This course, taught in English, focuses on the economic analysis of law. For Právo a právní věda students, it serves as the English-language equivalent of the compulsory course Právo a ekonomie II. It differs from the Czech-language course in the required reading, which is entirely in English, as well as in the selection of examples and topics discussed in lectures and seminars, which have a broader international focus.
Law can be viewed as a system of institutions designed to influence individual behaviour and interactions. One of its principal aims is to create conditions for voluntary cooperation and to provide individuals with space to pursue their own well-being while minimizing negative effects on the rest of society. Law should therefore produce desirable social outcomes. Economics studies human behaviour, interactions among individuals and groups, and their consequences for society. It is therefore a natural tool for analysing legal rules and their social impacts.
Law and Economics II applies fundamental economic tools to the analysis of the legal system. Legal institutions establish the constraints and incentives within which human activity takes place. Economic analysis will be used to examine areas of law such as property, tort law, contract law, and criminal law. Economics provides a unified framework that connects these seemingly distinct areas of law and helps students better understand the principles they have in common. Particular emphasis will be placed on understanding how different legal rules affect human behaviour and the functioning of markets, and whether their effects on social welfare are positive or negative.
Upon successful completion of the course, students should be able to:
• demonstrate knowledge of the fundamental concepts of the economic analysis of law;
• identify the economic dimensions of legal problems;
• apply basic economic principles to the analysis of legal rules and judicial decisions;
• make a basic assessment of legal rules in terms of economic efficiency;
• formulate meaningful predictions about the effects of legal rules on human behaviour and the functioning of markets.
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Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
This course, taught in English, focuses on the economic analysis of law. For Právo a právní věda students, it serves as the English-language equivalent of the compulsory course Právo a ekonomie II. It differs from the Czech-language course in the required reading, which is entirely in English, as well as in the selection of examples and topics discussed in lectures and seminars, which have a broader international focus.
Law can be viewed as a system of institutions designed to influence individual behaviour and interactions. One of its principal aims is to create conditions for voluntary cooperation and to provide individuals with space to pursue their own well-being while minimizing negative effects on the rest of society. Law should therefore produce desirable social outcomes. Economics studies human behaviour, interactions among individuals and groups, and their consequences for society. It is therefore a natural tool for analysing legal rules and their social impacts.
Law and Economics II applies fundamental economic tools to the analysis of the legal system. Legal institutions establish the constraints and incentives within which human activity takes place. Economic analysis will be used to examine areas of law such as property, tort law, contract law, and criminal law. Economics provides a unified framework that connects these seemingly distinct areas of law and helps students better understand the principles they have in common. Particular emphasis will be placed on understanding how different legal rules affect human behaviour and the functioning of markets, and whether their effects on social welfare are positive or negative.
Upon successful completion of the course, students should be able to:
• demonstrate knowledge of the fundamental concepts of the economic analysis of law;
• identify the economic dimensions of legal problems;
• apply basic economic principles to the analysis of legal rules and judicial decisions;
• make a basic assessment of legal rules in terms of economic efficiency;
• formulate meaningful predictions about the effects of legal rules on human behaviour and the functioning of markets.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
Kontroly studia předmětu a podmínky pro jejich úspěšné vykonání, způsob hodnocení -
1.The final grade is determined by the total number of points earned. Points are awarded for the final written test (based on the percentage of correct answers) and active participation in seminars.
2.The final written test consists of a series of multiple-choice and open-ended questions. The open-ended questions may involve a numerical exercise, a graphical model, or a brief written argument. These questions assess students’ ability to apply the concepts and models covered in lectures and seminars to similar contexts.
3.For each seminar, students will be assigned required reading and a set of problems to solve. Students are expected to complete the assigned reading and work through the problems before the seminar. Seminars will focus on discussing solutions to the assigned problems, discussing the required readings, extending material covered in lectures, and working through examples and applications.
4.At the end of each seminar, students will complete a short quiz. Points are awarded based on the percentage of correct answers in these quizzes.
The use of legal statutes and regulations is not relevant for completing the final written test or the in-class quizzes.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
1.The final grade is determined by the total number of points earned. Points are awarded for the final written test (based on the percentage of correct answers) and active participation in seminars.
