Law Commons^™

A Common Tragedy: Condemnation And The Anticommons, Robert L. Scharff

ExpressO

Abstract: Economic development of land may be suboptimal where multiple parties have the legal right to exclude use of the property in question. Michael Heller labeled this phenomenon the ‘anticommons.’ It has been argued that condemnation of private property for economic development is a potentially efficiency-enhancing solution to the anticommons problem. Until recently, this argument was largely academic. However, with the recent Supreme Court decision in Kelo v. City of New London, condemnation for economic development is now a valid policy choice. In this paper, I argue that the economic models used to justify condemnation are fundamentally flawed and that …

Valuing Cultural Differences In Behavioral Economics, Justin D. Levinson, Kaiping Peng

ExpressO

Behavioral economic research has tended to ignore the role of cultural differences in economic decision-making. The authors suggest that a systematic bias affects existing behavioral economic theory-- cognitive biases are often assumed to be universal. To examine how cultural background informs economic decision-making, and to test framing effects, morality effects, and out-group effects in a cross-cultural study, the authors conducted an experiment in the United States and China. The experiment was designed to test cultural and cognitive effects on a fundamental economic phenomenon-- how people estimate the financial values of objects over time.

Results of the experiment demonstrated dramatic cultural …

Incomplete Contracts In A Complete Contract World, Scott A. Baker, Kimberly D. Krawiec

ExpressO

This paper considers the role that contract doctrine should play in facilitating optimal investment in contractual relationships. All contracts are incomplete in the sense that they do not specify the optimal actions for the buyer and seller in every future contingency. This incompleteness can lead to both under and over-investment in resources specifically targeted to the needs of the other contracting party. To solve these investment problems, economists and legal scholars have looked to complicated contractual solutions and the ownership of assets.

This Article offers another solution: contract doctrine. Specifically, we propose a contractual default rule applicable to all contract …

Should Internet Protocol-Enabled Video Service Provided Over A Telephone Network Be Regulated As A Cable Service?, Hal J. Singer, J Gregory Sidak, Robert W. Crandall

ExpressO

We examine whether, on legal or policy grounds, Internet protocol-enabled video services provided over a telephone network should be regulated as a cable service. We evaluate the history of cable regulation and the services that Congress envisioned to be regulated when it first drafted legislation establishing a regulatory framework for cable television services in 1984. We then examine numerous differences between the IP-enabled video services delivered over a telephone network and those that Congress envisioned when regulating cable television service in 1984 and in subsequent years when it revised the Cable Act of 1984. Finally, we find that municipal franchise …

Antitrust Governance, Yane Svetiev

ExpressO

In this article, the author argues that antitrust law has entered a new phase of its controversial existence. The role of antitrust in moderating inter-firm relationships depends both on the problems of the underlying market regime and the institutional capacity of antitrust decision-makers to respond to those challenges. For much of the 20th century, the model firm was hierarchical: vertical integration within the business organization was a way of achieving transaction cost efficiencies and delivering higher levels of output at lower prices. Recognition of this fact transformed antitrust from its traditional focus on concentrated power, to a policy focused on …

Commodification And Contract Formation: Placing The Consideration Doctrine On Stronger Foundations, David S. Gamage

ExpressO

Under the traditional consideration doctrine, a promise is only legally enforceable if it is made in exchange for something of value. This doctrine lies at the heart of contract law, yet it lacks a sound theoretical justification – a fact that has confounded generations of scholars and created a mess of case law.

This paper argues that the failure of traditional justifications for the doctrine comes from two mistaken assumptions. First, previous scholars have assumed that anyone can back a promise with nominal consideration if they wish to do so. We show how social norms against commodification limit the availability …

Reverse Bifurcation, Dru Stevenson

ExpressO

Reverse bifurcation is a trial procedure in which the jury determines damages first, before determining liability. The liability phase of the trial rarely occurs, because the parties usually settle once they know the value of the case. This procedure is already being used in thousands of cases – nearly all the asbestos and Fen-phen cases – but this is the first academic article devoted to the subject. This article explains the history of the procedure and analyzes why it encourages settlements, simplifies jury instructions, and produces better outcomes for the parties.

