Law Commons^™

A Reputational View Of Antitrust’S Consumer Welfare Standard, Murat C. Mungan, John M. Yun

Faculty Scholarship

A reform movement is underway in antitrust. Citing prior enforcement failures, deviations from the original intent of the antitrust laws, and overall rising levels of sector concentration, some are seeking to fundamentally alter or altogether replace the current consumer welfare standard, which has guided courts over the past fifty years. This policy push has sparked an intense debate over the best approach to antitrust law enforcement. In this Article, we examine a previously unexplored potential social cost from moving away from the consumer welfare standard: a loss in the information value to the public from a finding of liability. A …

After Ftx: Can The Original Bitcoin Use Case Be Saved?, Mark Burge

Faculty Scholarship

Bitcoin and the other cryptocurrencies spawned by the innovation of blockchain programming have exploded in prominence, both in gains of massive market value and in dramatic market losses, the latter most notably seen in connection with the failure of the FTX cryptocurrency exchange in November 2022. After years of investment and speculation, however, something crucial has faded: the original use case for Bitcoin as a system of payment. Can cryptocurrency-as-a-payment-system be saved, or are day traders and speculators the actual cryptocurrency future? This article suggests that cryptocurrency has been hobbled by a lack of foundational commercial and consumer-protection law that …

Beneath The Property Taxes Financing Education, Timothy M. Mulvaney

Faculty Scholarship

Many states turn in sizable part to local property taxes to finance public education. Political and academic discourse on the extent to which these taxes should serve in this role largely centers on second-order issues, such as the vices and virtues of local control, the availability of mechanisms to redistribute property tax revenues across school districts, and the overall stability of those revenues. This Essay contends that such discourse would benefit from directing greater attention to the justice of the government’s threshold choices about property law and policy that impact the property values against which property taxes are levied.

The …

A Modern Defense Of Simple Rules For A Complex World, Richard A. Epstein

Texas A&M Law Review

My 1995 book Simple Rules for a Complex World articulated a general proposition that, in most situations, simple legal rules perform better in two key dimensions: (1) they are simpler to interpret and enforce, and (2) they generate efficient incentives on the parties to whom they apply. I then applied that view to matters of general legal theory, to matters of environmental law, and to disputes over labor. These principles apply to all forms of legal regulation, but in this Article, I shall limit my analysis to the five articles in this Collection. These are by Richard Revesz on global …

Optional Price Discrimination, Lee Anne Fennell

Texas A&M Law Review

Price discrimination generates considerable angst. As merchants develop ever-more-powerful mechanisms for gathering and compiling information about consumers, the specter of fully personalized pricing seems to loom as an ominous threat. Yet a parallel phenomenon quietly coexists with all this distress over tailored prices: models that encourage people to voluntarily contribute, typically in varying amounts, the sums necessary to cover the fixed costs of producing particular goods and services. This Article proposes enabling customers to opt into price discrimination in a more structured way across a broader range of markets. Optional price differentiation can make markets fairer and more inclusive by …

Climate Choice Architecture, Felix Mormann

Faculty Scholarship

Personal choices drive global warming nearly as much as institutional decisions. Yet, policymakers overwhelmingly target large-scale industrial facilities for reductions in carbon emissions, with individual and household emissions a mere afterthought. Recent advances in behavioral economics, cognitive psychology, and related fields have produced a veritable behavior change revolution. Subtle changes to the choice environment, or nudges, have improved stake-holder decision-making in a wide range of contexts, from healthier food choices to better retirement planning. But the vast potential of choice architecture remains largely untapped for purposes of climate policy and action. This Article explores that untapped potential and makes the …

The Failure Of Market Efficiency, William Magnuson

Faculty Scholarship

Recent years have witnessed the near total triumph of market efficiency as a regulatory goal. Policymakers regularly proclaim their devotion to ensuring efficient capital markets. Courts use market efficiency as a guiding light for crafting legal doctrine. And scholars have explored in great depth the mechanisms of market efficiency and the role of law in promoting it. There is strong evidence that, at least on some metrics, our capital markets are indeed more efficient than they have ever been. But the pursuit of efficiency has come at a cost. By focusing our attention narrowly on economic efficiency concerns—such as competition, …

Essential Property, Timothy M. Mulvaney, Joseph William Singer

Faculty Scholarship

For a sizable swath of the U.S. population, incomes and wealth are insufficient to cover life’s most basic necessities even in the most ordinary of times. A disturbingly resilient explanation for this state of affairs rests on the view that resource inequities are avoidable through self-reliance, a stance that invites observers to see people in poverty as morally suspect. This Article advances a counterview in contending that the widespread lack of essential resources did not simply arise naturally via individuals’ life choices but instead has been, in very meaningful part, created and perpetuated by our system of property laws.

