Stare decisis allows common law to develop gradually and incrementally. We show how judge-made law can steadily evolve and tend to increase efficiency even in the absence of new information. Judges' opinions must argue that their decisions are consistent with precedent: this is the more costly,...

The paper deals with a bilateral accident situation in which victims have heterogeneous costs of care. With perfect information,efficient care by the injurer raises with the victim's cost. When the injurer cannot observe at all the victim's type, and this fact can be verified by Courts,...

We study the standard economic model of unilateral accidents, in its simplest form, assuming that the injurers have limited assets.We identify a second-best optimal rule that selects as due care the minimum of first-best care, and a level of care that takes into account the wealth of the...

Regulations that constrain firms' externalities in one dimension can distort incentives and worsen externalities in other dimensions. In Peru's industrial fishing sector, the world's largest, fishing boats catch anchovy that plants along the coast convert into fishmeal. Matching administrative,...

Does cutting red tape foster entrepreneurship in industries with the potential to expand? We address this question by combining the time needed to comply with government entry procedures in 45 countries with industry-level data on employment growth and growth in the number of establishments...

Human beings increase their productivity by specializing their resources and exchanging their products. The organization of exchange is costly, however, because specialized activities need coordination and incentives have to be aligned. This work first describes how these exchanges are organized...