Economic Analysis of Public Law

347 Pages·2022·4.112 MB·English

by  Michael Rodi

Springer Textbooks in Law
Michael Rodi
Economic
Analysis
of Public Law
Springer Textbooks in Law
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resolution,mediation,arbitration–andmanymore.
Michael Rodi
Economic Analysis
of Public Law
MichaelRodi
InstituteforClimateProtection,EnergyandMobility(IKEM)
Berlin,Germany
Translatedby
KateMiller
InstituteforClimateProtection,EnergyandMobility(IKEM)
Berlin,Germany
ISSN2509-999X ISSN2510-0009 (electronic)
SpringerTextbooksinLaw
ISBN978-3-662-66088-1 ISBN978-3-662-66089-8 (eBook)
https://doi.org/10.1007/978-3-662-66089-8
TranslatedandeditedversionoftheGermanlanguageedition:“ÖkonomischeAnalysedesÖffentlichen
Rechts”byMichaelRodi,#Springer-VerlagBerlinHeidelberg2014.PublishedbySpringerGabler,
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Preface
Law and economics is an Anglo-American discipline that has only slowly gained
traction in continental Europe. At the same time, public law—as a phenomenon
distinct from civil law—has its roots in Europe and is uncommon in the Anglo-
American world. Writing a book on the economic analysis of public law is an
interesting challenge, as themain works written by scholars of law and economics
addresstopicsthat,incontinentalEurope,fallundertheumbrellaofprivateorcivil
law,suchastortandliabilitylaw.Still,itseemspromisingtoapplyrationalchoice
theorytophenomenalikethestateandtheconstitution,theadministrationandpublic
organisations, regulation and legal fields characterised by state intervention, like
fiscalorenvironmentallaw.
The idea for this book grew out of many years of teaching, during which I
observed that students showed great interest in this new field of research. They
told me that they found knowledge of the topic especially useful in their later
coursework on legal design. I am grateful to my students for all of the great
discussionswesharedinthelecturehallsandseminarroomsovertheyears.
I would also like to thank my colleagues at the Institute for Climate Protection,
Energy and Mobility (IKEM), where I have the privilege of serving as a director.
Thisbookbenefitedenormouslyfromyourkeeninsightandexpertise.Iamcontin-
uallyinspiredbyyourtirelessworktodevelopaframeworkforlawandpolicythat
willadvancetheenergytransition.
SpecialthanksgotoKateMiller,whotranslatedandeditedthetextmeticulously
andwithgreatpatience;itisourhopethatthisbookwillcontributetothediscussion
oflawandeconomicsintheEnglish-speakingworld.ThanksalsotoLisaCole,who
providedvaluableinputduringtherevisionprocess.Lastbutnotleast,thankyouto
Nils Baumann for preparing the manuscript for publication, as always in a reliable
andefficientway.
