Efficiency, Utility, and Wealth Maximization

Abstract

A fully adequate inquiry into the foundations of the economic approach to law would address at least the following four related questions: (1) What is economic efficiency; what does it mean to say that resources are allocated in an economically efficient manner or that a body of law is efficient? (2) Does the principle of efficiency have explanatory merit; that is, can the rules and principles of any or all of the law be rationalized or subsumed under an economic theory of legislation or adjudication? (3) How should law be formulated to promote efficiency; in what ways must legal rights and duties be assigned and enforced so that the rules that assign and enforce them are efficient? (4) Ought the law pursue economic efficiency; to what extent is efficiency a desirable legal value in particular, and a normatively attractive principle in general?