Endre Stavang

Some Thoughts on Economic Reasoning in Appellate Courts and Legal Scholarship

Economists find it worthwhile to study the effects of law, and to offer ex-planations or recommendations in light of such studies. Lawyers also contribute to this same enterprise, i.e., using the intellectual tools typically developed and used by economists. A lawyer may do this because it has intrinsic (intellectual) value or because it is relevant, by which I mean that it is proper from the perspective of legal methodology (and, if applicable, his or her’s own preferences). In this chapter, examples from Norway of such relevance are offered based on personal experienced as a judge and as a legal scholar. First, the intrinsic ingredient of economics in law is suggested using three appellate court cases that I co-decided for illustrative purposes. Secondly, three Norwegian contributions to legal scholarship are discussed to shed light on a demarcation problem that may arise more often in Europe than many other places and also to suggest more could and should be done to fuse economic analysis of law and doctrinalism. Thirdly, and relatedly, three principles for bridging economic reason and legal argument are highlighted. Although the main goal is to reflect normatively and exploratory on professional norms from the standpoint of someone who has internalized these norms, the chapter simultaneously reports “field data” contradicting Posner’s claim that economic analysis of law is con-genial to American judges only (Posner 1996 p. x) and Eidenmuller’s claim that it is a prerogative for the Legislator to take economic analysis of law into account (Eidenmuller 199y p. z).

The Green Option

We introduce an innovative market‐based mechanism that may be used to advance environmental goals. Our mechanism employs option theory to give established businesses a financial stake in the success of green technologies. We show why and how green companies should be given an option to transfer a block of their shares to any corporation of their choice, incentivize them to switch to environmentally friendly technologies and to use their political clout to alleviate legal, regulatory and political barriers to the adoption of such technologies. In short, giving established corporations a stake in green companies will give them a stake in the environment. Specifically, we propose enacting legislation that will empower green companies that meet certain conditions to transfer a call option to buy a block of its shares to an established company of their choice. The option will be given for free; the established company that receives the option will not have to pay anything for it initially. The exercise price will be the price of the green company’s share at the time of the transfer and the receiving company will have a period of five years to exercise. We call this mechanism the “environmental option.” From a legal standpoint, the mechanism we propose is not unprecedented, so our proposed scheme is not overtly intrusive, nor should it be very controversial. Furthermore, we believe that this risk is worth taking given the proposal’s potential upside.