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T h e Ox f o r d H a n d b o o k o f

L AW A N D
E C ON OM IC S
 The Oxford Handbook of

LAW AND
ECONOMICS
Volume 3: Public Law and
Legal Institutions

Edited by
FRANCESCO PARISI

1
 3
Great Clarendon Street, Oxford, ox2 6dp,
United Kingdom
Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship,
and education by publishing worldwide. Oxford is a registered trade mark of
Oxford University Press in the UK and in certain other countries
© Oxford University Press 2017
The moral rights of the author‌have been asserted
Impression: 1
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted, in any form or by any means, without the
prior permission in writing of Oxford University Press, or as expressly permitted
by law, by licence or under terms agreed with the appropriate reprographics
rights organization. Enquiries concerning reproduction outside the scope of the
above should be sent to the Rights Department, Oxford University Press, at the
address above
You must not circulate this work in any other form
and you must impose this same condition on any acquirer
Published in the United States of America by Oxford University Press
198 Madison Avenue, New York, NY 10016, United States of America
British Library Cataloguing in Publication Data
Data available
Library of Congress Control Number: 2017935284
ISBN 978–0–19–968426–7 (Volume 1)
ISBN 978–0–19–968420–5 (Volume 2)
ISBN 978–0–19–968425–0 (Volume 3)
ISBN 978–0–19–880373–7 (Set)
Printed and bound by
CPI Group (UK) Ltd, Croydon, CR0 4YY
Links to third party websites are provided by Oxford in good faith and
for information only. Oxford disclaims any responsibility for the materials
contained in any third party website referenced in this work.
 Contents

List of Figures ix
List of Tables xi
List of Abbreviations xiii
List of Contributors xv

PA RT I C ON ST I T U T ION S , S TAT U T E S ,
A N D R E G U L AT ION S
1. Optimal Constitutional Structure 3
Richard A. Epstein
2. The Design of Constitutions 28
Tom Ginsburg
3. Democratic Rulemaking 37
John M. de Figueiredo and Edward H. Stiglitz
4. Regulatory Decision-​Making and Economic Analysis 59
Mariano-​Florentino Cuéllar and Jerry L. Mashaw
5. Economics of Federalism 84
Robert P. Inman and Daniel L. Rubinfeld
6. Economics of Tax Law 106
Daniel Shaviro

PA RT I I C I V I L P RO C E S S A N D L I T IG AT ION
7. Judge-​Made Law and the Common Law Process 129
Ben Depoorter and Paul H. Rubin
8. Economics of Civil Procedure 143
Robert G. Bone
vi   Contents

9. Law and Economics of Evidence 171

Chris William Sanchirico
10. Economics of Litigation 201
Bruce H. Kobayashi
11. Settlement and Trial 229
Andrew F. Daughety and Jennifer F. Reinganum
12. Legal Fees and Lawyers’ Compensation 247
Winand Emons
13. The Legal Profession and the Market for Lawyers 259
Albert Yoon
14. Law and Economics of Alternative Dispute Resolution 280
Talia Fisher

PA RT I I I C R I M E A N D P U N I SH M E N T
15. Economics of Criminal Law: Crime and Punishment 295
Isaac Ehrlich
16. Economics of Criminal Procedure 325
Keith N. Hylton
17. Guns and Crime 344
Anthony A. Braga
18. Prosecutorial Strategies 370
Roger Bowles

PA RT I V B E YON D NAT IONA L L E G A L SYS T E M S

19. Economics of Ancient Legal Systems 395
Geoffrey Parsons Miller
20. Economics of Legal History 409
Daniel Klerman
21. Economics of International Law 439
Alan Sykes and Andrew Guzman
 Contents   vii

22. Enforcement of International Law 465

Paul B. Stephan
23. International Finance and Sovereign Debt 482
W. Mark C. Weidemaier and Mitu Gulati
24. Economics of International Organizations 501
Joel P. Trachtman
25. Choice of Law and Conflict of Laws 527
Erin O’Hara O’Connor

Name Index 549

Subject Index 557
 List of Figures

6.1 Individuals with different wage rates 109

10.1 The structure of litigation—​simple one-​stage model 203
10.2 Filing, litigation, and settlement—​low-​stakes (200) 204
10.3 Filing, litigation, and settlement—​high-​stakes (600) 205
10.4 The effect of two-​way cost-​and fee-​shifting 207
10.5 The effect of one-​way fee-​shifting 209
10.6 The effect of a contingency-fee arrangement—​high stakes 210
10.7 One-​stage negative value lawsuit 212
10.8 Three-​stage model of litigation 213
10.9 Asymmetric and sequential costs 214
10.10 Three-​stage litigation with information revelation—​total payoffs 215
10.11 Three-​stage litigation with information revelation—​marginal payoffs 216
10.12 Option value 218
10.13 Option value with settlement 219
10.14 Consolidated pre-​trial 219
10.15 Option value with consolidated pre-​trial 220
10.16 Reversing order and option value 221
10.17 The effect of prevailing litigant two-​way fee-​shifting 221
10.18 Prevailing litigant two-​way fee-​shifting and option value 222
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