Law Commons^™

Introduction To The Symposium On Labor Market Power, Eric A. Posner

University of Chicago Law Review

Recent empirical work on labor markets reveals that they are beset by frictions, including high levels of concentration and frequent collusion, contrary to the traditional view of labor markets as being perfectly competitive.1 The implications of this work for law and policy have only begun to be explored. The University of Chicago Law Review convened a symposium to bring together scholars from various disciplines and with different subject matter expertise but with a common interest in understanding the regulation of labor markets in light of new empirical results. The papers delivered at the symposium have been published in this symposium …

Labor Market Concentration And Competition Policy Across The Atlantic, Satoshi Araki, Andrea Bassanini, Andrew Green, Luca Marcolin, Cristina Volpin

University of Chicago Law Review

Drawing upon data from the largest cross-country study of labor market concentration to date, this Essay analyzes the level of concentration of labor-input markets in Europe and North America and provides a comparative perspective on employers’ monopsony power. It explores the characteristics of monopsony in labor markets and documents its impact by looking at the magnitude of employer concentration in selected jurisdictions. Using a harmonized dataset of online vacancies, this Essay shows that European labor markets are no more competitive than North American ones. It also supports the view that the effects of concentration on labor markets are broadly similar …

Conflict Of Laws? Tensions Between Antitrust And Labor Law, Matthew Dimick

University of Chicago Law Review

Not long ago, economists denied the existence of monopsony in labor markets. Today, scholars are talking about using antitrust law to counter employer wagesetting power. While concerns about inequality, stagnant wages, and excessive firm power are certainly to be welcomed, this sudden about-face in theory, evidence, and policy runs the risk of overlooking some important concerns. The purpose of this Essay is to address these concerns and, more critically, to discuss some tensions between antitrust and labor law, a more traditional method for regulating labor markets. Part I addresses a question raised in the very recent literature, about why antitrust …

Losing Leverage: Employee Replaceability And Labor Market Power, Cynthia Estlund

University of Chicago Law Review

Workers’ labor market power matters enormously to their lives at work and beyond. And most workers have too little of it. This Essay highlights one underappreciated set of factors in the decline of workers’ labor market power and explores policy levers that might help to rebalance the bargaining field. This Essay begins with the fairly self-evident observation that workers’ labor market power is a product in part of the ease with which employers can replace employees. That points to the importance of several trends in the organization and technology of work—including both fissuring and automation—that make it easier for private …

Worker Welfare And Antitrust, Herbert Hovenkamp

University of Chicago Law Review

The field of antitrust and labor has gone through a profound change in orientation. For the great bulk of its history, labor was viewed by antitrust enforcers as a competitive threat. The debate over antitrust and labor was framed around whether there should be a labor “immunity” from the antitrust laws. In just the last decade, however, the orientation has flipped. Most new writing views labor as a target of anticompetitive restraints imposed by employers. Antitrust is increasingly concerned with protecting labor rather than challenging its conduct.

Antitrust interest in labor markets is properly focused on two things. The smaller …

Coercive Rideshare Practices: At The Intersection Of Antitrust And Consumer Protection Law In The Gig Economy, Christopher L. Peterson, Marshall Steinbaum

University of Chicago Law Review

This Essay considers antitrust and consumer protection liability for coercive practices vis-à-vis drivers that are prevalent in the rideshare industry. Resale price maintenance, nonlinear pay practices, withholding data, and conditioning data access on maintaining a minimum acceptance rate all curtail platform competition, sustaining a high-price, tacitly collusive equilibrium among the few incumbents. Moreover, concealing relevant trip data from drivers is both deceptive and unfair when the platforms are in full possession of the relevant facts. In the absence of these coercive practices, customers too would be better off due to platform competition, which would lower average prices by sharpening competition …

Quasi Tripartism: Limits Of Co-Regulation And Sectoral Bargaining In The United States, César F. Rosado Marzán

University of Chicago Law Review

Disproportionate employer power is at least partly responsible for the sharp increase in economic inequality in the United States, which threatens the fabric of the Republic. Workplace law reform could provide workers with an institutional source of power that countervails employer power and compresses inequality. Ideas for workplace law reform include modest ones, such as instituting “co-enforcement,” and more ambitious ones, such as “sectoral bargaining.” According to their adherents, both require tripartite arrangements where capital, labor, and government provide inputs on how to regulate work.

