Law and Development — DU B.A. (Hons.) Economics Previous Year Question Papers

1. (a) Critically examine how legal institutions reduce uncertainty in economic transactions. Illustrate with examples from developing economies. (9) (b) "Not all legal reforms lead to development." Evaluate this statement with reference to institutional efficiency and enforcement capacity. (9) 2. (a) A government plans to digitize land records in rural areas where ownership is unclear and disputes are common. Analyse how poor property rights can distort market outcomes and investment decisions. (9) (b) Explain how better property rights can improve : (i) Credit markets (ii) Land markets (in) Agricultural productivity (3+3+3) 3. (a) (b) A mining company provides employment, but it also pollutes the environment, which affects villages in the surrounding areas. Compare legal liability rules with market-based instruments (tax/subsidy) in solving this extemality problem. (9) Design an efficient legal solution, taking into consideration factors such as transaction costs, bargaining power, and information asymmetry. (9) (a) Why do incomplete contracts emerge even when all contracting parties are rational? Explain with economic reasoning. (9) (b) Discuss how incentive systems and enforcement systems affect contractual performance in long-term contracts. (9) (a) q)) A contractor agrees to build a warehouse for {50 1akh. The cost incurred before the breach is {20 1akh. After the breach, the contractor takes another project and earns €351akh. The previous contract would have earned €40 (i) Expectation Damages (ii) Reliance Damages (iii) Opportunity Cost Damages (3+3+3) Discuss the impact of different damage rules on economic efficiency and breach. (9)