Law Commons^™

The Limits Of Diplomacy By Treaty: Evidence From China’S Bilateral Investment Treaty Program, Adam Chilton, Weijia Rao

Coase-Sandor Institute for Law & Economics Research Paper Series

The web of over 3,000 Bilateral Investment Treaties (“BITs”) is the primary body of international law regulating cross-border investments. Research suggests that these treaties may have had a limited impact on promoting new investments, but that they still may have helped to improve countries’ political relationships. In this paper, we document that this pattern was reversed for one of the most prolific signers of BITs: China. Using a stacked-event research design, we find that Chinese BITs are associated with an increase in Bilateral Foreign Direct Investment Flows but a divergence in voting patterns at the United Nations. We then explore …

Which Constitutional Provisions Are Most Important?, Richard Albert, Netta Barak-Corren, Daniel M. Brinks, Adam Chilton, Rosalind Dixon, Zachary Elkins, Tom Ginsburg, Ran Hirschl, David Landau, Ashley Moran, Yvonne Tew, Mila Versteeg

Coase-Sandor Institute for Law & Economics Research Paper Series

National constitutions codify provisions on a wide range of topics, ranging from presidential term limits to the country’s flag. But are all constitutional provisions equally important? Some are likely to be particularly consequential for how governments function, while others are likely to be largely symbolic. To date, there has been little research on the relative importance of constitutional provisions. To explore current thinking on this subject, we assembled a group of twelve comparative constitutional scholars to rate the relative importance of 340 constitutional pro- visions to the functioning of a country’s government. These aggregate ratings make three contributions to constitutional …

Matching Markets And Labor Monopsony: A Comment On The Priest/Roth Debateeric A. Posner, Eric A. Posner

Coase-Sandor Institute for Law & Economics Research Paper Series

In a neglected but prescient article, George Priest argued that the “unraveling” of markets for medical residents and judicial clerks resulted from the monopsony power of employers (a cartel in the first case, the government in the second). Because wages were largely fixed, early offers and acceptances of employment became an efficient form of nonprice competition—and efforts to solve the problem of unraveling through market design merely reinforced monopsony power. In a reply, Alvin Roth—the leading figure in the market design literature, who was instrumental in perfecting the design of the medical residency matching program—argued that Priest was wrong to …

Labor Market Trap, Eric A. Posner

Coase-Sandor Institute for Law & Economics Research Paper Series

Some products, notably but not only platforms, increase in value for users as the number of other users increases. These interaction or network effects can result in “product market traps” (Bursztyn et al., 2023) where people who use the product would be better off if they all stopped using it and switched to another product, but cannot because of coordination problems. A parallel but overlooked phenomenon is the labor market trap, where employees would be better off if they collectively left an employer, job, or profession, but cannot because of the difficulty of coordination. Product market and labor market traps …

The Common Political Foundations Of Originalism And Cost-Benefit Analysis, Jonathan S. Masur, Eric A. Posner

Coase-Sandor Institute for Law & Economics Research Paper Series

Cost-benefit analysis (CBA) and originalism are rarely discussed together, and seem to belong to different worlds of legal scholarship. The two methods are used by different institutions in different spheres of law for different purposes; what could they have in common? Nothing, or so it would seem. Yet closer inspection reveals surprising commonalities—both in terms of structure and function, on the one hand, and in historical pedigree and political economy, on the other. CBA and originalism are what we will call midlevel legal methods. Midlevel legal methods are neither normative commitments nor legal doctrines, but recurrently used methodologies that are …

How Much Does U.S. Fiscal System Redistribute?, Thomas Coleman, David A. Weisbach

Coase-Sandor Institute for Law & Economics Research Paper Series

There is a widespread view that the tax and transfer system has become less progressive and less redistributive. To assess this view, we compare data from three studies: Congressional Budget Office (2024), Piketty, Saez, Zucman (2018), and Auten and Splinter (2024). Although they use different definitions of income, units, and taxes and transfers, all three show that the tax and transfer system has become more redistributive, not less. We also review all studies of the issue since 2012, which confirms these findings. In short, there is robust evidence across definitions and methodologies, that the tax system has become more redistributive.