2.The final written test consists of a series of multiple-choice and open-ended questions. The open-ended questions may involve a numerical exercise, a graphical model, or a brief written argument. These questions assess students’ ability to apply the concepts and models covered in lectures and seminars to similar contexts.
3.For each seminar, students will be assigned required reading and a set of problems to solve. Students are expected to complete the assigned reading and work through the problems before the seminar. Seminars will focus on discussing solutions to the assigned problems, discussing the required readings, extending material covered in lectures, and working through examples and applications.
4.At the end of each seminar, students will complete a short quiz. Points are awarded based on the percentage of correct answers in these quizzes.
The use of legal statutes and regulations is not relevant for completing the final written test or the in-class quizzes.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
Sylabus -
The course covers the following topics:
·Institutions and social welfare
·Concepts of efficiency and their application
·Regulatory Impact Assessment (RIA)
·Externalities, public goods, and common-pool resources
·The Coase Theorem and transaction costs
·Economic theory of property rights
·Economic analysis of contractual relationships and contract law
·Economic analysis of tort liability
·Economics of crime
·Economics of litigation
·Asymmetric information and the principal–agent problem
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
The course covers the following topics:
·Institutions and social welfare
·Concepts of efficiency and their application
·Regulatory Impact Assessment (RIA)
·Externalities, public goods, and common-pool resources
·The Coase Theorem and transaction costs
·Economic theory of property rights
·Economic analysis of contractual relationships and contract law
·Economic analysis of tort liability
·Economics of crime
·Economics of litigation
·Asymmetric information and the principal–agent problem
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
2. Polinsky, A. M. (2018). An introduction to law and economics. Wolters Kluwer Law & Business.
Recommended literature:
1.Acemoglu, Daron, Johnson Simon and Robinson James A. Institutions as a fundamental cause of long-run growth. In Philippe Aghion and Stephen N. Durlauf (Eds.), Handbook of economic growth: volume 1A, 2005, (pp. 386–464). Amsterdam: Elsevier.
2. Akerlof, George A.,The Market for “Lemons”: Quality Uncertainty and the Market Mechanism, 1970, 84 Quarterly Journal of Economics, 488.
3. Becker, Gary: Crime and Punishment: An Economic Approach. Journal of Political Economy 76, 1968, pp. 167-217 (March/April).
4. Ben-Shahar, O., & Schneider, C. E. (2014). More than you wanted to know: The Failure of Mandated Disclosure. Princeton University Press, Introduction.
5. Calabresi, G., & Melamed, A. D. (1972). Property rules, liability rules, and inalienability: one view of the cathedral. Harvard law review, 1089-1128.
6. Coase, Ronald H., The Problem of Social Cost. Journal of Law and Economics, Vol. 3 (1960).
7. Djankov S., A. Shleifer, R. LaPorta, F. Lopez-de-Silanes (2003). Courts, Quarterly Journal of Economics.
8. Djankov S., O. Hart, C. McLiesh, A. Shleifer (2008). Debt Enforcement Around the World, J of Political Economy.
9. Friedman, David: Defining and Enforcing Rights: Property, Liability, & Spaghetti, in Law’s Order: What Economics Has to do with Law and Why It Matters, 2003, chapter 5.
10. Brabenec, T., & Montag, J. (2014). Criminals and the Price System: Evidence from Czech Metal Thieves. Journal of Quantitative Criminology, 1-34.
11. Montag, J. and Sobek, T. (2018): Proportionality test, forthcoming in Marciano, A. and Ramello G.B. (Eds.). 2019. Encyclopedia of Law and Economics. Springer, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3126389
12. Posner, Richard: Economic Analysis of the Law (5th ed.). New York: Aspen Publishers, 1998 pp. 3-31.
13. Shleifer A., R. LaPorta, F. Lopez-de-Silanes (2008). The economic consequences of legal origins, J of Economic Literature.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
2. Polinsky, A. M. (2018). An introduction to law and economics. Wolters Kluwer Law & Business.
Recommended literature:
1.Acemoglu, Daron, Johnson Simon and Robinson James A. Institutions as a fundamental cause of long-run growth. In Philippe Aghion and Stephen N. Durlauf (Eds.), Handbook of economic growth: volume 1A, 2005, (pp. 386–464). Amsterdam: Elsevier.
2. Akerlof, George A.,The Market for “Lemons”: Quality Uncertainty and the Market Mechanism, 1970, 84 Quarterly Journal of Economics, 488.
