A Treatise on the Methodology of Law and Economics:Clarification through the Debate between Coase and Posner
Date Issued
2014
Date
2014
Author(s)
Chiang, Kan-Hsueh
Abstract
Legal scholars in Taiwan are not unfamiliar with Law and Economics, as it represents an essential methodology well-established in the United States. Nevertheless, misconceptions with respect to this field are prevalent within the Taiwanese legal scholar community due to, in my opinion, an inadequate understanding of the very foundations of this discipline. Therefore, to clarify Law and Economics, my approach begins by analyzing the debate between the two founding fathers of this school: Ronald Coase and Richard Posner.
Chapter one provides a review of the great body of literature aimed at explicating the differences between the methodologies developed by these leading figures. Chapter two reveals the immense contributions of Coase and Posner through the context of their significance in the culmination of the most influential school for Law and Economics, the Chicago School of Economics. I divide the fundamentals of Coase’s theory into three streams of ideas: transaction cost, reciprocal nature of harm, and comparative institutional analysis. First, a rediscovery of Coase’s theory is necessary as the “Coase Theorem” is the most widely recognized yet the most misleading starting point to understanding Coase. In studying Posner, on the other hand, my approach begins with a comprehensive illustration of why he adopts the term “wealth maximization” instead of the more widely accepted term “utility maximization”. This leads to my next analysis of why Posner opts for the Kaldor-Hicks efficiency standard rather than the more extensively used Pareto-efficiency standard. The final part of this chapter will integrate all of the ideas of Posner using the philosophical foundation of his theories.
The most important assumptions underlying the foundations of Law and Economics may be categorized into “methodological individualism” and “rational man utility maximization”. In analyzing the views of Coase and Posner with respect to this dichotomy, while they both fall under “methodological individualism”, Coase can be shown to belong to “ecological rationality” and “institutional individualism”, while Posner belongs to “constructive rationality” and ”psychological individualism”. My investigation then progresses into their differing views on the essential meaning of jurisprudence, which include prediction and explanation. Under Posner’s pragmatism, he considers prediction, a tool in attaining the goal of wealth maximization, to be the essential meaning of jurisprudence. In contrast, Coase considers explanation, grounded on real phenomenon, to be the most important character of jurisprudence.
Finally, after clarifying the assumptions of Coase and Posner on the methodology of Law and Economics, I select three debates in common law to demonstrate how their differences in methodology lead to different outcomes on legal issues:
1.Property rules versus liability rules
2.The nature of negligence: penalty or compensation
3.Numerus Clausus
Subjects
法律經濟學
方法論
寇斯
波斯納
交易成本
損害相互性
財富最大化
法律實用主義
預測或解釋
Type
thesis
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