But can the United States, with its liberal market economy typically devoid of meaningful tripartism, …

Horizontal Collusion And Parallel Wage Setting In Labor Markets, Jonathan S. Masur, Eric A. Posner

Articles

Horizontal collusion among employers to suppress wages has received almost no attention in the academic literature, in contrast with its more familiar cousin, product-market collusion. The similar economic analysis of labor and product markets might suggest that antitrust should regulate labor and product markets in the same way. But product markets and labor markets do not operate identically: people behave differently as employees and as consumers. Unlike consumers who can switch products relatively easily, employees face significant frictions in changing jobs. Other labor market frictions are created by the pay equity norm and downward nominal wage rigidity. These and related …

Spacs, Pipes, And Common Investors, Frank Fagan, Saul Levmore

Articles

Special Purpose Acquisition Companies, or SPACs, have come to play a large role in bringing together small and large investors in the acquisition and expansion of private companies. A pessimistic version of this relatively recent alternative to conventional initial public offerings (IPOs), and other methods of investing in companies ready to expand, is that clever sharks take advantage of overly optimistic and ill-informed small investors. This Article offers a very different view. It shows that common investors need someone to locate good investment opportunities, and then they often benefit if another well-informed party can credibly vouch for the entity that …

Climate Change Policy In The International Context: Solving The Carbon Leakage Problem, David A. Weisbach, Samuel S. Kortum

Public Law and Legal Theory Working Papers

Under the Paris Agreement, nations set their own emissions goals and policies. As a result, climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. A key problem when carbon policies vary across countries is that energy intensive industries can relocate to places with few or no emissions restriction. Relocated industries would continue to pollute but would be operating in a less desirable location. Moreover, the countries that imposed strict emissions reductions lose the benefit of having those industries located domestically. This problem, known as leakage, is one of the key reasons …

The Corporate Governance Of Public Utilities, Aneil Kovvali, Joshua A. Macey

Articles

Rate-regulated public utilities own and operate one-third of U.S generators and nearly all the transmission and distribution system. These firms receive special regulatory treatment because they are protected from competition and subject to rate caps. In the past decade, they also have been at the center of high- profile corporate scandals. They have bribed regulators to secure subsidies for coal-fired generators and nuclear reactors. They have caused wildfires and coal- ash spills that resulted in hundreds of deaths and billions of dollars in liability. Their failure to maintain reliable electric service has contributed to catastrophic blackouts. Perhaps most consequentially, they …

Residents Against Housing: A Response To Professor Infranca’S ‘Differentiating Exclusionary Tendencies’, Lee Anne Fennell

Articles

Incumbent residents routinely oppose residential development.¹ Interestingly, this is true of both homeowners and renters, if for opposite reasons. Homeowners typically worry that new housing will cause the market value of their own homes to fall, resulting in a hit to what is usually a house-heavy personal wealth portfolio.² Tenants typically worry that new housing will cause the market value of their own homes to rise, generating pressure toward higher rents and displacement.³ Both homeowners and tenants also express concern that new housing development will change the character of their neighborhoods in unwanted ways.⁴

Resident opposition …

Book Review: The “Common-Good” Manifesto, William Baude, Stephen E. Sachs

Articles

In Common Good Constitutionalism, Professor Adrian Vermeule expounds a constitutional vision that might “direct persons, associations, and society generally toward the common good.” The book must be taken seriously as an intellectual challenge, particularly to leading theories of originalism.

That said, the challenge fails. The book fails to support its hostility toward originalism, to motivate its surprising claims about outcomes, or even to offer an account of constitutionalism at all. Its chief objections to originalism are unpersuasive and already answered in the literature it cites. The book does highlight important points of history and jurisprudence, of which originalists and others …

State International Agreements: The United States, Canada, And Constitutional Evolution, Curtis A. Bradley

Articles

The text of the US Constitution appears to require that individual states, to the extent that they are ever allowed to conclude agreements with foreign governments, must obtain congressional approval. In practice, however, states conclude many agreements with foreign governments, including with Canada and its provinces, and they almost never seek congressional approval. This practice is an illustration of both the importance of federalism in US foreign relations and the significant role played by historical practice in informing US constitutional interpretation. The phenomenon of state international agreements assumed new prominence in 2019 when the Trump administration sued to challenge a …

The Long Hand Of Anti-Corruption: Israeli Judicial Reform In Comparative Perspective, Tom Ginsburg

Articles

There are many ways in which to examine the current Israeli constitutional crisis. This article uses the lens of anti-corruption, a global movement which has changed politics in many countries. The long empowerment of the legal system in Israel arguably has its origins in policing corruption, which may be a particularly powerful motivator for the current governing coalition’s efforts to assert more control over the Supreme Court. The dynamics of anti-corruption in Israel are somewhat distinct from those of other countries in ways that may bode well for the Court in its confrontation with the government.

