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Full-Text Articles in Law

Leveraging Paraguay’S Hydropower For Sustainable Economic Development, Perrine Toledano, Nicolas Maennling Nov 2013

Leveraging Paraguay’S Hydropower For Sustainable Economic Development, Perrine Toledano, Nicolas Maennling

Columbia Center on Sustainable Investment Staff Publications

While internationally Paraguay is known for being the largest hydropower exporter in the world, the domestic economy suffers from regular outages and high system losses. The country is largely dependent on agricultural production, which has led to volatile economic performances in the past resulting from climatic circumstances and commodity price fluctuations. To address these two key policy challenges, the Government of Paraguay has approached The Earth Institute to: 1) explore the potential of a climate risk management system and sustainable agriculture activities to mitigate environmental vulnerability and 2) develop a high-level strategic plan to use Paraguay’s vast hydropower resources ...


Meas In The Wto: Silence Speaks Volumes, Henrik Horn, Petros C. Mavroidis Jan 2013

Meas In The Wto: Silence Speaks Volumes, Henrik Horn, Petros C. Mavroidis

Faculty Scholarship

This study contributes to the debate concerning the appropriate role of multilateral environmental agreements (MEAs) in WTO law, and in particular, in WTO dispute settlement. The distinguishing feature of the study is that it seeks to address the relationship between MEAs and WTO law in light of the reason why the parties have chosen to separate their obligations into two bodies of law without providing an explicit nexus between them. The basic conclusion is that legislators’ silence concerning this relationship should speak volumes to WTO adjudicating bodies: MEAs should not be automatically understood as imposing legally binding obligations on WTO ...


Accepting The Limits Of Tax Law And Economics, Alex Raskolnikov Jan 2013

Accepting The Limits Of Tax Law And Economics, Alex Raskolnikov

Faculty Scholarship

This Article explores the limits of tax law and economics, attributing them to the unique complexity of the tax optimization problem. Designers of the optimal tax system must account for the impossibility of deterring socially undesirable behavior, provide for redistribution, and minimize social costs on the basis of assumptions that are laden with deeply contested value judgments, pervasive empirical uncertainty, or both. Given these challenges, it is hardly surprising that economic theory has a much weaker connection to the content of our tax laws and their enforcement than it does to the content and enforcement of many other legal regimes ...


Law In Finance, Katharina Pistor Jan 2013

Law In Finance, Katharina Pistor

Faculty Scholarship

Law’s relevance to finance is by now well recognized, in no small part due to the literature on "law and finance" (La Porta et al. 1998; La Porta, Lopez-de-Silanes, and Shleifer 2008) celebrated in this journal ten years ago under the heading "the new comparative economics" (Djankov et al. 2003). There will always be some debate as to whether a specific law or regulation distorts or supports markets, but few would argue today that law is irrelevant to financial markets or that they could operate entirely outside it.

This special issue takes the debate about the relation between law ...


Multilateral Environmental Agreements In The Wto: Silence Speaks Volumes, Henrik Horn, Petros C. Mavroidis Jan 2013

Multilateral Environmental Agreements In The Wto: Silence Speaks Volumes, Henrik Horn, Petros C. Mavroidis

Faculty Scholarship

This study contributes to the debate concerning the appropriate role of multilateral environmental agreements (MEAs) in in WTO dispute settlement. Its distinguishing feature is that it seeks to address this relationship in light of the reason why the parties have chosen to separate their obligations into two bodies of law without providing an explicit nexus between them. The basic conclusion is that legislators’ silence concerning this relationship should speak volumes to WTO adjudicating bodies: MEAs should not be automatically understood as imposing legally binding obligations on WTO Members, but could be used as sources of factual information.


In The Shadow Of The Dsu: Addressing Specific Trade Concerns In The Wto Sps And Tbt Committees, Henrik Horn, Petros C. Mavroidis, Erik Wijkström Jan 2013

In The Shadow Of The Dsu: Addressing Specific Trade Concerns In The Wto Sps And Tbt Committees, Henrik Horn, Petros C. Mavroidis, Erik Wijkström

Faculty Scholarship

The paper argues that focusing only on disputes formally raised in the WTO Dispute Settlement system underestimates the extent of trade conflict resolution within the WTO. Both the SPS and TBT Committees address a significant number of ‘specific trade concerns’ (STCs) that in the overwhelming majority of cases do not become formal disputes. The STCs address differences between Members concerning the conformity of national measures in the SPS and TBT areas with these agreements. It appears as if Committee work on STCs significantly helps defuse potential trade frictions concerning national policies in the covered areas.


