Law Commons^™

Justice Sutherland Reconsidered, 62 Vand. L. Rev. 639 (2009), Samuel R. Olken

UIC Law Open Access Faculty Scholarship

No abstract provided.

Pass A Law, Any Law, Fast! State Legislative Responses To The Kelo Backlash, Edward J. Lopez, R. Todd Jewell, Noel D. Campbell

Faculty Publications

The Supreme Court in Kelo v. City of New London left protection of property against takings for economic development to the states. Since Kelo, thirty-seven states have enacted legislation to update their eminent domain laws. This paper is the first to theoretically and empirically analyze the factors that influence whether, in what manner, and how quickly states change their laws through new legislation. Fourteen of the thirty-seven new laws offer only weak protections against development takings. The legislative response to Kelo was responsive to measures of the backlash but only in the binary decision whether to pass any new law. …

Lessons From The Subprime Debacle: Stress Testing Ceo Autonomy, Steven Ramirez

Faculty Publications & Other Works

No abstract provided.

The Law, Culture, And Economics Of Fashion, C. Scott Hemphill, Jeannie Suk

Center for Contract and Economic Organization

Fashion is one of the world’s most important creative industries. It is the major output of a global business with annual U.S. sales of more than $200 billion — larger than those of books, movies, and music combined. Everyone wears clothing and inevitably participates in fashion to some degree. Fashion is also a subject of periodically rediscovered fascination in virtually all the social sciences and the humanities. It has provided economic thought with a canonical example in theorizing about consumption and conformity. Social thinkers have long treated fashion as a window upon social class and social change. Cultural theorists have …

Code, Crash, And Open Source: The Outsourcing Of Financial Regulation To Risk Models And The Global Financial Crisis, Erik F. Gerding

Publications

The widespread use of computer-based risk models in the financial industry during the last two decades enabled the marketing of more complex financial products to consumers, the growth of securitization and derivatives, and the development of sophisticated risk-management strategies by financial institutions. Over this same period, regulators increasingly delegated or outsourced vast responsibility for regulating risk in both consumer finance and financial markets to these privately owned industry models. Proprietary risk models of financial institutions thus came to serve as a "new financial code" that regulated transfers of risk among consumers, financial institutions, and investors.

The spectacular failure of financial-industry …

Cash Businesses And Tax Evasion, Susan Morse, Stewart Karlinsky, Joseph Bankman

Faculty Publications

This Article attempts to provide a qualitative picture of tax evasion in the small business sector. It provides details from almost 275 field study interviews with cash business owners and with tax preparers and bankers who serve cash business clients. Our research suggests answers to the questions of who evades taxes, what taxes they evade, and why and how they evade taxes. This Article proceeds in three additional parts. Part II summarizes the main threads of relevant social science research on small business tax compliance. Part III describes the methodology and results of this interview study. Part IV concludes.

Self-Realizing Inventions And The Utilitarian Foundation Of Patent Law, Alan J. Devlin, Neel U. Sukhatme

Georgetown Law Faculty Publications and Other Works

Unlike other forms of intellectual property, patents are universally justified on utilitarian grounds alone. Valuable inventions and discoveries, bearing the characteristics of public goods, are easily appropriated by third parties. Because much technological innovation occurs pursuant to significant expenditures—both in terms of upfront research and subsequent commercialization costs—inventors must be permitted to extract at least part of the social gain associated with their technological contributions. Absent some form of proprietary control or alternative reward system, economics predicts that suboptimal capital will be devoted to the innovative process.

This widely accepted principle comes with an important corollary: namely, that canons of …

Hedge Fund Activism In The Enforcement Of Bondholder Rights, Marcel Kahan, Edward B. Rock

All Faculty Scholarship

Activist hedge funds have transformed how bondholders respond to violations of their contractual rights. Insurance companies and mutual funds, the traditional investors in bonds, often slept on their rights and turned active only little and late. Hedge funds, by contrast, seek out opportunities for activism in order to make profits. In the wake of their activism, hedge funds have not only benefitted themselves, but their fellow bondholders as well. Alas, the remedy scheme for violations of bondholders rights – in particular, the centrality of the acceleration remedy – introduces its own set of imperfections. When treasury interest rates have increased …

