An Economic Analysis of Legal Rulemaking

THIS article continues and amplifies the examination of the legal process from the standpoint of economics begun by one of us in the last issue of the Journal.' In a study of the process, as distinct from the substantive content, of law, the social decision to regulate particular conduct-killing, or prices, or whatever-in a particular way is a given and the analysis focuses on the machinery of the legal system used to bring about compliance with the decision. The focus of the previous article was legal procedure. The present article discusses the degree of precision or specificity with which a legal command is expressed as a determinant of the efficiency of the legal process, a point on which the previous article touched only briefly.2 We are not concerned here with the question why some activities are regulated and others not. If we want to prevent driving at excessive speeds, one approach is to post specific speed limits and to declare it unlawful per se to exceed those limits; another is to eschew specific speed limits and simply declare that driving at unreasonable speeds is unlawful. Any choice along the specificity-generality continuum will generate a unique set of costs and benefits. This article discusses the conditions under which greater specificity or greater generality is the efficient choice and makes a preliminary effort to appraise the efficiency of the choices actually made by the legal process. Many of the concepts discussed in the following pages will be familiar to lawyers and other students