Law Commons^™

Qalys And Policy Evaluation: A New Perspective, Matthew D. Adler

All Faculty Scholarship

“QALYs” (Quality-Adjusted Life Years) are a metric for health and longevity very widely employed by health researchers. Surveys are used to assign health states a quality ranking on zero-one scale, with zero representing a health state no better than death and one perfect health. The total QALY value of a health profile is calculated as the time spent in its component health states, each weighted by its quality. Until a few years ago, despite the huge academic literature on QALY measurement, this approach was seldom used by policymakers in the U.S. But there have been recent signs of governmental interest …

Ip And Antitrust Policy: A Brief Historical Overview, Herbert J. Hovenkamp

All Faculty Scholarship

The history of IP/antitrust litigation is filled with exaggerated notions of the power conferred by IP rights and imagined threats to competition. The result is that antitrust litigation involving IP practices has seen problems where none existed. To be sure, finding the right balance between maintaining competition and creating incentives to innovate is no easy task. However, the judge in an IP/antitrust case almost never needs to do the balancing, most of which is done in the language of the IP provisions. The role of antitrust tribunals is the much more limited one of ensuring that any alleged threat to …

Did Reform Of Prudent Trust Investment Laws Change Trust Portfolio Allocation?, Max M. Schanzenbach, Robert H. Sitkoff

Law and Economics Papers

This paper investigates the effect of changes in state prudent trust investment laws on asset allocation in noncommercial trusts. The old prudent man rule favored “safe” investments

such as government bonds and disfavored “speculation” in stock. The new prudent investor rule, now widely adopted, relies on modern portfolio theory, freeing the trustee to invest based on risk and return objectives reasonably suited to the trust and in light of the composition of the trust portfolio as a whole. Using state- and institution-level panel data from 1986-1997, we find that after a state’s adoption of the new prudent investor rule, trust …

How High Do Cartels Raise Prices? Implications For Optimal Cartel Fines, John M. Connor, Robert H. Lande

All Faculty Scholarship

This Article examines whether the current penalties in the United States Sentencing Guidelines are set at the appropriate levels to deter cartels optimally The authors analyze two data sets to determine how high on average cartels raise prices. The first consists of every published scholarly economic study of the effects of cartels on prices in individual cases. The second consists of every final verdict in a US. antitrust case in which a neutral finder of fact reported collusive overcharges. They report average overcharges of 49% and 31% for the two data sets, and median overcharges of 25% and 22%. They …

Share Price As A Poor Criterion For Good Corporate Law, Lynn A. Stout

Cornell Law Faculty Publications

Academics, reformers, and business leaders all yearn for a single, objective, easy-to-read measure of corporate performance that can be used to judge the quality of public corporation law and practice. This collective desire is so powerful that it has led many commentators to grab onto the first marginally plausible candidate: share price.

Contemporary economic and corporate theory, as well as recent business history, nevertheless warn us against unthinking acceptance of share price as a measure of corporate performance. This Essay offers a brief reminder of some of the many reasons why stock prices often fail to reflect true corporate performance, …

Model Of Time-Inconsistent Misconduct: The Case Of Lawyer Misconduct, Manuel A. Utset

Scholarly Publications

No abstract provided.

Equity Analysis And Natural Hazards Policy, Matthew D. Adler

All Faculty Scholarship

What is an “equitable” policy for mitigating the impacts of hurricanes, earthquakes, floods, and other natural hazards? Economists tend to see “equity” or “distribution” as irreducibly political and subjective. But, in truth, equity analysis and cost-benefit analysis are on a par. Both require a normative justification. Moreover, normative argument can help us structure equity analysis, just as it can cost-benefit analysis. This chapter, written for a forthcoming book on natural hazards policy after Katrina, argues that equity is a normative consideration distinct from efficiency or overall well-being. It then argues that equity is individualistic, not group-based; ex post, not ex …

