Economic Analysis of Law: Uses & Limitations

Abstract

This paper examines one broad question: “How useful is the economic analysis of law?” Before getting to this question this paper defines the economic analysis o law (EAL) and traces its historical development. It then compares and contrasts legal and economic methods to determine the uses and limitations of EAL. The conclusion reached is that the benefits of EAL outweigh the costs but that good sense is necessary to determine where benefits exist and how costs can be avoided. The benefits, it is argued, are found in the economic analysis of legal policy where efficiency and utility are important. EAL may involve costs when applied to the functional areas of the law where adjudication and justice are more important than efficiency and utility.