Law Commons^™

Solomon’S Knot: How Law Can End The Poverty Of Nations, Robert D. Cooter, Hans Bernd Schaefer

Robert Cooter

Solomon's Knot: How Law Can End The Poverty Of Nations, Robert D. Cooter, Hans-Bernd Schaefer

Robert Cooter

Sustained growth depends on innovation, whether it’s cutting-edge software from Silicon Valley, an improved assembly line in Sichuan, or a new export market for Swaziland’s leather. Developing a new idea requires money, which poses a problem of trust. The innovator must trust the investor with his idea and the investor must trust the innovator with her money. Robert Cooter and Hans-Bernd Schäfer call this problem the “double trust dilemma of development.” How nations confront it determines whether their economies grow or stagnate. Nowhere is this problem more acute than in poorer nations. Nations are relatively poor in the modern world …

Law And The Poverty Of Nations, Robert D. Cooter, Hans Bernd Schaefer

Robert Cooter

This book manuscript uses the economic analysis of law and the theory of economic development to explain why some poor countries remain poor and others become rich. The book contributes to the economic analysis of law by reformulating its central conclusions in terms of growth, not static efficiency, and it contributes to the economic theory of growth by probing its legal foundations. The manuscript’s style is accessible to non-specialists and its substance challenges specialists. The book’s theme is that sustained growth comes from economic innovation, which combines novel ideas and capital. Combining them poses a “double trust problem” -- the …

Doing What You Say, Robert D. Cooter

Robert Cooter

Making wealth requires people to do what they say. In relationships and repeat transactions, reciprocity makes people do what they say, even without contract law. Relationships and repeat transactions, however, preclude competition. Competition involving transactions with strangers invigorates an economy and enables it to flourish. Making strangers do what they say requires them to commit legally. According to the contract principle for economic cooperation, the law should enable people to commit to doing what they say. When this principle is implemented, strangers can trust each other enough to work together even when money is at stake. Implementing this principle requires …

Bargaining With The State, Robert D. Cooter

Robert Cooter

According to the economic theory of bargaining, each party to a voluntary agreement must receive at least the amount that he can get on his own (“threat value”), plus a share of the surplus from the bargain. Courts frequently monitor bargains between citizens and the state. To protect citizens, the courts should focus on the fairness and efficiency of the threat points of the citizens. Unfortunately, courts often focus on the terms of the agreement, not the threat points. The wrong focus leads courts to impose rules that block bargains that would benefit both parties. I analyze an example where …