Against Feasibility Analysis
Thanks to Emily Buss, Dan Cole, Adam Cox, David Driesen, Frank Easterbrook, Jake Gersen, Martha Nussbaum, Arden Rowell, Adam Samaha, Tom Ulen, Adrian Vermeule, Sasha Volokh, David Weisbach, and participants at a workshop at The University of Chicago Law School for helpful comments, and to Charles Woodworth for excellent research assistance.
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Feasibility analysis, a method of evaluating government regulations, has emerged as the major alternative to cost-benefit analysis. Although regulatory agencies have used feasibility analysis (in some contexts called “technology-based” analysis) longer than cost-benefit analysis, feasibility analysis has received far less attention in the scholarly literature. In recent years, however, critics of cost-benefit analysis have offered feasibility analysis as a superior alternative. We advance the debate by uncovering the analytic structure of feasibility analysis and its normative premises, and then criticizing them. Our account builds on two examples of feasibility analysis, one conducted by OSHA and the other by EPA. We find that feasibility analysis leads to both under- and overregulation, and we conclude that it lacks a normative justification and should have no place in government regulation.
We thank Mike Livermore, Mike Gilbert, Greg Mitchell, Pierre Verdier, Bobbie Spellman, Michal Barzuza, Rip Verkerke, and John Harrison for helpful comments and suggestions.
We thank Mike Livermore, Mike Gilbert, Greg Mitchell, Pierre Verdier, Bobbie Spellman, Michal Barzuza, Rip Verkerke, and John Harrison for helpful comments and suggestions.
This Essay was written for the L&E vs. LPE Symposium organized by The University of Chicago Law Review. We thank Mike Livermore, Mike Gilbert, Greg Mitchell, Pierre Verdier, Bobbie Spellman, Michal Barzuza, Rip Verkerke, and John Harrison for helpful comments and suggestions.
Law and economics (L&E) emerged as a field in the middle of the twentieth century, it focused on using economic theory to study the common law. During this period, L&E offered insights so novel that it not only profoundly influenced legal doctrine, but the movement’s key figures also became some of the most cited and acclaimed scholars in the American academy. The field of law and economics has since continued to grow and become more technically sophisticated, but it is also a less cohesive movement. Moreover, L&E has been misunderstood and misrepresented by the emerging law and political economy (LPE) movement. This Essay starts the process of reclaiming L&E by offering a definition of the current field: Contemporary law and economics is an academic field that (1) has a commitment to using the social scientific method of inquiry to (2) study questions about the law and legal institutions (3) in a way that is typically informed by economic insights. It then describes L&E’s comparative advantages, explains its relationship to the LPE movement, and suggests a roadmap for its renewed relevance.
For helpful comments, we are grateful to Kiran Chawla, Lee Fennell, Louis Kaplow, Adi Leibovitch, Richard McAdams, David Weisbach, workshop participants at the University of Chicago, and the editors of The University of Chicago Law Review. We thank Hannah Lu and Safia Sayed for excellent research assistance.
For helpful comments, we are grateful to Kiran Chawla, Lee Fennell, Louis Kaplow, Adi Leibovitch, Richard McAdams, David Weisbach, workshop participants at the University of Chicago, and the editors of The University of Chicago Law Review. We thank Hannah Lu and Safia Sayed for excellent research assistance.
Should legal rules be designed exclusively based on efficiency considerations, or should they also attempt to promote an equitable distribution of social resources? The answer traditionally associated with scholarship in law and economics is that they should focus only on efficiency. Even for a society that cares about achieving an equitable distribution of resources by income, the argument goes, it is generally better to adopt legal rules based exclusively on efficiency considerations while relying on the income tax and transfer system to promote distributional goals. However, even proponents of the claim that social welfare is best promoted through the adoption of efficient legal rules agree that there are certain conditions under which it does not apply. This Essay considers when legal rules should be efficient and when they should not. It focuses on conditions that can cause the socially optimal legal rule to diverge from the efficient legal rule—i.e., the legal rule that would be optimal absent distributional considerations. Its goal is to translate these arguments to settings where the question of interest relates to the design of a legal rule rather than, say, the design of a commodity tax. In particular, it seeks to clarify the types of arguments that can support the adoption of inefficient legal rules when income taxation is available as a policy tool.
Mainstream antitrust policy is grounded in economics and views the protection of competition as antitrust’s singular goal. But the populist “antimonopoly movement” believes that antitrust should focus less on economic issues and more on the political influence of large firms. While the courts have long embraced the economic approach to antitrust, antimonopolists have recently gained some support in politics. This battle of ideas is therefore poised to determine the future of antitrust. Antitrust law currently suffers from a number of problems, but the antimonopoly movement does not offer serious solutions. On the contrary, by deemphasizing tangible economic harms in favor of abstract political concerns, it would cause immense economic damage. Antitrust populism is grounded in the moralistic belief that large companies are inherently detrimental to society, overlooking the fact that most big firms attained their success by providing significant economic benefits to the public, such as better products or lower prices. This Essay argues that rather than punishing bigness for its own sake, antitrust should focus on proscribing anticompetitive behavior and ensuring that all firms can compete on a level playing field.