ECO320H1 Study Guide - Final Guide: Property Law, Scrubbers, Expectation Damages
Document Summary
Economics: scientific theory to predict the effects of legal sanctions on behavior; generally provides a behavioral theory to predict how people respond to laws. Economists are experts on two policy values: efficiency and distribution. A prediction can be neutral or loaded with respect to social values. Economics provides such a method for efficiency (aka additional cost of collecting higher fines vs. decrease in accidents). Economic efficiency measures public benefits that include the profits of firms, the well being of consumers, and the wages of workers. A good legal system keeps the profitability of business and the welfare of people aligned, so that the pursuit of profits also benefits the public. Examples: white-collar crimes are usually committed after rational consideration of the potential gain and the risk of getting caught and punished. Rational crimes seldom occur unless the expected gain to the criminal exceeds the expected cost.
