On Optimal Legal Change, Past Behavior, and Grandfathering

Steven Shavell ()

No 13563, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: When is it socially advantageous for legal rules to be changed in the light of altered circumstances? In answering this basic question here, a simple point is developed -- that past compliance with legal rules tends to reduce the social advantages of legal change. The reasons are twofold: adjusting to a new legal rule often involves costs; and the social benefits of change are frequently only incremental, only in addition to those of past compliance. The general implications are that legal rules should be more stable than would be appropriate were the relevance of past behavior not recognized, and that a policy of grandfathering, namely, of permitting noncompliance, should sometimes be employed. The analysis of these points has broad relevance, applying across legal fields, often explaining what we observe but also indicating possibilities for reform, such as in the regulation of air pollution. The analysis is related to the conventional reliance-based justification for the stability of the law, the literature on legal transitions, and economic writing on optimal legal standards.

JEL-codes: K1 K2 K32 L5 (search for similar items in EconPapers)
Date: 2007-10
New Economics Papers: this item is included in nep-law and nep-reg
Note: LE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Steven Shavell, 2008. "On Optimal Legal Change, Past Behavior, and Grandfathering," Journal of Legal Studies, University of Chicago Press, vol. 37(1), pages 37-85, 01.

Downloads: (external link)
http://www.nber.org/papers/w13563.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:13563

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w13563

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().