Economic Analysis Of Conflict Of Laws

Thanks to the Chicago School of Economics of Law, economic theories, approaches and tools have been applied into numerous legal areas. Brand new economic perspectives and approaches shed light on many complicated legal issues. Economic analysis of Conflict of Laws (COL), a swamp full of conflicting theories and practices, is controversial, complex and difficult, but it may broaden our horizons towards COL to build an efficient and pragmatic COL system.With a concentration on COL, this paper reviews, summarizes and does a comparative study on currently available works on economic analysis of COL. From the perspective of sovereignty and private interests, the author resorts to cost and benefit theory, game theory and trade theory to analyze and interpret the three inroads to encounter conflicts of private laws, i.e., conflict avoidance, conflict exit and conflict resolution, to establish and promote both the macro and micro economic functions of COL.The paper has two chapters, which include three sections respectively. Based on an overview of the history of economic analysis of COL, Chapter One does a comparative study on econ. of COL from the following four aspects: perspectives of analysis, areas covered, economic approaches adopted, and mechanisms taken to fulfill the economic functions of COL. The author comments and criticizes economic analysis of COL in Section Three of Chapter One.Chapter Two is an economic interpretation and analysis of conflicts of private laws between states. Section One summarizes the three inroads to resolve conflicts of private laws, three levels of relations COL concerns, and the historical basis of COL. Emphasizing the public law nature of COL, Section Two applies cost and benefit theory, game theory and trade theory to interpret issues relevant to conflict avoidance and conflict resolution on the state vs. state level. Emphasizing the private law nature of COL, Section Three applies cost and benefit theory and game theory to interpret issues relevant to conflict exit and conflict resolution at the individual vs. individual level.Historical and comparative study on Econ. of COL demonstrates the following characteristics and trends in the science of econ. of COL:Firstly, perspectives of analysis shift from Sovereignty-Centered-Approach to Private-Interests-Centered-Approach. Secondly, legal areas covered expand from the basic framework of COL to detailed legal areas, such as contract, tort, property and procedural issues of COL. Thirdly, economic theories and approaches applied start with game theory, and expand to cost and benefit theory, public choice theory, etc. Finally, mechanisms to achieve the economic functions of COL diversify from the very beginning and concentrate on cooperation and competition between states, and private choice of law.Economic analysis of conflicts of private laws between states reveals the following conclusions:Lex Fori is cost-competitive for the forum state; while broader definition of the scope of benefits in application of law for states and games between states in choice of law indicate the significance of cooperation among states to avoid and resolve COL issues. Trade theory analysis of COL from the perspective of states suggests states develop their comparative advantages in COL, establish an open COL system and promote "free trade" in COL. As the ultimate subject to bear the costs and to enjoy the benefits of conflicts law, individuals compare their personal costs and benefits in choice of law to determine the optimal input in COL. Games between private parties in the choice of law process illuminate the significance of emphasis on the private law nature of COL, respects of the party autonomy principle, and protection of justified expectations of private parties, to achieve the ex ante admonitory functions of COL and the ex post functions of COL in minimization of dispute resolution costs.