AGENDA
i.
Introduction
ii.
Simulation
iii.
Economics Analysis of Law

Les Avantages

Tort Law
iv.
Economics & Law – Real World Application

Tuition Hikes

Chinese Bidding War vs. Evolved Countries
v.
Limitations
vi.
Conclusion & Discussion Questions
INTRODUCTION
http://www.youtube.com/watch?v=CouzZNjuyRM
http://www.youtube.com/watch?v=8-yWKgZv9JY
SIMULATION
Groups:
1: You have a low income and are willing to spend $1.
2: You have a high income and are willing to spend up to $2, however (1)
you would prefer to use an adoption agency, and (2) you would like to
spend less than $2 if possible. BUT, you want a baby, regardless of
where you get it!
SIMULATION
Scenario 1:
Child Adoption Act: Any person willing to adopt a child must do so (1) in
compliance with the CCQ, and (2) must go through a government run
non-profit adoption agency.
SIMULATION
Scenario 2:
No Regulation - Free Market.
L’ANALYSE ÉCONOMIQUE DU DROIT: LES
AVANTAGES
“La compréhension des mécanismes économique est donc cruciale pour les juristes,
les décideurs politiques, les magistrats et les avocats”
1. L’analyse économique « construit » le droit.
2. L’analyse économique prend en compte toute option (juridique) possible.
Le Droit du Contrat selon l’Analyse Économique
Le Droit de la Responsabilité Civile selon l’Analyse Économique
Application de l’analyse économique sur le Droit de la Famille
ECONOMIC ANALYSIS WITHIN TORT LAW
Economic Analysis of Law, 5th ed (R. Posner)
The Learned Hand Formula for Determining Liability (R. Posner)
 Liability IF B < PL
 B = burden (cost) of adequate precautions
 P = probability that injury will occur
 L = gravity of resulting injury
Bolton v. Stone (1951), Overseas Tankship v. Miller Steamship (1967)
No-fault systems
Employer liability
ECONOMICS ANALYSIS OF LAW – REAL WORLD
APPLICATION
1. Tuition Hikes
2. Chinese Bidding War
PROPOSED TUITION HIKES
Bad Economy /
Job market
Why did the government want to increase tuition?
Increase in
demand for
education
S
P
D2
Quantity from D1 > D2 increases
D1
Q
Price from D1->D2
increases
BIDDING WAR IN CHINA – OPPOSITE OF N.A.
One-Child Regulation
in China
Supply of young
professionals
decreases (prevented
around 250 M births)
Demand for young
professionals
increases
Result: Bidding war
for these
professionals, and
companies spending
more to find ways to
make them happy,
stay competitive.
LIMITATIONS OF ECONOMICS
Perfect
Information
Binary Analysis
Self-Interest
Can only assign
comparative
value
Economics is
not value
neutral
False
segmentation
LIMITATIONS OF ECONOMICS
1. Freedom of Choice
•
“Choosing to work below minimum wage”
2. Rationality
•
“Identifying items for consumption, calculating their value and then estimating potential
risks”
•
“Persons have things they care about and will do the best they can to achieve these things”
3. Defining Richness
•
“…in a culture like our own, which is so heavily dominated by the motive of self interest [one
cannot habitually think of rich as utility] without in fact universalizing the ordinary rather than
the technical meaning”
•
Risk of defending all transactions including the sale of oneself into slavery
4. Short time horizon
•“Present value of anything that will come into possession very far in the future…is nearly zero”
ALTERNATIVES
Traditional economics; not consistent with broader society’s view of itself:
Information Economics, Ecological Economics and Behavioral Economics; progress?
These fields can reveal areas where new laws are needed and how they can be most
effective
https://www.youtube.com/watch?v=nUdsTizSxSI#t=4m20s
CONCLUSION & DISCUSSION QUESTIONS
1. What did you think about the adoption simulation? Did you prefer the free market
or regulated market, and why?
2. The basic economics behind the Quebec tuition prices are undisputed, however,
there are many reasons why the increase did not occur. Community values played
a big part in this. What were your thoughts in regards to the proposed increase,
taking into account the economics and values of society?
3. As students, what are your thoughts on the bidding war and shortage of young
professionals in China, versus the competitive landscape which exists in North
America? Which system would you rather be in?