Economic Considerations of Legal Delimitation: Evidence from Judicial Verdicts in Bangladesh Courts

Abstract

The literature on law and economics argues that economic considerations have an important implication for consistent and efficient legal practices. In line with this tradition, this paper aims to analyse legal verdicts through the lens of transaction cost to ascertain if judicial decision takes social cost into account. In so doing, the research draws upon the literature of transaction cost theory, which examines the implications of transaction cost for legal verdicts. Data for the analysis consist of legal verdicts collected from Bangladesh. The paper shows that judicial decisions are influenced by economic matters, especially social and transaction costs. When the issue of these costs is clear, judges take this into consideration in deciding who should own what rights. This research contributes to the literature of law and economics by providing new information, which is believed to help regulators, policymakers, and legal practitioners in deciding value-creating property rights.