Law Commons^™

Gamestop And The Reemergence Of The Retail Investor, Jill E. Fisch

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The GameStop trading frenzy in January 2021 was perhaps the highest profile example of the reemergence of capital market participation by retail investors, a marked shift from the growing domination of those markets by large institutional investors. Some commentators have greeted retail investing, which has been fueled by app-based brokerage accounts and social media, with alarm and called for regulatory reform. The goals of such reforms are twofold. First, critics argue that retail investors need greater protection from the risks of investing in the stock market. Second, they argue that the stock market, in term, needs protection from retail investors. …

Municipal Fiber In The United States: A Financial Assessment, Christopher S. Yoo, Jesse Lambert, Timothy P. Pfenninger

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Despite growing interest in broadband provided by municipally owned and operated fiber-to-the-home networks, the academic literature has yet to undertake a systematic assessment of these projects’ financial performance. To fill this gap, we utilize municipalities’ official reports to offer an empirical evaluation of the financial performance of every municipal fiber project in the U.S. operating in 2010 through 2019. An analysis of the actual performance of the resulting fifteen-project panel dataset reveals that none of the projects generated sufficient nominal cash flow in the short run to maintain solvency without infusions of additional cash from outside sources or debt relief. …

A Lesson From Startups: Contracting Out Of Shareholder Appraisal, Jill E. Fisch

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Appraisal is a controversial topic. Policymakers have debated the goals served by the appraisal remedy, and legislatures have repeatedly revised appraisal statutes in an effort to meet those goals while minimizing the cost and potential abuse associated with appraisal litigation. Courts have struggled to determine the most appropriate valuation methodology and the extent to which that methodology should depend on case-specific factors. These difficulties are exacerbated by variation in the procedures by which mergers are negotiated and the potential for conflict-of-interest transactions.

Private ordering offers a market-based alternative to continued legislative or judicial efforts to refine the appraisal remedy. Through …

Why Aim Law Toward Human Survival, John William Draper

Librarian Scholarship at Penn Law

Our legal system is contributing to humanity’s demise by failing to take account of our species’ situation. For example, in some cases law works against life and supports interests such as liberty or profit maximization.

If we do not act, science tells us that humanity bears a significant (and growing) risk of catastrophic failure. The significant risk inherent in the status quo is unacceptable and requires a response. We must act. It is getting hotter. When we decide to act, we need to make the right choice.

There is no better choice. You and all your relatives have rights. The …

Is The Digital Economy Too Concentrated?, Jonathan Klick

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Concentration in the digital economy in the United States has sparked loud criticism and spurred calls for wide-ranging reforms. These reforms include everything from increased enforcement of existing antitrust laws, such as challenging more mergers and breaking up firms, to an abandonment of the consumer welfare standard. Critics cite corruption and more systemic public choice problems, while others invoke the populist origins of antitrust to slay the digital Goliaths. On the other side, there is skepticism regarding these arguments. This chapter continues much of that skepticism.

Taxing Bitcoin And Blockchains—What The Irs Told Us (And What It Didn’T), David J. Shakow

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The IRS recently issued its second description of how it will treat Bitcoin and other blockchain assets. Some of its analysis leaves open questions that invite further consideration, and important issues remain unresolved. Moreover, because the popular Bitcoin blockchain uses a "proof of work" consensus procedure, issues relating to the alternative "proof of stake" procedure have been neglected.

Whither The Regulatory “War On Coal”? Scapegoats, Saviors, And Stock Market Reactions, Cary Coglianese, Daniel E. Walters

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Complaints about excessive economic burdens associated with regulation abound in contemporary political and legal rhetoric. In recent years, perhaps nowhere have these complaints been heard as loudly as in the context of U.S. regulations targeting the use of coal to supply power to the nation’s electricity system, as production levels in the coal industry dropped by nearly half between 2008 and 2016. The coal industry and its political supporters, including the president of the United States, have argued that a suite of air pollution regulations imposed by the U.S. Environmental Protection Agency during the Obama administration seriously undermined coal companies’ …

Development On A Cracked Foundation: How The Incomplete Nature Of New Deal Labor Reform Presaged Its Ultimate Decline, Leo E. Strine Jr.

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Mariano-Florentino Cuéllar, Margaret Levi, and Barry R. Weingast’s excellent essay, Twentieth Century America as a Developing Country, Conflict, Institutional Change and the Evolution of Public Law, celebrates the period during which the National Labor Relations Act facilitated the peaceful resolution of labor disputes and improved the working conditions of American workers. These distinguished authors make a strong case for the essentiality of law in regulating labor relations and the importance of national culture in providing a solid context for the emergence of legal regimes facilitating economic growth and equality. This reply to their essay explores how the New Deal’s failure …

Preserving Life By Ranking Rights, John William Draper

Librarian Scholarship at Penn Law

Border walls, abortion, and the death penalty are the current battlegrounds of the right to life. We will visit each topic and more in this paper, as we consider ranking groups of constitutional rights.

The enumerated rights of the Due Process Clauses of the Fifth and Fourteenth Amendments—life, liberty, and property—merit special treatment. They have a deeper and richer history that involves ranking. Ranking life in lexical priority over liberty and property rights protects life first and maximizes safe liberty and property rights in the absence of a significant risk to life. This is not new law; aspects of it …

Hipster Antitrust: New Bottles, Same Old W(H)Ine?, Christopher S. Yoo

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Although the debate over hipster antitrust is often portrayed as something new, experienced observers recognize it as a replay of an old argument that was resolved by the global consensus that antitrust should focus on consumer welfare rather than on the size of firms, the levels of industry concentration, and other considerations. Moreover, the history of the Federal Trade Commission’s Section 5 authority to prevent unfair methods of competition stands as a reminder of the dangers of allowing enforcement policy to be guided by vague and uncertain standards.