Health And Financial Fragility: Evidence From Car Crashes And Consumer Bankruptcy, Edward R. Morrison, Arpit Gupta, Lenora M. Olson, Lawrence Cook, Heather Keenan Jan 2013

Health And Financial Fragility: Evidence From Car Crashes And Consumer Bankruptcy, Edward R. Morrison, Arpit Gupta, Lenora M. Olson, Lawrence Cook, Heather Keenan

Faculty Scholarship

This paper assesses the importance of adverse health shocks as triggers of bankruptcy filings. We view car crashes as a proxy for health shocks and draw on a large sample of police crash reports linked to hospital admission records and bankruptcy case files. We report two findings: (i) there is a strong positive correlation between an individual's pre-shock financial condition and his or her likelihood of suffering a health shock, an example of behavioral consistency; and (ii) after accounting for this simultaneity, we are unable to identify a causal effect of health shocks on bankruptcy filing rates. These findings ...


The Dignity Of Equality Legislation, Olatunde C.A. Johnson Jan 2013

The Dignity Of Equality Legislation, Olatunde C.A. Johnson

Faculty Scholarship

In Congressional Power to Effect Sex Equality, Patricia Seith argues that legal and social science commentary on the ratification failure of the Equal Rights Amendment ("ERA") does not properly account for the legislative gains achieved by the Economic Equity Act ("Equity Act"). In drawing attention to the Equity Act, Seith's account challenges common explanations of the source of women's equality gains, particularly the narratives offered by legal commentators who typically focus on the role of the Constitution and the courts. As Seith points out, the conventional account in legal history focuses on the effectuation of a "de facto ...


The Tragedy Of The Anticommons: A Concise Introduction And Lexicon, Michael Heller Jan 2013

The Tragedy Of The Anticommons: A Concise Introduction And Lexicon, Michael Heller

Faculty Scholarship

This article gives a concise introduction to the ‘tragedy of the anticommons.’ The anticommons thesis is simple: when too many people own pieces of one thing, nobody can use it. Usually, private ownership creates wealth. But too much ownership has the opposite effect – it leads to wasteful underuse. This is a free market paradox that shows up all across the global economy. If too many owners control a single resource, cooperation breaks down, wealth disappears, and everybody loses. Conceptually, underuse in an anticommons mirrors the familiar problem of overuse in a ‘tragedy of the commons.’ The field of anticommons studies ...


Fee Effects, Kathryn Judge Jan 2013

Fee Effects, Kathryn Judge

Faculty Scholarship

Intermediaries are a pervasive feature of modern economies. This article draws attention to an under-theorized cost arising from the use of specialized intermediaries – a systematic shift in the mix of transactions consummated. The interests of intermediaries are imperfectly aligned with the parties to a transaction. Intermediaries seek to maximize their fees, a transaction cost from the perspective of the parties. Numerous factors, including the requirement that a transaction create value in excess of the associated fees to proceed and an intermediary’s interest in maintaining a good reputation, constrain an intermediary’s tendency to use its influence in a self-serving ...


The Republic Of Choosing: A Behaviorist Goes To Washington, William H. Simon Jan 2013

The Republic Of Choosing: A Behaviorist Goes To Washington, William H. Simon

Faculty Scholarship

Cass Sunstein’s book Simpler recounts the author’s efforts during his tenure in the first Obama administration to apply the policy tools he helped derive from behavioral economics. In this review, I suggest that, while Sunstein reports some notable achievements, he exaggerates the utility of the behaviorist toolkit. Behaviorist-inspired interventions are marginal to most of the largest policy problems, and they played little role in the Obama administration’s most important initiatives. The book also reflects a misguided political strategy.


