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Full-Text Articles in Law and Economics

The Certification Paradox, Jonathan M. Barnett Jul 2018

The Certification Paradox, Jonathan M. Barnett

University of Southern California Legal Studies Working Paper Series

It is commonly observed that certification intermediaries mitigate informational asymmetries by “lending” reputational capital to support transacting parties’ quality commitments. However, this proposition is challenged by cases in which well-established intermediaries have failed to detect fraud, misrepresentation and other misbehavior. The “certification paradox” provides a more nuanced account that anticipates both the general success, and periodic failure, of certification intermediaries. Transacting parties minimize search and evaluation costs by using a small number of certification intermediaries with large stocks of reputational capital. Incumbent certifiers are substantially protected by entrants’ high costs of accumulating sufficient reputational capital and users’ high costs of ...


Special Interest Influence Under Direct Versus Representative Democracy, John G. Matsusaka Jul 2018

Special Interest Influence Under Direct Versus Representative Democracy, John G. Matsusaka

University of Southern California Legal Studies Working Paper Series

The ability of economic interest groups to influence policy is a common theme in economics and political science. Most theories posit that interest group power arises from the ability to influence elected or appointed government officials through vote-buying, lobbying, or revolving doors; that is, by exploiting the representative part of democracy. This raises the question: does special interest influence decline when policy is chosen using direct democracy, without involvement of representatives? An analysis of the content of the universe of state-level ballot initiatives during 1904-2017 reveals that business interests have been worse off as a result of initiatives across major ...


Passive Investors, Jill E. Fisch, Asaf Hamdani, Steven Davidoff Solomon Jun 2018

Passive Investors, Jill E. Fisch, Asaf Hamdani, Steven Davidoff Solomon

Faculty Scholarship

The increasing percentage of the modern capital markets owned by passive investors – index funds and ETFs – has received extensive media and academic attention. This growing ownership concentration as well as the potential power of passive investors to affect both corporate governance and operational decision-making at their portfolio firms has led some commentators to call for passive investors to be subject to increased regulation and even disenfranchisement. These reactions fail to account for the institutional structure of passive investors and the market context in which they operate. Specifically, this literature assumes that passive investors compete primarily on cost and that, as ...


Is Antitrust's Consumer Welfare Principle Imperiled?, Herbert J. Hovenkamp Jun 2018

Is Antitrust's Consumer Welfare Principle Imperiled?, Herbert J. Hovenkamp

Faculty Scholarship

Antitrust’s consumer welfare principle stands for the proposition that antitrust policy should encourage markets to produce output as high as is consistent with sustainable competition, and prices that are accordingly as low. Such a policy does not protect every interest group. For example, it opposes the interests of cartels or other competition-limiting associations who profit from lower output and higher prices. It also runs counter to the interest of less competitive firms that need higher prices in order to survive. Market structure is relevant to antitrust policy, but its importance is contingent rather than absolute – that is, market structure ...


Different Contexts, Different Risk Preferences?, Levon Barseghyan, Joshua C. Teitelbaum, Lin Xu Jun 2018

Different Contexts, Different Risk Preferences?, Levon Barseghyan, Joshua C. Teitelbaum, Lin Xu

Georgetown Law Faculty Publications and Other Works

We examine the stability of risk preferences across contexts involving different stakes. Using data on households' deductible choices in three property insurance coverages and their limit choices in two liability insurance coverages, we assess the stability across the five contexts in the ordinal ranking of the households' willingness to bear risk. We find evidence of stability across contexts involving stakes of the same magnitude, but not across contexts involving stakes of very different magnitudes. Our results appear to be robust to heterogeneity in wealth and access to credit, complicating seemingly ready explanations.


Investment Spending And Gdp, Kevin Zaldivar Jun 2018

Investment Spending And Gdp, Kevin Zaldivar

Celebration of Learning

This study's mission is to give a modern day analysis to investment spending and to provide insight to the degree of impact certain investments have on our GDP. This should interest local,state,and federal policy makers as well as anyone who practices their civic duty.


