Law Commons^™

Taxes And Competitiveness, Michael S. Knoll

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Around the world, the tax laws are shaped by concerns with competitiveness. This paper provides a general theory of how taxes impact competitiveness. As part of that theory, this paper also introduces the concept of tax-based competitiveness neutrality. A tax system is competitively neutral when taxes do not cause competitors to change their relative valuations of any investments. This paper then uses that theory to evaluate tax policy in two high profile and important areas. The paper begins by describing two models of competitiveness, called the conduit or new money model and the investor or old money model. The central …

Insurance Against Misinformation In The Securities Market, Tom Baker

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Prepared at the request of the Task Force to Modernize Securities Legislation in Canada, this study describes and evaluates evaluate a new capital markets insurance concept: securities misinformation insurance. This new insurance would compensate investors for losses caused by securities law violations. The most powerful objection to this new concept is that investors do not need a new insurance program for securities misinformation losses. Individual and institutional investors already can spread securities misinformation losses by holding a diversified portfolio. Nevertheless, a securities misinformation insurance program has the potential to provide systemic benefits: improved compliance with securities laws (resulting from cost …

Measuring Efficiency In Corporate Law: The Role Of Shareholder Primacy, Jill E. Fisch

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The shareholder primacy norm defines the objective of the corporation as maximization of shareholder wealth. Law and economics scholars have incorporated the shareholder primacy norm into their empirical analyses of regulatory efficiency. An increasingly influential body of scholarship uses empirical methodology to evaluate legal rules that allocate power within the corporation. By embracing the shareholder primacy norm, empirical scholars offer normative assessments about regulatory choices based on the effect of legal rules on measures of shareholder value such as stock price, net profits, and Tobin’s Q.

This Article challenges the foundations of using the shareholder primacy norm to judge corporate …

Standards Ownership And Competition Policy, Herbert J. Hovenkamp

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Antitrust law is a blunt instrument for dealing with many claims of anticompetitive standard setting. Antitrust fact finders lack the sophistication to pass judgment on the substantive merits of a standard. In any event, antitrust is not a roving mandate to question bad standards. It requires an injury to competition, and whether the minimum conditions for competitive harm are present can often be determined without examining the substance of the standard itself.

When government involvement in standard setting is substantial antitrust challenges should generally be rejected. The petitioning process in a democratic system protects even bad legislative judgments from collateral …

The Return Of Bargain: An Economic Theory Of How Standard Form Contracts Negotiation Between Businesses And Consumers, Jason S. Johnston

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This paper analyzes standard form contracts between firms and individual consumers (and borrowers). It presents a mix of anecdotal and empirical evidence from a large number of industries demonstrating a widespread pattern in which firms refrain from enforcing the typically clear bright line performance obligations that such standard form contracts set out (such as a consumer credit repayment terms, or a retail consumer's right to return goods). Instead, firms routinely give their supervisory employees the discretion to bargain around such terms. Within a simple and informal model, the paper explains such delegated, discretionary renegotiation as a means by which firms …

Choice, Consent, And Cycling: The Hidden Limitations Of Consent, Leo Katz

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Most legal scholars assume that if V consents to allow D to do something to him, such consent makes D's actions legally and morally acceptable. To be sure, they are willing to make an exception when consent is given under a specified list of conditions: Force, fraud, incompetence, third-party effects, unequal bargaining power, commodification, paternalism - all of these may be grounds for rejecting the validity of V's consent. We might call scholars who take this view of consent quasi-libertarians. In this Article, I argue against the quasi-libertarian view of consent. My central claim is that the validity of consent …

The Law Of Exclusionary Pricing, Herbert J. Hovenkamp

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The success of the Areeda-Turner test for predatory pricing and the Supreme Court's adoption of demanding proof requirements in its 1993 Brooke Group decision have made it very difficult for plaintiffs to win conventional predatory pricing claims. While many challenges to exclusionary pricing continue to be made, the legal theory has evolved away from classical predation to a variety of other theories. These include challenges to quantity and market share discounts, single item and package discounts, and various purchasing practices, including slotting fees, overinvestment in fixed cost assets, and overbuying of variable cost inputs. Plaintiffs have enjoyed somewhat greater success …

Meta-Blackmail And The Evidentiary Theory: Still Taking Motives Seriously, Mitchell N. Berman

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For generations, criminal law theorists, moral and political philosophers, and economists have struggled to resolve one of the law's great puzzles: whether, why, and under what circumstances the law should criminalize the conditional threat to do what is lawful. This is the so-called paradox of blackmail. Although libertarians have insisted that blackmail should be lawful, most commentators agree that at least some forms of blackmail are properly criminalized, disagreeing over the proper rationale. In his provocative article, Meta-blackmail, Russell Christopher presents a wholly novel argument in support of the libertarian conclusion. Christopher's argument relies upon the imaginary device of a …

European Implications Of Bankruptcy Venue Shopping In The U.S., David A. Skeel Jr.

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No abstract provided.