Berlin,Germany MichaelRodi
v
Contents
PartI BasicPrinciples
1 PrinciplesofanEconomicAnalysisofPublicLaw. . . . . . . . . . . . . . 3
1.1 AStudyofLawfromOutsidetheLegalField:Functionsand
OrientationofanEconomicAnalysisofLaw. . . . . . . . . . . . . . . . 4
1.1.1 EconomicAnalysisofLaw:AnIntroduction. . . . . . . . . . . 4
1.1.2 EconomicAnalysisofPublicLawandRelatedSciences. . 6
1.2 TheoreticalConcepts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
1.2.1 BasicMethodologicalPrinciples. . . . . . . . . . . . . . . . . . . . 10
1.2.2 MethodologicalFoundationsoftheEconomicAnalysisof
Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
1.2.3 TheTheoryofMarketFailure. . . . . . . . . . . . . . . . . . . . . . 32
1.3 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
2 StateandConstitution. . . . . .. . . . . . . . . .. . . . . . . . .. . . . . . . . . .. 59
2.1 PrinciplesofanInstitutionalEconomicsoftheStateand
Constitution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
2.2 NormativeConstitutionalTheoryintheFormofContract
Doctrine. . . .. . . . . . . . . . . .. . . . . . . . . . . .. . . . . . . . . . .. . . . 61
2.2.1 AnInterpretationofConstitutionalDemocracyBasedon
ContractTheory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
2.2.2 FormsofGovernmentasaSubjectofEconomicTheory. . . 65
2.2.3 EconomicTheoryofDemocracy. . . . . . . . . . . . . . . .. . . . 66
2.3 FunctionsoftheState. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
2.3.1 ManagementofInstitutions. . . . . . . . . . . . . . . . . . . . . . . 82
2.3.2 TypologicalOverviewofStateandGovernmentFunctions
(FieldsofAction). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
2.4 StateStructure(SpecificallyFederalism). . . . . . .. . . . . . . . . . . .. 88
2.4.1 TheQuestionofWhoShouldControltheState:Separation
ofPowers(Horizontal). . . . . . . . . . . . . . . . . . . . . . . . . . . 89
2.4.2 Federalism:SeparationofPowers(Vertical). . . . . . . . . .. 91
2.5 OpenStatehood. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
2.5.1 TheNeedtoOpenUptheStatetotheOutsideWorld. . . . . 101
vviiii
viii Contents
2.5.2 PrinciplesofInternationalCooperationBetweenStates. . . 102
2.5.3 QuestionsontheContentofInternationalLaw. . .. . . . . .. 109
2.6 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
3 EconomicTheoryofInstitutionsandOrganisations. . . . . . . . . . . . . 119
3.1 BasicPrinciples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
3.1.1 TheImportanceofOrganisations. . . . . . . . . . . . . . . . . . . 119
3.1.2 ApproachesinOrganisationalTheory. . . . . . . . . . . . . . . . 120
3.2 KeyTopicsinOrganisationalEconomics. . . . . . . . . . . . . . . . . . . 122
3.2.1 FreedomandRestrictionsintheFormation
ofOrganisations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
3.2.2 Decision-Making,DistributionandControlProblemsin
Organisations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
3.2.3 ExternalRelationships. . . . . . . . . . . . . . . . . . . . . . . . . . . 123
3.2.4 RegulatoryChallengesRelatedtoInternalandExternal
Relationships. . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 124
3.3 TypesofOrganisations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
3.3.1 TheFirm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
3.3.2 InterestGroups. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
3.3.3 TheMedia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
3.3.4 Parties. . .. . . . . .. . . . . .. . . . .. . . . . .. . . . . .. . . . .. . 140
3.4 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
4 TheoryofStateDecision-Making. . . . . . . . . . . . . . . . . . . . . . . . . . . 149
4.1 Decision-Makers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
4.1.1 Politicians. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150
4.1.2 TheAdministration(BureaucraticTheory). . . . . . . . . . . . . 151
4.2 Regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158
4.2.1 KeyConcepts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
4.2.2 CaptureTheoryandInterestGroups. . . . . . . . . . . . . . . . . 160
4.2.3 Legal-ImpactResearch. . . . . . . . . . . . . . . . . . . . . . . . . . . 161
4.2.4 ‘GoodGovernance’. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 164
4.3 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 165
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166
PartII FocusAreas
5 PublicFinance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171
