Economic Analysis of the Legal System


Consolidated Democracy, Constitutional Stability, and The Rule of Law

What sets a consolidated democracy apart? We argue that the expectation that under the rule of law a law-abiding government will not enforce the unlawful acts of its predecessor creates incentives for agents - such as members of the civil service or law enforcement agencies - not to comply with such acts. Thus, even an opportunistic government may find it in its best interest to abide by constitutional rules or, once it has been in violation, to reinstate the legal order. If so, the government contributes to its own punishment and agents' expectations are self-fulfilling. With Nadeem Naqvi and Bernhard K. Neumaerker. PDFile


Strategic Constitutional Choice in Autocracy

In a spatial model of political bargaining we show that there exists a constitution which a sufficiently patient autocrat would want to design and the parties forming a succeeding constitutional assembly would accept as a basis for negotiations on constitutional reform. That the middle class is opposed to redistribution strengthens the case for handing down a constitution and is a sufficient condition for the autocrat's constitution to be efficient. Increases in middle class wealth make constitution writing more attractive unless taxation is “too effective” in redistributing wealth. We relate our findings to the so-called "Pinochet Constitution" in Chile. With Katja Michalak. PDFile


Stable Constitutions in Political Transition, in: Advances in Political Economy, ed. by Caballero, G., Kselman, D. and Schofield, N., Springer 2013.

This paper develops a spatial model where an autocrat selects a status quo constitution which a succeeding elected constitutional assembly may or may not accept as a blue print for negotiations on constitutional reform. If the autocrat expects that the future constitutional assembly is dominated by parties which favor redistribution, he does not want to bind himself by the constitution. If the middle class opposes redistribution or the middle class and the right dominate the constitutional assembly, stable constitutions exist which are in the interest of the autocrat. This framework is applied to transition processes in Chile and Egypt. With Katja Michalak. PDFile


Rationality and the Legal Order, in: Economics, Rational Choice and Normative Philosophy, ed. by Tom Boylan and Ruvin Gekker, Routledge 2009.

While a constitution assigns the government the means to force others to comply, there is no outside enforcer who forces the rulers to play by the rules. In this paper we argue that the legality principle of the rule of law gives incentives for the rulers to accept the constitutional order. We develop a model where a short-lived government imposes a tax and may violate the constitutional order by redistributing property in order to gain a one-off prize in terms of political support. Under the rule of law, a constitutional government must not accept illegitimate ownership. If the future government is expected to act lawfully, illegitimate property owners curb effort and an expropriating government loses revenue. We give conditions under which there is a unique trembling hand perfect equilibrium where all governments are constitutional with a probability approaching one. PDFile