Robert Cooter and Thomas Ulen
This is a pdf version of the latest version (6th edition) of Law and Economics by Cooter and Ulen. The ownership of this book has reverted from the publisher to its authors, so we are posting it online for everyone freely to read or use as a textbook. After more than thirty years as the field’s leading textbook, it continues to cover the latest developments in the economic analysis of property, torts, contracts, legal process, and crimes. Each new edition refines the analytical core, incorporates new applications, and expands previous discussions of empirical legal studies and behavioral law and economics. We hope that you enjoy reading this book as much as we enjoyed writing it.
Looking forward to next year, this duet will become an internet symphony that takes full advantage of the internet revolution in publishing. Improvements will be posted to the internet continuously in small amounts (7.1, 7.2, 7.3, etc.), until a new edition appears with large changes (8.0). Not just a textbook, the 7th edition will have supporting materials, including translations. For updates, join the email list as indicated above. Perhaps you will have something to contribute to the website. For the best feast, the host supplies the main course each guest contributes a dish.
Original Digital Version: 6.0 posted July 2016
It is easier to explain an innovation after it occurs than before it occurs. With economic innovation as with progress in science, mystery drapes the future. A theme of this book is that the analysis of law can dispel part of the mystery of growth. Economic innovation usually requires combining new ideas and capital. They naturally resist each other. We will explain this resistance in terms of the “double trust dilemma” – the problem of inducing the innovator to trust the investor with his ideas, and also inducing the investor to trust the innovator with her money. The solution to this problem depends on law, especially the law of property, contracts, corporations, finance, and bankruptcy. Law and growth economics will dispel part of the mystery of growth by explaining law’s contribution to solving the double trust dilemma.
Like contemporary China and the USA, economics has exported much to law and imported little. Law and efficiency economics mostly consists in the economic analysis of law, not the legal analysis of the economy. By explaining the double trust dilemma, law and growth economics will improve the balance of trade in ideas between economics and law.
Original Version: 1.0 posted June 2013
Current Version: 1.4 posted August 2014
Previous versions available on request.
Robert D. Cooter
When Tolstoy decided to write a novel about the "Decembrist Revolt" of 1825 against Tsar Nicholas, he began setting the stage by describing Napoleon's invasion of Russia in 1812. One thousand pages later at the end of War and Peace a minor character appears whom Tolstoy intended to be the main character in the original, unwritten novel. Life is what happens while you are planning something else.
Comparing the great to the small, I planned a book on public law and economics, the first two chapters of which would concern constitutional law and economics, but I could not summarize succinctly a field that barely exists. So I ended up writing this book, which is a systematic account of constitutional law and economics as it exists today. I develop an original conception of democracy while synthesizing the application of economics and political science to constitutional law. I try to write in a way that is accessible to students and scholars from different disciplines. The book should be suitable for use in a class for advanced undergraduates, law students, or graduate students. Each chapter contains problems and exercises to test and deepen the reader's understanding.
I have taught parts of this book to students at Berkeley for several years. I have benefited from their comments, especially those by my teaching assistants Noah Baum and Neil Siegel. Winand Emons and Omri Yadlin, who taught from the book in successive years visiting Berkeley, gave me valuable comments and saved me from some errors.
I participated in intensive discussions on comparative topics in constitutional law at a conference in Saarbrucken in 1995. I presented early drafts of parts of this book in 1996 and 1998 when I lectured to European doctoral students and faculty in Switzerland at Studienzentrum Gerzensee, Stiftung Der Schweizerischen Nationalbank. I have also benefited from discussions at the annual meeting of the European Association of Law and Economics, the Latin American and Caribbean Law and Economics Association, and annual meetings of the Comparative Law and Economics Forum.
Discussions with Geoffrey Brennan and Phillip Pettit during my visit at the Australian National University in July 1998 forced me to elevate the generality of my analysis. Bruno Frey prompted me to rethink my views about direct democracy. My thanks to Debby Kearney of the Boalt Library reference staff for being a master detective and finding many references based on few clues from me. Thanks for various comments and help along the way to Chris Swain, Dhammika Dhamapala, Eric Rasmussen, Sandy Hoffman, and Georg von Wangenheim. Finally, I wish to thank Geoffrey Garrett and Bruce Chapman, whose thoughtful reviews of the manuscript's first complete draft gave me a fresh perspective on my project, and also Peter Dougherty of Princeton University Press.
Originally printed in 2000
Original Digital Version: posted September 2016