The …

A Proposed Sec Cyber Data Disclosure Advisory Commission, Lawrence J. Trautman, Neal Newman

Faculty Scholarship

Constant cyber threats result in: intellectual property loss; data disruption; ransomware attacks; theft of valuable company intellectual property and sensitive customer information. During March 2022, The Securities and Exchange Commission (SEC) issued a proposed rule addressing Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, which requires: 1. Current reporting about material cybersecurity incidents; 2. Periodic disclosures about a registrant’s policies and procedures to identify and manage cybersecurity risks; 3. Management’s role in implementing cybersecurity policies and procedures; 4. Board of directors’ cybersecurity expertise, if any, and its oversight of cybersecurity risk; 5. Registrants to provide updates about previously reported cybersecurity …

Deregulation And The Lawyers' Cartel, Nuno Garoupa, Milan Markovic

Faculty Scholarship

At one time, the legal profession largely regulated itself. However, based on the economic notion that increased competition would benefit consumers, jurisdictions have deregulated their legal markets by easing rules relating to attorney advertising, fees, and, most recently, nonlawyer ownership of law firms. Yet, despite reformers’ high expectations, legal markets today resemble those of previous decades, and most legal services continue to be delivered by traditional law firms. How to account for this seeming inertia?

We argue that the competition paradigm is theoretically flawed because it fails to fully account for market failures relating to asymmetric information, imperfect information, and …

Laws And Norms With (Un)Observable Actions, Claude Fluet, Murat C. Mungan

Faculty Scholarship

We analyze the interactions between social norms, the prevalence of acts, and policies when people cannot directly observe actors’ behavior and must rely on noisy proxies. Norms provide ineffective incentives when acts are committed either very frequently or very infrequently, because noisy signals of behavior are then too weak to alter people’s beliefs about others’ behavior. This cuts against the dynamics of the ‘honor-stigma’ model (Bénabou and Tirole 2006; 2011), and leads to the opposite positive and normative conclusions with even modest errors. The review process through which public signals are provided is then an additional policy variable. When the …

The Gender Pay Gap And High-Achieving Women In The Legal Profession, Milan Markovic, Gabrielle Plickert

Faculty Scholarship

Although women have made significant strides in the legal profession, female attorneys continue to earn far less than male attorneys. Relying on survey data from a large sample of full-time attorneys in Texas, we find a gender pay gap of thirty-five thousand dollars at the median that cannot be explained by differences in human capital or occupational segregation. We also provide evidence that the legal market especially disadvantages women who excel in law school. Whereas high academic achievement boosts male lawyers’ incomes substantially, it does not have the same effect on female lawyers’ incomes. High-achieving female lawyers earn less than …

The Pain Of Paying Taxes, Gary M. Lucas Jr

Faculty Scholarship

With a few caveats, standard economic models assume that, from society’s perspective, the payment of a tax constitutes a costless transfer from the taxpayer to the government. The financial loss to the taxpayer is exactly offset by the financial gain to the government, which can use the resulting tax revenue for the benefit of its citizens. In other words, paying taxes forces taxpayers to forgo private consumption, but the resulting loss in utility can be counterbalanced by an increase in utility from government spending. In fact, if the government spends wisely on beneficial public goods that are undersupplied by private …

Tiny Homes: A Big Solution To American Housing Insecurity, Lisa T. Alexander

Faculty Scholarship

“There’s no place like home,” said Dorothy. Yet, millions of people in the United States may face eviction, foreclosure, or homelessness in 2021 and beyond. America is on the brink of an unprecedented housing crisis in the wake of Covid-19. The federal government, and various states and localities, have taken actions to avert a housing crisis in the aftermath of Covid 19. While these actions have undeniably helped mitigate widespread foreclosure and eviction crises, they do not fully address the more fundamental American housing challenge—an inadequate supply of affordable housing at all income levels, a longstanding problem that Covid-19 has …

The Case For Corporate Climate Ratings: Nudging Financial Markets, Felix Mormann, Milica Mormann

Faculty Scholarship

Capital markets are cast as both villain and hero in the climate playbill. The trillions of dollars required to combat climate change leave ample room for heroics from the financial sector. For the time being, however, capital continues to flow readily toward fossil fuels and other carbon-intensive industries. Drawing on the results of an empirical study, this Article posits that ratings of corporate climate risk and governance can help overcome pervasive information asymmetries and nudge investors toward more climate-conscious investment choices with welfare-enhancing effects.

