Law and Economics Commons^™

The Long Quest For Legal Efficiency. On The Illusion Of A Process-Free Economic Analysis Of Law, Daniele Bertolini

daniele bertolini

In this paper I attempt to reconstruct and scrutinize the long lasting debate on economic efficiency as a legal concern, and to show that the prevailing idea of economic efficiency - which is exclusively referring to the contents of legal rules as disconnected from the features of the lawmaking process - misses the essence of the discipline. I demonstrate that conventional output-oriented approach is susceptible to the following criticisms: (1) it is affected by logical circularity and/or logical incompleteness; (2) it does not provide any guarantee of social welfare increases; (3) it does not account for the presence of losers; …

Putting A Price On Carbon: The Metaphor, David M. Driesen

David M Driesen

This Essay analyzes the characterization of both pollution taxes and so-called cap-and-trade programs addressing greenhouse gas emissions as policies that “put a price on carbon,” a characterization that has come to dominate both policy discussion and much modern scholarship on environmental instrument choice. It shows that the rationale for characterizing cap-and-trade— a quantitative rather than a pricing mechanism— as putting a price on carbon suggests that analysts should likewise treat traditional regulation as a mechanism putting a price on carbon. Treating “market-based mechanisms” as uniquely putting a price on carbon reflects and perpetuates a tendency to see markets and government …

Turf Wars: Territoriality And The Allocation Of Sales And Use Taxes In California, Kevin Schmitt

Kevin Schmitt

Sales and use tax revenue provides an important source of funding for California’s local governments, particularly its cities. Under the Bradley-Burns Uniform Local Sales and Use Tax Law, local governments may enact sales and use tax ordinances and contract with the state to manage collection and distribution. The current allocation system, known as the situs-based system, provides for distribution to local government based on the physical location of the retailer. Although such a system has logical appeal, in practice it has proven highly problematic, promoting unproductive competition among local governments for scarce revenue.

Reform of the situs-based allocation process has …

Banking And The Social Contract, Mehrsa Baradaran

Notre Dame Law Review

This Article asserts that there are three major tenets of the social contract: (1) safety and soundness, (2) consumer protection, and (3) access to credit. Regulators can and should require banks to meet standards in these areas to benefit society even if these measures reasonably reduce bank profits. Implicit in the social contract is the idea that each party must give up something in the exchange. This Article provides policymakers not only the appropriate narrative and justifications needed to frame their regulatory philosophy, but it also provides important textual support from the most prominent acts of banking legislation to give …

Investment Treaties And Industrial Policy: Select Case Studies On State Liability For Efforts To Encourage, Shape And Regulate Economic Activities In Extractive Industries And Infrastructure, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

This paper, prepared in connection with a February 2014 conference organized by the UN Economic Commission for Africa, discusses some of the implications that investment treaties have for investments in infrastructure and the extractive industries. It focuses on liability for government conduct (1) in connection with tenders and negotiations; (2) when responding to questions regarding the legality of the investment; (3) in using performance requirements to leverage benefits and capture spillovers from the investment; (4) changing the legal framework governing an investment in response to evolving needs, circumstances, and interests; (5) administering the investment; and (6) requesting, and responding to …

The Homo [Not So] Economicus And The Law: A Critique Of Positive Theory Of Rational Choice In The Law [En Español], Daniel A. Monroy

Daniel A Monroy C

From the Behavioral Economics point of view, this paper presents a critic to one dimension of rational choice theory that is widely accepted by Law and Economics scholars. Our hypothesis is that (i) individuals deviate anomalously but predictably of normative assumption of rational choice. We suggests that, (ii) more than –unbounded– rational self interested individuals, in certain contexts, people tend to deviate from this normative behavior and also, tend to judge the behavior of other people, according to the consistency of these behaviors with a hypothetical situation commonly referred to as the "reference transaction".

