International Review of Law and Economics 23 (2004) 341–344

Introduction

Nineteenth annual conference of the EuropeanAssociation of Law and EconomicsAthens, Greece, September 2002

Ben Depoortera, Aristides N. Hatzisb,∗a Center for Advanced Studies in Law and Economics, Ghent University, 9000 Gent,

Belgium & Olin Fellow in Law and Economics, Center for Studies in Law, Economics,and Public Policy, Yale Law School, New Haven, CT, USA

b Department of Philosophy & History of Science, University of Athens, University Campus,Ano Ilisia, 15771 Athens, Greece and Center for Institutional Reform, Athens, Greece

The 19th annual conference of the European Association of Law and Economics tookplace in Athens from 19 to 21 September 2002. It was organized by the University ofAthens, under the auspices of the Greek Ministry of Culture. Economic analysis of law isin a nascent stage in Greece. However, the conference was a great success, having over 250registered participants.

This year we had a number of innovations. Since there was an unprecedented number ofsubmissions (over 180), the scientific committee (Gerrit De Geest, Ben Depoorter, AristidesHatzis and Aspasia Tsaoussis) decided to accept 60 papers instead of the usual 40 papers.The papers were distributed in 24 panels, more particularly, 12 two-paper panels withdiscussants and 12 three-paper panels without discussants. In an attempt to involve theGreek academic community, we assigned 18 of the chairs not to EALE members, but toGreek professors of Law or Economics (among them a former Minister of Justice, a formerPresident of the Greek Supreme Court, two former Rectors of the University of Athens, andtwo members of the Academy of Athens). Our guest lecturer was Judge Richard Posner,who was also awarded two honorary degrees by the University of Athens and the Universityof Thessaloniki.1 An indication of success was that immediately after the conference, theGreek Association of Law and Economics was launched, which currently numbers over 60members.

∗ Corresponding author. Tel.:+30-210-727-5565; fax:+30-210-727-5530.E-mail address: ahatzis@phs.uoa.gr (A.N. Hatzis).1 See Richard A. Posner,Law, Economics & Democracy: Three Lectures in Greece (Athens: Ant. N. Sakkoulas

Publishers, 2002).

0144-8188/$ – see front matter © 2003 Elsevier Inc. All rights reserved.doi:10.1016/j.irle.2003.11.001

342 B. Depoorter, A.N. Hatzis / International Review of Law and Economics 23 (2004) 341–344

The scientific committee decided to promote research on European themes and the workof younger scholars. As a result, a substantial part of the papers were presented by youngscholars, taking the first (public) steps of their academic careers.

For this special issue, we had a difficult task before us: to select a handful of papers fromthe 26 submissions. In the selection process, we were fortunate enough to have the help of31 referees who helped us select the seven papers of this issue. We believe that these sevenpapers are illustrative of the scope, but also of the high level of scholarship characterizingEuropean scholarship in the economic analysis of law.

The first paper, “Cooperation in the Shadow of Regulatory Competition: The Case ofAsylum Legislation in Europe” is written by Ségolène Barbou des Places and Bruno Def-fains. The authors of this paper adopt a Law and Economics perspective to examine thelegislative activity in the field of asylum in Europe since the mid-1980s. They identify ageneralized shift from generous national asylum policies to restrictive and deterrent asylumlegislation and they attempt to explain the difficulties met by EU Member States in settingout efficient cooperative schemes in the 1990s. They also raise the issue of the efficiencyof the European asylum policy as it is currently delineated. According to the authors, theprovision of protection after the Second World War presented the characteristics of a jointproduct. As States expected private (i.e. nation-specific) benefits, the provision of protec-tion was both spontaneous and heterogeneous in Europe. However, by the mid-1980s, thecosts of asylum seekers’ reception dramatically increased and this led to the emergence ofa competitive regulatory game that took the form of a spiral of restrictions in the memberstates’ asylum legislation. The spontaneous cooperation of the 1990s failed to limit neg-ative regulatory competition. The authors propose a numbers of conditions for regulatorycompetition to produce a positive result, building upon the American debate on regulatorycompetition in the field of corporate law.

In the second paper (“The Contract Theory of Patents”), Vincenzo Denicolò and LuigiFranzoni show that patents may serve a valuable function as alternatives to trade secrets. Byadopting a “contract” theory of patents (the function of the patent system is to promote thediffusion of innovative knowledge), they see patents as legal devices that may induce firmsto disclose their innovations to the public, rather than tools necessary to foster research.They assume that the innovation is the outcome of “serendipity”, thus the stimulation ofR&D is not a concern. The optimal patent length must strike a balance between the benefitof inducing additional firms to disclose their innovations and the increase in deadweightloss associated with patentees’ monopoly power. This balance is positively related to theintensity of competition in the market for the innovation and the discount rate, and negativelyrelated to the size of the market for the innovation.