Cash Substitution And Deferred Consumption As Data Breach Harms, Lisa Yao Liu, Lior Jacob Strahilevitz

Coase-Sandor Institute for Law & Economics Research Paper Series

Federal courts have long been divided over whether consumers whose data are breached suffer an “injury in fact” that gives them standing to sue under Article III of the United States Constitution. Judicial opinions find no constitutional standing in a narrow majority of such cases, and plaintiffs are likely to lose absent causal links to subsequent identity theft or the disclosure of embarrassing information. Consumers whose data are breached thus are left without a federal remedy, and firms’ incentives to invest in data security are diminished. Our paper identifies a novel injury that results from data breaches. Upon learning about …

Can Machines Commit Crimes Under U.S. Antitrust Laws?, Aslihan Asil, Thomas G. Wollmann

The University of Chicago Business Law Review

Generative artificial intelligence is being rapidly deployed for corporate tasks including pricing. Suppose one of these machines communicates with the pricing manager of a competing firm, proposes to collude, receives assent, and raises price. Is this a crime under U.S. antitrust laws, and, if so, who is liable? Based on the observed behavior of the most widely adopted large language model, we argue that this conduct is imminent, satisfies the requirements for agreement and intent under Section 1 of the Sherman Act, and could confer criminal liability to both firms as well as the pricing manager of the competing firm.

“Killer Acquisitions” Reexamined: Economic Hyperbole In The Age Of Populist Antitrust, Jonathan M. Barnett

The University of Chicago Business Law Review

Major competition regulators, and substantial portions of the scholarly community, have rapidly adopted the view that “killer acquisitions” and “kill zones” constitute significant sources of competitive risk arising from incumbent acquisitions of emerging firms in digital markets. Based on this view, policymakers in the United States, European Union, and other jurisdictions have advocated for, and in some cases have taken, substantial changes to merger review policies that would erect significant obstacles to incumbent/startup acquisitions. A review of the relevant body of evidence finds that these widely-held views concerning incumbent/startup acquisitions rest on meager support, confined to ambiguous evidence drawn from …

Insider Abstention And Rule 10b5-1 Plans, David Rosenfeld

The University of Chicago Business Law Review

Company insiders will typically be in possession of material non-public information (MNPI) about their companies. In order to allow insiders the opportunity to trade, the SEC adopted Rule 10b5-1, which provides an affirmative defense to insider trading liability if the trades are made pursuant to a written plan or trading instruction entered into when the trader was not aware of MNPI. Over the years, there has been considerable concern that insiders were abusing Rule 10b5-1 plans by adopting plans just prior to trading, adopting multiple plans, or even terminating plans when they turned out to be unprofitable. The SEC recently …

Corporate Governance And Risk-Taking: A Statistical Approach, Steven L. Schwarcz

The University of Chicago Business Law Review

Because prudent corporate governance often requires managers to take risks based on statistically expected outcomes, corporate failures that have a small but finite chance of occurring cannot always be prevented. This Article makes three related claims about risk-taking in corporate governance.

This Article’s first claim is that managers should not automatically be presumed to be at fault for corporate failures that result from risk-taking decisions based on statistical methodologies that reasonably justify the decisions ex ante. Conceptually, the business judgment rule should protect corporate managers for engaging in a reasonable decision-making process, including one that is statistically based. Jurisdictionally, however, …

The Ascertainable Standards That Define The Boundaries Of The Sec’S Rulemaking Authority, Bernard S. Sharfman

The University of Chicago Business Law Review

On the heels of the U.S. Supreme Court’s decision in West Virginia v. Environmental Protection Agency, the “major questions” doctrine quickly came to be perceived as a significant impediment to the finalization of the Securities and Exchange Commission’s proposed rule on climate-related disclosures.

