American University Law Review
December, 1999
ARTICLE
The Law-and-Markets MovementMichael Abramowicz*
INTRODUCTION
Commentators increasingly have suggested market-based approaches to legal problems. These proposals, which range from tort-claims trading to bankruptcy auctions, rely on the information-processing capacity of capital markets to enhance existing legal institutions and to eliminate the need for some kinds of decisionmaking altogether. In this Article, Professor Abramowicz collects, critiques, and extends these proposals, describing various kinds of capital market mechanisms and imagining a number of potential legal uses. For market-based legal institutions to be viable, certain technical problems with capital market mechanisms, such as the potential for collusion, must be overcome. Such vulnerabilities are not intractable, however, and the solution often lies in using one type of market mechanism to address a weakness in another. By combining auction, exchange, and self-assessment, the Article constructs a �comprehensive market mechanism,� a general purpose tool for objectively predicting dollar amounts or other numbers useful for legal decisionmaking.
* Visiting Assistant Professor, Northwestern University School of Law. J.D., Yale Law School; B.A., Amherst College. I would like to thank participants in faculty workshops at the George Mason University School of Law, the Northwestern University School of Law, the University of Pennsylvania Law School, the University of Wisconsin Law School, and the Wharton Department of Legal Studies. Any remaining errors in the article could be corrected by the creation of an appropriate market mechanism.