Law Commons^™

How The Massachusetts Supreme Judicial Court Should Interpret Wynne, Michael S. Knoll, Ruth Mason

All Faculty Scholarship

In this special report, Knoll and Mason discuss how the Massachusetts Supreme Judicial Court should apply Wynne when it hears on remand First Marblehead v. Commissioner of Revenue. The authors conclude that when it originally heard the case, the Massachusetts court mistakenly considered, as part of its internal consistency analysis, whether Gate Holdings Inc. experienced double state taxation. As developed by the U.S. Supreme Court and most recently applied in Wynne, the internal consistency test is not concerned with actual double taxation that may arise from the interaction of different states’ laws. Rather, the test is designed to determine …

Global Value Chains And Resource Corridors: The Nexus Is Regional Integration, Perrine Toledano

Columbia Center on Sustainable Investment Staff Publications

To be more involved in the global value chains, sub-Saharan African countries should intensify their regional integration efforts. A first step in this direction can be implementing cross-border resource-based development corridors.

Political Uncertainty And The Market For Ipos, Jay B. Kesten, Murat C. Mungan

Faculty Scholarship

This Article presents a simple theory and model of the effects of political uncertainty on the market for IPOs. Our model generates four central predictions: (i) increased political uncertainty reduces the frequency of IPOs; (ii) firms that choose to conduct an IPO during periods of political uncertainty are, on average, of higher quality and generate greater return on investment in the secondary market; (iii) political uncertainty increases the cost of capital for IPO firms; but (iv) underpricing is less pronounced during periods of heightened political uncertainty. We demonstrate that each of these predictions is consistent with available empirical evidence.

Our …

Comments On Proposed Treasury Regulations Defining Terms Relating To Marital Status, Anthony C. Infanti, The American Bar Association

Articles

These comments respond to proposed Treasury Regulations defining terms relating to marital status in the Internal Revenue Code following the Supreme Court's decision in the Windsor and Obergefell cases. The comments applaud the Internal Revenue Service for reading gendered terms relating to marital status in a gender-neutral fashion. For a number of reasons, however, the comments recommend that the final regulations omit the proposed rule for determining an individual’s marital status and, in its place, codify the current deference to local law in determining marital status for federal tax purposes. Most importantly, the comments further recommend that the final regulations …

Negligence And Two-Sided Causation, Keith N. Hylton, Haizhen Lin, Hyo-Youn Chu

Faculty Scholarship

We extend the economic analysis of negligence and intervening causation to "two-sided causation" scenarios. In the two-sided causation scenario the effectiveness of the injurer's care depends on some intervention, and the risk of harm generated by the injurer's failure to take care depends on some other intervention. We find that the distortion from socially optimal care is more severe in the two-sided causation scenario than in the one-sided causation scenario, and generally in the direction of excessive care. The practical lesson is that the likelihood that injurers will have optimal care incentives under the negligence test in the presence of …

The New Stock Market: Sense And Nonsense, Merritt B. Fox, Lawrence R. Glosten, Gabriel V. Rauterberg

Articles

How stocks are traded in the United States has been totally transformed. Gone are the dealers on NASDAQ and the specialists at the NYSE. Instead, a company’s stock can now be traded on up to sixty competing venues where a computer matches incoming orders. High-frequency traders (HFTs) post the majority of quotes and are the preponderant source of liquidity in the new market. Many practices associated with the new stock market are highly controversial, as illustrated by the public furor following the publication of Michael Lewis’s book Flash Boys. Critics say that HFTs use their speed in discovering changes in …

Abandoned Criminal Attempts: An Economic Analysis, Murat C. Mungan

Faculty Scholarship

An attempt is 'abandoned' if the criminal, despite having a chance to continue with his criminal plan, forgoes the opportunity to do so. A regime that makes abandonment a defense to criminal attempts provides an incentive to the offender to withdraw from his criminal conduct prior to completing the previously intended offense. However, the same regime may induce offenders to initiate criminal plans more often by reducing the expected costs associated with such plans. The former effect is called the marginal deterrence effect and the latter is called the ex-ante deterrence effect of the abandonment defense. This Article formalizes a …

With Marriage On The Decline And Cohabitation On The Rise, What About Marital Rights For Unmarried Partners?, Lawrence W. Waggoner