This Article presents a new argument against finalization, an argument that does not require the application of the major questions doctrine. This argument finds its authority in the policy objectives and the one policy constraint found in the statutes that underlie the proposed rule. These policy standards, referred to as ascertainable standards in the Article, not only …

Predictability And Adaptation In Law And Other Markets (Chapter In A Coming Book: Research Handbook On Law And Time), Saul Levmore

Public Law and Legal Theory Working Papers

People and enterprises that are subject to the law find it useful to know what the law is at present, but then also to anticipate future rules. If laws are stable this is easily done. Stability is more common where the judicial branch is concerned, because precedents are often valued, and for good reason. They are more often followed by judges than by those involved in other methods of lawmaking. But in all of lawmaking, and even in the private sphere, there is value to consistency and certainty. And yet, surprises can be attractive if they are not confronted on …

Kalven For Corporations: Should For-Profit Corporations Adopt Public Statement Policies?, Anthony Casey, Tom Tom Ginsburg

Public Law and Legal Theory Working Papers

In the last few years, corporations have been called upon to take public positions on myriad issues unconnected to core business concerns. Demands for public statements may arise from various stakeholders, as well as from the general public and the media. Sometimes such statements are uncontroversial, but other times, firms find themselves in a no-win position, in which both silence and voice will offend some core constituency. Crafting meaningful public-facing statements becomes a major challenge.

In this article, we ask whether these corporations should adopt some form of express upfront policy on when they will and when they will not …

Ideological Concordance Between Students And Professors, Adam Bonica

Public Law and Legal Theory Working Papers

We develop a measure of student-professor ideological concordance based on the share of faculty members who are more liberal than the students at a given school. We then use data on the ideology of students and professors in American law schools over more than a twenty-year period to estimate the degree of ideological concordance in the legal academy. We find that as professors have become more liberal over time, their students have become even more liberal. The result is that ideological concordance has increased over time and that by 2010 the average law student actually attended a law school with …

Which Constitutional Provisions Are Most Important?, Richard Albert, Netta Barak Corren, Daniel M. Brinks, Adam Chilton, Rosalind Dixon, Zachary Elkins, Tom Ginsburg, Ran Hirschl, David Landau, Ashley Moran, Yvonne Tew, Mila Versteeg

Public Law and Legal Theory Working Papers

National constitutions codify provisions on a wide range of topics, ranging from presidential term limits to the country’s flag. But are all constitutional provisions equally important? Some are likely to be particularly consequential for how governments function, while others are likely to be largely symbolic. To date, there has been little research on the relative importance of constitutional provisions. To explore current thinking on this subject, we assembled a group of twelve comparative constitutional scholars to rate the relative importance of 340 constitutional provisions to the functioning of a country’s government. These aggregate ratings make three contributions to constitutional studies: …

A New Measure Of Surviving Children That Sheds Light On Long-Term Trends In Fertility, Anup Malani, Ari Jacob

Public Law and Legal Theory Working Papers

The consequences of fertility decline flow primarily from reduction in the number of surviving children, i.e., both births and survival, not simply from reductions in births. Therefore, neoclassical economic theories that attempt to explain fertility decline (e.g., quantity-quality models) hinge on preferences for surviving children, not births per se. This paper provides a new measure of surviving children. Effective fertility rate (EFR) is the product of the current fertility rate and the projected probability that a child survives until some age A. This age A could be between 15-49 for a measure (EFRR) that tracks reproductive potential, or 15-65 for …

Private Security And Public Police, Ben Grunwald, John Rappaport, Michael Berg

Public Law and Legal Theory Working Papers

Private security officers outnumber police by a wide margin, and the gap may be growing. As cities have claimed to defund the police, many have quietly expanded their use of private security, reallocating spending from the public to the private sector. It is difficult to know what to make of these trends, largely because we know so little about what private security looks like on the ground. On one prevalent view of the facts, a shift from public to private security would mean little more than a change of uniform, as the two labor markets are deeply intertwined. Indeed, academics, …

