UNDERSTANDING LAW AND ECONOMICS: A PRIMER FOR JUDGES by Lourdes A.

Sereno Associate Professor, University of the Philippines College of Law

I. DECISION-MAKING AS APPLICATION OF LEGAL THEORY Law-making, as practiced by both by the legislature and the judiciary carries implicit beliefs about human existence and the nature of society. Each resolution of a conflict, presupposes a theory about the nature of law. While there are predominant schools of thought on the matter, the exercise of the judicial function requires a judicious choice of a legal theory, in accordance with what the judge believes to be true and represents the essence of the legal system. Some theories believe that law springs from a source higher than human desire and choices. Some believe that law is nothing more than the-external and objective manifestation of societal choices and is therefore value-free. Since it is indisputable that a judicial decision affects the behavior of society, whether the behavior of direct litigants in the case, those incidentally affected, and future actors, the fact that decisions mold lives and societies inevitably impress the necessity of choosing a theory which compels intellectual assent, and inner fit. In other words, it must be a choice which will prove to be correct in the light of the experience and inner convictions of the law-maker or the judge who interprets the law.

Legal theory, at bottom, is a theory about the state and nature of man and human society. It is concerned about social organization, and the concepts of powers and rights are defined in the context of allocation of finite resources, and the less definable concepts of dignity, equality and entitlements. Both political and social theory, therefore, provide the foundational underpinnings for both legal and economic theory. Law and economics, on the other hand, according to some authors, is not a neutral and objective science, but assumes values which are embedded in ones social theory. It is therefore important to obtain a background on the most popular legal theories and what they represent before a transition to law and economics can be made.

In turn, a good lawyer must understand the philosophical bias behind a position, whether it be that of the Constitution, a particular judge, or a piece of legislation, so that a more effective case can be made for his clients cause. A good lawyer can make use of the economic tools available in order to present his point. A judge, in the same manner, will benefit from the same analytical tools to unlock the rock-bottom position of litigants before her court.

a. Natural Law

Natural law may be defined as the universal discipline of virtue impressed in the heart and mind of human beings to guide them in the exercise of their rights, in the performance of their obligations, in the observance of rules, and in the preservation of order and unity. The precepts of natural law are righteousness, justice, equality, and fairness.

Plato and Aristotle regarded natural law as a discipline to which human conduct must conform in order to realize both the individual and the common good. To St. Paul and St. Augustine, the concept of natural law produced an enlightened conscience, rooted in the heart and mind of man. The Christian philosophers concluded that no one can really pIead ignorance of the natural law because his innate good faith and moral nature are never silenced.

Even today, many of the social debates raging especially on allowable relationships, are anchored not on objectively-verifiable rules but on appeals to a higher law.

b. Positive Law The positivists made a dramatic departure from the moral necessity concept of law. Law need not be a manifestation of an internal or eternal imperative that must be obeyed, flowing as it does from metaphysical or philosophical urgencies and essences. The first foundation of legal positivism holds that law is a social fact, and not necessarily a moral concept. John Austin, in particular, advocated the separation of law and morals, and the principal thrust of the positivists is to keep the legal order apart from the perplexities of ethics.

The second important argument of the positivists is freedom from metaphysical speculations. Positivists approach the problem of the nature of law by viewing the issue by way of the empirical sphere of reality - the is - rather than the transcendental sphere of the ideal - the ought. Suprapositive law as the standard of validity of positive law is transcendental nonsense, because precepts of natural law are arguably vague, unshared as they are as values.

Positive law has its own criteria, and that is, the philosophy of legal positivism, which rests on the three preconditions of sovereignty, command and sanction. This simply means that any violation of the command issued by the supreme political superior is an infraction thereof and authorizes sanction. As a pragmatic approach, it eased the problem of identification, especially for civil law countries, where the law must first, save in certain exceptions, be generally founded on an existing legislative pronouncement.

c. Legal Realism Proponents of judicial legal realism on the other hand are skeptical of the traditional views of the moralists on the one hand, and the sterile approach of the positivists on the other. It seeks to assert the flesh-and-blood character of law, and the pivotal position that judges have in the legal system. As Chief Justice John Marshall asserted in Marbury v. Madison (1 Cranch 137), it is empathically the province and duty of the Court to say what the law is. In the same vein, Justice Holmes said: The life of the law has not been logic, it has been experience. The felt necessities of the times, the prevalent moral and political theories, intentions of public policy avowed or unconscious, even the prejudices which judges share with their fellow men, have had a great deal to do than the syllogism in determining the rules by which men should be governed.