3. Becker, Gary: Crime and Punishment: An Economic Approach. Journal of Political Economy 76, 1968, pp. 167-217 (March/April).
4. Ben-Shahar, O., & Schneider, C. E. (2014). More than you wanted to know: The Failure of Mandated Disclosure. Princeton University Press, Introduction.
5. Calabresi, G., & Melamed, A. D. (1972). Property rules, liability rules, and inalienability: one view of the cathedral. Harvard law review, 1089-1128.
6. Coase, Ronald H., The Problem of Social Cost. Journal of Law and Economics, Vol. 3 (1960).
7. Djankov S., A. Shleifer, R. LaPorta, F. Lopez-de-Silanes (2003). Courts, Quarterly Journal of Economics.
8. Djankov S., O. Hart, C. McLiesh, A. Shleifer (2008). Debt Enforcement Around the World, J of Political Economy.
9. Friedman, David: Defining and Enforcing Rights: Property, Liability, & Spaghetti, in Law’s Order: What Economics Has to do with Law and Why It Matters, 2003, chapter 5.
10. Brabenec, T., & Montag, J. (2014). Criminals and the Price System: Evidence from Czech Metal Thieves. Journal of Quantitative Criminology, 1-34.
11. Montag, J. and Sobek, T. (2018): Proportionality test, forthcoming in Marciano, A. and Ramello G.B. (Eds.). 2019. Encyclopedia of Law and Economics. Springer, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3126389
12. Posner, Richard: Economic Analysis of the Law (5th ed.). New York: Aspen Publishers, 1998 pp. 3-31.
13. Shleifer A., R. LaPorta, F. Lopez-de-Silanes (2008). The economic consequences of legal origins, J of Economic Literature.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
Výsledky učení -
Knowledge:
Students will be able to:
1.Explain the concept of efficiency in law (Pareto efficiency, Kaldor–Hicks efficiency) and distinguish between mere transfers and genuine social costs and benefits.
2.Distinguish between externalities, public goods, common-pool resources, and information asymmetries, and identify their typical causes.
3.Compare different instruments for addressing externalities (regulation, Pigouvian taxes/subsidies, tradable permits, and private-law solutions) and explain the role of transaction costs.
4.Explain the conditions under which bargaining leads to efficient outcomes and clarify how law affects outcomes when transaction costs are high.
5.Describe the economic benefits and costs of property rights, including the problems of the “tragedy of the commons” and the “tragedy of the anticommons.”
6.Analyze, using examples, how different legal rules for protecting property rights (injunctions vs. damages/liability rules) lead to different outcomes under low and high transaction costs.
7.Characterize contract law as a tool for reducing opportunism, allocating risk, and addressing unforeseen circumstances; distinguish between complete and incomplete contracts and explain the role of default rules.
8.Analyze, using examples, how different mechanisms of compensation, sanctions, and termination rights affect the parties’ behavior in contractual performance and renegotiation.
9.Explain the differences between productive, destructive, and redistributive information and demonstrate, using examples, how they affect the validity of contracts concluded under conditions of asymmetric information.
10.Describe liability in unilateral accident settings using the Hand Rule and strict liability, and explain how these rules affect the behavior of potential injurers.
11.Explain the expected value of litigation, the “settlement range,” the role of uncertainty/information, and rules governing the allocation of litigation costs; calculate the expected value of litigation for both parties.
12.Explain adverse selection and moral hazard and apply the principal–agent model to legal relationships.
Skills (Application and Analysis):
Students will be able to:
1.Classify a specific legal change as a Pareto improvement or a Kaldor–Hicks improvement.
2.Identify externalities, public goods, or common-pool resources in a given case and propose an appropriate policy or legal instrument, taking transaction costs into account.
3.Determine the appropriate corrective tax or subsidy and compare the effectiveness of regulation, taxes, and tradable permits in a given scenario.
4.Predict bargaining outcomes within a Coasean framework and explain why and under what conditions bargaining may fail.
5.Evaluate the design of property rights (ownership, registration, protection of good-faith acquisition), identify anticommons problems, and propose legal changes that facilitate the efficient use of resources.
6.Evaluate appropriate remedies for breach of contract and calculate potential damages in a model case.
7.Apply the formula B < P × L to determine the optimal level of care in a unilateral accident setting and assess the role of the “activity level.”