Desde la perspectiva del Behavioral Economics, …

Comparative Effectiveness Research As Choice Architecture: The Behavioral Law And Economics Solution To The Health Care Cost Crisis, Russell Korobkin

Michigan Law Review

With the Patient Protection and Affordable Care Act (“ACA”) set to dramatically increase access to medical care, the problem of rising costs will move center stage in health law and policy discussions. “Consumer directed health care” proposals, which provide patients with financial incentives to equate marginal costs and benefits of care at the point of treatment, demand more decisionmaking ability from consumers than is plausible due to bounded rationality. Proposals that seek to change the incentives of health care providers threaten to create conflicts of interest between doctors and patients. New approaches are desperately needed. This Article proposes a government-facilitated …

The Evolution Of Intellectual Property Protections In The People’S Republic Of China: Is There An Enforcement Problem?, William Mcguire, Michael Wotherspoon

William McGuire

No abstract provided.

The Chapter 11 Efficiency Fallacy, Diane Lourdes Dick

BYU Law Review

This Article challenges the persistent claim that Chapter 11’s increasing utilization of market mechanisms will help facilitate economically efficient resolutions of corporate financial distress. Using two recent case studies, I show that, in fact, these mechanisms are used by stakeholders with existing market power to take control of the restructuring process and extract rents at the expense of other constituents: creditors, equity holders, and—in the case of companies that receive governmental bailouts—taxpayers. These distortionary effects are obscured by a dominant, neoclassical legal paradigm that ignores institutional and political dynamics. I advance a new explanatory model that draws upon modern social …

Implementing Antitrust's Welfare Goals, Herbert J. Hovenkamp

All Faculty Scholarship

United States antitrust policy is said to promote some version of economic welfare. Antitrust promotes allocative efficiency by ensuring that markets are as competitive as they can practicably be, and that firms do not face unreasonable roadblocks to attaining productive efficiency, which refers to both cost minimization and innovation. One important welfare debate is whether antitrust should adopt a “consumer welfare” principle rather than a more general “total welfare” principle.

The simple version of the consumer welfare test is not a balancing test. If consumers are harmed by reduced output or higher prices resulting from the exercise of market power, …

Harm To Competition Under The 2010 Horizontal Merger Guidelines, Herbert J. Hovenkamp

All Faculty Scholarship

In August, 2010, the Antitrust Division and the Federal Trade Commission issued new Guidelines for assessing the competitive effects of horizontal mergers under the antitrust laws. These Guidelines were long awaited not merely because of the lengthy interval between them and previous Guidelines but also because enforcement policy had drifted far from the standards articulated in the previous Guidelines. The 2010 Guidelines are distinctive mainly for two things. One is briefer and less detailed treatment of market delineation. The other is an expanded set of theories of harm that justify preventing mergers or reversing mergers that have already occurred.

The …

Merger Policy And The 2010 Merger Guidelines, Herbert J. Hovenkamp

All Faculty Scholarship

New Horizontal Merger Guidelines were issued jointly by the Antitrust Division and the Federal Trade Commission in August, 2010, replacing Guidelines issued in 1992 that no longer reflected either the law or government enforcement policy. The new Guidelines are a striking improvement. They are less technocratic, accommodating a greater and more realistic variety of theories about why mergers of competitors can be anticompetitive and, accordingly, a greater variety of methodologies for assessing them.

The unifying theme of the Horizontal Merger Guidelines is to prevent the enhancement of market power that might result from mergers. The 2010 Guidelines state that “[a] …

Ceo & Employee Pay Discrepancy: How The Government's Policies Have Encouraged The Gap, David R. Meals

The Journal of Business, Entrepreneurship & the Law

This paper examines the role of the U.S. Government in the CEO versus worker pay gap, both in contributing to its creation and the ability to reverse it. To better understand this issue, this paper includes a survey of current U.S. and foreign CEO compensation practices, a survey of theories proposed to explain the divergence between U.S. and foreign CEO compensation, a review of the social and business impact of excessive CEO compensation, and identifies socioeconomic theories regarding the excessive CEO pay trend. This is followed by a review of the history of attempted solutions along with newly enacted and …

Is There A Justification For Imposing Criminal Liability On Corporate Managers In Tax Legislation?, Karnit Malka

Karnit Malka

No abstract provided.