Professor John Chapman Gray further emphasized that the law is what the court says it is, and that statutes, like customs and usages, are no more than sources of the law. It is the courts which put life into the dead words of the statute. Realists criticize the other schools for ignoring the unarticulated feelings and intentions of the different actors in a court setting, for the indifference of the appellate processes to the realities of a courtroom trial, and for including in the value of decisions rhetoric which does not address the material facts and issue at hand.

d. Critical Legal Theory The Critical Legal Studies movement is of very recent origin, and presents a radical view of jurisprudence. According to its proponents, the task of a good law school is to provide a legal education which frees the minds of professors and students alike from the grips of the dominant liberal paradigm and to de-legitimize the improper and illicit tie between law and politics.

Deconstruction is the term used by the moveme nt as a method or technique of: 1) analysing the tendencies, beliefs, attitudes, and interpretations of the dominant liberal paradigm, and 2) internal reformulation and development of the ideas and concepts of the dominant liberal paradigm by the presentation of the rationale or justification for the censure and the offer of alternative solutions. Deconstruction is distinguished from de-legitimization, which is the technique of unmasking the illicit tie between law and politics.

Critical legal scholars seek to internally reformulate the dominant liberal paradigm toward a post-liberal socio-legal order. Jural concepts and constructs which have been abused or misinterpreted through the subtle and sophisticated ways by the dominant liberal paradigm to give them different casts and meanings, will be developed to nurture the law as an effective means of balancing interests, demands and expectations of the different sectors of society. In the context of Philippine jurisprudence, the rule of law, separation of government powers, majoritarian rule. positive equality, checks and balances, rights and obligations, consent of the governed. equal protection of the law, judicial activism, and free enterprise are but a few of these.

e. Policy Science The policy-oriented approach was proposed by two Yale University professors during the Second World War in reaction to the value-free approach of legal positivism. Policy science regards the view that there are no moral principles that consciously precede the law as dangerous, leading in fact to ruinous and destructive conflicts. On the other hand, it views the concept of judicial legal realism that statutes, rules and ordinances are no more than sources of the law and that the law is what the courts will do or likely do as destructive of the separation of governmental powers and functions.

The policy science school of jurisprudence underscores the need for the eventual identification of basic social values in the legal orders of all societies. The end result of the policy science approach is the survival of humanity through the universal identification and recognition of the social values. These social values are power, knowledge, respect, income, safety and health, liberty, and equality. Esteem for human personality and dignity however, is regarded as the

overarching social value. Where it is taken into account all other social values are easier to attain and are then widely and equitably shared among the people. Conversely, where this is not considered at all the other social values are difficult to attain.

II. LAW AND THE SOCIAL SCIENCES

a. Law and Anthropology, Sociology, etc. In the same manner that legal theory is bound up by a socio-political theory, the social sciences have been used to illuminate ones understanding of human society within the framework of a proponents system of values.

Resolution of cases using arguments drawn from the social sciences started with the works of Max Weber and Roscoe Pound, wherein an attempt was made to use social science data, specifically sociological data, to analyze legal behavior. However, most of these works have focused on the participants behavior rather on the substantive content of the law. It has only been more recently that social studies have been applied in the some areas of legal research and legal reform, such as family law, sexual crimes, welfare legislation, criminal defenses, penology, etc.

b. Law and Economics No other analytical framework in the social sciences has been used with a sufficiently fair degree of application as law and economics. Although sociology and law, for example, has been used for more than a hundred years, it has been the tightness of economic analysis which has allowed its application to the fullest range of legal situations. Of course, it can be argued that law and economics has remained, except in the areas of antitrust and liability, only in the realm of the academic disciplines. It is surprising, however, that economic tools of analysis fuel many contemporary legal debates such as prison reform, the welfare system, taxation, even procedure and family law. The ability of economics to abstract from reality as a theoretical framework and arrive at generalizations is in fact, its greatest strength.

The most predominant use of law and economics, as a disciplinal tool, has been by the neoclassical economists and the political conservatives. Although this paper is not intended to evaluate the correctness of these ideologies, it is observed that for purposes of coming up with a predictive theory of behavior, the neoclassical approach must at the very least be understood. In the first place, most modern legislation, especially in the field of competition policy and new approaches to regulation of natural monopolies, such as public utilities, uses the neoclassical analysis of markets. It is therefore this approach, by sheer necessity, that will be the substantive focus of this paper.