Patent Portfolios, Gideon Parchomovsky, R. Polk Wagner

All Faculty Scholarship

This article presents a new theory of patent value, responding to growing empirical evidence that the traditional appropriability premise of patents is fundamentally incomplete in the modern innovation environment. We find that for patents, the whole is greater than the sum of its parts: the true value of patents lies not in their individual worth, but in their aggregation into a collection of related patents, a patent portfolio. The patent portfolio theory thus explains what is known as “the patent paradox”: in recent years patent intensity—patents obtained per research and development dollar—has risen dramatically even as the expected value of …

Tradable Pollution Permits And The Regulatory Game, Jason S. Johnston

All Faculty Scholarship

This paper analyzes polluters' incentives to move from a traditional command and control (CAC) environmental regulatory regime to a tradable permits (TPP) regime. Existing work in environmental economics does not model how firms contest and bargain over actual regulatory implementation in CAC regimes, and therefore fail to compare TPP regimes with any CAC regime that is actually observed. This paper models CAC environmental regulation as a bargaining game over pollution entitlements. Using a reduced form model of the regulatory contest, it shows that CAC regulatory bargaining likely generates a regulatory status quo under which firms with the highest compliance costs …

Federalism And Antitrust Reform, Herbert J. Hovenkamp

All Faculty Scholarship

Currently the Antitrust Modernization Commission is considering numerous proposals for adjusting the relationship between federal antitrust authority and state regulation. This essay examines two areas that have produced a significant amount of state-federal conflict: state regulation of insurance and the state action immunity for general state regulation. It argues that no principle of efficiency, regulatory theory, or federalism justifies the McCarran-Ferguson Act, which creates an antitrust immunity for state regulation of insurance. What few benefits the Act confers could be fully realized by an appropriate interpretation of the state action doctrine. Second, the current formulation of the antitrust state action …

Economic Efficiency And The Parameters Of Fairness: A Marriage Of Marketplace Morals And The Ethic Of Care, Barbara Ann White

All Faculty Scholarship

This article provides resolutions to a number of conundrums that have vexed policy-makers and scholars for some decades. The most significant conclusion is that efficiency and fairness concerns do not conflict but rather mutually support each other in the goal of maximizing social welfare. This is contrary to the more widely-held view by both advocates of law and economic reasoning and those favoring deontological concerns that a trade-off between fairness and efficiency is inevitable. This article demonstrates how the coalescence of the two frameworks, the cultivation of fairness with law and economics' efficiency maximization, yields greater enhancements of social welfare …

Reform Of Public Company Disclosure In Europa, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

Exclusive Dealing, The Theory Of The Firm, And Raising Rivals' Costs: Toward A New Synthesis, Alan J. Meese

Faculty Publications

No abstract provided.

The Fair Value Of Cornfields In Delaware Appraisal Law, Lawrence Hamermesh, Michael L. Wachter

All Faculty Scholarship

The Delaware Supreme Court’s opinions in Weinberger and Technicolor have left a troublesome uncertainty in defining the proper approach to the valuation of corporate shares. That uncertainty – increasingly important as going private mergers become more frequent – can be resolved by a blend of financial and doctrinal analysis. The primary problem—the potential opportunism by controlling shareholders in timing going private mergers—can be addressed by a more complete understanding of corporate finance. The definition of fair value must include not only the present value of the firm’s existing assets, but also the future opportunities to reinvest free cash flow, including …

One For All: The Problem Of Uniformity Cost In Intellectual Property Law, Michael W. Carroll

Working Paper Series

Intellectual property law protects the owner of each patented invention or copyrighted work of authorship with a largely uniform set of exclusive rights. Historically, this uniformity may have been justified in light of the relative homogeneity of market conditions applicable to protected subject matter, such as books or mechanical inventions. Technological progress since the founding has led to considerable growth in the range of inventions and expressive works to which patent and copyright law apply, respectively. In the modern context, it is clear that innovators’ needs for intellectual property protection vary substantially across industries and among types of innovation. Applying …

A Positive Externalities Approach To Copyright Law: Theory And Application, Jeffrey L. Harrison

UF Law Faculty Publications

The basic goal of copyright law is, at a general level, fairly well understood, yet the law itself seems untethered to any consistent analytical approach designed to achieve that goal. This Article has two goals. The first is to explain in some detail what copyright law might look like if it reflected economic reasoning. The second is to put to the test the question of whether copyright law is as far out of sync with economic guidelines as White-Smith Music and Eldred suggest.

