The Fundamental Scheme of L&E

Giovanni Tuzet (Bocconi University)

Abstract

A basic idea of the economic approach to legal norms is to look at these as incentives to perform certain forms of conduct. If these incentives have a minimum of effectiveness, they have an impact on the conduct of their addressees and produce some economic consequences.
The fundamental scheme of this economic approach to law is the following, with C for conduct, S for sanction, EC for economic consequences, Þn meaning that between C and S there is a normative (legal) implication, and Þf meaning that between (C Þn S) and EC there is a factual (causal) implication:

(C Þn S) Þf EC

Legal norms generally have a conditional logical structure: they are constituted by an antecedent part representing a kind of conduct and a consequent ascribing a legal consequence to this conduct. If this conduct is performed, a certain legal consequence ought to follow. Logically speaking, the antecedent is descriptive of a kind of conduct, whereas the consequent is normative in that it prescribes what ought to follow from that conduct. Typically, the legal consequence is a sanction on those who perform the conduct.
When the sanction is negative (e.g. a fine), it has the apparent role of an incentive not to perform the regulated conduct. When it is positive (e.g. a fiscal deduction) it provides an incentive to perform the conduct. If such norms are effective, they play a role in the decision-making of the law’s addressees.
The paper explores the assumptions, features and scope of this fundamental scheme.

©2021 Italian Society of Law and Economics. All rights reserved.