Law, Economics, And Torture, James Boyd White

Book Chapters

This paper addresses three sets of questions, among which it wishes to draw connections: (1) Why has there been so little resistance to the recent massive transfer of national wealth to the rich and super-rich? It is the majority who are injured, and they presumably hold the power in a democracy: why have they not exercised it? (2) Why are law schools so dominated by questions of policy, with rather little interest in the intellectual and linguistic activities of the practicing lawyer and judge? Why indeed do judicial opinions themselves seem so often to be written in a dead and …

The Role Of Nonprofits In Ced, Dana A. Thompson

Book Chapters

Nonprofit institutions play an integral role in community economic development (CED) in the United States. These entities initiate and implement most CED activities, and the CED movement would be significantly weakened without their existence. This chapter briefly explores the historical context of various nonprofit organizations in assisting low- and moderate-income communities across the United States, the ways in which modern-day nonprofit organizations are effecting change in their communities, and the challenges to their effectiveness.

The first section of this chapter discusses community development corporations (CDCs), neighborhood-based organizations that are the primary instruments used to drive and implement revitalization in low- …

Banking Reform In The Chinese Mirror, Katharina Pistor

Faculty Scholarship

This paper analyzes the transactions that led to the partial privatization of China’s three largest banks in 2005-06. It suggests that these transactions were structured to allow for inter-organizational learning under conditions of uncertainty. For the involved foreign investors, participation in large financial intermediaries of central importance to the Chinese economy gave them the opportunity to learn about financial governance in China. For the Chinese banks partnering with more than one foreign investor, their participation allowed them to benefit from the input by different players in the global financial market place and to learn from the range of technical and …

Neoliberal Penality: A Brief Genealogy, Bernard E. Harcourt

Faculty Scholarship

The turn of the twenty first century witnessed important shifts in punishment practices. The most shocking is mass incarceration – the exponential rise in prisoners in state and federal penitentiaries and in county jails beginning in 1973. It is tempting to view these developments as evidence of something new that emerged in the 1970s – of a new culture of control, a new penology, or a new turn to biopower. But it would be a mistake to place too much emphasis on the 1970s since most of the recent trends have antecedents and parallels in the early twentieth century. It …

Free Enterprise Fund V. Public Company Accounting Oversight Board, Peter L. Strauss

Faculty Scholarship

In the wake of the Enron and WorldCom accounting scandals, Congress created the Public Company Accounting Oversight Board (“PCAOB”) under the aegis of the Securities and Exchange Commission (“SEC”), with President Bush’s support. Its purpose was to replace deficient accounting industry self-regulation with effective external regulation. The choices it made in doing so engendered passionate arguments about constitutionally necessary presidential authority and separation of powers. These divided the D.C. Circuit 2-1 and will be rehearsed before the Supreme Court in the coming weeks. President Bush’s administration defended those choices; Judge Rogers, writing for the majority, found no valid constitutional objection …

Letting Good Deeds Go Unpunished: Volunteer Immunity Laws And Tort Deterrence, Jill R. Horwitz, Joseph Mead

Articles

Does tort law deter risky behavior in individuals? We explore this question by examining the relationship between tort immunity and volunteering. During the 1980s and 1990s, nearly every state provided some degree of volunteer immunity. Congress followed with the 1997 Volunteer Protection Act. This article analyzes these acts, identifying three motivations for them: the chilling effects of tort liability, limits on liability insurance, and moral concerns. Using data from the Independent Survey’s Giving and Volunteering surveys, we then identify a large and positive correlation between immunity and volunteering. We next consider the implications of the findings for tort theory and …

Litigation Discovery Cannot Be Optimal But Could Be Better: The Economics Of Improving Discovery Timing In A Digital Age, Scott A. Moss

Publications

Cases are won and lost in discovery, yet discovery draws little academic attention. Most scholarship focuses on how much discovery to allow, not on how courts decide discovery disputes--which, unlike trials, occur in most cases. The growth of computer data--e-mails, lingering deleted files, and so forth--increased discovery cost, but the new e-discovery rules just reiterate existing cost-benefit proportionality limits that draw broad consensus among litigation scholars and economists. But proportionality rules are impossible to apply effectively; they fail to curb discovery excess yet disallow discovery that meritorious cases need. This Article notes proportionality's flaws but rejects the consensus blaming bad …