The Behavioral Economics Of Multilevel Marketing, Heidi H. Liu

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Multilevel marketing companies (MLMs) - sales organizations that compensate independent consultants based on the sales and recruitment of other consultants - form a significant part of the American economy. Yet, MLMs provide little information to regulators and potential participants regarding potentially material information. Although MLMs are often compared to pyramid schemes, consultants argue that participation in a MLM allows them to make money outside of the traditional full-time labor force. This paper examines the law, economics, and psychology of MLMs, suggesting that MLMs may draw on prospective consultants' cognitive biases in persuading consultants to join and continue a MLM. Consultants …

The Economics Of Immigration Reform, Howard F. Chang

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In this article, I draw upon economic theory and recent empirical work on the economic and fiscal effects of immigration to evaluate some recent proposals for immigration reform in terms of their effects on the economic welfare of natives in the United States. In particular, I consider the Reforming American Immigration for a Strong Economy (RAISE) Act, a bill that would cut immigration to half of its current level. President Donald Trump has endorsed the RAISE Act and has insisted that many of its provisions be part of any legislation legalizing the status of unauthorized immigrants granted relief under the …

Before International Tax Reform, We Need To Understand Why Firms Invert, Michael S. Knoll

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A wave of corporate inversions by U.S. firms over the past two decades has generated substantial debate in academic, business, and policy circles.

The core of the debate hinges on a couple of key economic questions: Do U.S. tax laws disadvantage U.S.-domiciled companies relative to their foreign competitors? And, if so, do inversions improve the competitiveness of U.S. multinational firms both abroad and at home?

There is unfortunately little, if any, empirical work directly determining whether U.S.-based MNCs are currently tax-disadvantaged compared to their foreign rivals, or measuring the amount by which (if any) U.S.-based MNCs improve their competitive position …

The Limits Of Performance-Based Regulation, Cary Coglianese

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Performance-based regulation is widely heralded as a superior approach to regulation. Rather than specifying the actions regulated entities must take, performance-based regulation instead requires the attainment of outcomes and gives flexibility in how to meet them. Despite nearly universal acclaim for performance-based regulation, the reasons supporting its use remain largely theoretical and conjectural. Owing in part to a lack of a clear conceptual taxonomy, researchers have yet to produce much empirical research documenting the strengths and weaknesses of performance-based regulation. In this Article, I provide a much-needed conceptual framework for understanding and assessing performance-based regulation. After defining performance-based regulation and …

Why Law Now Needs To Control Rather Than Follow Neo-Classical Economics, John William Draper

Librarian Scholarship at Penn Law

Selfish utilitarianism, neo-classical economics, the directive of short-term income maximization, and the decision tool of cost-benefit analysis fail to protect our species from the significant risks of too much consumption, pollution, or population. For a longer-term survival, humanity needs to employ more than cost-justified precaution.

This article argues that, at the global level, and by extension at all levels of government, we need to replace neo-classical economics with filters for safety and feasibility to regulate against significant risk. For significant risks, especially those that are irreversible, we need decision tools that will protect humanity at all scales. This article describes …

Single Point Of Entry And The Bankruptcy Alternative, David A. Skeel Jr.

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This Essay, which will appear in Across the Great Divide: New Perspectives on the Financial Crisis, a Brookings Institution and Hoover Institution book, begins with a brief overview of concerns raised by the Lehman Brothers bankruptcy about the adequacy of our existing architecture for resolving the financial distress of systemically important financial institutions. The principal takeaway of the first section is that Title II as enacted left most of these issues unanswered. By contrast, the FDIC’s new single point of entry strategy, which is introduced in the second section, can be seen as addressing nearly all of them. The …

Neoclassical Labor Economics: Its Implications For Labor And Employment Law, Michael L. Wachter

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Whereas law and economics appears throughout business law, it never caught on in legal commentary about labor and employment law. A major reason is that the goals of the National Labor Relations Act (NLRA), the country’s foundational labor law, are at war with basic principles of economics. The lack of integration is unfortunate if understandable. Notwithstanding the NLRA’s normative goal to keep wages out of competition, economic analysis applies as centrally to labor markets as to any other market.

One of the NLRA’s primary goals is to equalize bargaining power. Its drafters envisioned achieving this goal through procedural and substantive …

The Perils Of Forgetting Fairness, Michael B. Dorff, Kimberly Kessler Ferzan

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No abstract provided.

Bankruptcy's Home Economics, David A. Skeel Jr.

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This essay began its life as a commentary on Elizabeth Warren’s article “The New Economics of the American Family” at the American Bankruptcy Institute's 25th Anniversary Symposium of the Bankruptcy Code in 2003. (Both the Warren article and my commentary were published in the symposium in the American Bankruptcy Institute Law Review.) “The New Economics of the American Family” was drawn in many respects from then-Professor Warren’s co-authored book, The Two Income Trap. The essay refers to both, though it puts particular emphasis on the article. The essay begins by briefly describing the basic thesis of the article-- …

The Role Of Politics And Policy In Television Regulation, Christopher S. Yoo

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This article is a reply to Thomas Hazlett’s commentary on my article entitled, “Rethinking the Commitment to Free, Local Television.” Although politics and public choice theory represent an important approach for analyzing government actions, economic policy still exercises some influence over the regulation of television. On the one hand, we agree that the regulatory preference of free television and local programming is more a reflection of political considerations than economic policy and that the importance of promoting communities of interest over geographic communities, and the potential for new services such as Digital Audio Radio Services to benefit consumers. On the …