Idiosyncratic Risk During Economic Downturns: Implications For The Use Of Event Studies In Securities Litigation, Edward G. Fox, Merritt B. Fox, Ronald J. Gilson Jan 2013

Idiosyncratic Risk During Economic Downturns: Implications For The Use Of Event Studies In Securities Litigation, Edward G. Fox, Merritt B. Fox, Ronald J. Gilson

Faculty Scholarship

We reported in a recent paper that during the 2008-09 financial crisis, for the average firm, idiosyncratic risk, as measured by variance, increased by five-fold. This finding is important for securities litigation because idiosyncratic risk plays a central role in event study methodology. Event studies are commonly used in securities litigation to determine materiality and loss causation. Many bits of news affect an issuer’s share price at the time of a corporate disclosure that is the subject of litigation. Because of this, even if an issuer’s market–adjusted price changes at the time of the disclosure, one cannot ...


Becker And Foucault On Crime And Punishment – A Conversation With Gary Becker, François Ewald, And Bernard Harcourt: The Second Session, Gary S. Becker, Francois Ewald, Bernard E. Harcourt Jan 2013

Becker And Foucault On Crime And Punishment – A Conversation With Gary Becker, François Ewald, And Bernard Harcourt: The Second Session, Gary S. Becker, Francois Ewald, Bernard E. Harcourt

Faculty Scholarship

In his 1979 lectures at the Collège de France, The Birth of Biopolitics, Michel Foucault discussed and analyzed Gary Becker’s economic theory of crime and punishment, originally published in The Journal of Political Economy in 1968 under the title “Crime and Punishment: An Economic Approach.” In this historic, second encounter at the University of Chicago, Gary Becker responds to Foucault’s lectures and possible critical readings of his writings on crime and punishment, in conversation with Professors François Ewald (who was, at the time in 1979, Foucault’s assistant at the Collège and one of Foucault’s closest interlocutors ...


Protecting Reliance, Victor P. Goldberg Jan 2013

Protecting Reliance, Victor P. Goldberg

Faculty Scholarship

Reliance plays a central role in contract law and scholarship. One party relies on the other’s promised performance, or its statements, or its anticipated entry into a formal agreement. Saying that reliance is important, however, says nothing about what we should do about it. In this paper the focus is on the many ways that parties choose to protect reliance. The relation between what parties do and what contract doctrine cares about is tenuous at best. Contract performance takes place over time and the nature of the parties’ future obligations can be deferred to take account of changing circumstances ...


Protecting Reliance, Victor P. Goldberg Jan 2013

Protecting Reliance, Victor P. Goldberg

Faculty Scholarship

Reliance plays a central role in contract law and scholarship. One party relies on the other’s promised performance, or its statements, or its anticipated entry into a formal agreement. Saying that reliance is important, however, says nothing about what we should do about it. In this paper the focus is on the many ways that parties choose to protect reliance. The relation between what parties do and what contract doctrine cares about is tenuous at best. Contract performance takes place over time and the nature of the parties’ future obligations can be deferred to take account of changing circumstances ...


Extraterritorial Financial Regulation: Why E.T. Can't Come Home, John C. Coffee Jr. Jan 2013

Extraterritorial Financial Regulation: Why E.T. Can't Come Home, John C. Coffee Jr.

Faculty Scholarship

Systemic risk poses a classic "public goods" problem. All nations want systemic stability, but most would prefer that other nations pay for it, allowing them to "free ride." Moreover, because global financial institutions can park their higher risk operations almost anywhere, some nations can profit from regulatory arbitrage by keeping their regulatory controls laxer than in the more financially developed nations (which bear the principal share of the costs from financial contagion). As a result, the free riders do not need to internalize the full costs of systemic risk, but profit from imposing costs on others.

Under these conditions, all ...


Three Discount Windows, Kathryn Judge Jan 2013

Three Discount Windows, Kathryn Judge

Faculty Scholarship

It is widely assumed that the Federal Reserve is the lender of last resort in the United States and that the Fed’s discount window is the primary mechanism through which it fulfills this role. Yet, when banks faced liquidity constraints during the 2007–2009 financial crisis (the Crisis), the discount window played a relatively small role in providing banks much needed liquidity. This is not because banks forewent government backed liquidity; rather, they sought it elsewhere. First, they increased their reliance on collateralized loans, known as advances, from the Federal Home Loan Bank system, a little known government sponsored ...


