Norms, Standards, Rights

Abstract

Preparing European unification European legislators are changing fundamentally important parts of the legal systems of the member states. Furthermore, the internal market will cause many additional social interactions among European citizens. These interactions are influenced not only by law but also by social norms in the different countries. This paper discusses the question how different social norms and different legal systems work together, if there is a need for state intervention not acknowledged before, what the advantages of a uniform European law are and what kind of equilibria are to be expected. The answer will be that many social and legal norms can be best understood as standards with network externalities, creating sometimes separating equilibria, or one dominating equilibrium which may or may not be welfare optimal but will nevertheless prevail over competing alternatives driven by self-enforcing network advantages. Like an avalanche, some social norm or a legal regulation can be self-enforcing, snowballing, and irrevocable even if its initial choice or existence was completely arbitrary or has proved to be a mistake in the long run. Furthermore, the chaos-like self-enforcing development of some social or legal norms restrict the practical realm of the Coase-theorem. Coordination against excess inertia or excess momentum and compensating people's losses in the standardization process and influencing the different developments at the very early stages may be an additional important welfare improving activity of the state.