Law & Economics Working Papers

Part I of this paper uses recent government data to trace the decline of marriage and the rise of cohabitation in the United States. Between 2000 and 2010, the population grew by 9.71%, but the husband and wife households only grew by 3.7%, while the unmarried couple households grew by 41.4%. A counter-intuitive finding is that the early 21st century data show little correlation between the marriage rate and economic conditions. Because of the Supreme Court’s decision in Obergefell v. Hodges (2015), same-sex marriage is now universally available to same-sex couples. Part I considers the impact of same-sex marriage on …

Reparations For Slavery And Jim Crow, Its Assumptions And Implications, David B. Lyons

Faculty Scholarship

This paper develops the case for reparations to African Americans today, based on wrongdoing that began with slavery, that was not repaired by Reconstruction, that was continued in new forms under Jim Crow, and that left a deeply-entrenched legacy of disadvantage despite civil rights reforms of the twentieth century. It reviews relevant aspects of U.S. history and policies since 1607 and lays out the moral considerations that call for a system of reparations far beyond anything yet contemplated by American society. It argues that cash payments, while needed, would not suffice, because slavery and Jim Crow were not just a …

Parody And Fair Markets, Jessica Silbey

Faculty Scholarship

In December 2011, the UK Intellectual Property Office commissioned the Centre for Intellectual Property Policy and Management at Bournemouth University to research the effects of parody on copyrighted works. Do parodies harm the market for the underlying work? How might we measure the economic effects of parody, as incentive depressors or engines?

UK copyright law does not contain an exception specifically covering parodies. The authors of the study perceive the UK copyright law as one of the most restrictive in seven jurisdictions surveyed (US, Canada, Australia, France, Germany, Netherlands, UK) with regard to parodies. By commissioning this research, the UK …

What Notice Did, Jessica D. Litman

Law & Economics Working Papers

In the 21st century, copyright protection is automatic. It vests in eligible works the instant that those works are first embodied in a tangible format. Many Americans are unaware of that, believing instead that registration and copyright notice are required to secure a copyright. That impression is understandable. For its first 199 years, United States copyright law required authors to take affirmative steps to obtain copyright protection. The first U.S. copyright statute, enacted by Congress in 1790, required the eligible author of an eligible work to record the title of the work with the clerk of the court in the …

The New Road To Serfdom: The Curse Of Bigness And The Failure Of Antitrust, Carl Bogus

Law Faculty Scholarship

This Article argues for a paradigm shift in modern antitrust policy. Rather than being concerned exclusively with consumer welfare, antitrust law should also be concerned with consolidated corporate power. Regulators and courts should consider the social and political, as well as the economic, consequences of corporate mergers. The vision that antitrust must be a key tool for limiting consolidated corporate power has a venerable legacy, extending back to the origins of antitrust law in early seventeenth century England, running throughout American history, and influencing the enactment of U.S. antitrust laws. However, the Chicago School's view that antitrust law should be …

Procedural Triage, Matthew J.B. Lawrence

Faculty Scholarly Works

Prior scholarship has assumed that the inherent value of a “day in court” is the same for all claimants, so that when procedural resources (like a jury trial or a hearing) are scarce, they should be rationed the same way for all claimants. That is incorrect. This Article shows that the inherent value of a “day in court” can be far greater for some claimants, such as first-time filers, than for others, such as corporate entities and that it can be both desirable and feasible to take this variation into account in doling out scarce procedural protections. In other words, …

A Framework For A Formal Sovereign Debt Restructuring Mechanism: The Kiss Principle (Keep It Simple, Stupid) And Other Guiding Principles, Charles W. Mooney Jr.

All Faculty Scholarship

Given the ongoing work on a multilateral restructuring process for sovereign debt in the UN, consideration of the content and implementation of a sovereign debt restructuring mechanism (SDRM) is timely. The framework and content of the SDRM proposed here differs from earlier proposals in several important respects. For the classification and supermajority voting of claims in the approval a restructuring plan, it would mimic the structure and operation of the model collective action clauses (Model CACs) proposed by the International Capital Markets Association. Restructuring under a qualified sovereign debt restructuring law (QSDRL) would be guided by four principles: (i) observe …

From Fedspeak To Forward Guidance: Regulatory Dimensions Of Central Bank Communications, Robert B. Ahdieh

Faculty Scholarship

In the face of the financial crisis that engulfed the globe beginning in 2007, the U.S. Federal Reserve quickly found itself without the key lever of monetary policy on which it had traditionally relied: short-term interest rate adjustments designed to move long-term rates, and thereby expected levels of lending, investment, and capital retention. By late 2008, short-term rates were already close to zero, yet unemployment remained strikingly high – with no sign of any likely renewal of bank lending or commercial investment.