The Moral Significance Of Economic Life, Andrzej Rapaczynski Jan 2013

The Moral Significance Of Economic Life, Andrzej Rapaczynski

Faculty Scholarship

Much of the modern perception of the role of economic production in human life – whether on the Left or on the Right of the political spectrum – views it as an inferior, instrumental activity oriented toward self-preservation, self-interest, or profit, and thus as essentially distinct from the truly human action concerned with moral values, justice, and various forms of self-fulfillment. This widely shared worldview is rooted, on the one hand, in the Aristotelian tradition that sees labor as a badge of slavery, and freedom as lying in the domain of politics and pure (not technical) knowledge, and, on the other hand ...


Designing Corporate Bailouts, Antonio E. Bernardo, Eric L. Talley, Ivo Welch Jan 2013

Designing Corporate Bailouts, Antonio E. Bernardo, Eric L. Talley, Ivo Welch

Faculty Scholarship

Although common economic wisdom suggests that government bailouts are inefficient because they reduce incentives to avoid failure and induce excessive entry by marginal firms, in practice bailouts are difficult to avoid for systemically significant enterprises. Recent experience suggests that bailouts also induce litigation from shareholders and managers complaining about expropriation and wrongful termination by the government. Our model shows how governments can design tax-financed corporate bailouts to reduce these distortions and points to the causes of inefficiencies in real-world implementations such as the Troubled Asset Relief Program. Bailouts with minimal distortion depend critically on the government’s ability to expropriate ...


Sharing The Risks And Rewards Of Economic Migration, Anu Bradford Jan 2013

Sharing The Risks And Rewards Of Economic Migration, Anu Bradford

Faculty Scholarship

International cooperation on economic migration has been difficult to achieve. The interests of emigration countries (“source countries”) and immigration countries (“destination countries”) seem impossible to align. These countries disagree on who should migrate: source countries resist migration that leads to a brain drain, while destination countries welcome these very migrants given that they are likely to be the most productive citizens and the least likely to become fiscal burdens on the destination country. In addition, destination countries resist migration that leads to domestic unemployment through labor replacement. As a result, international economic migration remains restricted at a substantial cost to ...


Assessing The Optimism Of Payday Loan Borrowers, Ronald J. Mann Jan 2013

Assessing The Optimism Of Payday Loan Borrowers, Ronald J. Mann

Faculty Scholarship

This essay compares the results from a survey administered to payday loan borrowers at the time of their loans to subsequent borrowing and repayment behavior. It thus presents the first direct evidence of the accuracy of payday loan borrowers’ understanding of how the product will be used. The data show, among other things, that about 60% of borrowers accurately predict how long it will take them finally to repay their payday loans. The evidence directly contradicts the oft-stated view that substantially all extended use of payday loans is the product of lender misrepresentation or borrower self-deception about how the product ...


Irredeemably Inefficient Acts: A Threat To Markets, Firms, And The Fisc, Alex Raskolnikov Jan 2013

Irredeemably Inefficient Acts: A Threat To Markets, Firms, And The Fisc, Alex Raskolnikov

Faculty Scholarship

This Article defines and explores irredeemably inefficient acts – a conceptually distinct and empirically important category of socially undesirable conduct. Though inefficient behavior is, no doubt, pervasive, the standard view holds that inefficient conduct may be converted into efficient behavior by forcing actors to internalize the external harms of their decisions. For some acts, however, such conversion is impossible. These acts are not just inefficient forms of otherwise socially beneficial activities – they are not just contingently inefficient. Rather, they are inefficient at their core; they reduce social welfare no matter what the regulator does. These irredeemably inefficient (or just irredeemable) acts ...


