Topics in the Economic Analysis of Law

Introduksjon

How should an M&A transaction be structured? How should corporations be governed? When should auditors be held liable for corporate misconduct? What is the most effective way to limit anticompetitive behavior? This course uses economic reasoning to analyze such questions.

The core analytical tool is the economic analysis of law (often referred to as law and economics)—a powerful framework for understanding how legal rules influence behavior, markets, and economic outcomes. Rather than focusing primarily on legal doctrine, the course emphasizes how legal rules operate in practice. Using tools from economics, it examines how laws shape incentives, allocate risk, and affect decision-making under uncertainty.

Building on this framework, the course analyzes how legal systems structure economic relationships through both public legal rules and private ordering. Public rules are set and enforced by regulators, courts, and legislatures, while private rules emerge through contracts and corporate governance arrangements chosen by firms and individuals within the legal framework.

Contracts are treated not simply as legal documents, but as privately designed systems of rules that allocate risk, create incentives, and address information problems in economic relationships. The course therefore places particular emphasis on contract design and corporate governance—two central mechanisms through which private actors structure high-value, long-term transactions and manage conflicts of interest between shareholders, managers, boards, and creditors.

The course also examines areas in which public legal rules play a direct and central role. In tort law, we analyze how liability rules shape precaution and risk-taking. In competition law, we examine market power, strategic behavior, and the economic logic of antitrust intervention. Across these domains, students learn to engage rigorously in debates about regulation and legislation, to interpret and assess legal arguments, and to reason about the economic consequences of legal change.

Throughout the course, students develop a systematic way of analyzing legal problems using economic reasoning. This approach provides a deep understanding of how legal systems function in practice and plays a central role in modern policy analysis. It clarifies how regulation is designed, how complex transactions are negotiated, and offers a framework for comparing alternative legal rules and institutional arrangements.
 

Kursets innhold

• Contracts: Why do contracts exist? When should law intervene in private contracting? How can we design effective contracts under real-world constraints? How should contracts allocate risk, provide incentives, and handle unforeseen contingencies?

• Tort law: When should you sue? How much are you entitled to in damages? How do liability rules affect precaution and activity levels? How can tort law be explained and interpreted by economic theory?

• Corporate governance: What are the economic rationales behind different corporate governance structures? How do legal rules shape conflicts between majority and minority shareholders, and between shareholders and management?

• Competition law: When does market power become a problem for efficiency? How should firms think about pricing strategies under competition law? When are agreements between firms harmful to competition? How should mergers be evaluated?

  The course also touches on criminal sanctions as one tool in the legal toolkit for shaping economic behavior.
   

Forbehold

Dette er et utdrag fra den komplette kursbeskrivelsen for kurset. Dersom du er aktiv student på BI, kan du finne de komplette kursbeskrivelsene med informasjon om bl.a. læringsmål, læreprosess, pensum og eksamen på portal.bi.no. Vi tar forbehold om endringer i denne beskrivelsen.