Nuno Garoupa - Legal Origins and the Efficiency Dilemma

Economists advise that the law should seek efficiency. More recently, it has been suggested that common law systems are more conducive of economic growth than code-based civil law systems. This book argues that there is no theory to support such statements and provides evidence that rejects a one-size-fits-all approach. Both common law and civil law systems are reviewed to debunk the relationship between the efficiency of the common law hypothesis and the alleged inferiority of codified law systems.

Legal Origins and the Efficiency Dilemma has six aims: explaining the efficiency hypothesis of the common law since Posners 1973 book; summarizing the legal origins theory in the context of economic growth; debunking their relationship; discussing the meaning of common law and the problems with the efficiency hypothesis by comparing laws across English speaking jurisdictions; illustrating the shortcomings of the legal origins theory with a comparative law and economics analysis; and concluding there is no theory and evidence to support the economic superiority of common law systems. Based on previous pieces by the authors, this book expands their work by including new areas of analysis (such as trusts), detailing previous analysis (such as French law versus common law in the areas of contract, property and torts), and updating for recent developments in the academic discourse.

This volume is of interest to academics and students who study microeconomics, comparative law and foundations of law, as well as legal policy analysts.

Nuno Garoupa is Professor of Law at Texas A&M University, School of Law, and holds the Chair in Research Innovation at Catlica Global School of Law, Lisbon, Portugal.

Carlos Gmez Ligerre is Professor of Private Law at the Pompeu Fabra University (Universitat Pompeu Fabra), Barcelona, Spain.

Lela Mlon is Adjunct Professor of Law at the Pompeu Fabra University (Universitat Pompeu Fabra), Barcelona, Spain.

The economics of legal relationships
Sponsored by Michigan State University College of Law Series Editors:
Nicholas Mercuro
Michigan State University College of Law
Michael D. Kaplowitz
Michigan State University

A full list of titles in this series is available from www.routledge.com/economics/series/ELR.

12 The Legal-Economic Nexus
Warren J. Samuels

13 Economics, Law and Individual Rights
Edited by Hugo M. Mialon and Paul H. Rubin

14 Alternative Institutional Structures
Evolution and impact
Edited by Sandra S. Batie and Nicholas Mercuro

15 Patent Policy
Eff ects in a national and international framework
Pia Weiss

16 The Applied Law and Economics of Public Procurement
Edited by Gustavo Piga and Steen Treumer

17 Economics and Regulation in China
Edited by Michael Faure and Guangdong Xu

18 Law, Bubbles and Financial Regulation
Erik F. Gerding

19 Empirical Legal Analysis
Assessing the performance of legal institutions
Edited by Yun-chien Chang

20 Predatory Pricing in Antitrust Law and Economics
Nicola Giocoli

21 The Role of Law in Sustaining Financial Markets
Edited by Niels Philipsen and Guangdong Xu

22 Law and Economics
Philosophical issues and fundamental questions
Edited by Aristides N. Hatzis and Nicholas Mercuro

23 Public Procurement Policy
Edited by Gustavo Piga and Tnde Tatrai

24 Legal Origins and the Effi ciency Dilemma
Nuno Garoupa, Carlos Gmez Ligerre and Lela Mlon

Nuno Garoupa, Carlos Gmez Ligerre and Lela Mlon

First published 2017
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN

and by Routledge
711 Third Avenue, New York, NY 10017

Routledge is an imprint of the Taylor & Francis Group, an informa business

2017 Nuno Garoupa, Carlos Gmez Ligerre and Lela Mlon

The right of Nuno Garoupa, Carlos Gmez Ligerre and Lela Mlon to be identified as authors of this work has been asserted by them in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers.

Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe.

British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library

Library of Congress Cataloging in Publication Data
Names: Garoupa, Nuno, author. | Gmez Ligerre, Carlos, author. | Mlon, Lela, author.
Title: Legal origins and the efficiency dilemma / Nuno Garoupa, Carlos Gmez Ligerre and Lela Mlon.
Description: New York, NY : Routledge, 2017. | Includes index.
Identifiers: LCCN 2016031097| ISBN 9781138232877 (hardback) | ISBN 9781315311210 (ebook)
Subjects: LCSH: Law--Economic aspects. | Law and economic development.
Classification: LCC K487.E3 G37 2017 | DDC 340/.1--dc23
LC record available at https://lccn.loc.gov/2016031097

ISBN: 978-1-138-23287-7 (hbk)
ISBN: 978-1-315-31121-0 (ebk)

Typeset in Times New Roman
by Saxon Graphics Ltd, Derby

To my daughters, Beatriz and Anna
NG

To my family
CG

To my family, my strength: Kevyn, Nermin, Slavi, Alen, Chantal, Michel and Audrey
LM

PART I
Legal origins in a nutshell inherent dangers of its blind acceptance

PART II
Piercing the veil application of legal origins to specific legal institutes

PART III
Modern dilemmas in US and EU law as representatives of the two distinct legal families

The authors are grateful to one anonymous referee, Jess Alfaro, Benito Arruada, Amitai Aviram, Daniel Berkowitz, Justin Borg Barthet, Donald J. Boudreaux, Henry Butler, Francisco Cabrillo, Peter Cane, Tony Duggan, Anna Gins Fabrellas, Michael Faure, Fernando Gmez Pomar, Jean-Louis Halperin, Pierre Larouche, Bob Lawless, lvaro Lobato, Ejan Mackaay, Bertrand du Marais, Nicholas Mercuro, Andrew Morriss, Anthony Ogus, Ken Oliphant, Eric Posner, Mark Ramseyer, Mathias Reimann, Leonor Rossi, Paul Rubin, Mathias Siems, Greg Taylor, Andrew Torrance, Catherine Valcke, Stephen Waddams, the Searle-Kauffman (20092010) fellows at the Orange County meeting, and the participants at the Spanish Association of Law and Economics meeting (Madrid, 2010) for helpful comments and suggestions. We have also benefited from comments by seminar participants at Harvard law school (program for Spanish legal scholars), University of Illinois law school, University of Toulouse economic department, Fundacin Rafael del Pino (Madrid), and ENS (Paris). Caroline Belloff, Dana Noya-Damasco, Roya H. Samarghandi and Tatiana Triveri have provided superb research assistance. The usual disclaimers apply.

Carlos Gmez Ligerre acknowledges the financial support granted by the Spanish Department of Economy (DER2013-47560-R).