Different applications
The first distinction concerns the economic method or approach. A second distinction refers to the different uses of legal economic analysis. Economic analyses of legal problems are used in vastly different contexts.
In court cases, economic experts have traditionally played a role when specifically economic expertise (such as the likely effects of mergers) was required. With the expansion of law and economics as a subdiscipline to virtually every aspect of legal applications, the economist’s role has likewise become a broader one. The scope of a legal economic analysis of a court expert will depend on whether the expertise is required for elucidating the particulars of a single case or whether an assessment of the likely consequences of setting precedent is called for. In the first case, the application of received economic knowledge and exercise of standard techniques is normally sufficient, whereas in the second case a model may have to be developed (and tested).A legal economic analysis plays an important part in administrative applications as well. Again there is a substantial distinction between the analysis of the application of a specific rule to a particular case or whether the impact of the rule on all the cases to which it is applied has to be analysed. Again, in the second case, an explicit model will have to be constructed. The most genuine applications of an economic analysis to legal problems occur at the legislative level. Since at this level we will normally observe a competition between different proposals, the task of the economist is to sort out which aspects of the differences between them are economically relevant. It is hoped that a single model of relevance can be developed that encompasses the competing proposals. The broader the impact of the legislation under consideration, the more thorough hypothesis testing will be required.
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