Famously, the Fed embraced so-called quantitative easing – the purchase of massive volumes of public and private debt …

Behavioral Public Choice And The Law, Gary M. Lucas Jr., Slaviša Tasić

Faculty Scholarship

Behavioral public choice is the study of irrationality among political actors. In this context, irrationality means systematic bias, a deviation from rational expectations, or other departure from economists’ conception of rationality. Behavioral public choice scholars extend the insights of behavioral economics to the political realm and show that irrational behavior is an important source of government failure. This Article makes an original contribution to the legal literature by systematically reviewing the findings of behavioral public choice and explaining their implications for the law and legal institutions. We discuss the various biases and heuristics that lead political actors to support and …

With Marriage On The Decline And Cohabitation On The Rise, What About Marital Rights For Unmarried Partners?, Lawrence W. Waggoner

Articles

This article draws attention to a cultural shift in the formation of families that has been and is taking place in this country and in the developed world. Part I uses recent government data to trace the decline of marriage and the rise of cohabitation in the United States. Between 2000 and 2010, the population grew by 9.71 %, but the husband and wife households only grew by 3.7%, while the unmarried couple households grew by 41.4%. A counter-intuitive finding is that the early 21st century data show little correlation between the marriage rate and economic conditions. Because of the …

Mandatory Process, Matthew J.B. Lawrence

Faculty Scholarly Works

This Article suggests that people tend to undervalue their procedural rights—their proverbial “day in court”—until they are actually involved in a dispute. The Article argues that the inherent, outcome-independent value of participating in a dispute resolution process comes largely from its power to soothe a person’s grievance— their perception of unfairness and accompanying negative emotional reaction—win or lose. But a tendency to assume unchanging emotional states, known in behavioral economics as projection bias, can prevent people from anticipating that they might become aggrieved and from appreciating the grievance-soothing power of process. When this happens, people will waive their procedural rights …

Rent Certainty Is Not Rent Control, Tom Dunne

Reports

The housing crisis and the debate about rent control should result in a beneficial change to the regulation of the sector but the opportunity could be lost for want of clarity of thinking about the nature of rent certainty and the distinction between it and rent control. At present rent is regulated by the Residential Tenancies Act 2004 (RTA 2004) which provides that rent can only change once a year and cannot be more than the market rent. Many argue a greater degree of rent certainty is required and that rent should not be allowed to increase by more than …

The Developmental Effect Of State Alcohol Prohibitions At The Turn Of The 20th Century, Mary F. Evans, Eric Helland, Jonathan Klick, Ashwin Patel

All Faculty Scholarship

We examine the quasi-randomization of alcohol consumption created by state-level alcohol prohibition laws passed in the U.S. in the early part of the 20th century. Using a large dataset of World War II enlistees, we exploit the differential timing of these laws to examine their effects on adult educational attainment, obesity, and height. We find statistically significant effects for education and obesity that do not appear to be the result of pre-existing trends. Our findings add to the growing body of economic studies that examines the long-run impacts of in utero and childhood environmental conditions.

Can Simple Mechanism Design Results Be Used To Implement The Proportionality Standard In Discovery?, Jonah B. Gelbach

All Faculty Scholarship

I point out that the Coase theorem suggests there should not be wasteful discovery, in the sense that the value to the requester is less than the cost to the responder. I use a toy model to show that a sufficiently informed court could design a mechanism under which the Coasean prediction is borne out. I then suggest that the actual information available to courts is too little to effect this mechanism, and I consider alternatives. In discussing mechanisms intended to avoid wasteful discovery where courts have limited information, I emphasize the role of normative considerations.

Compliance In The 21st Century: The Exchange Of Tax Information And The Future Of Banking Secrecy In Singapore, Wai Yee Wan

Research Collection Yong Pung How School Of Law

The presentation discusses the future of exchange of tax information and banking secrecy in Singapore

The Importance Of Being Dismissive: The Efficiency Role Of Pleading Stage Evaluation Of Shareholder Litigation, Lawrence A. Hamermesh, Michael L. Wachter

All Faculty Scholarship

It has been claimed that the risk/reward dynamics of shareholder litigation have encouraged quick settlements with substantial attorneys’ fee awards but no payment to shareholders, regardless of the merits of the case. Fee-shifting charter and bylaw provisions may be too blunt a tool to control agency costs associated with excessive shareholder litigation, and are in any event now prohibited by Delaware statute. We claim, however, that active judicial supervision of public company shareholder litigation at an early stage reduces the costs of frivolous litigation to shareholders by separating meritorious from unmeritorious litigation before the full costs of discovery are incurred. …

