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2006

Law and Economics

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Institution
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Articles 1 - 25 of 25

Full-Text Articles in Law

Holding Charities Accountable: Some Thoughts From An Ex-Regulator, Catharine P. Wells Dec 2006

Holding Charities Accountable: Some Thoughts From An Ex-Regulator, Catharine P. Wells

Boston College Law School Faculty Papers

This paper recounts a number of lessons learned in the course of serving as the Director of Public Charities for the Commonwealth of Massachusetts. It incorporates these lessons into a discussion of the proper analysis of charitable organizations. Should charities be analogized to for-profit firms or are they something that is essentially different? The paper argues that they lack many of the attributes of Coasian firms and that they should be considered as “consumption groups” that have different methods of accountability.


The Problem Of Social Cost In A Genetically Modified Age, Paul J. Heald, James C. Smith Nov 2006

The Problem Of Social Cost In A Genetically Modified Age, Paul J. Heald, James C. Smith

Scholarly Works

In Part I of this Article, we apply the Coase Theorem and its most useful corollary to the problem of pollen drift. We conclude that the liability of pollen polluters should be governed by balancing rules against nuisance law, to be applied on a case-by-case basis, rather than by a blanket liability or immunity rule. We also conclude that truly bystanding non-GMO farmers should have a viable defense to patent infringement because liability would result in the application of a reverse Pigovian tax that cannot be justified under accepted economic theory. Only a contextual approach can account for the wide ...


Minding The Gaps: Fairness, Welfare, And The Constitutive Structure Of Distributive Assessment, Robert C. Hockett Sep 2006

Minding The Gaps: Fairness, Welfare, And The Constitutive Structure Of Distributive Assessment, Robert C. Hockett

Cornell Law Faculty Working Papers

Despite over a century’s disputation and attendant opportunity for clarification, the field of inquiry now loosely labeled “welfare economics” (WE) remains surprisingly prone to foundational confusions. The same holds of work done by many practitioners of WE’s influential offshoot, normative “law and economics” (LE).

A conspicuous contemporary case of confusion turns up in recent discussion concerning “fairness versus welfare.” The very naming of this putative dispute signals a crude category error. “Welfare” denotes a proposed object of distribution. “Fairness” describes and appropriate pattern of distribution. Welfare itself is distributed fairly or unfairly. “Fairness versus welfare” is analytically on ...


Too Big To Fail: Moral Hazard In Auditing And The Need To Restructure The Industry Before It Unravels, Lawrence A. Cunningham Sep 2006

Too Big To Fail: Moral Hazard In Auditing And The Need To Restructure The Industry Before It Unravels, Lawrence A. Cunningham

Boston College Law School Faculty Papers

Large audit firms may believe that they are too big to fail. Arthur Andersen’s 2002 criminal indictment reduced their number from five to four, and the government decided in 2005 to avoid indicting KPMG for crimes it admitted committing. If audit firms interpret the government’s reluctance to indict as signaling aversion to tough action against them, moral hazard arises. This offsets auditing improvements mandated by the Sarbanes-Oxley Act of 2002 that are designed to strengthen auditors’ reputations with managers for thoroughness and improve financial statement reliability. Neutralizing this moral hazard requires a credible alternative industry structure so that ...


Law, Media, & Environmental Policy: A Fundamental Linkage In Sustainable Democratic Governance, Zygmunt J.B. Plater Sep 2006

Law, Media, & Environmental Policy: A Fundamental Linkage In Sustainable Democratic Governance, Zygmunt J.B. Plater

Boston College Law School Faculty Papers

The functional linkages between law and media have long been signficant in shaping American democratic governance. Over the past thirty-five years, environmental analysis has similarly become essential to shaping international and domestic governmental policy. Environmentalism—focusing as it does on realistic interconnected accounting of the full potential negative consequences as well as benefits of proposed actions, policies, and programs, over the long term as well as the short term, with careful consideration of all realistic alternatives— provides a legal perspective important for societal sustainability. Because environmental values and norms are often in tension with established industrial interests that resist public ...


Discounting, On Stilts, Douglas A. Kysar Aug 2006

Discounting, On Stilts, Douglas A. Kysar

Cornell Law Faculty Publications

This paper provides a critical overview of several articles presented at the Intergenerational Discounting and Intergenerational Equity Conference held at the University of Chicago Law School on April 27-28, 2006. First, it demonstrates that conventional normative justifications offered for the use of discounting future costs and benefits for policy analysis in the intergenerational context do not withstand scrutiny. Second, it observes that the compensatory transfers that are sometimes thought to sanitize the cost-benefit procedure in the intergenerational context are deeply problematic, both in their theoretical construction and in their practical adequacy for the tasks they are being deployed to accomplish ...


