Once Upon a Time in America: Barriers to the Diffusion of Law & Economics

Abstract

In 1990, the European Law and Economics Association held a symposium about the state of as well as the impediments to the diffusion of Law & Economics (L&E) in civil law countries. The contributions concluded that the civil law system, legal tradition, legal culture as well as language barriers posed the main difficulties to the diffusion of L&E in the countries considered [Cooter and Gordley 1991: 261ff.]. By focusing only on civil law countries, however, the contributions neglected that the initial diffusion of L&E within the United States had also been impeded. Using economic theory, it is shown in this paper how incentives for economists and law scholars may have contributed to impeding the initial diffusion of L&E. The presented barriers are based on rational behavior by actors in economics and jurisprudence which results in a human capital investment problem and a game theoretic coordination problem for lawyers as well as a tendency for economists not to publish in law journals. Using qualitative evidence it is shown that these barriers are likely to have been at work (even) in the US. Focusing on the US also makes it possible to identify remedies to these diffusion barriers. The barriers, it is argued, were reduced by subsidizing the human capital investment in L&E for lawyers as well as by founding specialized L&E journals to reduce the coordination problem. It is argued that these measures could also be used in civil law countries in order to facilitate the diffusion of L&E.