Punitive Damages, Liquidated Damages, And Clauses Penale In Contract Actions: A Comparative Analysis Of The American Common Law And The French Code Civil, Charles R. Calleros

ExpressO

Although American common law allows punitive damages for reckless or intentional torts, it will neither allow a jury to assess punitive damages for breach of contract nor permit enforcement of a contractual damages clause that is deemed to be punitive. This approach is rooted in an early Chancery practice of granting equitable relief from oppressive penal bonds and has been more recently justified as a means of facilitating efficient breach. Economic efficiency, however, can be accomplished even if punitive damages could be assessed for intentional breach, because the parties would have an incentive to negotiate a release from the first …

Buried Online: State Laws That Limit E-Commerce In Caskets, Jerry Ellig, Asheesh Agarwal

ExpressO

Consumers seeking to purchase caskets online could benefit from the Supreme Court’s 2005 decision that states cannot discriminate against interstate direct wine shipment. Federal courts have reached conflicting conclusions when asked whether state laws requiring casket sellers to be licensed funeral directors violate the U.S. Constitution’s Due Process Clause. In Powers v. Harris, the 10th Circuit even offered an unprecedented ruling that economic protectionism is a legitimate state interest that can justify otherwise unconstitutional policies. In Granholm v. Heald, however, the Supreme Court declared that discriminatory barriers to interstate wine shipment must be justified by a legitimate state interest, and …

The Efficiencies Defense In Mergers: The Baby-Food Case Reconsidered , Daniel J. Richards, Richard B. Dagen

ExpressO

The Federal Trade Commission’s successful challenge to the proposed merger of Heinz and Beech-Nut baby food operations in 2001 remains a controversial case that raises concern over the role of cost efficiencies in merger analysis. Although the FTC argued that the merger would result in an increased likelihood of coordinated effects, we develop an alternative explanation for why the merger was likely to harm consumers even in the absence of such cooperation. We show that a conventional model of vertical product differentiation is able to replicate the premerger market data. Vertical product differentiation assumes that consumers agree on the relative …

Information Disclosure And The Union Representation Election, Matthew T. Bodie

ExpressO

In its oversight of union representation elections, the National Labor Relations Board seeks to create “laboratory conditions” to determine “the uninhibited desires” of employees. Despite the Board’s intrusive regulation of union and employer campaign conduct, the Board does nothing to insure that employees get basic information relating to their decision. Given the flaws in the market for union representation, particularly with respect to conflicts of interest, the Board should take a more aggressive role in ensuring that employees get the information they need to make rational representation decisions. This Article proposes a new system of mandatory disclosure, modeled on disclosure …

Corporate Form And Substantive Consolidation, William H. Widen

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This Article reformulates substantive consolidation doctrine in light of modern financing techniques. Building upon the author's research showing the prevalence of substantive consolidation in large public bankruptcies, it offers an economic account (based on Coase's theory of firm size) to explain why we should expect that the circumstances giving rise to substantive consolidation should be common (rather than rare as suggested by the rhetoric of case law). Extending the asset partitioning theory developed by Professors Hannsmann and Kraakman, it offers a model for looking at the corporate form within corporate groups, particularly in the insolvency context. The recent Third Circuit …

The Dutch Auction Myth, Peter B. Oh

ExpressO

The initial public offering process is under assault. Critics of this process have woven a complex set of interconnected objections to the orthodox method for conducting IPOs, pricing of shares, and allocating them to preferred investors. These critics instead point to online auctions as an alternative IPO method that can provide more equitable access, efficient prices, and egalitarian allocations. These claims rest on Google’s recent IPO and W.R. Hambrecht + Co.’s OpenIPO mechanism, conventionally regarded as impure variants of what is known as a descending-bid or Dutch auction (Dutch IPO).

This article assesses the empirical and theoretical case for Dutch …

Sarbanes-Oxley Act Of 2002: Are Multi-National Corporations Unduly Burdened?, William Alan Nelson

ExpressO

The Sarbanes-Oxley Act was enacted by Congress in response to the frauds perpetrated by several large U.S. companies; Enron and WorldCom were the main catalysts for the swift regulatory response. Though the primary impetus of Sarbanes-Oxley was to deter corruption domestically, its impact has had multinational reach. Problems arise when foreign corporations domiciled outside the United States are subject to both U.S. securities law and the laws of their home country, particularly when the laws are in conflict. This five part comment examines the effect that the Sarbanes–Oxley Act of 2002 has had on multinational corporations. The comment begins by …

