However, since costs predominate in making the changeover, discussion
focuses on them.
Economic Costs
Introduction
Changeover costs and benefits include three types of economic costs –
transaction costs, adjustment costs and predictability costs.
Transaction Costs
Transaction costs or losses are the costs in changing from one rule to another.
For example a legislature incurs transaction costs when changing from Statute
0 to Statute X.
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Legislatures
Transaction costs are the costs of repealing the old statute and making the new
one. Generally speaking, the larger the scope of the statute and the larger its
text, the larger are its transaction costs. Transaction costs include any inquiries
that preceded the passing and implementation of the statute, any trials or
testing of the processes or practices which the statute enables, the cost of
drafting, the cost of the time of the legislature in debating and approving and
the cost of publishing the statute. Obviously transaction costs for legislation
are higher in a federal than in a unitary system because legislation covering the
same ground that falls within the province of the regions has to be separately
enacted by each regional legislature.
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There is also the cost of judicial
policing of the federal legislative boundaries between central and regional
governments.
319
Courts
Transaction costs for a court are the costs of abrogating the old rule in the
precedent and formulating a new one. These are the costs of the court hearing
and deliberating on the change.
Three types of rules seek to lessen the transaction costs of a court. First, the
rules of precedent limit the range of courts that can overrule a prior decision
and thus reduce the amount of time courts spend in reconsidering prior cases.
So much is this the case that Thomas S Currier has argued that if cases were
continually decided without guidance from precedent “the judicial workload
would be intolerable”.
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Second, in some jurisdictions there are rules that
require a party to obtain leave to have the court hear an appeal from a lower
___________________
317
Landes (1979) at p 239; Peters (1996) at p 2039
318
See Hall (1998), Mason (1986).
319
See McConvill and Smith (2001).
320
Currier (1965) pp 235-238
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