Deterring "Double-Play" Manipulation In Financial Crisis: Increasing Transaction Cost As A Regulatory Tool, Lin (Lynn) Bai, Rujing Meng

Faculty Articles and Other Publications

The sub-prime mortgage crisis that originated in the United States has triggered a global credit crunch, threatening the solvency of emerging markets that have relied heavily on foreign debt, and resulting in the devaluation of their currencies. Currency market interventions by the central banks in countries with a currency board system lead to higher short-term interest rates and further declinations in the local stock market. This economic setting invites the double-play manipulation strategy that simultaneously attacks both the local currency and the stock market. History has shown that a central bank’s stock market intervention is costly and that sustaining the …

Complex Bundled Discounts And Antitrust Policy, Herbert J. Hovenkamp, Erik Hovenkamp

All Faculty Scholarship

A bundled discount occurs when a seller conditions a discount or rebate on the buyer's purchaser or two or more different products. Firms that produce fewer than all the good in the bundle find it difficult to compete because they must amortize the discount across a smaller range of goods. For example, if the dominant firm offers a 10% discount for purchase of both good A and good B, but the rival makes only good B, it will have to offer a discount that is large enough to match the dominant firm's B discount as well as the foregone discount …

International Law: Practical Authority, Global Justice, John Linarelli

Scholarly Works

No abstract provided.

The Viability Of Antitrust Price Squeeze Claims, Erik Hovenkamp, Herbert J. Hovenkamp

All Faculty Scholarship

A price squeeze occurs when a vertically integrated firm "squeezes' a rival's margins between a high wholesale price for an essential input sold to the rival, and a low output price to consumers for whom the two firms compete. Price squeezes have been a recognized but controversial antitrust violation for two-thirds of a century. We examine the law and economics of the price squeeze, beginning with Judge Hand's famous discussion in the Alcoa case in 1945. While Alcoa has been widely portrayed as creating a "fairness" or "fair profit" test for unlawful price squeezes, Judge Hand actually adopted a cost-based …

Belief In A Just World, Blaming The Victim, And Hate Crime Statutes, Dhammika Dharmapala, Nuno Garoupa, Richard H. Mcadams

Faculty Scholarship

The earliest economic theory of discrimination proposed the subsequently neglected idea of a "vicious circle" of discrimination (Myrdal,1944). We draw on psychological evidence (that people derive utility from believing that the world is just) to propose a behavioral economic model in which the vicious circle envisaged by Myrdal can arise. We demonstrate the power of this approach through an application to the issue of whether and how to justify penalty enhancements for hate crimes against members of disfavored groups. The crucial assumption is that individuals engage in biased inference in order to preserve their Belief in a Just World, thus …

Peter Mieszkowski And The General Equilibrium Revolution In Public Finance, James R. Hines Jr.

Articles

The importance of understanding the implications of general equilibrium is by now abundantly clear to researchers analyzing public fi nance issues. What is perhaps less apparent is that this was not always so. The study of public fi nance was radically transformed during the 15 years between 1959 and 1974 by the pioneering efforts of a small number of leading scholars, notably including Peter Mieszkowski. Thanks to their efforts, the analysis of applied problems in public finance moved from partial equilibrium to general equilibrium, providing the methods and insights that characterize modern public economics. The transformation began with the publication …

Intellectual Liability, Daniel A. Crane

Articles

Intellectual property is increasingly a misnomer since the right to exclude is the defining characteristic of property and incentives to engage in inventive and creative activity are increasingly being granted in the form of liability rights (which allow the holder of the right to collect a royalty from users) rather than property rights (which allow the holder of the right to exclude others from using the invention or creation). Much of this recent reorientation in the direction of liability rules arises from a concern over holdout or monopoly power in intellectual property. The debate over whether liability rules or property …

Confronting The Circularity Problem In Private Securities Litigation, Jill E. Fisch

All Faculty Scholarship

Many critics argue that private securities litigation fails effectively either to deter corporate misconduct or to compensate defrauded investors. In particular, commentators reason that damages reflect socially inefficient transfer payments—the so-called circularity problem. Fox and Mitchell address the circularity problem by identifying new reasons why private litigation is an effective deterrent, focusing on the role of disclosure in improving corporate governance. The corporate governance rationale for securities regulation is more powerful than the authors recognize. By collecting and using corporate information in their trading decisions, informed investors play a critical role in enhancing market efficiency. This efficiency, in turn, allows …