Structural Logics Of Presidential Disqualification: An Essay On Trump V. Anderson, Aziz Z. Huq

Public Law and Legal Theory Working Papers

This Comment analyzes the Trump v. Anderson per curiam on its own terms, and by the criteria generically employed by the Court in other rulings. I untangle and then closely evaluate three distinct structural logics upon which the Court’s holding rests. These logic sound in terms of the registers (roughly speaking) of federalism, the separation of powers, and democracy. Because the first two founds prove incoherent, I show that the opinion ultimately rests on an (unpersuasive) logic of democratic defense. The disqualification shares this foundation with the Court’s subsequent immunity decision, which is also briefly discussed. Both judgments, I show, …

The Trouble With Classifications, Aziz Z. Huq

Public Law and Legal Theory Working Papers

The Supreme Court relies increasingly on anti-classification rules to implement the Constitution’s commands of even-handed state treatment. These rules direct attention to whether an instance of a forbidden classification is present on the face of a challenged law. They contain two necessary steps. First, a court defines a general category of impermissible terms. Second, a court ascertains whether an instance of the category is found in enacted text—triggering the familiar strict scrutiny analysis. So defined, anti-classification rules now dominate Equal Protection, Free Speech, ‘dormant’ Commerce Clause, and even Free Exercise jurisprudence. The Roberts Court celebrates them as “commonsense,” citing their …

Trade Secrecy's Information Paradox, Christopher Buccafusco, Jonathan S. Masur, Deepa Varadarajan

Public Law and Legal Theory Working Papers

Trade secret law is meant to encourage socially beneficial behaviors by permitting firms to protect their investments in the creation of valuable information. In theory, the ability to protect valuable information will make firms more likely to create that information in the first instance. But the law can also be used to shield socially harmful behaviors from public oversight. Firms can assert trade secret protection to prevent journalists, watchdogs, and criminal defendants from learning whether they are engaged in dangerous, wrongful, or biased activity. Ideally, trade secret law should sort socially beneficial uses from socially harmful ones, permitting only the …

Administrative Enslavement, Adam Davidson

Public Law and Legal Theory Working Papers

There are currently over a million people enslaved in the United States. Under threat of horrendous punishment, they cook, clean, and even fight fires. They do this not in the shadow of the law but with the express blessing of the Thirteenth Amendment’s Except Clause, which permits enslavement and involuntary servitude as punishment for a crime.

Despite discussions of this exception in law reviews, news reports, and Netflix documentaries, few commentators have recognized that this enslavement happens silently. No prosecutor, judge, or defense attorney tells convicted people that they will be enslaved as punishment for their crime. It is only …

An Apa For Tax, David A. Weisbach

Public Law and Legal Theory Working Papers

Recent Supreme Court cases threaten to upend the administrative law applicable to the tax system. Loper Bright eliminates Chevron deference. Ohio v. EPA heightens the scrutiny given to regulatory preambles. And Corner Post effectively eliminates the statute of limitations for challenging the validity regulations. A number of lower court decisions move in the same direction, aggressively using administrative law to invalidate guidance. Combined, these decisions threaten to make issuing guidance much more difficult and to slow the guidance process.

These decisions are based on the Administrative Procedure Act or related statutes rather than constitutional principles. Therefore, to the extent that …

Bootstrapped: A (Qualified) Defense Of Practice-Based Constitutional Argument, Alma Diamond

Public Law and Legal Theory Working Papers

We have our Constitution in common, even if we share very little else. This, at least, is a core tenet of our constitutional order: that we share in a single framework of duties and entitlements despite our underlying moral, political, and philosophical differences. But is it really possible to occupy a shared legal world if we live in very different moral, political and philosophical worlds? This is the question raised by deeply consequential constitutional controversies in an increasingly polarized society. It is a question about the basis of, and justification for, constitutional law. Is our constitutional law ultimately a matter …

