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Public Choice

, Volume 153, Issue 3–4, pp 515–517 | Cite as

Andrei Shleifer: The failure of judges and the rise of regulators

Cambridge: MIT Press, 2012, viii + 343 pages. USD 40.00 (cloth)
  • Paul G. Mahoney
Book Review

Ronald Coase (1937) argued that transaction costs determine whether allocations will be made through the market or by hierarchical decision making within a firm. In The failure of judges and the rise of regulators, Andrei Shleifer makes a similar argument about the choice between litigation and regulation. Parties governed by a litigation system may be analogized to traders in a market who transact (that is, determine levels of activity and care) according to prices (damages) set by judges. Regulation, by contrast, gives a planner the right to determine activity and care levels for the parties. The choice between these two methods of social control, Shleifer argues, reflects the relative cost of the two forms of governance in a given situation.

The book argues that this framework sheds light on changes in the mix between litigation and regulation over time and across countries. As the title suggests, when judges fail to produce efficient outcomes because ex post litigation is too...

Notes

Acknowledgements

I am grateful to John Harrison and Andrei Shleifer for comments.

References

  1. Becker, G. S. (1968). Crime and punishment: an economic approach. Journal of Political Economy, 76(2), 169–217. CrossRefGoogle Scholar
  2. Coase, R. H. (1937). The nature of the firm. Economica, 4(16), 386–405. CrossRefGoogle Scholar
  3. Lochner v. New York (1906). 198 U.S. 45. Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  1. 1.University of Virginia School of LawCharlottesvilleUSA

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