Law and Growth Economics: A Framework for Research

Robert D. Cooter and Aaron Edlin

Berkeley Olin Program in Law & Economics, Working Paper Series from Berkeley Olin Program in Law & Economics

Abstract: Many law and economics models concern static efficiency and redistribution. The standard analysis of dynamic industries requires lawmakers to balance faster innovation against lower consumer prices. Sustained growth dominates these effects, so law and growth economics should focus on maximizing it. Law can increase the growth rate by making innovation more profitable. We distinguish innovation into phases -- discovering ideas, developing them with capital and labor, and marketing innovations. Strengthening intellectual property law and weakening antitrust law increases the costs of developing ideas, and also increases the revenues from marketing innovations. To maximize the profitability of innovation, law should balance these two effects. We use these ideas to develop a framework for law and growth economics.

Keywords: Law (search for similar items in EconPapers)
Date: 2011-01-13
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Citations: View citations in EconPapers (2)

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