The Neoclassical View Of Corporate Fiduciary Duty Law, Zachary J. Gubler

University of Chicago Law Review

Traditionally, corporate fiduciary duties are said to run to the corporation itself. But what does this mean? Something, this Article argues, that is quite different from what both shareholder and stakeholder value maximization proponents think. Specifically, the argument is that corporate fiduciary duties are owed not to any flesh-and-blood stakeholder, including current shareholders, but rather to a hypothetical permanent investor whose holding period is forever. Like any statement of corporate purpose, this “permanent equity maximization norm” is rooted in an underlying model of the corporation. In this case, the underlying model must be one that sees the corporation as a …

The Constitutional Money Problem, Aziz Z. Huq, Brian D. Galle

Public Law and Legal Theory Working Papers

We consider three aspects of the constitutional status of the U.S. Federal Reserve. Under the Supreme Court’s contemporary approach to constitutional meaning, there is a surprising degree of doubt about whether key aspects of the Federal Reserve (“Fed”)—its independence from Congress and the President, and even its power to create money— are constitutional. We suggest this is reason to believe the Court’s dominant interpretive approaches generate implausible results, but identify a previously overlooked source of constitutional grounding for the Fed that better supports its authority and structure. We further sketch the potential limits, costs, and benefits of our suggestion.

In …

Lost Time: Paying For Delays Associated With Labor Strikes And Traffic Jams (Chapter In A Coming Book: Research Handbook On Law And Time), Saul Levmore

Public Law and Legal Theory Working Papers

Waiting is often costly. In many settings, one party delays to impose costs on another. In other settings, delay yields a small gain while imposing significant costs on others who cannot easily bargain. Where the parties can bargain, at least one expects the other to relent and to bring about a settlement that is mutually beneficial. Inasmuch as time offers the opportunity to gather information, compare alternatives, and reach yet better bargains, law does not and should not simply discourage all delays. On the other hand, it is often the case that when parties delay before reaching a bargain, they …

The Comparative Constitutional Design Of Elections, Parties And Voting, Tom Ginsburg, Aziz Z. Huq, Tarunabh Khaitan

Public Law and Legal Theory Working Papers

We develop a measure of student-professor ideological concordance based on the share of faculty members who are more liberal than the students at a given school. We then use data on the ideology of students and professors in American law schools over more than a twenty-year period to estimate the degree of ideological concordance in the legal academy. We find that as professors have become more liberal over time, their students have become even more liberal. The result is that ideological concordance has increased over time and that by 2010 the average law student actually attended a law school with …

Asking Gpt For The Ordinary Meaning Of Statutory Terms, Christoph Engel, Richard H. Mcadams

Public Law and Legal Theory Working Papers

We report on our test of the Large Language Model (LLM) ChatGPT (GPT) as a tool for generating evidence of the ordinary meaning of statutory terms. We explain why the most useful evidence for interpretation involves a distribution of replies rather than only what GPT regards as the single “best” reply. That motivates our decision to use Chat 3.5 Turbo instead of Chat 4 and to run each prompt we use 100 times. Asking GPT whether the statutory term “vehicle” includes a list of candidate objects (e.g., bus, bicycle, skateboard) allows us to test it against a benchmark, the results …

The Common Political Foundations Of Originalism And Cost-Benefit Analysis, Jonathan S. Masur, Eric A. Posner

Public Law and Legal Theory Working Papers

Cost-benefit analysis (CBA) and originalism are rarely discussed together, and seem to belong to different worlds of legal scholarship. The two methods are used by different institutions in different spheres of law for different purposes; what could they have in common? Nothing, or so it would seem. Yet closer inspection reveals surprising commonalities—both in terms of structure and function, on the one hand, and in historical pedigree and political economy, on the other. CBA and originalism are what we will call midlevel legal methods. Midlevel legal methods are neither normative commitments nor legal doctrines, but recurrently used methodologies that are …