In the absence of a meaningful price on carbon, three private ordering initiatives are trying to …

Data Autonomy, Cesare Fracassi, William Magnuson

Faculty Scholarship

In recent years, “data privacy” has vaulted to the forefront of public attention. Scholars, policymakers, and the media have, nearly in unison, decried the lack of data privacy in the modern world. In response, they have put forth various proposals to remedy the situation, from the imposition of fiduciary obligations on technology platforms to the creation of rights to be forgotten for individuals. All these proposals, however, share one essential assumption: we must raise greater protective barriers around data. As a scholar of corporate finance and a scholar of corporate law, respectively, we find this assumption problematic. Data, after all, …

The Political Economy Of Enforcer Liability For Wrongful Police Stops, Tim Friehe, Murat C. Mungan

Faculty Scholarship

This article questions whether excessive policing practices can persist in an environment where law enforcement policies are subject to political pressures. Specifically, it considers a setting where the police decide whether to conduct stops based on the suspiciousness of a person's behavior and the potential liability for conducting a wrongful stop. We establish that the liability level that results in a voting equilibrium is smaller than optimal, and consequently, that excessive policing practices emerge in equilibrium.

Beyond Algorithms: Toward A Normative Theory Of Automated Regulation, Felix Mormann

Faculty Scholarship

The proliferation of artificial intelligence in our daily lives has spawned a burgeoning literature on the dawn of dehumanized, algorithmic governance. Remarkably, the scholarly discourse overwhelmingly fails to acknowledge that automated, non-human governance has long been a reality. For more than a century, policymakers have relied on regulations that automatically adjust to changing circumstances, without the need for human intervention. This article surveys the track record of self-adjusting governance mechanisms to propose a normative theory of automated regulation.

Effective policymaking frequently requires anticipation of future developments, from technology innovation to geopolitical change. Self-adjusting regulation offers an insurance policy against the …

Predictable Punishments, Brian Galle, Murat C. Mungan

Faculty Scholarship

Economic analyses of both crime and regulation writ large suggest that the subjective cost or value of incentives is critical to their effectiveness. But reliable information about subjective valuation is scarce, as those who are punished have little reason to report honestly. Modern “big data” techniques promise to overcome this information shortfall but perhaps at the cost of individual privacy and the autonomy that privacy’s shield provides.

This Article argues that regulators can and should instead rely on methods that remain accurate even in the face of limited information. Building on a formal model we present elsewhere, we show that …

Scaling Commercial Law In Indian Country, Marc Lane Roark

Texas A&M Law Review

How do you drive economic enterprise in a financial desert? Indian tribes, academics, economists, and policy makers have considered the means and methods for energizing economic growth for forty years. Efforts such as the creation and promotion of the Model Tribal Secured Transactions Act (“MTSTA”) promise much toward creating conditions that would gather financial opportunity to tribal regions that experience poverty at a strikingly higher rate than any other place in the United States. And yet, while the law has been available for more than ten years, tribes have been reticent to adopt it. This Article fills the vacuum in …

Expansion Of New Law In Southeast May Stave Off Black Land Loss, Thomas W. Mitchell, Sarah Stein, Ann Carpenter

Faculty Scholarship

Landownership and homeownership are significant contributors to the creation of wealth and thus, drivers of intergenerational economic mobility. However, many people who have inherited family land are unable to realize these opportunities because of the legal effect of their particular form of landownership, often called heirs' property. These landowners are more likely to lose their land through what is known as a partition sale—a property sale resulting from a dispute between co-owners, often ignited by an outside party with an investment interest in the land. This Partners Update article explores the repercussions of heirs' property ownership and examines legislative solutions …

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

Faculty Scholarship

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’ …

From Suspicion To Sustainability In Global Supply Chains, Robert C. Bird, Vivek Soundararajan

Texas A&M Law Review

Global supply chains power 80% of world trade, but also host widespread environmental, labor, and human rights abuses in developing countries. Most scholarship focuses on some form of sanction to motivate supply chain members, but we propose that the fundamental problem is not insufficient punishment, but a lack of trust. Fickle tastes, incessant demands for lower prices, and spot market indifference force suppliers into a constant struggle for economic survival. No trust can grow in such an environment, and few sustainability practices can take meaningful root. Responding to multiple calls for scholarship in the supply chain literature, we propose a …

