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The Elgar Companion to Law and Economics, Second Edition

Edited by Jürgen G. Backhaus

This thoroughly updated and revised edition of a popular and authoritative reference work introduces the reader to the major concepts and leading contributors in the field of law and economics. The Companion features accessible, informative and provocative entries on all the significant issues, and breaks new ground by bringing together widely dispersed yet theoretically congruent ideas.
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Chapter 28: General Norms and Customs

Jean-Michel Josselin and Alain Marciano


Jean-Michel Josselin and Alain Marciano Introduction Economic interactions between individuals take place within institutions which can be defined either as informal constraints (sanctions, customs, taboos, traditions and codes of conduct) or as formal rules (constitutions, laws, property rights) (North, 1991). Social norms or general norms can be defined as the broader set of rules including informal constraints and formal rules. Therefore, the set of general norms can be delineated by the nature of agreements among individuals. A basic distinction is thus possible between conventions, which are tacit rules, and institutions, which result solely from an explicit and formal agreement among individuals. Customs belong to the first subset of general social norms, defined as informal and tacitly agreed rules. Using economic tools, we shall define customs and show how their properties are those of conventional norms. Then, we shall study the boundaries within which they are supposed to be obeyed. Finally, we shall examine the conditions under which customs ground legal rules and compare them to other sources of the law. Customs as conventional rules The formation process of customary law has frequently been analysed from the positive perspective of the description of some particular types of societies or practices. International trade is frequently quoted as a significant example (Benson, 1998a, 1998b). Primitive (Landa, 1983; Benson, 1991) or medieval (Greif, 1989; Milgrom et al., 1990, Greif et al., 1994) societies also provide evidence that help us to understand how customary rules emerge. These various customary orders...

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