Business Commons^™

Markets In Ip And Antitrust, Herbert J. Hovenkamp

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The purpose of market definition in antitrust law is to identify a grouping of sales such that a single firm who controlled them could maintain prices for a significant time at above the competitive level. The conceptions and procedures that go into “market definition” in antitrust can be quite different from those that go into market definition in IP law. When the issue of market definition appears in IP cases, it is mainly as a query about the range over which rivalry occurs. This rivalry may or may not have much to do with a firm’s ability to charge a …

“Impact” In 3d—Maximizing Impact Through Transactional Clinics, Praveen Kosuri

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In speaking about “impact” clinical legal education, it is almost always exclusively as litigation—innocence projects, representing Guantanamo detainees, human rights concerns, environmental issues. Though these clinical efforts target different societal ills, all try to use the legal system as a catalyst for change. Rarely do clinicians invoke the word “impact” in the same manner in discussing transactional legal work much less transactional clinics. Yet transactional clinics can and do perform impact work. This article describes the current landscape of transactional clinics, the distinct evolution of community economic development clinics from small business and organizations clinics and argues that both can …

Disparate Impact Realism, Amy L. Wax

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In Ricci v. DeStefano, 129 S. Ct. 2658 (2009), the Supreme Court recently reaffirmed the doctrine, first articulated by the Court in Griggs v. Duke Power Company, 401 U.S. 424 (1971), that employers can be held liable under Title VII of the 1964 Civil Rights Act for neutral personnel practices with a disparate impact on minority workers. The Griggs Court further held that employers can escape liability by showing that their staffing practices are job related or consistent with business necessity.

In the interim since Griggs, social scientists have generated evidence undermining two key assumptions behind that decision and its …

The Marginalist Revolution In Corporate Finance: 1880-1965, Herbert J. Hovenkamp

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During the late nineteenth and early twentieth centuries fundamental changes in economic thought revolutionized the theory of corporate finance, leading to changes in its legal regulation. The changes were massive, and this branch of financial analysis and law became virtually unrecognizable to those who had practiced it earlier. The source of this revision was the marginalist, or neoclassical, revolution in economic thought. The classical theory had seen corporate finance as an historical, relatively self-executing inquiry based on the classical theory of value and administered by common law courts. By contrast, neoclassical value theory was forward looking and as a result …

A Preface To Neoclassical Legal Thought, Herbert J. Hovenkamp

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Most legal historians speak of the period following classical legal thought as “progressive legal thought.” That term creates an unwarranted bias in characterization, however, creating the impression that conservatives clung to an obsolete “classical” ideology, when in fact they were in many ways just as revisionist as the progressives legal thinkers whom they critiqued. The Progressives and New Deal thinkers whom we identify with progressive legal thought were nearly all neoclassical, or marginalist, in their economics, but it is hardly true that all marginalists were progressives. For example, the lawyers and policy makers in the corporate finance battles of the …

When The Government Is The Controlling Shareholder, Marcel Kahan, Edward B. Rock

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As a result of the 2008 bailouts, the United States Government is now the controlling shareholder in AIG, Citigroup, GM, GMAC, Fannie Mae and Freddie Mac. Corporate law provides a complex and comprehensive set of standards of conduct to protect non-controlling shareholders from controlling shareholders who have goals other than maximizing firm value. In this article, we analyze the extent to which these existing corporate law structures of accountability apply when the government is the controlling shareholder, and the extent to which federal “public law” structures substitute for displaced state “private law” norms. We show that the Delaware restrictions on …

Making Sense Of The New Financial Deal, David A. Skeel Jr.

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In this Essay, I assess the enactment and implications of the Dodd-Frank Act, Congress’s response to the 2008 financial crisis. To set the stage, I begin by very briefly reviewing the causes of the crisis. I then argue that the legislation has two very clear objectives. The first is to limit the risk of the shadow banking system by more carefully regulating the key instruments and institutions of contemporary finance. The second objective is to limit the damage in the event one of these giant institutions fails. While the new regulation of the instruments of contemporary finance—including clearing and exchange …

A Cost-Benefit Interpretation Of The "Substantially Similar" Hurdle In The Congressional Review Act: Can Osha Ever Utter The E-Word (Ergonomics) Again?, Adam M. Finkel, Jason W. Sullivan

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The Congressional Review Act permits Congress to veto proposed regulations via a joint resolution, and prohibits an agency from reissuing a rule “in substantially the same form” as the vetoed rule. Some scholars—and officials within the agencies themselves—have understood the “substantially the same” standard to bar an agency from regulating in the same substantive area covered by a vetoed rule. Courts have not yet provided an authoritative interpretation of the standard.

