Though Ronald Coase's The Problem of Social Cost(1960) is generally considered to have begun the law and economics movement, the application of economic theory and methods to legal issues can be found much earlier. Indeed, Adam Smith's (1723–1790) own analysis of the effects of the licensing of professionals is an early example of what one would today consider law and economics scholarship. However, Coase's work can be thought of as the beginning of the first identifiable school of thought in law and economics scholarship—the Chicago, or positive, School of law and economics.

Approaches to Law and Economics

Proponents of the Chicago School argue that market forces cause the common law to develop efficient, or wealth maximizing, legal rules. As suggested by the Coase Theorem, only transaction costs ...

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