The Economic Analysis of Law (EAL)

The Economic Analysis of Law (EAL) provides those responsible for applying the law a method to verify how it works on individuals’ behaviors and its efficiency. That means, based on the assumption that there is a certain rationality in the conduct of individuals, EAL makes it possible to investigate decision making in the face of a given legal rule. The EAL efficiency concept doesn’t imply the substitution of the justice criterion by efficiency, but rather as an option for applying the law since it is known that every inefficient rule is unfair, although the opposite not necessarily occurs. Also, international institutions play a significant role when it comes to reducing costs and they influence negotiation and compliance. This way, EAL allows understanding the complex reality of political-economic subsidy strategies in the WTO and to rethink its mechanisms to counter distortive subsidies, specially, by least developed and developing countries. The study suggests that the social criteria should be added to efficiency by which negative externalities shall be considered in its calculation.