In order to understand the economic approach and the inconsistency of copyright law, as well as the …

Bargaining For Takings Compensation, Abraham Bell, Gideon Parchomovsky

All Faculty Scholarship

Efficiency and fairness require paying full compensation to property owners when their property is taken by eminent domain. Yet, to date, the evidentiary challenge of proving subjective value has proved insurmountable, and current law requires condemnees to settle for fair market value. This Article proposes a self-assessment mechanism that can make full compensation at subjective value practical. Under our proposal, property owners must be given the opportunity to state the value of the property designated for condemnation. Once property owners name their price, the government can take the property only at that price. However, if the government chooses not to …

A Law And Economics Perspective On Terrorism, Nuno M. Garoupa , Jonathan Klick, Francesco Parisi

George Mason University School of Law Working Papers Series

This paper reviews the existing law and economics literature on crime, noting where various models might apply to the terror context. Specifically, it focuses on two strands of the literature, deterrence and incapacitation. Challenging the conventional application of the basic rational agent model of crime in the context of terrorism, it considers anti-terror measures enacted by different countries, highlighting how the details of the laws correspond to the insights from economic models of crime. In conclusion, the paper proposes an efficient sorting mechanism in which individuals will be provided with adequate incentives to reveal their type to law enforcement authorities.

Two Tales Of Bundling, Bruce H. Kobayashi

George Mason University School of Law Working Papers Series

The economic literature on bundling has made many theoretical advances. However, several omissions reveal themselves. The advances have largely been on the theoretical side. These models contain restrictive assumptions regarding the existence of monopoly in some markets, and the nature of rivalry in others. The models generally ignore obvious and ubiquitous reasons firms may use bundled discounts. These models have not been subject to robustness checks, nor have their assumptions been tested empirically. As a result, the literature that shows the possibility of anticompetitive harm does not provide a reliable way to gauge whether the potential for harm would outweigh …

The Economics Of Loyalty Discounts And Antitrust Law In The United States, Bruce H. Kobayashi

George Mason University School of Law Working Papers Series

This paper examines the law and economics of loyalty discounts. While there have been recent advances in the economic analysis of loyalty discounts, this literature is still relatively recent and sparse. Though some of these papers provide tests that would serve to identify either deviations from short run profit maximization or, in the case of bundled discounts, a reduction in consumer welfare or the exclusion of a hypothetically equally efficient competitor, these tests have several shortcomings. As a result, the economic literature currently does not provide a reliable way to gauge whether the potential harm from the use of loyalty …

Life V. Death: Or Why The Death Penalty Should Marginally Deter, Charles N. W. Keckler

George Mason University School of Law Working Papers Series

Econometric measures of the effect of capital punishment have increasingly provided evidence that it deters homicides. However, most researchers on both sides of the death penalty debate continue to rely on rather simple assumptions about criminal behavior. I attempt to provide a more nuanced and predictive rational choice model of the incentives and disincentives to kill, with the aim of assessing to what extent the statistical findings of deterrence are in line with theoretical expectations. In particular, I examine whether it is plausible to suppose there is a marginal increase in deterrence created by increasing the penalty from life imprisonment …

Crops, Guns & Commerce: A Game Theoretical Critique Of Gonzales V. Raich, Maxwell L. Stearns

George Mason University School of Law Working Papers Series

In Gonzales v. Raich, the Supreme Court sustained an application of the Controlled Substances Act (“CSA”), banning all private use of marijuana, as applied to two women who had cultivated or otherwise acquired marijuana for the treatment of severe pain pursuant to the California Compassionate Use Act. Writing for the majority, Justice Stevens placed Raich at the intersection of two landmark Commerce Clause precedents: Wickard v. Filburn, the notorious 1942 decision, which upheld a penalty under the Agriculture Adjustment Act of 1938 applied to a local farmer who violated his wheat quota but who had used the modest excess portion …