Entrenched Managers & Corporate Social Responsibility, Shane M. Shelley

ExpressO

A growing number of academics have suggested U.S. corporate governance laws bestow too much power on managers. Much of the research focuses on the relationship between corporate governance arrangements, which supply a means to managerial power, and the financial performance of corporations. This exclusive focus on financial performance may be misguided. Although profits serve as a proxy for the benefits corporations provide society, they do not always adequately reflect the costs of the activities that generated them. In this sense, financial performance may not give an accurate, or at least complete, picture of the real value of corporations. Whether managers …

Overvalued Equity And The Case For An Asymmetric Insider Trading Regime, Thomas A. Lambert

ExpressO

The forty-year debate over whether insider trading should be regulated has generally proceeded in all-or-nothing terms: Either all insider trading should be permitted (subject only to private restrictions imposed by issuers themselves), or none should. This Article argues for an asymmetric insider trading policy under which insider trading that decreases the price of an overvalued stock is generally permitted, but insider trading that increases the price of an undervalued stock is generally prohibited. Concluding that the net investor benefits of price-decreasing insider trading exceed those of price-enhancing insider trading, the Article argues that an asymmetric insider trading regime likely represents …

Exploring The Source Of Transatlantic Antitrust Divergence, Alan J. Devlin

ExpressO

This paper seeks to explore the sources of substantive divergence between the antitrust regimes of the U.S. and EC and to present a framework upon which harmonization could potentially be achieved. While the rise of the Chicago School and post-Chicago theory have merged to ensure a central role for economics in dictating antitrust enforcement in the United States, no such clear standard has emerged in Europe. The consequences for firms operating on a transatlantic basis are potentially severe, as they have to formulate different business strategies depending on which jurisdiction they operate in. An assessment of EC law demonstrates an …

Global Pharmaceutical Patent Law In Developing Countries- Amending Trips To Promote Access For All, Angela J. Anderson

ExpressO

This comment will analyze the need to amend and revise the current global pharmaceutical patent system under TRIPS to take into account the needs of developing countries and overall public health. This comment will emphasize that the current international trade rules, which although administered by the WTO, are dictated by developed country governments and powerful pharmaceutical companies, and therefore, without reform will further diminish the access of poor people in developing countries to vital medicines. Part II of this comment will provide a general overview of the international trade law governing patents on pharmaceuticals focusing specifically on the development of …

The "Public Use" Requirement In Eminent Domain Law: A Rationale Based On Secret Purchases And Private Influence, Daniel B. Kelly

ExpressO

This article provides a rationale for understanding and interpreting the “public use” requirement within eminent domain law. The rationale is based on two factors. First, while the government often needs the power of eminent domain to avoid the problem of strategic holdout, private parties are usually able to purchase property through secret buying agents. The availability of these buying agents makes the use of eminent domain for private parties unnecessary (and indeed, undesirable). The government, however, is ordinarily unable to make secret purchases because its plans are subject to democratic deliberation and known in advance. Second, while the use of …

The Promise (And Limits) Of Neuroeconomics, Jedediah S. Purdy

ExpressO

Neuroeconomics – the study of brain activity in people engaged in tasks of reasoning and choice – looks set to be the next behavioral economics: a set of findings about how people make decisions that casts doubt on widely accepted premises about rationality and social life. This essay explains what is most exciting about the new field and lays out some specific research tasks for it.

By enabling researchers to view the mind at work, neuroeconomics puts in question the most basic premise of twentieth-century empiricism, sometimes called positivism or behaviorism: that people are black boxes to one another, and …

Regulatory Status Of Voip In The Post-Brand X World, Jerry Ellig

ExpressO

During the past several years, the Federal Communications Commission has engaged in a series of rulemakings to determine the regulatory status of Voice over Internet Protocol (VoIP). The Supreme Court’s Brand X decision clarifies that even if the FCC’s determination conflicts with that of a court, the FCC’s judgment holds sway as long as the decision is reasonable. We believe that VoIP should be classified as an information service, rather than a telecommunications service, for several reasons. First, the Internet Protocol nature of VoIP technology means that it functions like an information service, rather than a telecommunications service. Second, in …

Informal Economy: Is It A Problem, A Solution Or Both? The Perspective Of The Informal Business, Omar E. Garcia-Bolivar

ExpressO

This paper deals with the informal economy. For many it is a solution, for others it is a problem. What can the law do to incorporate the informal economy into the formal economy? Does it really matter? What are the challenges?

