What is efficiency about? Total welfare, we all know it. Except, that it needs not. For Adam Smith, Kaldor and Hicks of (Kaldor-Hick efficiency), and Ronald Coase, a concern for the benefits consumers lose due to imperfect competition is constitutive of the defense of markets as a social institution. Frank Knight, founding father of the Chicago School of Economics (no less), thought of the monopolist as a thief. Hence, efficiency can be about consumer welfare and consumer sovereignty (not in the narrow sense currently being criticized, especially by law and political economy scholars).
Where does the law stand? Following Calabresi, the question is: which notion of efficiency fits best with the law? In The Consumer Welfare Hypothesis, I develop a method to answer this question and apply it to EU antitrust and consumer law.
The method is called reverse-engineering legal reasoning. It improves on Posner’s original and pathbreaking efficiency hypothesis of the common law and does what line of research did not, namely producing knowledge about the content of the law.
The talk will focus on illustrating the method, its application, and possible extensions.
About the speaker:
Fabrizio Esposito is Assistant Professor of Private Law at the NOVA School of Law in Lisbon and holds a Ph.D. from the European University Instutite. His research focuses on exchange contracts, that he argues are best understood in terms of consumer welfare maximization and consumer sovereignty, so that the legal system complements and substitutes the invisible hand in putting ‘consumers’ in the driver’s seat of the economy. This perspective is developed in particular in his book The Consumer Welfare Hypothesis in Law and Economics (Edward Elgar 2022; summary here) and a follow-up paper. (Note: in his framework, labour is not an exchange but a co-production contract.)
Fabrizio’s scholarship is in the Calabresian tradition of Law and Economics (as argued here). Notably, he has developed a method to check the fitness of economic concepts with legal reasoning (discussed also here) that he applied extensively to prove the consumer welfare hypothesis in the context of EU law.
Fabrizio has published extensively on the methodology of law and economics, with a focus on consumer law. He has co-edited Research Methods in Consumer Law (Edward Elgar 2018), Economics in Legal Reasoning (Palgrave 2022) and the Cambridge Handbook on Algorithmic Price Personalization and the Law (forthcoming).