Thomas Eger, in the third paper of the issue, bearing the title “Opportunistic Termina-tion of Employment Contracts and Legal Protection Against Dismissal in Germany andthe USA”, analyses the protection against individual and collective dismissals from a com-parative Law and Economics perspective, by juxtaposing German and American laborlegislation. By emphasizing the link between protection against dismissal and the incentiveto invest in firm-specific human capital, the author shows that some degree of protectionagainst unfair dismissal might increase efficiency since market failures will prevent employ-ers and employees from voluntarily agreeing on all mutually beneficial constraints regard-ing dismissals. In Germany, employees are to a large degree protected against opportunistic

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dismissals, but in the US the protection is much weaker. The differences in legal protec-tion against dismissal in both countries are accompanied by typical differences in skillprofiles, in external mobility and internal flexibility of the workers, as well as in productmarket strategies. The author claims that some degree of legal protection against dismissalis necessary in order to stabilize the product market strategies. A socially efficient reformof employment protection should focus on reducing legal uncertainty, by increasing theimportance of legally specified severance pays in case of dismissals.

In the fourth paper (“Judicial Conformity versus Dissidence: An Economic Analysis ofJudicial Precedent”), Sophie Harnay and Alain Marciano claim that a judicial decision doesnot only reflect the personal preference of a judge (personal satisfaction), but also the ex-pected response of the judicial community to the decision (professional satisfaction). Theyfollow the precedent, mostly because they wish to benefit from the adoption externalitiesin the judicial market. The judicial decision-making process is modeled as a coordinationproblem with a sequential game of two periods in which judges play a bandwagon strat-egy. However, the incomplete information as to the preferences of their colleagues mightlead to extreme formalism, which can be overcome through a design of specific mecha-nisms aimed to promote both legal change and the realization of adoption externalities.Finally, the authors examine the pros and the cons of centralized and decentralized legalsystems, without opting for one of the two major judicial decision-making systems (civil andcommon law).

The fifth paper, “Economic Analysis and Legal Pragmatism” by Elizabeth Krecké, isa study of the underlying methodological and epistemological foundations of the recentevolution in the work of Judge Richard Posner. The author attempts to answer the questionof whether this evolution reflects a parallel radical change of the basic foundations ofLaw and Economics or merely a minor shift that does not undercut the methodologicalfoundations. She believes that Posner’s pragmatic turn has important implications, withoutrejecting the usefulness of economics to the study of legal phenomena, in accepting the factthat the mechanical social efficiency model is empirically deficient.

Peter Lewisch, in the sixth paper of this issue (“A Theory of Identification”) analyzesthe phenomenon of “identification” of individuals with actors in their relevant environmentand on the implications of this identification for non-market choices, especially for voting.The author relates the concept of “identification” to the constructivist approach “of creatinga new reality” by ascribing a certain meaning to the observable “hard facts”. The frameadopted by the individual when creating this reality is unstable and subject to change.The environment itself by means of a complex communication process contributes to thisdynamic. “Identification”, hence, can be seen as a frame that the individual adopts partly inresponse to the observed environment. There exists a “natural tendency” for identification,which is attributable to the attempt of the individual to realize utility gains. An exampleis voting when the actor identifies himself or herself with a political actor. Identificationvoting can explain situations where the theory of expressive voting fails.

In the final paper (“The Cost of Delegated Control: Vicarious Liability, Secondary Lia-bility and Mandatory Insurance”), Giuseppe Dari Mattiacci and Francesco Parisi deal withthe systems of delegated control (vicarious liability, secondary liability, and mandatory in-surance). The authors’ main concern is with the cost of monitoring delegated control. Thearticle analyzes mandatory insurance, regarded as a mechanism of controlling potential

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tortfeasors, through the lens of insurer’s monitoring, rather than as a contract to transferrisk from a risk-averse to a risk-neutral party. The authors compare the structure and in-centive properties of alternative legal instruments. According to the authors, the allocationof the cost of delegated control to the injurer and his principal induces inefficient precau-tion but produces incentives to reduce monitoring costs. On the contrary, where this costis externalized on victims through lower levels of due care, precaution would be efficientbut incentives to reduce the monitoring cost would be severely diluted. Whether efficientprecaution or efficient monitoring technology is desirable is an empirical question. Liabilityrules seem to be instrumental to preventing problems of excessive precaution that mightotherwise arise in imperfect-internalization settings where the principal does not bear theagent’s precaution cost.