Economic analysis of state legal interventions in lease relationships on the idea of market efficiency and its failures

Abstract

Lease is one of the most important legal relationships that, by its economic and social dimensions, has been a main concern for statesmen of any country. In Iran, since modern legislation, the question of how to regulate the relationships has been subject to ups and downs. Civil Code may be understood as a starting point based on the autonomy of will (supply and demand). Influenced by some evolutions, the lease gradually came to be a critical contract so that statesmen authorized themselves to intervene in leasing relationships. Looking at such lease Acts proves such interventionist trend. The trend, however, ceased to continue following Islamic revolution and by passing of the 1376 Act, it came back to its starting point (Civil Code). Such a turning fitted to the idea of market efficiency. This paper examines the said interventions on the idea of market efficiency first by reviewing the lease Acts in terms of interventionism and then by using economic theory, it examines some situations known as market failures and shows that the interventionist Acts of lease cannot be explained on the basis of market failure.

Keywords

• market efficiency
• market failure
• monopoly
• public goods
• information asymmetric
• externalities
• legal intervention