Contents

Preface viii
Acknowledgments x
Part I: Coase Theorem 1
1 The Problem of Social Cost 3
Ronald H. Coase
2 The Cost of Coase 14
Robert Cooter

Part II: Property Rights, Liability Rules, and Regulation 19
3 Property Rules, Liability Rules, and Inalienability: One View of the Cathedral 21
Guido Calabresi and A. Douglas Melamed
4 Economic Theory of Liability Rules 34
John P. Brown
5 Unity in Tort, Contract, and Property: The Model of Precaution 42
Robert Cooter
6 Coming to the Nuisance 53
Donald Wittman
7 Liability for Harm versus Regulation of Safety 59
Steven Shavell

Part III: Intellectual Property 69
8 Mistake, Disclosure, Information, and the Law of Contracts 71
Anthony T. Kronman
9 An Economic Analysis of Copyright Law 83
William M. Landes and Richard Posner
10 Authors’ and Artists’ Moral Rights: A Comparative Legal and Economic
Analysis 97
Henry Hansmann and Marina Santilli

Part IV: Contracts and Warranties 111
11 A Theory of the Consumer Product Warranty 113
George L. Priest
12 Fixed-Price versus Spot-Price Contracts: A Study in Risk Allocation 122
A. Mitchell Polinsky
13 The Theory of the Firm and the Structure of the Franchise Contract 126
Paul H. Rubin
14 Transaction Cost Determination of “Unfair” Contractual Arrangements 133
Benjamin Klein
15 The Law and Economics Approach to Contract Theory 141
Alan Schwartz

Part V: Corporations and Corporate Finance 151
16 Limited Liability in the Theory of the Firm 153
Susan E. Woodward
17 Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership
Structure 162
Michael C. Jensen and William H. Meckling
18 State Law, Shareholder Protection, and the Theory of the Corporation 177
Ralph K. Winter
19 The Proper Role of a Target’s Management in Responding to a Tender Offer 192
Frank H. Easterbrook and Daniel R. Fischel
20 The Regulation of Insider Trading 201
Dennis W. Carlton and Daniel R. Fischel
21 Corporate Reorganizations and the Treatment of Diverse Ownership
Interests: A Comment on Adequate Protection of Secured Creditors
in Bankruptcy 212
Douglas G. Baird and Thomas H. Jackson

Part VI: Family Law 223
22 The Economics of the Baby Shortage 225
Elisabeth M. Landes and Richard A. Posner
23 A Market for Babies 231
J. Robert S. Prichard
24 Marriage, Divorce, and Quasi Rents; Or, “I Gave Him the Best Years of
My Life” 241
Lloyd Cohen

Part VII: Crime and Criminal Law 253
25 Crime and Punishment: An Economic Approach 255
Gary S. Becker
26 Blackmail, Privacy, and Freedom of Contact 266
Richard A. Posner

Part VIII: Norms 277
27 Approximate Optimality of Aboriginal Property Rights 279
Martin J. Bailey
28 Property in Land 286
Robert C. Ellickson
29 Efficient Rules in Highway Safety and Sports Activity 306
Donald Wittman
30 Rings and Promises 318
Margaret F. Brinig
Index 322