• 00:00    |    
    Initial credits
  • 00:06    |    
  • 01:53    |    
    The Market Failure Argument
    • Examples of negative externalities
    • Government regulation as a remedy
  • 07:43    |    
    The relationship between market and law
  • Refuting the academic conception
  • 09:37    |    
    Understanding the law
    • Types of law
    • Origins of tort law
    • A misleading characterization of common law
    • Illustrating common law
    • Battery and assault
    • The role of common law
    • The role of legislation
    • A concluding definition for law
  • 31:05    |    
    Understanding the market
  • A true definition of "free market"
  • 34:05    |    
    The relationship between market and law: What it really looks like
  • Civil liability - The endogenous regulatory feature
  • 35:54    |    
    Re-examining the Market Failure Argument
    • The effectiveness of civil liability: The McDonald's Coffee-Cup case
    • Does the argument make sense?
    • Civil liability vs. government legislation: The Oil Pollution Act of 1990
  • 52:19    |    
    Hasnas's Rule
  • 54:26    |    
    Final words
  • 54:56    |    
    Questions and comments section
    • How do you assign property rights in order to accurately convey an individual's right to sue? Is negation of insurance by insurance companies a mechanism ofn civil liability?
    • How do you deal with asymmetrical information between the person who does the damage and those who are affected by it?
    • Wouldn't a regulation of a civil liability be a part of how the market regulates itself?
  • 01:04:53    |    
    Final credits

Economics of Legal Regulation: A Hayekian View

New Media  | 11 de octubre de 2013  | Vistas: 66

The Market Failure Argument is a commonly used justification for government regulation of the free market. It states that the market is incapable of protecting third parties from damages produced by certain negative externalities, and that only central legislation can cover this need.

In this lecture, John Hasnas reveals a compelling alternative to this view, by re-defining the relationship between law and market as often considered by economists. Hasnas emphasizes the importance of understanding the existence of three types of law. Legislation is composed of general rules created by legislators, that apply to all individuals. Customary and common law however, are norms that have evolved to serve human needs, in order to discourage unwanted behavior, while maintaining the largest possible amount of individual freedom. This type of common law-regulation exists in the realm of voluntary market transactions. Market and law are not truly separate.

In reality, the ideal of the free market isn’t completely unregulated. While it is free of government regulation, it is still regulated by ethical beliefs, customary practices, and by civil liability. The market’s endogenous regulatory mechanism accounts for negative externalities quite effectively. All this considered, is The Market Failure Argument truly valid? Hasnas concludes as follows: Before defending statutory government regulation of the market, it is important to find those few, if any, externalities that the market really cannot cover using it’s own internal regulatory systems.


John Hasnas is author of the book Trapped: When Acting Ethically…


Nuestra misión es la enseñanza y difusión de los principios éticos, jurídicos y económicos de una sociedad de personas libres y responsables.

Universidad Francisco Marroquín