The Race To The Middle, William Magnuson

Faculty Scholarship

How does federalism affect the quality of law? It is one of the fundamental questions of our constitutional system. Scholars of federalism generally fall into one of two camps on the question. One camp argues that regulatory competition between states leads to a “race to the bottom,” in which states adopt progressively worse laws in order to pander to powerful constituencies. The other camp, conversely, argues that regulatory competition leads to a “race to the top,” incentivizing states to adopt progressively better laws in the search for more desirable outcomes for their constituencies. Despite their apparent differences, however, both the …

The Paradox Of Minority Attorney Satisfaction, Milan Markovic, Gabrielle Plickert

Faculty Scholarship

A substantial literature documents the challenges faced by minority attorneys in the legal profession, ranging from underrepresentation in prestigious practice settings and lower incomes to discrimination from fellow lawyers, clients, and judges. In light of the foregoing, one would expect minority attorneys to regret their decisions to attend law school and become lawyers. Yet, empirical research indicates that minority attorneys are predominately satisfied with their decision to become attorneys and that their satisfaction is on par with that of white attorneys. How to account for this seeming paradox?

Drawing on data from a large cross-section of Texas lawyers, this is …

Capturing The Regulatory Agenda: An Empirical Study Of Agency Responsiveness To Rulemaking Petitions, Daniel E. Walters

Faculty Scholarship

In environmental regulation as well as in other regulatory domains, a critical question is how outside interests shape the rulemaking agenda. A great deal of skepticism toward regulation stems from the widespread perception that agencies excessively, or even exclusively, cater to business interests. One answer to these concerns is administrative procedure, in particular rulemaking petitions, which are provided for in the Administrative Procedure Act and in many substantive environmental statutes. Although rulemaking petitions could in theory be used by business interests to strengthen their hold on regulatory agenda-setting, a growing number of scholars, highlighting the critical role a rulemaking petition …

Betting On Climate Policy: Using Prediction Markets To Address Global Warming, Gary M. Lucas Jr, Felix Mormann

Faculty Scholarship

Global warming, sea level rise, and extreme weather events have made climate change a top priority for policymakers across the globe. But which policies are best suited to tackle the enormous challenges presented by our changing climate? This Article proposes that policymakers turn to prediction markets to answer that crucial question. Prediction markets have a strong track record of outperforming other forecasting mechanisms across a wide range of contexts — from predicting election outcomes and economic trends to guessing Oscar winners. In the context of climate change, market participants could, for example, bet on important climate outcomes conditioned on the …

Market Segmentation Vs. Subsidization: Clean Energy Credits And The Commerce Clause's Economic Wisdom, Felix Mormann

Faculty Scholarship

The dormant Commerce Clause has long been a thorn in the side of state policymakers. The latest battleground for the clash between federal courts and state legislatures is energy policy. In the absence of a decisive federal policy response to climate change, nearly thirty states have created a new type of securities—clean energy credits—to promote lowcarbon renewable and nuclear power. As more and more of these programs come under attack for alleged violations of the dormant Commerce Clause, this Article explores the constitutional constraints on clean energy credit policies. Careful analysis of recent and ongoing litigation reveals the need for …

Free Trade In Electric Power, Joel B. Eisen, Felix Mormann

Faculty Scholarship

This Article develops the core legal framework of a new electricity-trading ecosystem in which anyone, anytime, anywhere, can trade electricity in any amount with anyone else. The proliferation of solar and other distributed energy resources, business model innovation in the sharing economy, and climate change present enormous challenges — and opportunities — for America’s energy economy. But the electricity industry is ill equipped to adapt to and benefit from these transformative forces, with much of its physical infrastructure, regulatory institutions, and business models a relic of the early days of electrification. We suggest a systematic rethinking to usher in a …

The Social Cost Of Carbon, Greenhouse Gas Policies, And Politicized Benefit/Cost Analysis, Benjamin Zycher

Texas A&M Law Review

Benefit/cost analysis can be a powerful tool for examination of proposed (or alternative) public policies, but, unsurprisingly, decisionmakers’ policy preferences can drive the analysis, rather than the reverse. That is the reality with respect to the Obama Administration computation of the social cost of carbon, a crucial parameter underlying the quantitative analysis of its proposed climate policies, now being reversed in substantial part by the Trump Administration. The Obama analysis of the social cost of carbon suffered from four central problems: the use of global benefits in the benefit/cost calculation, the failure to apply a 7% discount rate as required …