Interpreting Data: A Reply To Professor Pardo, Robert M. Lawless, Angela K. Littwin, Katherine M. Porter, John A. E. Pottow, Deborah K. Thorne, Elizabeth Warren

Articles

Professor Pardo has published a pointed critique to our Report, raising three major complaints. First, he claims that we make two predicating assumptions in our study that are flawed. Second, he contends that we misunderstand the means test and fail to appreciate with sufficient "nuance" its "operative effect." Third, he maintains that our Report suffers from methodological problems. We can address the two impugned assumptions quickly. The first one - that BAPCPA's means test is the sole causal agent driving 800,000 putative filers from the bankruptcy courts - is not one we make. The second - regarding the income profiles …

Critical Tax Theory: An Introduction, Anthony C. Infanti, Bridget J. Crawford

Book Chapters

Our book Critical Tax Theory: An Introduction (Cambridge University Press 2009) highlights and explains the major themes and methodologies of a group of scholars who challenge the traditional claim that tax law is neutral and unbiased. The contributors to this volume include pioneers in the field of critical tax theory, as well as key thinkers who have sustained and expanded the investigation into why the tax laws are the way they are and what impact tax laws have on historically disempowered groups. This volume will provide an accessible introduction to this new and growing body of scholarship. It will be …

Those Who Forget The Regulatory Successes Of The Past Are Condemned To Failure, William K. Black

Faculty Works

This paper shows that the reregulation of the savings & loan (S&L) industry was successful because the regulators correctly identified the primary cause of the second phase of the debacle as an epidemic of “accounting control fraud” and took effective measures to contain such frauds. Control frauds occur when the persons controlling a seemingly legitimate organization use it as a “weapon” to defraud. In the financial sector, accounting control fraud is the “weapon of choice.” The regulators’ primary insights were (1) that lenders optimize accounting fraud by engaging in a distinctive operational pattern that would be irrational for any honest …

The World Trade Organization: A Legal And Institutional Analysis, Anu Bradford

Faculty Scholarship

The law of the WTO can be complex and the intricacies of the WTO hard to grasp even by someone who has spent years studying this area of law. In providing a clear, well-structured and highly accessible introduction to the legal and institutional aspects of the WTO, Jan Wouters and Bart De Meester offer a refreshingly uncomplicated book that walks the reader through the basic legal doctrine underlying international trade.

Neoliberal Penality: The Birth Of Natural Order, The Illusion Of Free Markets, Bernard E. Harcourt

Faculty Scholarship

What work do the categories “the free market” and “regulation” do for us? Why do we incarcerate one out of every one hundred adults? These seemingly unrelated questions, it turns out, are deeply interconnected. The categories of free and regulated markets emerged as an effort to make sense of irreducibly individual phenomena – unique forms of market organization. In the process, these categories helped shape our belief that the economic realm is characterized by natural order and equilibrium, and that the only legitimate sphere of government intervention is policing and punishment. The consequences have been devastating: first, in distorting and …

Subsidizing Creativity Through Network Design: Zero Pricing And Net Neutrality, Robin S. Lee, Tim Wu

Faculty Scholarship

Today, through historical practice, there exists a de facto ban on termination fees – also referred to as a “zero-price” rule (Hemphill, 2008) – which forbids an Internet service provider from charging an additional fee to a content provider who wishes to reach that ISP’s customers. The question is whether this zero-pricing structure should be preserved, or whether carriers should be allowed to charge termination fees and engage in other practices that have the effect of requiring payment to reach users. This paper begins with a defense of the de facto zero-price rule currently in existence. We point out that …

On Uncertainty, Ambiguity, And Contractual Conditions, Eric L. Talley

Faculty Scholarship

This article uses the recent Delaware Chancery Court case of Hexion v. Huntsman as a template for motivating thoughts about how contract law should interpret contractual conditions in general – and "material adverse event" provisions in particular – within environments of extreme ambiguity (as opposed to risk). Although ambiguity and aversion there to bear some facial similarities to risk and risk aversion, an optimal contractual allocation of uncertainty does not always track the optimal allocation of risk. After establishing these intuitions as a conceptual proposition, I endeavor to test them empirically, using a unique data set of 528 actual material …