WHY WAS THE COMMON LAW EFFICIENT? Paul h. rubin Introduction a basic question for law and economics is the efficiency of law. Hayek, (1960 and 1973)although writing before the law and economics movement and writing from another perspective, had argued that common or judge-made law was better than statute law, we return to Hayek's arguments below. Posner(1973; 2003) has of course argued often and forcefully that the common law is efficient. His arguments are based on examination of particular legal doctrines. I call this the"micro"argument for legal efficiency. The evolutionary models were aimed at explaining this micro efficiency There is more recent literature that uses empirical methods to compare various legal systems. This literature generally finds that common law is more efficient than other forms of law. I call this the"macro argument for efficiency. It is ultimately a hayekian argument, based on the idea that in common law systems, governments have less power than in other systems. I first discuss micro efficiency, and them macro Micro” Efficiency Micro efficiency is based on an examination of particular legal doctrines and attempts to determine if they are efficient. This was the method used by Posner.(Much of my own work is of this type; see for example Rubin, 1983). The difficulty with this method of analysis, is that often the conclusion regarding the efficiency of a particular rule depends on unmeasured transactions costs of various sorts; if the analysts'intuitionWHY WAS THE COMMON LAW EFFICIENT? Paul H. Rubin* Introduction A basic question for law and economics is the efficiency of law. Hayek, (1960 and 1973) although writing before the law and economics movement and writing from another perspective, had argued that common or judge-made law was better than statute law; we return to Hayek’s arguments below. Posner (1973; 2003) has of course argued often and forcefully that the common law is efficient. His arguments are based on examination of particular legal doctrines. I call this the “micro” argument for legal efficiency. The evolutionary models were aimed at explaining this micro efficiency. There is more recent literature that uses empirical methods to compare various legal systems. This literature generally finds that common law is more efficient than other forms of law. I call this the “macro” argument for efficiency. It is ultimately a Hayekian argument, based on the idea that in common law systems, governments have less power than in other systems. I first discuss micro efficiency, and them macro. “Micro” Efficiency Micro efficiency is based on an examination of particular legal doctrines and attempts to determine if they are efficient. This was the method used by Posner. (Much of my own work is of this type; see for example Rubin, 1983). The difficulty with this method of analysis, is that often the conclusion regarding the efficiency of a particular rule depends on unmeasured transactions costs of various sorts; if the analysts’ intuition 1