Discounts And Exclusions, Herbert J. Hovenkamp

All Faculty Scholarship

The discounting practices of dominant firms has emerged as one of the most problematic areas of private antitrust enforcement against single-firm conduct. The most difficult discount practices to assess are bundled, or multi-product discounts in situations where no significant rival produces every product that is included in the bundle. A debate has emerged over whether such discounts are properly assessed under a legal test that analogizes them to predatory pricing or to tying. Defendants typically prefer predatory pricing analogies, requiring a showing that the price of the assembled bundle was below a relevant measure of cost, such as marginal cost …

Day 2: Thursday, 18 August 2005: Upper Colorado River Endangered Fish Recovery Program, Bob Muth, Tom Pitts, Dan Luecke

Endangered Species Act Congressional Field Tour (August 17-19)

58 pages (includes illustrations and maps).

Contains references.

Agenda: Endangered Species Act Congressional Field Tour, University Of Colorado Boulder. Natural Resources Law Center

Endangered Species Act Congressional Field Tour (August 17-19)

The Center sponsored its third annual field tour for staff members of the United States Congress, the United States Environmental Protection Agency, and the Colorado state legislature.

Day 1: Wednesday, 17 August 2005: Biodiversity And Critical Habitat, Charles Bedford, Federico Cheever, Tim Sullivan

Endangered Species Act Congressional Field Tour (August 17-19)

6 pages (includes color illustration).

Contains references.

Day 1: Wednesday, 17 August 2005: Science And The Esa, Joy Nicholopoulos, William Lewis

Endangered Species Act Congressional Field Tour (August 17-19)

43 pages (includes illustrations and map).

Contains references.

Digital Vat And Development: D-Vat And D-Velopment, Richard Thompson Ainsworth

Faculty Scholarship

This article suggests that the time is right for developing countries to consider adopting a comprehensive, fully digital VAT, (complete with certified software and trusted third party intermediaries who could assume all of the taxpayer's VAT responsibilities) within the limited group of enterprises encompassed by the large taxpayer group.

Since the e-commerce revolution began in the 1990's, tax policy discussions in developed economies have enlisted "e-solutions" to streamline consumption tax administration, as well as to resolve technical problems.

Inspiration came from the marketplace. Policy-makers observed widespread, business-initiated e-solutions to consumption tax compliance problems in a wide spectrum of jurisdiction. There …

Is Forum-Shopping Corrupting America's Bankruptcy Courts? Review Of Lynn M. Lopucki, "Courting Failure: How Competition For Big Cases Is Corrupting The Bankruptcy Courts", Todd J. Zywicki

George Mason University School of Law Working Papers Series

In his new book, Courting Failure: How Competition for Big Cases is Corrupting the Bankruptcy Courts, Professor Lynn LoPucki’s book argues that that current bankruptcy venue rules have spawned an improper “competition for big cases” that has “corrupted” America’s bankruptcy courts. LoPucki argues that this competition has harmed the bankruptcy system and the economy, transferring wealth from creditors and employees to incumbent management and bankruptcy professionals. He also argues that the competition that has corrupted the American bankruptcy system is being replicated internationally, resulting in a similar competition and similar harm on the global stage.

This essay reviews LoPucki’s book …

Rev. Proc. 2005-24 And The Upc Elective Share, Lawrence W. Waggoner

Law & Economics Working Papers Archive: 2003-2009

This article discusses Revenue Procedure 2005-24, which came as a bombshell to the estate-planning bar. The Rev. Proc. requires a spousal waiver of elective-share rights in order for a charitable remainder annuity trust (CRAT) or a charitable remainder unitrust (CRUT) created on or after June 28, 2005, to qualify for a charitable deduction. The elective share is a statutory provision common to most probate codes in non-community-property states that protect a decedent’s surviving spouse against disinheritance.

The Rev. Proc. is primarily though apparently not exclusively addressed to the elective share of the Uniform Probate Code (UPC). Unfortunately, the Rev. Proc. …