The Best Puffery Article Ever, David A. Hoffman

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This Article provides the first extensive legal treatment of an important defense in the law of fraud and contracts: puffery. Legal authorities commonly say they make decisions about whether defendants should be able to utter exaggerated, optimistic, lies based on assumptions about buyer behavior, concluding that consumers do not rely on such speech. However, as the Article shows, such analyses are proxies for a deeper analytical question: does the speech encourage or discourage a type of consumption activity that the court deems welfare maximizing? The Article presents a novel constitutional analysis of puffery doctrine that focuses on the meaning of …

The Essential Role Of Securities Regulation, Zohar Goshen, Gideon Parchomovsky

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This Article posits that the essential role of securities regulation is to create a competitive market for sophisticated professional investors and analysts (information traders). The Article advances two related theses-one descriptive and the other normative. Descriptively, the Article demonstrates that securities regulation is specifically designed to facilitate and protect the work of information traders. Securities regulation may be divided into three broad categories: (i) disclosure duties; (ii) restrictions on fraud and manipulation; and (iii) restrictions on insider trading-each of which contributes to the creation of a vibrant market for information traders. Disclosure duties reduce information traders' costs of searching and …

The "Bad Man" Goes To Washington: The Effect Of Political Influence On Corporate Duty, Jill E. Fisch

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No abstract provided.

The Equilibrium Content Of Corporate Federalism, William W. Bratton, Joseph A. Mccahery

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No abstract provided.

An Efficiency-Based Explanation For Current Corporate Reorganization Practice, Kenneth M. Ayotte, David A. Skeel Jr.

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No abstract provided.

Regulatory Responses To Investor Irrationality: The Case Of The Research Analyst, Jill E. Fisch

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An extensive body of behavioral economics literature suggests that investors do not behave with perfect rationality. Instead, investors are subject to a variety of biases that may cause them to react inappropriately to information. The policy challenge posed by this observation is to identify the appropriate response to investor irrationality. In particular, should regulators attempt to protect investors from bad investment decisions that may be the result of irrational behavior?

This Article considers the appropriate regulatory response to investor irrationality within the concrete context of the research analyst. Many commentators have argued that analyst conflicts of interest led to biased …

Subsidizing Addiction: Do State Health Insurance Mandates Increase Alcohol Consumption?, Jonathan Klick, Thomas Stratmann

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A model of addiction in which individuals are forward looking implies that as the availability of addiction treatment options grows, individuals will consume more of an addictive good. We test this implication using cross-state variation in the adoption of mental health parity mandates that include substance abuse treatments. We examine the effects of these mandates on the consumption of alcohol and find that parity legislation leads to an increase in alcohol consumption. To account for the possible endogeneity of the adoption of mental health parity mandates, we perform an instrumental variables analysis and find that the ordinary least squares estimation …

Network Neutrality And The Economics Of Congestion, Christopher S. Yoo

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No abstract provided.

Supersize Pay, Incentive Compatibility, And The Volatile Shareholder Interest, William W. Bratton

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No abstract provided.

The Tuna Court: Law And Norms In The World's Premier Fish Market, Eric Feldman

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Legal scholars have long emphasized the corrosive impact of conflict on long-term commercial and interpersonal relationships. To minimize the negative consequences of such conflict, members of close-knit groups who anticipate future interactions create ways of resolving their disputes with reference to internal group norms rather than relying on state-mandated legal rules. From farmers in California’s Shasta County to jewelers in midtown Manhattan and neighbors in Sanders County, the literature describes people who create norms of conflict management that are faster and less expensive than relying on formal law, and lessen the harm that conflict causes to their relationships. This article …

The "Duty" To Be A Rational Shareholder, David A. Hoffman

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How and when do courts determine that corporate disclosures are actionable under the federal securities laws? The applicable standard is materiality: would a (mythical) reasonable investor have considered a given disclosure important. As I establish through empirical and statistical testing of approximately 500 cases analyzing the materiality standard, judicial findings of immateriality are remarkably common, and have been stable over time. Materiality's scope results in the dismissal of a large number of claims, and creates a set of cases in which courts attempt to explain and defend their vision of who is, and is not, a reasonable investor. Thus, materiality …

Aggregation On The Couch: The Strategic Uses Of Ambiguity And Hypocrisy, Stephen B. Burbank

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In this Essay, Professor Burbank comments on the essays by Professors Nagareda and Issacharoff. Welcoming the opportunity to revisit the interplay between procedure and substantive law and the question of democratic accountability that Professor Nagareda’s essay presents, Professor Burbank concludes that the parts of that essay are greater than the whole. He finds that Professor Nagareda’s pursuit of unifying themes and a general normative theory leads to inconsistencies in classification between procedure and substance and to an impoverished vision of institutional legitimacy. Professor Burbank voices concern that this quest, which is also evident in the current draft of the American …

The Need For A Reduced Workweek In The United States, Vicki Schultz, Allison K. Hoffman

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This paper argues that a reduced workweek offers a way to alleviate work-family conflict without exacerbating the sex-based division of labor in paid work and unpaid family work. We distinguish our position from two other approaches: (1) one that compensates unpaid family work directly (through such policies as traditional welfare provision, or alimony), policies we argue can discourage women from labor force attachment and contribute to sex-stereotyping and sex-segregated employment; and (2) an approach that spurs employers to accommodate workers' family responsibilities (through such policies as part-time work for parents), policies workers often avoid out of a well founded fear …