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2012 | OriginalPaper | Chapter
Accident Law and Markets, Part I: The Unilateral Care Model
Published in: Law and Markets
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Chapter 3 examined situations where transactions costs were sufficiently low to render legal rules irrelevant from an efficiency point of view. If these conditions always prevailed and transactions costs were sufficiently low — and if economists cared only about economic efficiency — then the study of law and economics would not be very interesting (and this would be a very short book!). In such a world, parties would always be able to bargain around the law, and as a result of the reasoning embodied in the Coase Theorem, legal rules would simply not matter for efficiency — although they would of course matter for distribution and for the parties involved.