doctrines. 8 This is"economic analysis of law, and is the domain we explore below Many of us are uncomfortable with economics, both because we distrust its theory and methodology, and, more embarrassingly, because we are uncertain that we have the quantitative or other skills needed to use these tools. Complex graphs, charts and multivariable equations do not often appear to be particularly inviting to those trained in the law. However, it does not appear that these tools are necessary for all types of economic analysis of law, and in fact, the highly mathematical formal analysis that economists often use has, to date shed little light on the issues that most interest international lawyers. Many of the most relevant and useful tools of analysis for our issues do not require great mathematical skill International legal scholars should find few obstacles to the use of the new institutional economics. "Modern institutional economics is economics as it ought to be. 9 New institutional economics seeks to integrate neo-classical economics, which has concentrated on the workings of the price system(in fields amenable to pricing), with institutional analysis. Institutions, by definition, are entities in which decisions are made outside the formal price system. In order to study institutions, it is necessary to add consideration of the cost of transactions( transaction costs and of the effects of strategic behavior(game theory ); both are areas that international lawyers are already familiar with In brief, new institutional economics incorporates price theory, transaction cost economizing and game theory. 10 It incorporates, and is also incorporated in, economic analysis of property rights, II public choice theory 12 and positive political economy. 13 A primary tool of this approach is comparative institutional analysis 14 -a form of analysis already at the heart of much 8 George Stigler, Law or Economics?, 35 J. L& ECON. 455, 467(1992). See also Guido Calabresi, The New Economic Analysis of Law. Scholarship, Sophistry, or Self-Indulgence, 68 PROC. BRIT. ACAD.(1982) 9 Ronald Coase. The New Institutional Economics. 140J INST. theo ecoN. 229. 231 (1984) econ >2, e. g, Douglass C. North, The New Institutional Economics, 142 J INST& THEO 230(1986) 11 See YORAM BARZEL, ECoNOMIC ANALYSIS OF PROPERTY RIGHTS(1997 12 See, e.g., DENNIS MUELLER, PUBLIC CHOICE II(1979); MAXWELL STEARNS, PUBLIC CHOICE AND PUBLIC LAW READINGS AND COMMENTARY(1996) 13 See, e.g., Daniel A. Farber and Philip P. Frickey, Positive Political Theory in the nineties, 80 GEO LJ.457(1992) 14 See, e.g., Ronald Coase, The New Institutional Economics, 140 J. INST& THEo ecoN 229(1984): Bruno S. Frey, Institutions Matter: The Comparative Analysis of Institutions, 34 EUR ECON REV. 443(1990); NEIL KOMESAR, IMPERFECT ALTERNATIVES: CHOOSING INSTITUTIONS IN LAW ECONOMICS AND PUBLIC POLICY(1994): Douglass North, Institutions, Transaction Costs and 5doctrines.”8 This is "economic analysis of law," and is the domain we explore below. Many of us are uncomfortable with economics, both because we distrust its theory and methodology, and, more embarrassingly, because we are uncertain that we have the quantitative or other skills needed to use these tools. Complex graphs, charts and multivariable equations do not often appear to be particularly inviting to those trained in the law. However, it does not appear that these tools are necessary for all types of economic analysis of law, and in fact, the highly mathematical formal analysis that economists often use has, to date, shed little light on the issues that most interest international lawyers. Many of the most relevant and useful tools of analysis for our issues do not require great mathematical skill. International legal scholars should find few obstacles to the use of the new institutional economics. “Modern institutional economics is economics as it ought to be.”9 New institutional economics seeks to integrate neo-classical economics, which has concentrated on the workings of the price system (in fields amenable to pricing), with institutional analysis. Institutions, by definition, are entities in which decisions are made outside the formal price system. In order to study institutions, it is necessary to add consideration of the cost of transactions (transaction costs) and of the effects of strategic behavior (game theory); both are areas that international lawyers are already familiar with. In brief, new institutional economics incorporates price theory, transaction cost economizing and game theory.10 It incorporates, and is also incorporated in, economic analysis of property rights,11 public choice theory12 and positive political economy.13 A primary tool of this approach is comparative institutional analysis14 -- a form of analysis already at the heart of much 8 George Stigler, Law or Economics?, 35 J.L.& ECON. 455, 467 (1992). See also Guido Calabresi, The New Economic Analysis of Law: Scholarship, Sophistry, or Self-Indulgence, 68 PROC. BRIT. ACAD. (1982). 9 Ronald Coase, The New Institutional Economics, 140 J. INST. & THEO. ECON. 229, 231 (1984). 10 See, e.g., Douglass C. North, The New Institutional Economics, 142 J. INST. & THEO. ECON. 230 (1986). 11 See YORAM BARZEL, ECONOMIC ANALYSIS OF PROPERTY RIGHTS (1997). 12 See, e.g., DENNIS MUELLER, PUBLIC CHOICE II (1979); MAXWELL STEARNS, PUBLIC CHOICE AND PUBLIC LAW: READINGS AND COMMENTARY (1996). 13 See, e.g., Daniel A. Farber and Philip P. Frickey, Positive Political Theory in the Nineties, 80 GEO. L.J. 457 (1992). 14 See, e.g., Ronald Coase, The New Institutional Economics, 140 J. INST. & THEO. ECON. 229 (1984); Bruno S. Frey, Institutions Matter: The Comparative Analysis of Institutions, 34 EUR. ECON REV. 443 (1990); NEIL KOMESAR, IMPERFECT ALTERNATIVES: CHOOSING INSTITUTIONS IN LAW, ECONOMICS AND PUBLIC POLICY (1994); Douglass North, Institutions, Transaction Costs and 5