Proxy Access Voting: Evaluating Proxy Access And The Recent Phenomenon Of Corporations Adopting Shareholder Protective Policies, Danielle Vukovich Jun 2018

Proxy Access Voting: Evaluating Proxy Access And The Recent Phenomenon Of Corporations Adopting Shareholder Protective Policies, Danielle Vukovich

San Diego International Law Journal

Shareholders hold a financial stake in a corporation, and therefore are often viewed as owners of the corporation and believed to be in control for all corporate actions. However, their powers are circumscribed. Board of directors committees nominate directors to serve the corporation and these directors have the power to select the corporation’s officers. The committees provide shareholders a slate of proposed directors that are voted on and approved at the annual shareholder meeting. Shareholders may also propose their own slate of directors, but this typically requires a proxy contest, which can be expensive due to the costs both ...


Debt Stigma And Social Class, Michael D. Sousa Jun 2018

Debt Stigma And Social Class, Michael D. Sousa

Seattle University Law Review

For as long as creditors have been extending credit to consumer debtors, Western society has stigmatized those individuals who failed to repay their financial obligations or who found themselves swamped by unmanageable debt. Over the past three decades, scholars have studied whether the stigma surrounding indebtedness and bankruptcy has declined or increased in American society, mainly due to the sharp spike in consumer bankruptcy filings during the 1990s. These studies have resulted in a general debate over whether debt stigma still exists in society. Absent from the scholarly literature to date is an exploration of whether debtors from different social ...


The Corporate Law Dilemma And The Enlightened Sovereign Control Paradigm: In Search Of A New Legal Framework, Vincenzo Bavoso Jun 2018

The Corporate Law Dilemma And The Enlightened Sovereign Control Paradigm: In Search Of A New Legal Framework, Vincenzo Bavoso

Brooklyn Journal of Corporate, Financial & Commercial Law

This Article is centered on the proposal of a new model of corporate decision-making: the enlightened sovereign control paradigm. In revisiting the long-standing academic debate on the corporate objective, typically enshrined in the dichotomy between shareholder value and stakeholder theory, a critique of these existing models is put forward. In particular, it questions the ability of the existing theories to take account of the complex and multidimensional risks that are created by the company which affect different constituencies both inside and outside the company. While the global financial crisis of 2008 reignited the urgency to further define an appropriate legal ...


Investor-State Dispute Settlement: Is There A Better Alternative?, Emily Osmanski Jun 2018

Investor-State Dispute Settlement: Is There A Better Alternative?, Emily Osmanski

Brooklyn Journal of International Law

As the world has transitioned from national; isolated economies with localized issues into a globalized and interconnected economy with cross-border disputes; the law has struggled to keep up. Recent trade negotiations have highlighted the difficulty states face in promoting trade; while also creating a fair; accessible; and equitable forum for producers and consumers with nationalities touching every area of the globe. For several decades; Investor-State Dispute Settlement (ISDS) has been in place to address claims brought by foreign investors against the host states. External improvements have helped support foreign direct investment and the ISDS model of dispute resolution; such as ...


Charting A New Course In Cuba? Why The Time Is Now To Settle Outstanding American Property Claims, Marco Antonio Dueñas Jun 2018

Charting A New Course In Cuba? Why The Time Is Now To Settle Outstanding American Property Claims, Marco Antonio Dueñas

Brooklyn Journal of International Law

The recent warming of relations between the United States and Cuba offered generations of Cubans; Americans; and Cuban Americans renewed hope for normalized relations. One obstacle—satisfactory resolution of property claims—stands in the way; which dates back to the Cuban government’s nationalization of all U.S. assets on the island. The Cuban Liberty and Democratic Solidarity Act of 1996 (the “Helms-Burton Act”) predicates resolution of these decades-old property claims by the Cuban government as an essential condition for the full resumption of economic and diplomatic relations between the two neighbors. Separated by only ninety miles of Caribbean Sea ...


Financing Green: Reforming Green Bond Regulation In The United States, Echo Kaixi Wang Jun 2018

Financing Green: Reforming Green Bond Regulation In The United States, Echo Kaixi Wang

Brooklyn Journal of Corporate, Financial & Commercial Law

In recent years, green bonds have emerged as a way for the financial industry to contribute to environmentally friendly projects, combat climate change, and provide funds for green infrastructures across the world. While the green bond market has expanded drastically across large nations in Europe and Asia, market growth has stalled in the United States, in part due to a lack of promising regulations in the United States. Existing regulations on green bond issuance in the United States only exists in the form of non-binding international guidelines. This Note reviews the benefits and potentials of green bonds both as an ...