III. THE LEVELS OF APPLICATION OF ECONOMICS

a. Law and Development

A term for the branch of discourse on the effects of law on societal development, especially on economic development. Recognized in international organizations as a very important field of concerns, it currently receives significant international attention in the form of grants and project funding for the study of its various aspects. Specific issues include questions on the appropriateness of colonially-inherited or imposed laws on indigenous cultures, the role of the legal profession on socio-economic development, and the establishment of adequate legal infrastructures for newly-liberated societies or emerging economies.

b. Economic and Business Laws

Refers to the study of positive law which impacts on the conduct of business or the economic processes. In the traditional Philippine law curriculum, includes all subjects in commercial law, taxation, and the sub-area of administrative law called public regulation of business.

These first two levels of application are the more popular ones, and which can be easily understood and appreciated by lawyers and judges alike, since they see the immediate benefit of understanding the dynamics of law and economic growth on the macroeconomic level on one hand, and the private consequences of rights and obligations in commercial and other businessrelated law in the discharge of their role to their clients and to the public.

It is the third level of application which is novel, apparently intimidating and dismissed as irrelevant. However, far from being entirely academic, the discourses on the academic discipline called law and economics can have far-reaching practical application, both as a source of doctrine and as a framework by which an analysis of cases can be made easier. Of course, the limitations must always be kept in mind.

c. Law and Economics as a Legal Discipline

As an academic discipline, became popular starting in the early 1960s in America with the works of Ronald Coase (who later won a Nobel prize in economics for his study on social costs and the economics of institutions) and Guido Calabresi (who later became dean of Yale Law School). The study of economic dynamics in antitrust cases has always been recognized as the most advanced field of study in law and economics, and since the Sherman Act in 1890, has been a rich field of both legislation, judicial decisions, and scholarship. Until the early 60s, however, economic analytical tools were not applied to other legal situations. Coases earliest work on the subject was an article on the problem of social cost. Calabres is was on risk distribution and the law of torts.

Coases article was especially groundbreaking because he attempted to create an analytical model for assigning property rights and liability in economic terms. Many followed, scrutinizing many legal doctrines through economic analysis. Gary Becker made the next important breakthrough with his prolific writings on the relevance of economics to a wide range of nonmarket behavior, even charity and love, and wrote on specific subjects as economic analysis of crime, racial discrimination, marriage and divorce. It was the University of Chicago Law School that sustained the most intense interest in the new law and economics. The most famous member of its faculty was a judge, Richard Posner, who became quite well-known for his many books and articles on law and economics. One famous judge, Judge Learned Hand, is also known for his law and economics analysis in several cases, one of which became known as the Learned Hand formula in negligence cases.

i. The Law on Antitrust

Antitrust laws, started with the Sherman Act which prohibited contracts and other combinations in restraint of trade, monopolies, and on conspiracies and attempts to monopolize. It sought to prevent cartelization, and imposed both civil and criminal sanctions. For a long time, the law emphasized the legal aspect of the behavior by focusing on the illegality of the agreement, rather than its effects on price and output. Neither did the cases make a sufficient distinction between legitimate uses of market monopoly power and cartelization, such as in the exercise of property rights arising from patent. Cases in the United States had such dramatic impact on the economy, such as the United States Steel corporation cases, the breakup of the American Bell, and the American Tobacco case. The most famous cases today are the series of suits brought by the Department of Justice and other software companies against Microsoft corporation, the computer programs behemoth. In the Philippines, of course, the most important landmark is the Tatad v. Viray case ( GR 124360 & 127867, November 5, 1997) which is being sought to be reconsidered by the government, and to a partial extent by one of the petitioners. Notice how the following antitrust concepts were discussed in the decision: monopolies, cartelization, predatory pricing and barriers IO entry. US courts base pronounced the following instances, among others, as antitrust behavior: (a) the maintenance of a minimum price by which retailers may sell the manufacturers product; (b) mergers which result in the acquisition of monopoly power; (c) oligopolies exhibiting cartelization behavior; (d) predatory price discrimination; (e) foreclosure, i.e., the attempt by one firm to foreclose entry by other firms, such as buying all retail outlets, the other description of this behavior is the creation of barriers to entry; and (f) boycotts, whereby a group of sellers might agree to boycott a supplier who enters into competition with them.

