Berkeley Program in Law and Economics

This Article develops a new approach to choice of law. Founded on economic principles rather than the

notions of sovereignty that are typically used by choice of law scholars, it seeks to build new foundations for

choice of law scholarship. The analysis in the Article makes it possible to discuss alternative choice of law rules

in terms of their impact on the well-being of individuals. In other words, it makes it possible to consider

questions of efficiency within a choice of law discussion.

The Article traces how the self-interested behavior of nations is at odds with globally efficient rules, and

shows how choice of law rules can impact the incentives of countries. The analysis yields eight “choice of law

lessons” that help explain the impact of choice of law rules. From these lessons emerge several policies that

provide countries with an incentive to regulate more efficiently.

The Article then applies its analysis to several specific substantive law topics – bankruptcy, securities, and

antitrust – demonstrating how the framework of the Article can be applied in particular cases. The role of

international institutions is also examined. It is shown that they represent an effective tool to facilitate

negotiations over choice of law issues in certain cases, but not in others. This discussion informs a variety of

current issues. For example, it explains why negotiations over international competition policy and environmental

policy should be carried out within the WTO rather than in a separate forum.