Strict Liability And The Mitigation Of Moral Luck, Gregory C. Keating Aug 2006

Strict Liability And The Mitigation Of Moral Luck, Gregory C. Keating

University of Southern California Legal Studies Working Paper Series

The general problem of moral luck—that responsibility is profoundly affected by factors beyond the control of the person held responsible—has two distinct dimensions in the case of accidental injury (and no doubt in many other cases). One dimension is concerned with attribution of moral blame. Thomas Nagel explains: “If one negligently leaves the bath running with the baby in it, one will realize, as one bounds up the stairs towards the bathroom, that if the baby has drowned one has done something awful, whereas if it has not one has merely been careless.” How badly one has behaved ...


The Story Of Nlrb V. Mackay Radio & Telegraph Co.: The High Cost Of Solidarity, Thomas C. Kohler, Julius G. Getman Aug 2006

The Story Of Nlrb V. Mackay Radio & Telegraph Co.: The High Cost Of Solidarity, Thomas C. Kohler, Julius G. Getman

Boston College Law School Faculty Papers

In 1938, in NLRB v. Mackay Radio & Telegraph Co., the Supreme Court offered one of its earliest interpretations of the National Labor Relations Act. Although the Court’s holding provided that employers may not discriminate against employees for their union activity when the strike is over and workers are reinstated, dicta in the opinion also provided that under the NLRA employers enjoy an unrestricted right to replace strikers. In the 70 years since the Court’s announcement, scholars remain baffled by the contradictions presented by the “Mackay doctrine”—a rule that forbids employers from discharging legally protected strikers while, at ...


Greed And Pride In International Bankruptcy: The Problems And Proposed Solutions To “Local Interests”, John A. E. Pottow Jul 2006

Greed And Pride In International Bankruptcy: The Problems And Proposed Solutions To “Local Interests”, John A. E. Pottow

Law & Economics Working Papers Archive: 2003-2009

From just-enacted (2005) chapter 15 of the U.S. Bankruptcy Code to the U.K. Enterprise Act of 2002, legislative reforms to international bankruptcy are on the rise. One of the thorniest issues facing scholars and policymakers alike in these efforts is what to do with the nettlesome problem of “local interests.” What exactly are these “local interests,” and what is it that we are we trying to protect? Literature to date has been elusive in pinning this down and has offered, for the most part, only undifferentiated anxiety that an international bankruptcy regime may impinge undesirably upon “local concerns ...


The Transatlantic Gmo Dispute Against The European Communities: Some Preliminary Thoughts, David A. Wirth Jul 2006

The Transatlantic Gmo Dispute Against The European Communities: Some Preliminary Thoughts, David A. Wirth

Boston College Law School Faculty Papers

Any day now, a World Trade Organization panel is expected to rule in a dispute between the U.S. and the EU concerning market access for genetically-engineered foods and crops. This piece, written before the release of the WTO panel's report, analyzes novel systemic issues concerning the impact of WTO law on regulatory design, at both the national and international levels, that are raised by this dispute. These include (1) the application of WTO disciplines to regulatory schemes that require prior governmental approval to protect the environment and public health from newly-introduced products and substances; (2) the role of ...


The Common Law As An Iterative Process: A Preliminary Inquiry, Lawrence A. Cunningham Jun 2006

The Common Law As An Iterative Process: A Preliminary Inquiry, Lawrence A. Cunningham

Boston College Law School Faculty Papers

The common law often is casually referred to as an iterative process without much attention given to the detailed attributes such processes exhibit. This Article explores this characterization, uncovering how common law as an iterative process is one of endless repetition that is simultaneously stable and dynamic, self-similar but evolving, complex yet simple. These attributes constrain the systemic significance of judicial discretion and also confirm the wisdom of traditional approaches to studying and learning law. As an iterative system, common law exhibits what physicists call sensitive dependence on initial conditions. This generates a path dependency from which it may be ...


Legal Scholarship, Humility, And The Scientific Method, David J. Herring May 2006

Legal Scholarship, Humility, And The Scientific Method, David J. Herring

University of Pittsburgh School of Law Working Paper Series

This essay responds to the question of "What next for law and behavioral biology?" by describing an approach to legal scholarship that relies on the scientific method. There are two steps involved in this approach to legal scholarship. First, the legal scholar must become familiar with an area of scientific research that is relevant to the development of law and policy. (This essay uses behavioral biology research as an example.) Second, the legal scholar must seek and form relationships across disciplines, becoming an active member of a scientific research team that conducts studies relevant to particular issues of law and ...