ii. Doctrines of Liability and Adjudication of Property Rights

Property rights are analyzed in terms of what extent and distribution of rights maximize the efficient allocation of limited resources, and the effects of enforcement or non-enforcement of such rights on output and prices. Corollarily, liability for damages caused by such properties are distributed among the property owners and the victims in accordance with the question of risk. Who should bear the risk is analyzed according to the various options available to the courts and legislators, according to the question of which liability judgment will bring about the desired efficient behavior from both the property owner and the victim. Although economics is not considered ultimately with regard to who should pay for an incurred cost, since such cost no longer impacts on the efficiency criterion, it is however immensely concerned with the effects of

liability judgments on future behavior. This field has given rise to the various doctrines not only in tort, but also in insurance law, and criminal behavior.

iii. Some Pioneering Areas: Criminal Law, Family Law and the Legal Process

These were in the past never considered as being affected by economic processes, but the wealth of literature created after the 1960s allowed many scholars to analyze criminal behavior, family rights and even legal processes according to economic frameworks, most significantly the efficiency framework.

The basic questions in an analysis of criminal law are: (1) finding the optimum criminal sanction to achieve the desired social end, and (2) determining which behavior ought to be criminalized and which would be sufficiently deterred by a simple remedy for damages or requiring prebreach security. The optimum criminal sanction is determined first by comparing the cost of the action to the victim as against the expected benefit to the criminal. If that is so, then society must force the criminal to enter into a voluntary transaction with the victim if he wants the benefits. As the criminal is unwilling or unable, then, the performance of the act prohibited must be outweighed by the cost of the crime to the criminal, measured by the severity of the punishment multiplied by the probability of apprehension and conviction less the expected benefits from the crime. Thus, in a society where the probability of apprehension and conviction is very small, property crimes are very attractive as a method of saving on the cost of entering into voluntary transactions with the victim.

In family law, the family is considered as a maximizing production unit. In most societies where the husband works and the wife manages the household, there is a maximization of income by both since the husband maximizes the monetary income from outside sources, while the wife maximizes income from the production of the familys basic goal, which is believed by most law and economics scholars to be the birth, caring and rearing of children. With increasing opportunities and incomes for women outside the home, the opportunity costs of rearing children has also risen, making the price of production of children higher. With higher prices, the demand for children will decrease, and this has been the observed trend in many developed countries. The interesting question of why then do parents produce children could yield four answers: (1) as an unintended by-product of sexual activity: (2) the maximization of income from the children (# 1 and 2 are true in poor countries, but not in others); (3) maximization of other services from the children (such as respect); and (4) the instinct to preserve the genetic line. Why parents maximize the investment in the children when it is true love which animates their relationship can be explained by a parent maximizing his utility function, which is identical to the utility function of the child. Thus, the happier the child, the happier the parent also.

IV. THE NATURE AND LIMITATIONS OF ECONOMIC REASONING a. Assumptions The first basic assumption in economics is that the world is one of limited resources, yet human beings possess unlimited wants. The basic goal therefore of economics is value-maximization or efficiency. Human beings therefore will tend to maximize their utility function, whether this function be measurable in direct monetary or property terms, or in nonmaterial, affective or

ethical goals. Economics does not pass judgment on human values per se, but having been directed to the desired goal, economics can say whether the means chosen result in greater or less efficiency. It can also point out the costs of social and personal choices. It is in this light that it is normative, but beyond that, is already the realm of metaphysics, and social ethics. From this assumption, rises another assumption, that price is inversely related to demand, and conversely, that people resort to substitution to maximize utility. Economic cost, which is the standard by which a maximizer evaluates his choices, is not limited to the monetary price, but rather is equivalent to opportunity cost, i.e., the cost that will be incurred because resources were devoted to the production of Product X instead of Product Y. Goods, therefore which are not denied the use of, are free goods, like the cost of breathing air. It is the diversion of one resource to one use as against another that is the principal determinant of cost. Efficiency is the maximization of the value of one good or service to a human being as against economic cost.

