PHIL 2050 Lecture Notes - Lecture 5: Market Failure, Absolute Liability, Susan Dimock
11 Apr 2016
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Document Summary
Not to be used without written permission of the copyright holder. Law serves the goal of economic efficiency (wealth maximization). Role/motive of judges: normative: we ought to have efficient rules. Efficiency is a value and efficient rules are justified. Efficient rules are rules that serve to bring about efficient allocations of resources. Richard posner (american judge and jurisprudent): efficiency = wealth-maximization. Value of a resource = offer price or asking price in a market. Wealth = monetary gains + any other satisfactions that can be measured. Rationality = instrumental, maximization of personal satisfactions; self-interested not selfish; will be motivated by incentives / disincentives. Wealth is increased any time two or more people trade goods and the offer price is higher than the asking price (e. g. stamp collection). Necessarily increases net utility for the parties (at least one winner and no losers)