Theories Of Asbestos Litigation Costs ­ Why Two Decades Of Procedural Reform Have Failed To Reduce Claimants’ Expenses, Jeffrey M. Davidson May 2006

Theories Of Asbestos Litigation Costs ­ Why Two Decades Of Procedural Reform Have Failed To Reduce Claimants’ Expenses, Jeffrey M. Davidson

Student Scholarship Papers

In twenty years of asbestos litigation, procedural reforms at all levels of the civil litigation system have failed to reduce plaintiffs’ attorneys’ fees. The result has been dramatic undercompensation of asbestos tort victims. This paper attempts to explain this remarkable fact using economic methodology. The paper offers three theories: First, that the continuing difficulty of assessing causation in asbestos and other mass tort cases predictably impedes the efforts of procedural reform to reduce costs; second, that changes in defendant and insurer risk attitudes have generated costly litigation; third, that collusion of plaintiffs’ attorneys to maintain prices cannot be ruled out ...


A Gravity Model Of Globalization, Democracy And Transnational Terrorism, S Brock Blomberg, B Peter Rosendorff May 2006

A Gravity Model Of Globalization, Democracy And Transnational Terrorism, S Brock Blomberg, B Peter Rosendorff

University of Southern California Legal Studies Working Paper Series

This paper provides an original study into how democratization and globalization influence transnational terrorism -- examining the motives of terrorists and how democratic institutions and international integration influence non-state economic actors. We employ a gravity model to investigate the relative importance of globalization and democratization on transnational terrorism and external conflict. We construct an original database of over 200,000 observations from 1968-2003 for 189 countries, to examine the extent to which economic, political and historical factors influence the likelihood of citizens from one country to engage in terrorist activities against another. We …nd that the advent of democratic institutions, high ...


Comparative Foreign Direct Investment Law: Determinants Of The Legal Framework And The Level Of Openness And Attractiveness Of Host Economies, Jean-Yves P. Steyt May 2006

Comparative Foreign Direct Investment Law: Determinants Of The Legal Framework And The Level Of Openness And Attractiveness Of Host Economies, Jean-Yves P. Steyt

Cornell Law School LL.M. Student Research Papers

Foreign direct investment, henceforth denoted FDI, constitutes a basic component of the ongoing economic globalization. The latter phenomenon refers to the increasing economic interdependence of countries in the sense that today goods, services, capital and technologies are exchanged or diffused on a truly global market, accompanied by an unprecedented cross-border flow of human resources.

A large majority of states on every continent have been liberalizing or further liberalizing their investment policies and laws over the last decades. The substantial impact and role of international instruments and organizations on this progressive liberalization process has been stressed on both the global and ...


The Gratuities Debate And Campaign Reform – How Strong Is The Link?, George D. Brown May 2006

The Gratuities Debate And Campaign Reform – How Strong Is The Link?, George D. Brown

Boston College Law School Faculty Papers

The federal gratuities statute, 18 USC § 201(c), continues to be a source of confusion and contention. The confusion stems largely from problems of draftsmanship within the statute, as well as uncertainty concerning the relationship of the gratuities offense to bribery. Both offenses are contained in the same statute; the former is often seen as a lesser-included offense variety of the latter. The controversy stems from broader concerns about whether the receipt of gratuities by public officials, even from those they regulate, should be a crime. The argument that such conduct should not be criminalized can be traced to, and ...


Language, Deals And Standards: The Future Of Xml Contracts, Lawrence A. Cunningham May 2006

Language, Deals And Standards: The Future Of Xml Contracts, Lawrence A. Cunningham

Boston College Law School Faculty Papers

eXtensible Markup Language (XML) structures information in documentary systems ranging from financial reports to medical records and business contracts. XML standards for specific applications are developed spontaneously by self-appointed technologists or entrepreneurs. XML’s social and economic stakes are considerable, especially when developed for the private law of contracts. XML can reduce transaction costs but also limit the range of contractual expression and redefine the nature of law practice. So reliance on spontaneous development may be sub-optimal and identification of a more formal public standard setting model necessary. To exploit XML’s advantages while minimizing risks, this Article envisions creating ...


The Notion Of Solidarity And The Secret History Of American Labor Law, Thomas C. Kohler Apr 2006

The Notion Of Solidarity And The Secret History Of American Labor Law, Thomas C. Kohler

Boston College Law School Faculty Papers

“Solidarity,” a term not overly familiar to Americans, sometimes seems to have as many meanings as it has users. The concept became incorporated into American thought during the 19th and 20th century waves of Catholic and Jewish immigration. It provides a European vision of communitarian social order that competes with the “unencumbered self”—America’s unique brand of individualism. Among philosophers, politicians, religious thinkers, and social activists, solidarity theory sought to redefine the then-prevailing views of social bonds. Nowhere is this more apparent than in the American labor movement, which espouses as its core values the principles of unity and ...