Although these assumptions have been strongly questioned, they are no more necessary to make than assumptions in any mathematical model or in any explanative theory for that matter. Nonmaterial values are still capable of being accommodated within that framework, because it allows the societal or individual to define the utility function, i.e., the societys utility or welfare is maximized by putting more resources into ethical choices which society values. The fact that these assumptions may not be realistic or may be too simple to describe reality is precisely its strength as an analytical tool its ability to abstract from the richness of reality to arrive at a general prediction of behavior. Neither is the fact that economics cannot answer a lot of questions and can often be mistaken, enough reason to deny its value as a tool. All sciences and fields of study, by their very nature, will be wrong many times, yet they need not be dismissed solely on that basis.

b. Tools of Logic The beauty of economic analysis is its ability to immediately conceptualize the scenario which confronts all decision makers, whether from an individual or from a more collective point of view: that of having finite choices. Whereas other social sciences cannot capture in hierarchical form these choices, and the effects they may have, economics attempts to do that by abstracting from the situation and predicting what would be the probable outcome on behavior had the parties been made to shoulder the costs in cases of voluntary transactions, pay damages, or be put under pains and penalties. In this way, it has been very useful in resolving by way of direct application not only antitrust cases, but tort, liability, contract, property rights, insurance, taxation, issues on the welfare system, and pollution and environmental cases.

It has been said that even the earliest cases on property rights and torts were actually descriptions of resource-maximization. Hadley v. Baxendale (1852) is the most often-cited case which laid the groundwork for limiting the liability for contract breach only on foreseeable consequences. If liability were made greater than that standard, then there would be no incentive for the victim to exercise caution, since the gains to him from breach would be greater than the benefit from fulfillment. On the other hand, liability less than that will induce the breacher to cause the breach intentionally, or in negligence cases, wantonly, inasmuch as the loss to him arising from the breach will be less than the benefit arising from the fulfillment of the contract. This is a simple application of the efficiency criterion.

However, even in separation of powers cases, it has even been said that Justice Hugo Black in 1963 stated in Ferguson v. Sbupa (372 US 726,729), in formulating the rationality review

doctrine to strike down a legislation which does not overtly infringe a specific constitutional right, used economic analysis in justifying the concept of social welfare and public interest. Thus, as a tool for drawing the logical nexus between the means and the avowed end, economics can be useful. For one, economists never presume that legislation is enacted to promote the public interest. The more dominant theory is that the legislative process is the redistribution of wealth in favor of some politically effective interest group. In this light, therefore, court intervention can sometimes, in the view of economists, even balance out the interests, to give representation to the politically underrepresented. However, this does not seem to be the prevailing view of our Supreme Court by many economists. But that is entirely a different matter.

c. The Question of Justice and Equity The most emotional debates on the place of economics in legal reasoning have to do with the notion that justice and equity can never be set against the standard of efficiency. The first way by which economics can be useful in the justice and equity debate is to show that in the majority of instances, the concepts are just descriptions of economic conditions in two senses: (a) distributive justice is nothing more than pronouncements on the tolerable degree of economic inequality in society, and which issue economics can definitely help, and (2) the notion of due process and rights as illustrations of the value against the waste of resources. Penalties without trial, unjust enrichment, and failure to redress the demand for damages are simply, at bare bones, efficiency concepts. The second manner by which economics can be useful is for values clarification - to show that in many instances there are pseudo-justice issues masquerading under intellectual disguises and at the same time, concretize the cost of justice. After all, any debate on justice is not complete without a consideration of its costs.

V. SAMPLE APPLICATIONS

a. Tort Blyth v. Birmingham (156 Eng Rep. 1047 [1856}). - The question was whether a water company had been negligent in failing to bury its pipe deep enough to prevent them from bursting because of frost and inflicting damage on the plaintiffs home. The court held that inasmuch as the frost that period had been of unprecedented severity, the probability of the pipe bursting had been low, and therefore the defendant was not negligent. Nor was the loss so great as to justify the heavy expenses in burying the pipes deeper. The economic formula used was: Cost of Prevention is greater than Expected Cost of the Accident, therefore, it is more efficient not to make the defendant incur the greater expenses. This later was elucidated into the Learned Hand Formula: the defendant is guilty of negligence if the loss caused by the accident, multiplied by the probability of the accident occurring, exceeds the burden of precaution.

