The Law and Economics of the Bluebook Market Failure:

As promised in my last post, I will now explore the reasons why the Bluebook market failure persists despite its manifest flaws.

1. Most Bluebook costs are externalities.

The decision whether or not to use the Bluebook is made by law review boards, but most actual bluebooking is done by low-level journal members or by authors of articles. To be sure, the onerous nature of bluebooking probably deters some people from applying for law journal membership, but at most schools there will be more than enough applicants anyway, because of the credential benefits of being a law journal member. The demand for journal membership is relatively inelastic. Thus, board members have little incentive to take into account most of the costs of bluebooking. To be sure, board members (at least at some journals) also have to waste time on bluebooking, but they might have to spend even more time adopting and implementing a new citation system.

2. Short time horizons.

Law journal board members generally serve for only 1 year. If they choose to adopt a new citation system, they will have to bear all or most of the transition costs (choosing the system, training people to use it, informing authors and helping THEM to make the transition, etc.), but will reap only a small proportion of the benefits, most of which will accrue to their successors. Moreover, if the transition turns out to be a failure, the board members might suffer considerable reputational costs, whereas few people will blame them for continuing with longstanding status quo policies. The key point here is that law journal boards have insufficient incentive to innovate.

3. Bluebooking as hazing.

Having to learn the Bluebook increases the costs of entry to law journal membership and, at least at the margin, makes membership a more exclusive club. The harder it is to qualify for journal membership, the more rare this credential becomes and – potentially – the higher the market value of having it. People who have already paid the cost of entry to the exclusive club (i.e. – board members) have at least some incentive to keep it as exclusive as possible. The phenomenon of fraternity hazing may work in the same way. Hazing makes it more difficult to join the frat, and thus makes it a more exclusive club for the brothers. Obviously, there are limits to this process. If the hazing is truly horrendous, there will be too few applicants for the club. But bluebook hazing hasn’t (yet!) reached that point.

Some people argue that the main obstacle to Bluebook abolition is the self-interest of the four journals who publish it and make a great deal of money as a result (Harvard, Yale, Columbia, and Penn). It is true that this interest exists, but it does not explain why editorial boards at other journals (who are consumers of the Bluebook rather than producers) do not junk it in favor of a simpler system.