Competition, Consumer Welfare, And The Social Cost Of Monopoly, Yoon-Ho Alex Lee Mar 2006

Competition, Consumer Welfare, And The Social Cost Of Monopoly, Yoon-Ho Alex Lee

Student Scholarship Papers

Conventional deadweight loss measures of the social cost of monopoly ignore, among other things, the social cost of inducing competition and thus cannot accurately capture the loss in social welfare. In this Article, we suggest an alternative method of measuring the social cost of monopoly. Using elements of general equilibrium theory, we propose a social cost metric where the benchmark is the Pareto optimal state of the economy that uses the least amount of resources, consistent with consumers’ utility levels in the monopolized state. Since the primary goal of antitrust policy is the enhancement of consumer welfare, the proper benchmark ...


Transparency In The Budget Process, Elizabeth Garrett, Adrian Vermeule Jan 2006

Transparency In The Budget Process, Elizabeth Garrett, Adrian Vermeule

University of Southern California Legal Studies Working Paper Series

Budget procedures are often adopted or changed to improve “transparency” in budgeting. This phrase can refer to two different, although related, stages of the budget process. First, transparency may refer to the outputs of budgeting; here the ideal is that the tradeoffs inherent in a budget should be made clear, salient and understandable to policy makers and the public. Second, transparency may refer to the inputs of budgeting; here the ideal is to ensure that the decision-making process is itself conducted in public. This paper focuses on the second concept of budget transparency – the degree to which important budgeting decisions ...


Pricelessness And Life: An Essay For Guido Calabresi, Gregory C. Keating Jan 2006

Pricelessness And Life: An Essay For Guido Calabresi, Gregory C. Keating

University of Southern California Legal Studies Working Paper Series

This paper - written for a conference celebrating "The Costs of Accidents," three and half decades after its publication - pays tribute to Calabresi's remarkable exploration of the deepest, most disturbing and most difficult problem in the law of accidents. Throughout his long and distinguished career, Guido Calabresi has insisted that a tragic conflict of irreconcilable values lies at the heart of our law of accidents. We are profoundly committed both to "the ideal that life is a pearl beyond price" and to the practice of valuing people's lives in market terms - to the practice of pricing life. We know ...


An Economic Model Of Fair Use (With Thomas Miceli), Richard Adelstein Jan 2006

An Economic Model Of Fair Use (With Thomas Miceli), Richard Adelstein

Division II Faculty Publications

A formal model of the law of fair use.


The New Commerce Clause Doctrine In Game Theoretical Perspective, Maxwell L. Stearns Jan 2006

The New Commerce Clause Doctrine In Game Theoretical Perspective, Maxwell L. Stearns

Faculty Scholarship

The Roberts Court emerges at a critical juncture in the development of Commerce Clause doctrine. While the Commerce Clause doctrine implicates concerns for federalism and separation of powers, both of which are rooted in the earliest part of our constitutional history, the new Court presents an ideal opportunity to critically assess existing doctrines and to develop new analytical paradigms. The Rehnquist Court succeeded for the first time in sixty years in imposing substantive limits on the scope of this important source of Congressional power. That Court proved far less successful, however, in developing a coherent normative theory that reconciles the ...


Richard Posner Meets Reb Chaim Of Brisk: A Comparative Study In The Founding Of Intellectual Legal Movements, Samuel J. Levine Jan 2006

Richard Posner Meets Reb Chaim Of Brisk: A Comparative Study In The Founding Of Intellectual Legal Movements, Samuel J. Levine

Scholarly Works

Of the various movements that have surfaced in American legal theory in recent decades, law and economics has emerged as perhaps the most influential, leading some to characterize it as the dominant contemporary mode of analysis among American legal scholars. In this essay, Levine considers law and economics in the context of a comparative discussion of another prominent intellectual legal movement, the Brisker method of Talmudic analysis, which originated in Eastern Europe in the late nineteenth century and quickly developed into a leading method of theoretical study of Jewish law. The Brisker method takes its name from the city of ...


The Fed’S New Model Of Supervision For “Large Complex Banking Organizations”: Coordinated Risk-Based Supervision Of Financial Multinationals For International Financial Stability, Cynthia C. Lichtenstein Jan 2006

The Fed’S New Model Of Supervision For “Large Complex Banking Organizations”: Coordinated Risk-Based Supervision Of Financial Multinationals For International Financial Stability, Cynthia C. Lichtenstein

Boston College Law School Faculty Papers

Large internationally active financial institutions, in particular multinational banks, have the capacity to create profound disturbances in the globalized financial markets in the event of failure. For that reason, these entities are supervised and examined in a manner that is completely different than the ordinary business corporation. This piece describes the new methodology that has been developed by the United States' central bank, the Board of Governors of the Federal Reserve System or "the Fed" for short, since 1995, for examining what the Fed calls "large complex banking organizations" or LBCOs and indicates how the system in fact carries out ...