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When the Editorial and Programme Director of the Institute of Economic Affairs asked me to write the foreword to this new edition of Cento Veljanovski’s The Economics of Law, I accepted his invitation immediately and with great pleasure. A book I had long wanted to see back in print, to benefi t both new generations of students and practising lawyers and economists as yet unfamiliar with the area, would soon once again be available. | The Economics of Law The Economics of Law Second edition CENTO VELJANOVSKI iea The Institute of Economic Affairs Second edition published in Great Britain in 2006 by The Institute of Economic Affairs 2 Lord North Street Westminster London swap 3LB in association with Profile Books Ltd First edition published in 1990 by The Institute of Economic Affairs The mission of the Institute of Economic Affairs is to improve public understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems. Copyright The Institute of Economic Affairs 1990 2006 The moral right of the author has been asserted. All rights reserved. Without limiting the rights under copyright reserved above no part of this publication may be reproduced stored or introduced into a retrieval system or transmitted in any form or by any means electronic mechanical photocopying recording or otherwise without the prior written permission of both the copyright owner and the publisher of this book. A CIP catalogue record for this book is available from the British Library. ISBN-10 o 255 365616 ISBN-13 978 o 255 365611 Many IEA publications are translated into languages other than English or are reprinted. Permission to translate or to reprint should be sought from the Director General at the address above. Typeset in Stone by Phoenix Photosetting Chatham Kent www.phoenixphotosetting.co.uk Printed and bound in Great Britain by Hobbs the Printers CONTENTS The author 8 Foreword by Geoffrey E. Wood 10 Summary 14 List of tables figures and boxes 17 1 Introduction 21 A harmful disciplinary divide 22 The economic approach to law 24 Outline of the book 25 2 A short history 27 Disciplinary divides 28 The development of the economic approach 30 3 Law as an incentive system 44 Ex post versus ex ante 44 Rent control and all that 4 7 Assumption of economic rationality 49 Economists do it with models 5 3 Positive versus normative economics 56