Behavioral Ethics, Behavioral Compliance, Donald C. Langevoort

Georgetown Law Faculty Publications and Other Works

The design of an effective legal compliance system for an organization fearing prosecution for white-collar crime or regulatory violations requires skill at predicting human behavior. It is entirely plausible to use the economist’s simplifying assumptions of rational choice and pecuniary self-interest in making these predictions. But the realism of these assumptions has been under attack for decades now, suggesting that we should at least consider more nuanced behavioral possibilities when designing and implementing compliance programs. The label “behavioral compliance” can be attached to the design and management of compliance that draws from this wider range of behavioral predictions about individual …

Institutional Investors In Corporate Governance, Edward B. Rock

All Faculty Scholarship

This chapter of the Oxford Handbook on Corporate Law and Governance examines the role of institutional investors in corporate governance and the role of regulation in encouraging institutional investors to become active stewards. I approach these topics through asking what lessons we can draw from the U.S. experience for the E.U.’s 2014 proposed amendments to the Shareholder Rights Directive.

I begin by defining the institutional investor category, and summarizing the growth of institutional investors’ equity holdings over time. I then briefly survey how institutional investors themselves are governed and how they organize share voting. This leads me to two central …

Not Treble Damages: Cartel Recoveries Are Mostly Less Than Single Damages, John M. Connor, Robert H. Lande

All Faculty Scholarship

Antitrust law provides treble damages for victims of antitrust violations, but the vast majority of private cases settle. The average or median size of these settlements relative to the overcharges involved has, until now, been only the subject of anecdotes or speculation. To ascertain what we term "Recovery Ratios," we assembled a sample consisting of every completed private U.S. cartel case discovered from 1990 to mid-2014 for which we could find the necessary information. For each of these 71 cases we collected, we assembled neutral scholarly estimates of affected commerce and overcharges. We compared these to the damages secured in …

Explaining Trade Agreements: The Practitioners' Story And The Standard Model, Donald H. Regan

Articles

There are two widely accepted explanations of why politically motivated governments make trade agreements. There is an informal explanation, which I shall call the ′practitioners′ story′, even though it is most economists′ informal view as well. And there is a formal explanation in the economics literature, which I shall call the ′standard model′, referring to the basic structure shared by the Bagwell-Staiger and Grossman-Helpman models. Unfortunately, the practitioners′ story and the standard model contradict each other at every crucial point. For example, in the practitioners′ story, trade agreements are about reducing politically motivated protectionism; and getting an agreement depends on …

Recursive Collective Actions Problems: The Structure Of Procyclicality In Financial And Monetary Markets, Macroeconomies And Formally Similar Contexts, Robert C. Hockett

Cornell Law Faculty Publications

The hallmark of a collective action problem is its aggregating multiple individually rational decisions into a collectively irrational outcome. Arms races, “commons tragedies” and “prisoners’ dilemmas” are well-known, indeed well-worn examples. What seem to be less widely appreciated are two complementary propositions: first, that some collective action problems bear iterative, self-exacerbating structures that render them particularly destructive; and second, that some of the most formidable challenges faced by economies, societies, and polities are iteratively self-worsening problems of precisely this sort. Financial markets, monetary systems and macroeconomies in particular are rife with them – as are other complex systems subject to …

Deterrence And Antitrust Punishment: Firms Versus Agents, Keith N. Hylton

Faculty Scholarship

Antitrust enforcement regimes rely on penalties against two groups of actors for deterrence: penalties against the violating firm and penalties against the violating firm's agents. Here, I examine the economics of punishing agents versus firms. My area of application is antitrust, but the argument applies generally to other fields in which the government has the choice of punishing the agent, the firm, or both. This analysis suggests that whenever the firm has an incentive, given existing penalties, to engage in some illegal act that may result in relatively modest punishment for its agents, the firm can almost always induce its …

The Evolution And Vitality Of Merger Presumptions: A Decision-Theoretic Approach, Steven C. Salop

Georgetown Law Faculty Publications and Other Works

This article reviews the formulation and evolution of the Philadelphia National Bank anticompetitive presumption through the lens of decision theory and Bayes Law. It explains how the economic theory, empirical evidence and experience are used to determine a presumption and how that presumption interacts with the reliability of relevant evidence to rationally set the appropriate burden of production and burden of persuasion to rebut the presumption. The article applies this reasoning to merger presumptions. It also sketches out a number of non-market share structural factors that might be used to supplement or replace the current legal and enforcement presumptions for …