Fractured Majorities And Their Reasons, Saul Levmore

Articles

The wisdom of crowds correctly exalts majority decision-making on appellate courts as well as on many other settings, including hospitals and committees with multiple doctors or board members. But the same confidence in majorities should be applied to the reasons that are attached to a vote, or opinion, and then to a majority’s rejection of a member’s reasoning. This Article introduces the problems confronted when examining the reasons for opinions, and then the reasons beneath those reasons. It shows that majority decision-making is not as reliable as it first seems and, indeed, that a single decision-maker may at times be …

Coordinated Rulemaking And Cooperative Federalism’S Administrative Law, Bridget A. Fahey

Articles

“Cooperative federalism” is not just a model of federalism; it is a model of administration. From health care to air quality to emergency management, transportation, immigration, national security, and more, cooperative federalism is the regulatory model of choice. But scholars have yet to conceptualize a cooperative administrative law for cooperative federalism. As this Article shows, however, federal and state bureaucracies have devised intricate strategies for coordinating their implementation of the programs they jointly administer.

The Article begins to elaborate cooperative federalism’s unseen administrative apparatus by focusing on its distinctive form of legislative rulemaking, the workhorse of administrative law. I show …

The (Mis)Uses Of The S&P 500, Adriana Z. Robertson

Articles

No abstract provided.

Introduction To The Symposium On Labor Market Power, Eric A. Posner

Articles

No abstract provided.

Against Political Theory In Constitutional Interpretation, Christopher S. Havasy, Joshua C. Macey, Brian Richardson

Articles

Judges and academics have long relied on the work of a small number of Enlightenment political theorists—particularly Locke, Montesquieu, and Blackstone—to discern meaning from vague and ambiguous constitutional provisions. This Essay cautions that Enlightenment political theory should rarely, if ever, be cited as an authoritative source of constitutional meaning. There are three principal problems with constitutional interpretation based on eighteenth-century political theory. First, Enlightenment thinkers developed distinct and incompatible theories about how to structure a republican form of government. That makes it difficult to decide which among the conflicting theories should possess constitutional significance. Second, the Framers did not write …

Severability First Principles, William Baude

Articles

The United States Supreme Court has decided a number of cases involving severability in the last decade, from NFIB v. Sebelius and Murphy v. NCAA to Seila Law v. CFPB, Barr v. AAPC, United States v. Arthrex, California v. Texas, and Collins v. Yellen. The analysis has not been consistent, the Justices have not been able to agree, and the results have not been intuitive. Some of the Justices have proposed a revisionist approach, but they too have been unable to agree on what it requires.

This Article proposes a return to first principles. Severability is a question of what …

The Promise & Perils Of Open Finance, Dan Awrey, Joshua Macey

Articles

We are at the dawn of a new age of Open Finance. Open Finance seeks to harness the potential of new platform technology to enhance customer data access, sharing, portability, and interoperability—thereby leveling the informational playing field and fostering greater competition between incumbent financial institutions and a new breed of financial technology (fintech) disruptors. According to its proponents, this competition will yield a radical restructuring of the financial services industry, offering more and better choices for consumers looking to make fast payments, borrow money, invest their savings, manage household budgets, and compare financial products and services. The promise of Open …

Strategic Subdelegation, Brian D. Feinstein, Jennifer Nou

Articles

Appointed leaders of administrative agencies routinely record subdelegations of governmental authority to civil servants. That appointees willingly cede authority in this way presents a puzzle, at least at first glance: Why do these appointees assign their power to civil servants insulated by merit protection laws, that is, to employees over whom they have limited control? This article develops and tests a theory to explain this behavior. Using original data on appointee-to-civil servant delegations and a measure of the ideological distance between these two groups of actors, we show that appointees are more willing to vest power in civil servants when …

