A fundamental insight of the economic analysis of law is the notion that legal sanctions are “prices” set for given categories of legally relevant behavior. This idea develops around the positive conception of law as a command backed by an enforceable sanction. Law and economics uses the well-developed tool of price theory to predict the effect of changes in sanctions on individual behavior. One essential question, however, remains unanswered: how can the legal system set efficient prices if there is no market process that generates them? In other words, how can legal rules reflect the level of social undesirability of the conduct being sanctioned?