5.1 StateBudget. . . .. . . . . .. . . . . . .. . . . . . .. . . . . . .. . . . . . .. . 171
5.2 GovernmentSpending. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
5.2.1 NormativeDeterminationoftheOptimalGovernment
Share. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 172
5.2.2 StateDecisionsonGovernmentSpending. . . . . . . . . . . . . 174
Contents ix
5.3 GovernmentRevenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180
5.3.1 TaxesandFees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182
5.3.2 GovernmentDebt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 197
5.4 PublicFinancesUnderFederalism. . . . . . . . . . . . . . . . . . . . . . . . 210
5.4.1 BasicPrinciples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 210
5.4.2 SpendingPower. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 211
5.4.3 RevenuePowers,EspeciallyTaxSovereignty. . . . . . . . . . 212
5.4.4 TransferPaymentsandFiscalEqualisationSchemes. . . .. 215
5.4.5 MacroeconomicResponsibility. . . . . . . . . . . . . . . . . . . . . 216
5.5 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 216
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 217
6 PublicEconomicLaw. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
6.1 BasicPrinciples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 223
6.1.1 GeneralEconomicHistory. . . . . . . . . . . . . . . . . . . . . . . . 223
6.1.2 ConstitutionalandEuropeanLegalFrameworkfor
EconomicPolicy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224
6.1.3 TopicsinLegalEconomics. . . . . . . . . . . . . . . . . . . . . . . 225
6.2 StateandCompetition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
6.2.1 GuaranteeofEffectiveCompetitionBetweenPrivate
Parties. . .. . . . . .. . . . . .. . . . .. . . . . .. . . . . .. . . . .. . 227
6.2.2 StateActivitiesRelatedtoCompetition. . . . . . . . . . . . . . . 229
6.3 EconomicRegulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
6.3.1 BasicPrinciples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 247
6.3.2 MacroeconomicPolicies(BusinessCycleorEconomic
StabilisationPolicy). . . . . . . . . . . . . . . . . . . . . . . . . . . . . 248
6.3.3 NaturalMonopoliesandOptionsforStateRegulation. . . . 251
6.3.4 TraditionalEconomicOversightandRegulation. . . . . . . . 256
6.4 InternationalEconomicRelationsandtheGlobalEconomic
Constitution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
6.4.1 BasicPrinciples. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
6.4.2 InternationalTradeLaw. . . . . . . . . . . . . . . . . . . . . . . . . . 259
6.5 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 266
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
7 EnvironmentalEconomics. .. . . . .. . . . .. . . . .. . . . .. . . . .. . . . .. 273
7.1 PrinciplesofEnvironmentalEconomics. . . . . . . . . . . . . . . . . . . . 273
7.1.1 MarketFailuresinanEnvironmentalContext. . . . . . . . . . 273
7.1.2 TheCoaseTheorem(ExchangeandNegotiated
Solutions). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
7.1.3 ValuationofEnvironmentalDamage. . . . . . . . . . . . . . . . . 277
7.1.4 EvaluationCriteriaforEnvironmentalPolicy. . . . . . . . . . . 285
7.2 EnvironmentalPolicyMeasures. . . . . . . . . . . . . . . . . . . . . . . . . . 287
7.2.1 EnvironmentalRegulatoryLaw(‘DirectRegulation’,
‘Command-and-ControlLaw’). . . . . . . . . . . . . . . . . . . . . 288
x Contents
7.2.2 EnvironmentalLiability. . . . . . . . . . . . . . . . . . . . . . . . . . 291
7.2.3 EnvironmentalTaxesandCharges. . . . . . . . . . . . . . . . . . 295
7.2.4 FinancialSupportProgrammes. . . . . . . . . . . . . . . . . . . . . 300
7.2.5 EnvironmentalCertificateTrading. .. . . .. . . .. . . .. . . .. 302
7.2.6 InformalInstrumentsofEnvironmentalPolicy. . . . . . . . . . 309
7.3 InstrumentVarietyandInstrumentMix. . . . . . . . . . . . . . . . . . . . 315
7.4 InternationalAspectsofEnvironmentalPolicy. . . . . . . . . . . . . . . 321
7.4.1 DilemmaStructureofGlobalEnvironmentalProblems. . . . 321
7.4.2 UnilateralMeasuresbyStates. . . .. . . . . . . . . . . . . . . . . . 322
7.4.3 InternationalCooperation. . . . . . . . . . . . . . . . . . . . . . . . . 323
7.4.4 ClimatePolicyasanExampleofInternational
Cooperation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 324
7.5 Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330
References. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331