Are We Unnecessarily Serving Up Civil Liberties On A Patriot Platter?, Kyle A. Clark

ExpressO

This paper seeks to identify the general cognitive biases and overall measurement errors inherent in recent studies seeking to measure the effects of terrorism. Such biases lead to unprincipled conclusions founded upon incomplete information. These problems are exacerbated by inaccurate measures of the true impact of terrorism on the economy, the human psyche, policy-making and the world community. Such measurement errors severely diminish the probative value of the studies and lead to merely speculative conclusions. The goal of this paper is to shed light on these inaccurate conclusions in the hope that future legislation and practices aimed at curbing terrorism …

Backlash To Globalization In The Form Of State Legislation: Constitutional Implications, John R. Weber

ExpressO

This paper will examine the Constitutional issues raised by the influx of state anti-outsourcing legislation using a recently enacted New Jersey statute. The New Jersey statute is very similar to, and contains many of the same features as, many other bills introduced in legislatures across the nation. Moreover, the political impetus for the introduction and enactment of the legislation reflects the struggle over the outsourcing issue that is occurring in communities nationwide.

Global Pharmaceutical Patent Law In Developing Countries- Amending Trips To Promote Access For All, Angela J. Anderson

ExpressO

This comment will analyze the need to amend and revise the current global pharmaceutical patent system under TRIPS to take into account the needs of developing countries and overall public health. This comment will emphasize that the current international trade rules, which although administered by the WTO, are dictated by developed country governments and powerful pharmaceutical companies, and therefore, without reform will further diminish the access of poor people in developing countries to vital medicines. Part II of this comment will provide a general overview of the international trade law governing patents on pharmaceuticals focusing specifically on the development of …

Regulatory Reform: The New Lochnerism?, David M. Driesen

ExpressO

This article explores the question of whether contemporary regulatory reformers’ attitudes toward government regulation have anything in common with those of the Lochner-era Court. It finds that both groups tend to favor value neutral law guided by cost-benefit analysis over legislative value choices. Their skepticism toward redistributive legislation reflects shared beliefs that regulation often proves counterproductive in terms of its own objectives, fails demanding tests for rationality, and violates the natural order. This parallelism raises fresh questions about claims of neutrality and heightened rationality that serve as important justifications modern regulatory reform.

The Market For Takeover Defenses, Sharon Hannes

ExpressO

This paper develops a market-based approach to takeover defenses. In this framework, a firm’s decision to go public without defenses is considered a decision to produce an unshielded target. The paper shows that the voluminous classical literature on takeover defenses, which argues either that takeover defenses are good for all firms or that they are bad for all firms, actually ignores both supply and demand considerations. Recent empirical findings that revealed that IPO-stage firms diverge in antitakeover practices led to the rapid development of a new branch in the literature. This branch emphasizes that firms diverge in defense-adopting costs due …

The New Biopolitics: Autonomy, Demography, And Nationality, Jedediah S. Purdy

ExpressO

No abstract provided.

Card Check Recognition: The Ongoing Legal And Legislative Battle, Michael E. Aleo

ExpressO

A great debate has been brewing for years over whether unions should be able to organize employees outside of the traditional election procedures provided by the National Labor Relations Act (“NLRA” or “the Act”). Typically, in an organizing drive, a union solicits support from employees to indicate a desire to run a National Labor Relations Board (“NLRB” or “Board”) election. The union does this by collecting cards from employees affirming the employees’ desire to have a representation election. If the union collects valid cards from at least one-third of eligible employees in the appropriate bargaining unit, the union may then …

Regulating Contract Formation: Precontractual Reliance, Sunk Costs, And Market Structure, Ofer Grosskopf, Barak Medina

ExpressO

This Article challenges the plausibility of the prospect of underinvestment in precontractual reliance (PCR). We argue that a negotiating party is motivated to invest in PCR not only through her expectation to extract the benefits that the investment yields (Added-Value Motivation), but also through the effect of the investment on her position vis-à-vis her competitors (Competition-Based Motivation). We demonstrate that under plausible assumptions, when a negotiating party operates in a relatively competitive market, the Competition-Based Motivation is frequently sufficient to induce optimal PCR, even without appropriate contractual provisions or legal intervention.

We suggest several normative implications. First, legal intervention that …