Privacy And/Or Trade, Anupam Chander, Paul M. Schwartz

University of Chicago Law Review

International privacy and trade law developed together but are now engaged in significant conflict. Current efforts to reconcile the two are likely to fail, and the result for globalization favors the largest international companies able to navigate the regulatory thicket. In a landmark finding, this Article shows that more than sixty countries outside the European Union are now evaluating whether foreign countries have privacy laws that are adequate to receive personal data. This core test for deciding on the permissibility of global data exchanges is currently applied in a nonuniform fashion with ominous results for the data flows that power …

Insolvency Courts: General Principles For Systems Design, Anthony Casey, Joshua Macey

Coase-Sandor Institute for Law & Economics Research Paper Series

This article sets out general principles for designing the role of corporate insolvency courts. The authors identify four general considerations relevant to that design: (a) the sophistication and development of the relevant private markets and private law, (b) the applicable background corporate law principles, (c) the competence—in terms of experience and sophistication, capacity and resources, efficiency, and neutrality and lack of corruption—of the courts in question, and (d) the availability of alternative systems through forum and venue shopping or other forms of exit. Having identified these considerations, the article then explores how each affects the role that insolvency courts should …

Sharing Where Bargains Are Impossible, Saul Levmore, Andrew Verstein

Coase-Sandor Institute for Law & Economics Research Paper Series

Cooperation sometimes breaks down, and former teammates will disagree about whathappens next. For example, when can an employee quit to join a competitor? Courts often resolve disputes by looking at the parties’ actual or hypothetical bargain. Thus, a court may ask whether there was a non-competition agreement (and whether it was reasonable), or whether the employee is taking a “corporate opportunity” as she departs. These are all-or-nothing determinations by courts; either the bargain, or law, fully allows or fully prohibits the disputed conduct.

This is a suitable approach when fair and efficient bargains are possible. But, this article argues that …

A Primer On Option Valuation In Restructuring, Caroline Boone, Anthony Casey

Coase-Sandor Institute for Law & Economics Research Paper Series

The restructuring of a financially distressed but viable business firm creates an unusual and complex valuation problem. The distressed business has taken on too much debt and must adjust its capital structure to preserve value. The goal of the process is to emerge with a new capital structure that allows the firm to raise funds for future projects. But that requires a two-pronged valuation. On the one hand, the old claims on the firm must be reconciled to determine who is owed what. On the other hand, the value available to pay those claims derives from the firm’s prospects at …

A Critique Of The American Law Institute’S Draft Restatement Of The Corporate Objectiv, Stephen M. Bainbridge

The University of Chicago Business Law Review

The American Law Institute (ALI) is currently working on a Restatement of the Law of Corporate Governance (Restatement). At the ALI’s May 2022 annual meeting, the membership approved, inter alia, § 2.01, which purports to restate the objective of the corporation. Section 2.01 differentiates between what the drafters refer to as common law jurisdictions and stakeholder jurisdictions. The latter are those states that have adopted a constituency statute (a.k.a. a non-shareholder constituency statute).

The drafters assert that, in common law jurisdictions, the corporate objective is to “enhance the economic value of the corporation, within the boundaries of the law . …

Unplugging Heartbeat Trades And Reforming The Taxation Of Etfs, Jeffrey M. Colon

The University of Chicago Business Law Review

The much-touted tax efficiency of equity exchange traded funds (ETFs) has historically been built upon portfolios that track indices with low turnover and the tax exemption for in-kind distributions of appreciated property.

This rule permits ETFs to distribute appreciated shares tax-free to redeeming authorized participants (APs) and reduce a fund’s future capital gains. ETFs and APs, working together, exploit this rule in so-called heartbeat trades in which an ETF distributes shares of a specific company or companies to a redeeming AP, instead of a pro rata basket of the ETF’s portfolio. The distributed securities are appreciated shares of companies that …

The (Mis)Uses Of The S&P 500, Adriana Z. Robertson

The University of Chicago Business Law Review

The S&P 500 is widely used to (i) direct capital through “passive” investing, (ii) benchmark investment portfolios, and (iii) evaluate firm performance. The securities regulatory regime’s approach to each of these uses is fundamentally flawed. I show that the index is neither neutral nor constant: it represents substantial amounts of discretionary decision-making and is simply one particular large-cap portfolio. I then argue that an “S&P 500 fund” is not meaningfully passive, the mutual fund prospectus benchmark requirement is flawed, and the requirement that index constituents compare their performance to that of the index is nonsensical. I propose regulatory changes to …