Law & Economic Development

Course objectives and organization

The course presents key contributions to the economic analysis of law from the classic to very recent findings. The students are expected to learn how to analyze the evolution and the economic impact of legal institutions from an economic point of view and, more generally, how law is built into a formal model. From a policy viewpoint moreover, the students will learn how to critically evaluate the observed legal variation and how to propose possible reforms.

Course Contents

In the first part of the course, I will introduce the economic notions of “contracting and property institutions” and the related legal notions of “legal traditions” and “property, liability and inalienability rules.” Moreover, I will discuss the evidence on the relative economic role of these institutions produced by well-known literatures considering them as exogenous. In the second part of the course, I will illustrate a new strand of literature analyzing the determinants of each of the two groups of arrangements and providing, via the explicit consideration of such determinants, new evidence on the impact of property and contracting institutions. Finally, I will discuss avenues open to future research and how the final essays should access them.
Assessment:
Each student is expected to send to c.guerriero@unibo.it by May 19th 2025 a 5000-word research proposal on a possible application of the material discussed in class. This should include research question, institutional background, details of the methodological approach and its link with the course material, and both the expected academic and policy contributions.

Reading List

Class 1: Exogenous Contracting and Property Institutions

Coase, Ronald H. 1960. “The Problem of Social Cost.” Journal of Law and Economics, 3: 1-44.
Acemoglu, Daron, and Simon Johnson. 2005. “Unbundling Institutions.” Journal of Political Economy, 113: 949-995.
La Porta, Rafael, Florencio Lopez-de-Silanes, and Andrei Shleifer. 2008. “The Economic Consequences of Legal Origins.” Journal of Economic Literature, 46: 285-332.
Besley, Timothy, and Maitreesh Ghatak. 2010. “Property Rights and Economic Development.” In: Handbook of Development Economics, Vol. V. Mark Rosenzweig and Dani Rodrik, eds. Amsterdam: Elsevier, 4525-4589.
Calabresi, Guido and Melamed, A. Douglas. 1972. “Property Rules, Liability Rules and Inalienability: One View of the Cathedral.” Harvard Law Review, 85: 1089-1128.

Class 2: From Exogenous to Endogenous Contracting Institutions

Guerriero, Carmine. 2016a. “Endogenous Legal Traditions.” International Review of Law and Economics, 46: 49-69
Guerriero, Carmine. 2016b. “Endogenous Legal Traditions and Economic Outcomes.” Journal of Comparative Economics, 44: 416-433.
Guerriero, Carmine. 2024. “Understanding Legal Origins: on the Determinants and Impact of Legal Traditions.” https://ssrn.com/abstract=3859717

Classes 3 & 4: From Exogenous to Endogenous Property Institutions

Guerriero, Carmine. 2023. “Property Rights, Transaction Costs, and the Limits of the Market.” Economics of Governance, 24 (2023): 143-176.
Guerriero, Carmine. 2016c. “Endogenous Property Rights.” Journal of Law and Economics, 59: 313-358.
Benati, Giacomo, Carmine Guerriero, and Federico Zaina. 2022. “The Origins of Political Institutions and Property Rights.” Journal of Comparative Economics, 50: 946-968.
Benati, Giacomo, and Carmine Guerriero. 2021. “Climate Change and State Evolution.” Proceedings of the National Academy of Sciences, 118: e2020893118.

Class 5: Final Essay

Question time about the final essay.