b. Contracts The law of contracts is important to maintain the theory of incentives and value-maximization. If the law does not make a future promise enforceable, then a seller would be better off seIling at a low price for instant cash, than for a higher price but with the promise of payment in the future. The value to the seller is not maximized, he loses the price difference, and the thing sold -does not go to the person who values it more, the deferred payor. With contract law, the efficient outcome is encouraged. The autonomy of contracts principle also respects the bargain, the

voluntary transaction, as the most efficient, assuming of course that the basis and the consent for the contract existed. The most famous early application of these principles can be found in the Hadley v. Baxendale case, the issue being the extent of liability of the promissor in cases of contract breach (See IV.b., supra).

c. Pollution In cases of industrial pollution, the question most often is who bears the burden of pollution. If we assign each neighboring homeowner the right to breathe fresh air, then the polluter will have to purchase that right from each affected person. Considering the number of individuals that will be involved, the cost of transacting with each of them, apart from the purchase price of the right, is too overwhelming to make it nigh impossible. There will also be the problem of the hold-out, who will make his fee so exorbitant, that he might prevent the resolution of the problem from ever happening. However, to completely free the pollutant from liability is to inaccurately lower his cost, i.e., he is subsidized in the indirect costs of the pollution to society. These indirect costs, or costs which are largely social and ignored by the private enterprise fall within the category of externalities, and the goal of the economist is to factor them in to arrive at an accurate picture of the cost of producing a number of units of a certain good. What is often resorted to is the polluters fee, whereby administrative processes ensure that the cost of pollution is paid by the polluter. A related case is Oposa v. Fucforan where the concept of intergenerational equity is an attempt to factor in an externality which is often ignored by the timber industry - the cost to future generations of an environment bereft of forests.

d. The Legal Process and Judicial Decision-Making In economic terms, the body of precedent is the lawyers capital stock. The body of precedent yields value over a period of time, and this value is measured in the durability of a legal doctrine - the length of time by which it has predictive capability in the outcome of future similar cases. The more frequently these precedents are overturned, the more their value diminishes. That is why, unlike some professions, the value of a lawyers services increases over time, i.e., his ability to utilize the capital stock in relation to his age and experience, is positive. This capital stock is produced by the lawyers of the litigants and the judges, yet the judges are not paid in relation to the value the capital stock gives. Why is this so? What then do judges maximize? Generally, it cannot be monetary gain because the rules of judicial ethics prohibit them from doing so. Neither, on a general scale, can it be the promotion of the interests of the class to which he belongs because conflict-of-interest rules are intended to curtail that. And, by the way, interesting studies in the United States reveal that the economic interests of the Federal Supreme Court justices appreciated insignificantly in relation to their decisions.

The more dominant theories state that judges maximize either of two things: (a) their ability to render decisions in such a way that the probability of their promotion is increased, and (b) the promotion of their values and preferences, thus their extreme sensitivity to being overturned, since the welfare-value of their decision will be rendered worthless should it be overturned. This welfare-maximization matrix is not incompatible with the viewed sacred duty of judges to uphold the law. The usefulness of the insight is to draw attention to areas that can be strengthened in the reform process - the stability of judicial decisions as precedent to increase predictability in the system, and the strategic importance of the educational process for the legal world.

With respect to law-making, most economists view the process as redistribution of wealth between the politically effective and ineffective. Thus, the importance of an independent judiciary cannot be underemphasized because in many instances an efficient outcome can result from judicial intervention. Since the process of law -making is such, it is quite important to control the use and solicitation of campaign funds, to minimize the frequency and severity of interest-group politics, because this often brings about an inefficient outcome.

VII. CONCLUSION Economics can help, within bounds, to clarify the costs and benefits of a certain outcome, and to arrive at a resolution of a case which attempts to maximize societal welfare without sacrificing the non-negotiable values. In other instances, where there is nothing at stake other than outright property interests, a straightforward cost-benefit analysis might even be sufficient for the final outcome. However, when a societys intransmutable values are at issue, then the role of economics is to clarify what are pseudo-justice issues, and those which can be viewed with mere economic measures. To those that are genuine nonmaterial justice issues, economics can also speak by clarifying for society what is the cost of upholding these values. In all these instances, there is room for making use of a tool which has been immensely helpful in terms of economic development in many jurisdictions.

ACKNOWLEDGMENTS The author would like to acknowledge Prof. Crisolito S, Pascual, retired Justice of the Court of Appeals, and Richard A. Posner, U.S. Federal Judge, from whose works the author took liberally in making these notes.