Transfer Pricing: Un Practical Manual – China, Richard Thompson Ainsworth, Andrew Shact

Faculty Scholarship

Any contemporary Chinese transfer pricing assessment needs to consider the United Nation (UN) Practical Manual on Transfer Pricing for Developing Countries released in May 2013. In particular, Chapter 10 discusses Country Practices and presents China’s most up to date transfer pricing policy statement.

China is not an Organization for Economic Cooperation and Development (OECD) member nor has it formally adopted the OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. Chapter 10 makes it very clear that China is charting a different transfer pricing course in at least nine important areas. China believes that: 1. significant comparability adjustments are …

Aboriginal Food Security In Northern Canada: An Assessment Of The State Of Knowledge, Harriet Kuhnlein, Fikret Berkes, Laurie Hing Man Chan, Treena Wasonti:Io Delormier, Asbjørn Eide, Chris Furgal, Murray Humphries, Henry Huntington, Constance Macintosh, Ian Mauro, David Natcher, Barry Prentice, Chantelle Richmond, Cecilia Rocha, Kue Young

Reports & Public Policy Documents

As the world’s population increases, as global markets become more interconnected, and as the effects of climate change become clearer, the issue of food insecurity is gaining traction at local, national, and international levels. The recent global economic crisis and increased food prices have drawn attention to the urgent situation of the world’s 870 million chronically undernourished people who face the number one worldwide risk to health: hunger and malnutrition. Although about 75% of the world’s undernourished people live in low-income, rural regions of developing countries, hunger is also an issue in Canada. In 2011, 1.6 million Canadian households, or …

Confronting Chaos: The Fiscal Constitution Faces Federal Shutdowns And (Almost) Debt Defaults, Charles Tiefer

All Faculty Scholarship

Recent events raise the question of whether two near-failures in what scholars call the "Fiscal Constitution" may plunge the government into paralysis or chaos. In October 2013, a lapse in congressional appropriations shut the government down for two weeks. The shutdown furloughed hundreds of thousands of federal employees. It caused some agencies, such as the Internal Revenue Service ("IRS"), virtually to close their doors and to curtail their services.

Simultaneously, and potentially even more devastating, the House of Representatives (alternatively "House") firmly refused during an extremely tense countdown to raise the statutory debt ceiling of the government. When the government …

Speculative Tech: The Bitcoin Legal Quagmire & The Need For Legal Innovation, Paul H. Farmer Jr.

Journal of Business & Technology Law

No abstract provided.

A Behavioral Justification For Escalating Punishment Schemes, Murat C. Mungan

Scholarly Publications

The standard two-period law enforcement model is considered in a setting where individuals usually, but not exclusively, commit crimes only after comparing expected costs and benefits. Where escalating punishment schemes are present, there is an inherent value in keeping a clean criminal record; a person with a record may unintentionally become a repeat offender if he fails to exert self-control, and be punished more severely. If the punishment for repeat offenders is sufficiently high, one may rationally forgo the opportunity of committing a profitable crime today to avoid being sanctioned as a repeat offender in the future. Therefore, partial deterrence …

Managing The Public Trust: How To Make Natural Resource Funds Work For Citizens, Andrew Bauer, Perrine Toledano, Malan Rietveld

Columbia Center on Sustainable Investment Staff Publications

Given their collective size – approximately $3.5 trillion in assets as of end-2013 and growing – and concerns about the motivations of their government owners, much has been written on natural resource funds (NRFs), their investments and global influence. However their impacts on governance and public financial accountability at home have received far less attention.

On the one hand, these funds can be used to serve the public interest, for example by covering budget deficits when resource revenues decline, saving for future generations, or helping to mitigate Dutch Disease through fiscal sterilization. On the other hand, they can undermine public …