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Legal efficiency and consistency

Accepted version
Peer-reviewed

Type

Article

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Authors

Anderlini, L 
Riboni, A 

Abstract

© 2019 Elsevier B.V. We analyze the efficiency and consistency of court decisions under common and civil law. As a leading example, we study the enforcement of property rights. Judges are of two types: some are conservative and follow the precedent or the statute, while others maximize social welfare. When courts intervene ex-post, after the relevant economic choices have been made, welfare-maximizing courts face a “commitment problem.” Such an ex-post bias has implications on the relative “consistency” and efficiency of each legal system. Surprisingly, we find that court decisions are more consistent under common law than under civil law. The welfare comparison between the two systems is, instead, ambiguous. However, in changing economic environments, common law is more likely to dominate civil law because of its greater adaptability.

Description

Keywords

Property right protection, Legal origin, Time-Inconsistency, Investment, Legal adaptability

Journal Title

European Economic Review

Conference Name

Journal ISSN

0014-2921
1873-572X

Volume Title

121

Publisher

Elsevier BV