Whistleblowers—A Case Study In The Regulatory Cycle For Financial Services, Ronald H. Filler, Jerry W. Markham Jun 2018

Whistleblowers—A Case Study In The Regulatory Cycle For Financial Services, Ronald H. Filler, Jerry W. Markham

Brooklyn Journal of Corporate, Financial & Commercial Law

The Securities and Exchange Commission and the Commodity Futures Trading Commission were directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) to create whistleblower protection programs that reward informants with massive bounty payments. At the time of its passage, the Dodd-Frank Act was a highly controversial statute that was passed on partisan lines. Its whistleblowing authority was one of its “most contentious provisions.” As the result of the 2016 elections, the Dodd-Frank Act has come under renewed attack in Congress and by the new Trump administration. The stage is being set for possible repeal of ...


Talent Can't Be Allocated: A Labor Economics Justification For No-Poaching Agreement Criminality In Antitrust Regulation, Rochella T. Davis Jun 2018

Talent Can't Be Allocated: A Labor Economics Justification For No-Poaching Agreement Criminality In Antitrust Regulation, Rochella T. Davis

Brooklyn Journal of Corporate, Financial & Commercial Law

As of late, labor markets have been a focus point in antitrust enforcement. In 2016 the Department of Justice (DOJ) announced an unprecedented policy to pursue no-poaching agreements criminally. More recently, in January 2018, the DOJ’s Attorney General indicated that the agency is following through on the policy. This Article argues that the DOJ’s new policy is logical and prudent because the economic effects that no-poaching agreements have on labor markets mirror the anticompetitive effects of customer allocation agreements. It also shows that the policy is well-supported by labor economics and antitrust policies. In efforts to comply with ...


Regulation And The Marginalist Revolution, Herbert J. Hovenkamp May 2018

Regulation And The Marginalist Revolution, Herbert J. Hovenkamp

Faculty Scholarship

The marginalist revolution in economics became the foundation for the modern regulatory State with its “mixed” economy. Marginalism, whose development defines the boundary between classical political economy and neoclassical economics, completely overturned economists’ theory of value. It developed in the late nineteenth century in England, the Continent and the United States. For the classical political economists, value was a function of past averages. One good example is the wage-fund theory, which saw the optimal rate of wages as a function of the firm’s ability to save from previous profits. Another is the theory of corporate finance, which assessed a ...


Has The Academy Led Patent Law Astray?, Jonathan M. Barnett May 2018

Has The Academy Led Patent Law Astray?, Jonathan M. Barnett

University of Southern California Legal Studies Working Paper Series

Scholarly commentary widely asserts that technology markets suffer from a triplet of adverse effect arising from the strong patent regime associated with the establishment of the Court of Appeals for the Federal Circuit in 1982: "patent" thickets burdening innovation with transaction and litigation costs; "patent holdup" resulting in excessive payouts to opportunistic patent holders; and "royalty stacking" causing exorbitant patent licensing fees. Together these effects purportedly depress innovation and inflate prices for end-users. These repeated assertions are inconsistent with the continuing robust output, declining prices, and rapid innovation observed in the most patent-intensive technology markets during the more that three ...


Uncharted Waters? Legal Ethics And The Benefit Corporation, Joseph Pileri May 2018

Uncharted Waters? Legal Ethics And The Benefit Corporation, Joseph Pileri

St. Mary's Journal on Legal Malpractice & Ethics

Corporate law norms are reflected in lawyers’ ethical duties. The enactment of benefit corporation legislation across the country signals a legislative acknowledgment that corporate law can serve as a public, rather than a merely private, ordering mechanism. Benefit corporations expressly adopt a public benefit as a legal purpose of the enterprise. While many have written about this important development with respect to corporate fiduciary law, this essay is the first to explore the professional and ethical responsibility of lawyers representing benefit corporations. In the last century, as scholars and courts drove an understanding of corporate law that elevated the interests ...


The Pricing Impact Of Decreasing Competitiveness Of The Health Insurance Market, Lauren N. Patterson May 2018

The Pricing Impact Of Decreasing Competitiveness Of The Health Insurance Market, Lauren N. Patterson

University of Tennessee Honors Thesis Projects

No abstract provided.


