The traditional view of economists has been that corrective taxes are superior to direct regulation of harmful externalities when the state's information about control costs is incomplete. In recent years, however, many economists seem to have adopted a different view--that either corrective...

It is evident that both law and morality serve to channel our behavior. Law accomplishes this primarily through the threat of sanctions if we disobey legal rules. Morality too involves incentives: bad acts may result in guilt and disapprobation, and good acts may result in virtuous feelings and...

A theoretical model of deterrence is studied in which the imposition of nonmonetary (as opposed to monetary) sanctions is socially costly. It is therefore desirable that the system of sanctions be designed so that sanctions are imposed infrequently. If courts possess perfect information, the...

Although the corrective tax has long been viewed by economists as a desirable remedy for the problem of harmful externalities, its actual use has been limited, mainly to the domain of pollution. Liability, in contrast, has great importance in controlling harmful externalities. I compare the tax...

In our 1994 article in this journal, we demonstrated that legal rules should not be adjusted to disfavor the rich and favor the poor in order to redistribute income, because the income tax and transfer system is a more efficient means of redistribution. In this article, we revisit our argument...

The legal system is an expensive social institution, raising the question of whether the amount of litigation is socially appropriate. The thesis developed here is that it is not--because of fundamental differences between private and social incentives to use the legal system. These differences...