Legal positions and institutional complementarities

Abstract

Legal positions (such as rights, duties, liberties, powers, liabilities and immunities) are linked together by institutional differing from the usual institutional that have been recently considered by the Economic Literature. Legal positions do not only satisfy the usual conditions of institutional complementarity stemming from the fact legal positions that fit each other do marginally better than the ones that do not. They define also legal equilibria characterised by the social scarcity constraint that is typical of positional goods. Legal positions can be considered as positional goods defining equilibrium conditions that may be violated but that must hold ex-post as accounting identities. In this sense they define strong institutional complementarities supported by the tight glue of social scarcity. The positional nature of legal relations implies that ex-ante disequilibrium is very likely to arise and to generate a constant oversupply of positions such as rights and powers with respect to correlated positions such as duties and liabilities. Alternative systems of capitalism are characterised by both the strong institutional complementarities existing among different legal positions and the weak complementarities existing among the legal positions and the other characteristics of the system such as the technology and the nature of the resources. In this way, the ex-ante disequilibrium, due to the positional nature of legal relations, can spill over other parts of the economic system.