Economic analysis of law is the most advanced methodological tool for legal policy making and structural analysis of existing and future legal institutions and contract planning. Legal rules, codified or judge-made, and contracts are scrutinized under aspects of allocational efficiency including transaction costs, the problems of externality and risk, distributional consequences and incentive compatibility.

The course starts with an outline of the general concepts of standard micro-economic analysis and its extensions by the new institutional and behavioral economics in their application to legal rules and private arrangements. Three applications are treated in the first part: tort, contract, and corporation law, including advanced forms of business cooperation, such as franchising. This first part is taught by Prof. Schanze.

The second part, taught by Prof. Henderson, turns to the law and economics of capital markets as a qualified example for the application of economic analysis to a central field of market regulation. It will outline the most important theories of corporate finance in the context of current policy debates about how best to regulate capital markets. We will study the Efficient Capital Market Hypothesis, Insider Trading , the regulation of secondary trading markets and initial public offerings as well as the differences between markets for debt and equity. Particular emphasis will be placed on the operation of capital markets for the securities of firms that are expecting financial distress and insolvency. The main references will be US cases and practice.

This second part can also be attended separately by scholars and students, including economists, who are interested in the working of capital markets.

Exam each semester.

Three hours school exam. A - E for passed, F for failed.

Exam language:

• Question paper: English
• Answer paper: English

Support materials allowed during exam:

See section 3-5 of the Supplementary Regulations for Studies at the Faculty of Law at the University of Bergen.

Special regulations about dictionaries:

• According to the Regulations for Studies, one dictionary is permitted support material during the examination. Bilingual dictionaries containing for example both Norwegian-English and English-Norwegian are considered as one dictionary.
• Bilingual dictionaries to/from the same two languages - for example Norwegian-English/English-Norwegian - in two different volumes are also considered as one dictionary (irrespective of publisher or edition).
• Dictionaries as described above cannot be combined with any other types of dictionaries.
• Any kind of combination which makes up more than two physical volumes is forbidden.
• In case a student has a special need for any other combination than the above mentioned, such combination has to be clarified with/approved by the course coordinator minimum two weeks before the exam. Students who have not been granted permission to have a special combination minimum two weeks before the exam will be subject to the usual regulations (Section 3-5) about examination support materials.

Course teachers: Professor II Erich Schanze

Administrative contact: Higher Executive Officer Nathalie S. L. Gaulier: Nathalie.Gaulier@jurfa.uib.no