Freedom Of Contracts, Hanoch Dagan, Michael Heller Jan 2013

Freedom Of Contracts, Hanoch Dagan, Michael Heller

Faculty Scholarship

“Freedom of contracts” has two components: (1) the familiar freedom to bargain for terms within a contract and (2) the long-neglected freedom to choose from among contract types. Theories built on the first freedom have reached an impasse; attention to the second points toward a long-elusive goal, a liberal and general theory of contract law. This theory is liberal because it develops an appealing conception of contractual autonomy grounded in the actual diversity of contract types. It is general because it explains how contract values – utility, community, and autonomy – properly relate to each other across contract types. Finally, it is ...


A Legal Theory Of Finance, Katharina Pistor Jan 2013

A Legal Theory Of Finance, Katharina Pistor

Faculty Scholarship

This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put them in direct tension with commitments enshrined in law or contracts. This is the case especially in times of financial crisis when the full enforcement of legal commitments would result in the self-destruction of the financial system. This law-finance paradox tends to be resolved by suspending the full force of law where the survival ...


Tax Advice For The Second Obama Administration, Michael J. Graetz Jan 2013

Tax Advice For The Second Obama Administration, Michael J. Graetz

Faculty Scholarship

Delivered January 18, 2013 as the keynote address at a conference cosponsored by Pepperdine Law School and Tax Analysts.


Updating The Competitive Tax Plan: A New Epilogue For 100 Million Unnecessary Returns, Michael J. Graetz Jan 2013

Updating The Competitive Tax Plan: A New Epilogue For 100 Million Unnecessary Returns, Michael J. Graetz

Faculty Scholarship

This is the first step of a new epilogue for my book 100 Million Unnecessary Returns: A Simple, Fair, and Competitive Tax Plan for the United States. In January 2012, the Tax Policy Center (TPC), pursuant to a grant from Pew Charitable Trust, published an article analyzing and estimating the parameters of the tax plan set forth in this book. TPC has now updated its estimates to take into account the January 2013 “fiscal cliff” legislation and other economic changes. Certain details of the plan have also been revised somewhat.

The competitive tax reform plan has five pieces: First, enact ...


Sharing The Risks And Rewards Of Economic Migration, Anu Bradford Jan 2013

Sharing The Risks And Rewards Of Economic Migration, Anu Bradford

Faculty Scholarship

International cooperation on economic migration has been difficult to achieve. The interests of emigration countries ("source countries") and immigration countries ("destination countries') seem impossible to align. These countries disagree on who should migrate: source countries resist migration that leads to a brain drain, while destination countries welcome these very migrants given that they are likely to be the most productive citizens and the least likely to become fiscal burdens on the destination country. In addition, destination countries resist migration that leads to domestic unemployment through labor replacement. As a result, international economic migration remains restricted at a substantial cost to ...


Technological Innovation, International Competition, And The Challenges Of International Income Taxation, Michael J. Graetz, Rachael Doud Jan 2013

Technological Innovation, International Competition, And The Challenges Of International Income Taxation, Michael J. Graetz, Rachael Doud

Faculty Scholarship

Because of the importance of technological innovation to economic growth, nations strive to stimulate and attract the research and development ("R&D") that leads to that innovation and to make themselves hospitable environments for the holding of intellectual property ("IP"). Tax policies have taken center stage in their efforts to accomplish these goals and to capture a share of the income from technological innovations.

Designing cost-effective methods of supporting technological innovations has, however, become substantially more difficult as the world economy has become more interconnected. Where R&D is performed and where income is earned change in response to the ...


The Agency Costs Of Agency Capitalism: Activist Investors And The Revaluation Of Governance Rights, Ronald J. Gilson, Jeffery N. Gordon Jan 2013

The Agency Costs Of Agency Capitalism: Activist Investors And The Revaluation Of Governance Rights, Ronald J. Gilson, Jeffery N. Gordon

Faculty Scholarship

Equity ownership in the United States no longer reflects the dispersed share ownership of the canonical Berle-Means firm. Instead, we observe the reconcentration of ownership in the hands of institutional investment intermediaries, which gives rise to "the agency costs of agency capitalism." This ownership change has occurred because of (i) political decisions to privatize the provision of retirement savings and to require funding of such provision and (ii) capital market developments that favor investment intermediaries offering low-cost diversified investment vehicles. A new set of agency costs arises because in addition to divergence between the interests of record owners and the ...