Take This Job And Shove It: The Pragmatic Philosophy Of Johnny Paycheck And A Prayer For Strict Liability In Appalachia, Eugene "Trey" Moore Iii May 2018

Take This Job And Shove It: The Pragmatic Philosophy Of Johnny Paycheck And A Prayer For Strict Liability In Appalachia, Eugene "Trey" Moore Iii

The Scholar: St. Mary's Law Review on Race and Social Justice

Abstract forthcoming


A Commentary On Litigation Involving Uber Technologies, Inc., Catherine Hagemeier May 2018

A Commentary On Litigation Involving Uber Technologies, Inc., Catherine Hagemeier

Economics Undergraduate Honors Theses

Uber Technologies, Inc. is a peer-to-peer ridesharing, food delivery, and transportation network managed in San Francisco, California. Travis Kalanick and Garrett Camp developed the idea for the ridesharing app in 2008, after experiencing difficulty hailing a cab. They originally designed the app to be used in major metropolitan areas, but the business inevitably took off; it now operates in 633 cities worldwide. In 2017, Uber claimed that the company earned roughly $7.5 billion in revenue, employed more than 12,000 “independent drivers,” and connected over one billion people (“Finding the Way”). Though widely successful and heralded as a major ...


Cost-Benefit Analysis Outside Of Welfarism, Mark A. Geistfeld May 2018

Cost-Benefit Analysis Outside Of Welfarism, Mark A. Geistfeld

New York University Law and Economics Working Papers

Welfarism is the principle that the goodness of a social state is an increasing function of individual welfare and does not depend on anything else. As Gregory Keating convincingly argues in the lead article for this symposium, welfarism cannot account for important normative differences among different types of welfare losses or costs. Welfarism entails that all welfare losses and gains—regardless of their source—are to be rendered fungible and then compared within a cost-benefit analysis (CBA) of the welfare changes. According to Keating, liberal egalitarian principles such as equal freedom or self-determination normatively distinguish bodily injuries from harms to ...


Keynote Address To The Atlas Conference: “International Business Disputes In An Era Of Receding Globalism”, Lord Peter H. Goldsmith Qc, Pc May 2018

Keynote Address To The Atlas Conference: “International Business Disputes In An Era Of Receding Globalism”, Lord Peter H. Goldsmith Qc, Pc

Georgia State University Law Review

This is a transcript of the luncheon keynote address by Lord Peter Goldsmith at the Sixth Annual Conference of the Atlanta International Arbitration Society (AtlAS) on October 23, 2017.

Lord Peter Goldsmith QC, PC, is London Co-Managing Partner and Chair of European and Asian Litigation at Debevoise & Plimpton LLP. He joined the firm after serving as the UK’s Attorney General from 2001-2007, prior to which he was in private practice as one of the leading barristers in London.

Lord Goldsmith has a long practice in arbitration and in the interface between arbitration and litigation. He appears as counsel for ...


Asarco Llc V. Atlantic Richfield Company, Ryan L. Hickey Apr 2018

Asarco Llc V. Atlantic Richfield Company, Ryan L. Hickey

Public Land and Resources Law Review

The Comprehensive Environmental Response, Compensation, and Liabiltiy Act, commonly known as CERCLA, facilitates cleanup of hazardous waste sites and those contaminated by other harmful substances by empowering the Environmental Protection Agency to identify responsible parties and require them to undertake or fund remediation. Because pollution sometimes occurrs over long periods of time by multiple parties, CERCLA also enables polluters to seek financial contribution from other contaminators of a particular site. The Ninth Circuit clarified the particuar circumstances under which contribution actions may arise in Asarco LLC v. Atlantic Richfield Co., holding non-CERCLA settlements may give rise to CERCLA contribution actions ...


Crowdfunding Civil Justice, Ronen Perry Apr 2018

Crowdfunding Civil Justice, Ronen Perry

Boston College Law Review

The Article provides a systematic law and economics analysis of civil litigation crowdfunding. It first distinguishes between investment-based and non-investment-based crowdfunding models. Investment-based litigation crowdfunding is generally a welcome phenomenon, because it enables parties to pursue meritorious claims and defenses without generating a significant risk of frivolous litigation. Thus, it should be minimally regulated by securing disclosure of relevant information to potential investors. Non-investment-based crowdfunding of process costs should be subject to professional vetting, which will inhibit frivolous claims and defenses that waste scarce administrative resources and do not further the underlying goals of civil law. Non-investment-based crowdfunding of outcome ...


