven teaching centres within the EU (Aix-Marseille, Bologna, Gent, Hamburg, Rotterdam, Vienna, Warsaw) and two worldwide (Haifa and Mumbai).
Since its beginning, the Law and Economics Programme has steadily increased in numbers of participating students and scholars. The broad supply of teaching centres has clearly added to the attractiveness of the Programme. For example, in the year 2007-2008 there were more than 500 applications for a maximum of 116 places in the Programme. Most applicants are nationals of EC member states and Israel, but there is also an increasing number of applications from outside Europe (North America, Canada, Latin America, India, China and other Asian countries).
Law & Economics in Europe
Although the origins of Law & Economics are decidedly American, this has not prevented its spread to our continent. The annual conference of the European Association of Law and Economics (EALE), organised each year at a European university, has evolved into a major event. In several European universities, professors and assistants are developing and refining the Law & Economics approach, and EMLE is designed to help fill the need for a strong European-based academic programme and training scheme.