This Article examines a spectrum of possible understandings of the standard, and relates them to the legislative history (of both the Congressional Review Act itself and the congressional veto …

The Shifting Terrain Of Risk And Uncertainty On The Liability Insurance Field, Tom Baker

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Recent sociological and historical work suggests that insurance risks often are not reliably calculable, except in hindsight. Insurance is “an uncertain business,” characterized by competition for premiums that pushes insurers into the unknown. This essay takes some preliminary steps that extend this insight into the liability insurance field. The essay first provides a simple quantitative comparison of U.S. property and liability insurance premiums over the last sixty years, setting the stage to make three points: (1) liability insurance premiums have grown at a similar rate as property insurance premiums and GDP over this period, providing yet another piece of evidence …

Health Insurance, Risk, And Responsibility After The Patient Protection And Affordable Care Act, Tom Baker

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This essay explores the new social contract of healthcare solidarity through private ownership, markets, choice, and individual responsibility embodied in the Patient Protection and Affordable Care Act. This essay first explains the four main health care risk distribution institutions affected by the Act – Medicare, Medicaid, the individual and small employer market, and the large group market – with an emphasis on how the Act changes those institutions and how they are financed. The essay then describes the “fair share” approach to health care financing embodied in the Act. This approach largely rejects the actuarial fairness vision of what constitutes …

Introduction To Creation Without Restraint: Promoting Liberty And Rivalry In Innovation, Christina Bohannan, Herbert J. Hovenkamp

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This document contains the table of contents, introduction, and a brief description of Christina Bohannan & Herbert Hovenkamp, Creation without Restraint: Promoting Liberty and Rivalry in Innovation (Oxford 2011).

Promoting rivalry in innovation requires a fusion of legal policies drawn from patent, copyright, and antitrust law, as well as economics and other disciplines. Creation Without Restraint looks first at the relationship between markets and innovation, noting that innovation occurs most in moderately competitive markets and that small actors are more likely to be truly creative innovators. Then we examine the problem of connected and complementary relationships, a dominant feature of …

The Political Economy Of Fraud On The Market, William W. Bratton, Michael L. Wachter

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No abstract provided.

Promoting The Buildout Of New Networks Vs. Compelling Access To The Monopoly Loop: A Clash Of Regulatory Paradigms, Christopher S. Yoo

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No abstract provided.

Government Governance And The Need To Reconcile Government Regulation With Board Fiduciary Duties, Lisa Fairfax

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Corporate governance scandals inevitably raise concerns about the extent to which corporate directors failed in their responsibility to monitor the corporation and its managers, especially in terms of the latter's’ misdeeds. Corporate governance reforms strive to shore up directors' roles by seeking to ensure that boards have sufficient incentives to engage in effective oversight and to hold the boards more accountable. The current financial crisis has ushered in an era of significant government reform of the financial system and involvement in corporate governance matters. Such involvement has increased board of directors' responsibilities but has not reconciled those responsibilities with board …

A New Deal In A World Of Old Ones, Theodore Ruger

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No abstract provided.

Antitrust And Innovation: Where We Are And Where We Should Be Going, Herbert J. Hovenkamp

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For large parts of their history intellectual property law and antitrust law have worked so as to undermine innovation competition by protecting too much. Antitrust policy often reflected exaggerated fears of competitive harm, and responded by developing overly protective rules that shielded inefficient businesses from competition at the expense of consumers. By the same token, the IP laws have often undermined rather than promoted innovation by granting IP holders rights far beyond what is necessary to create appropriate incentives to innovate.

Perhaps the biggest intellectual change in recent decades is that we have come to see patents less as a …

The Insignificance Of Proxy Access, Marcel Kahan, Edward B. Rock

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No abstract provided.

At The Conjunction Of Love And Money: Comment On Julie A. Nelson, Does Profit-Seeking Rule Out Love? Evidence (Or Not) From Economics And Law, William W. Bratton

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No abstract provided.

Reconsidering International Tax Neutrality, Michael S. Knoll

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For decades, U.S. international tax policy has shifted back and forth between territorial-source-exemption taxation and worldwide-residence-credit taxation. The former is generally associated with capital import neutrality (CIN) and the latter with capital export neutrality (CEN). One reason why national tax policy has shifted back and forth between those benchmarks is because it is widely accepted that a tax system cannot simultaneously satisfy both CEN and CIN unless tax rates on capital are harmonized across jurisdictions. In this essay, I argue that the international tax literature contains two different and conflicting definitions for CIN. Under one definition, which goes back at …

The Model Business Corporation Act At Sixty: Shareholders And Their Influence, Lisa Fairfax

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In the sixty years since the Committee on Corporate Laws (Committee) promulgated the Model Business Corporation Act (MBCA), there have been significant changes in corporate law and corporate governance. One such change has been an increase in shareholder activism aimed at enhancing shareholders’ voting power and influence over corporate affairs. Such increased shareholder activism (along with its potential for increase in shareholder power) has sparked considerable debate. Advocates of increasing shareholder power insist that augmenting shareholders’ voting rights and influence over corporate affairs is vital not only for ensuring board and managerial accountability, but also for curbing fraud and other …

Deregulation Vs. Reregulation Of Telecommunications: A Clash Of Regulatory Paradigms, Christopher S. Yoo

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For the past several decades, U.S. policymakers and the courts have charged a largely deregulatory course with respect to telecommunications. During the initial stages, these decisionmakers responded to technological improvements by narrowing regulation to cover only those portions of industry that remained natural monopolies and deregulating those portions that became open to competition. Eventually, Congress began regulating individual network components rather than services, mandating that incumbent local telephone companies provide unbundled access to any network element. As these elements became open to competition, the courts prompted the Federal Communications Commission to release almost the entire network from unbundling obligations. The …