Judicial path dependence and market restrictions in Canada

This article explains a persistent puzzle in Canadian constitutional law: significant internal trade barriers persist despite well-documented economic costs. Existing accounts based on path dependence and institutional inertia do not fully explain why constitutional doctrine has not adapted to these pressures. To address this gap, the article develops the concept of Internally Generated Legal Evolution (IGLE). IGLE describes a form of doctrinal development in which legal systems remain internally active but structurally constrained, producing continuous interpretive refinement without altering underlying allocations of authority. The mechanism operates through the interaction of incremental precedent, judicial informational closure, and institutional lock-ins. Together, these processes shape what can be recognized as legally relevant, limiting the system's capacity to respond to coordination problems even where their economic significance is well established. The framework is applied to the federalism jurisprudence of the Judicial Committee of the Privy Council. It shows how early centralized appellate decisions produced a decentralized regulatory environment in which doctrinal development persisted without addressing interprovincial externalities or internal market fragmentation. The result is a pattern of adaptive stasis: ongoing legal and institutional adjustment alongside persistent inefficiency. By distinguishing decentralization itself from the constraints generated by early doctrinal choices, the article reframes debates on Canadian federalism. More broadly, it offers a generalizable account of path-dependent constitutional development in common-law systems. It also clarifies the limits of efficiency-oriented theories of legal evolution by showing how internally adaptive processes can entrench inefficient trajectories.