8.Calculate the expected value of litigation, determine the range for a possible settlement, and assess how procedural rules (e.g., the “loser pays” rule) affect the likelihood of settlement.
9.Identify information problems (adverse selection, moral hazard, principal-agent problems) in legal contexts, propose solutions, and explain their effects on incentives and risk.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
Knowledge:
Students will be able to:
1.Explain the concept of efficiency in law (Pareto efficiency, Kaldor–Hicks efficiency) and distinguish between mere transfers and genuine social costs and benefits.
2.Distinguish between externalities, public goods, common-pool resources, and information asymmetries, and identify their typical causes.
3.Compare different instruments for addressing externalities (regulation, Pigouvian taxes/subsidies, tradable permits, and private-law solutions) and explain the role of transaction costs.
4.Explain the conditions under which bargaining leads to efficient outcomes and clarify how law affects outcomes when transaction costs are high.
5.Describe the economic benefits and costs of property rights, including the problems of the “tragedy of the commons” and the “tragedy of the anticommons.”
6.Analyze, using examples, how different legal rules for protecting property rights (injunctions vs. damages/liability rules) lead to different outcomes under low and high transaction costs.
7.Characterize contract law as a tool for reducing opportunism, allocating risk, and addressing unforeseen circumstances; distinguish between complete and incomplete contracts and explain the role of default rules.
8.Analyze, using examples, how different mechanisms of compensation, sanctions, and termination rights affect the parties’ behavior in contractual performance and renegotiation.
9.Explain the differences between productive, destructive, and redistributive information and demonstrate, using examples, how they affect the validity of contracts concluded under conditions of asymmetric information.
10.Describe liability in unilateral accident settings using the Hand Rule and strict liability, and explain how these rules affect the behavior of potential injurers.
11.Explain the expected value of litigation, the “settlement range,” the role of uncertainty/information, and rules governing the allocation of litigation costs; calculate the expected value of litigation for both parties.
12.Explain adverse selection and moral hazard and apply the principal–agent model to legal relationships.
Skills (Application and Analysis):
Students will be able to:
1.Classify a specific legal change as a Pareto improvement or a Kaldor–Hicks improvement.
2.Identify externalities, public goods, or common-pool resources in a given case and propose an appropriate policy or legal instrument, taking transaction costs into account.
3.Determine the appropriate corrective tax or subsidy and compare the effectiveness of regulation, taxes, and tradable permits in a given scenario.
4.Predict bargaining outcomes within a Coasean framework and explain why and under what conditions bargaining may fail.
5.Evaluate the design of property rights (ownership, registration, protection of good-faith acquisition), identify anticommons problems, and propose legal changes that facilitate the efficient use of resources.
6.Evaluate appropriate remedies for breach of contract and calculate potential damages in a model case.
7.Apply the formula B < P × L to determine the optimal level of care in a unilateral accident setting and assess the role of the “activity level.”
8.Calculate the expected value of litigation, determine the range for a possible settlement, and assess how procedural rules (e.g., the “loser pays” rule) affect the likelihood of settlement.
9.Identify information problems (adverse selection, moral hazard, principal-agent problems) in legal contexts, propose solutions, and explain their effects on incentives and risk.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
Požadavky k zápisu -
Students who have completed the course Právo a ekonomie II may not enrol in this course. For Právo a právní věda students, enrolment in this course is conditional upon concurrent enrolment in Právo a ekonomie I or prior completion of an equivalent introductory course in microeconomics. For Právo a právní věda students, successful completion of this course is conditional upon successful completion of Právo a ekonomie I or recognition of an equivalent course. For Právo a právní věda students, successful completion of this course serves as a substitute for the compulsory course Právo a ekoomie II.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
Students who have completed the course Právo a ekonomie II may not enrol in this course. For Právo a právní věda students, enrolment in this course is conditional upon concurrent enrolment in Právo a ekonomie I or prior completion of an equivalent introductory course in microeconomics. For Právo a právní věda students, successful completion of this course is conditional upon successful completion of Právo a ekonomie I or recognition of an equivalent course. For Právo a právní věda students, successful completion of this course serves as a substitute for the compulsory course Právo a ekoomie II.
Poslední úprava: Šicnerová Barbora, Mgr. (16.09.2026)