Was The Amt Effectively Repealed?, Reed Shuldiner Apr 2018

Was The Amt Effectively Repealed?, Reed Shuldiner

Faculty Scholarship

The individual alternative minimum tax (AMT) was a much disliked feature of the tax law prior to the Tax Cuts and Jobs Act (TCJA). Yet, despite repeated promises to repeal the AMT as part of tax reform, the TCJA dropped AMT repeal in favor of increasing the AMT exemption and its phaseout threshold. The question raised by this development is whether the AMT changes should be viewed as yet another stop-gap tweak of the AMT or whether the changes should be viewed as returning the AMT to its roots as a tax on high-income taxpayers using excessive loopholes. In this ...


Incomplete Contracting And Ai Alignment, Dylan Hadfield-Menell, Gillian K. Hadfield Apr 2018

Incomplete Contracting And Ai Alignment, Dylan Hadfield-Menell, Gillian K. Hadfield

University of Southern California Legal Studies Working Paper Series

We suggest that the analysis of incomplete contracting developed by law and economics researchers can provide a useful framework for understanding the AI alignment problem and help to generate a systematic approach to finding solutions. We first provide an overview of the incomplete contracting literature and explore parallels between this work and the problem of AI alignment. As we emphasize, misalignment between principal and agent is a core focus of economic analysis. We highlight some technical results from the economics literature on incomplete contracts that may provide insights for AI alignment researchers. Our core contribution, however, is to bring to ...


Antitrust And Democracy: A Case Study From German Fascism, Daniel A. Crane Apr 2018

Antitrust And Democracy: A Case Study From German Fascism, Daniel A. Crane

Law & Economics Working Papers

In the recent political discourse around antitrust reform, prominent voices from across the political spectrum have asserted that excessive economic concentration imperils democracy. This theme has been raised periodically over the course of U.S. history, perhaps most forcibly after the Second World War when the framers of the Celler-Kefauver Act argued that industrial concentration in Germany enabled the rise of Nazism. This paper examines the relationship between Nazism and monopoly through a case study of the I.G. Farben chemical cartel. In analyzing Farben's role as Hitler's facilitator, this paper asks three questions: (1) How did industrial ...


Mutuals: An Area Of Legal Climate Change, Karl T. Muth, Andrew Leventhal Apr 2018

Mutuals: An Area Of Legal Climate Change, Karl T. Muth, Andrew Leventhal

William & Mary Business Law Review

Underappreciated in its importance and often-misunderstood in its implications, the choice between a company limited by shares and a company organized as a mutual is an important decision in sectors ranging from agriculture to banking to insurance. Adding gravity to this particular decision is the difficulty and enormous cost of corporate metamorphosis between company types later in the company’s life. The authors examine the history of the mutual form, its popularity’s rise and fall during the twentieth century, and its advantages and disadvantages in today’s environment.


A 2016 Copa America Bump For Major League Soccer? Strengthening The Case For Legal Action Arising From The Corrupted 2022 World Cup Bid, Jeff Todd, R. Todd Jewell Apr 2018

A 2016 Copa America Bump For Major League Soccer? Strengthening The Case For Legal Action Arising From The Corrupted 2022 World Cup Bid, Jeff Todd, R. Todd Jewell

William & Mary Business Law Review

Governmental and private investigations have generated evidence of corruption in the bidding process to host the 2022 FIFA World Cup, which went to Qatar rather than the United States. One economic study has shown an increase in professional soccer attendance in European countries that host the World Cup and the European Championships. Accordingly, Major League Soccer and its investor-operators could pursue tort and unfair competition claims to argue that denial of a 2022 World Cup USA will result in lowered attendance, and thus lost profits and diminished business value. Key differences in American and European soccer leagues and sports markets ...


Oligopoly Pricing And Richard Posner, Keith Hylton Apr 2018

Oligopoly Pricing And Richard Posner, Keith Hylton

Faculty Scholarship

Over a span of nearly 50 years Richard Posner’s voice has loomed large over the subject of oligopoly pricingand antitrust. The span begins in 1969 with Posner’s publication of “Oligopoly and the Antitrust Laws: A Suggested Approach,” which argues for more aggressive enforcement of Section 1 in cases involving circumstantial evidence of conspiracy. The span ends with Posner’s opinion in In re Text Messaging Antitrust Litigation, in 2015. The two writings, the first an academic article published early in Posner’s career and the second a judicial opinion published near the end of his time on the ...