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Appraising Merger Efficiencies, Herbert J. Hovenkamp Jan 2017

Appraising Merger Efficiencies, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Mergers of business firms violate the antitrust laws when they threaten to lessen competition, which generally refers to a price increase resulting from a reduction in output. However, a merger that threatens competition may also enable the post-merger firm to reduce its costs or improve its product. Attitudes toward mergers are heavily driven by assumptions about efficiency gains. If mergers of competitors never produced efficiency gains but simply reduced the number of competitors, a strong presumption against them would be warranted. We tolerate most mergers because of a background, highly generalized belief that most or at least many produce cost ...


The Marginalist Revolution In Corporate Finance: 1880-1965, Herbert J. Hovenkamp Jul 2011

The Marginalist Revolution In Corporate Finance: 1880-1965, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

During the late nineteenth and early twentieth centuries fundamental changes in economic thought revolutionized the theory of corporate finance, leading to changes in its legal regulation. The changes were massive, and this branch of financial analysis and law became virtually unrecognizable to those who had practiced it earlier. The source of this revision was the marginalist, or neoclassical, revolution in economic thought. The classical theory had seen corporate finance as an historical, relatively self-executing inquiry based on the classical theory of value and administered by common law courts. By contrast, neoclassical value theory was forward looking and as a result ...


A Preface To Neoclassical Legal Thought, Herbert J. Hovenkamp Jun 2011

A Preface To Neoclassical Legal Thought, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Most legal historians speak of the period following classical legal thought as “progressive legal thought.” That term creates an unwarranted bias in characterization, however, creating the impression that conservatives clung to an obsolete “classical” ideology, when in fact they were in many ways just as revisionist as the progressives legal thinkers whom they critiqued. The Progressives and New Deal thinkers whom we identify with progressive legal thought were nearly all neoclassical, or marginalist, in their economics, but it is hardly true that all marginalists were progressives. For example, the lawyers and policy makers in the corporate finance battles of the ...


The Law Of Vertical Integration And The Business Firm: 1880-1960, Herbert J. Hovenkamp Jan 2010

The Law Of Vertical Integration And The Business Firm: 1880-1960, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Vertical integration occurs when a firm does something for itself that it could otherwise procure on the market. For example, a manufacturer that opens its own stores is said to be vertically integrated into distribution. One irony of history is that both classical political economy and neoclassicism saw vertical integration and vertical contractual arrangements as much less threatening to competition than cartels or other horizontal arrangements. Nevertheless, vertical integration has produced by far the greater amount of legislation at both federal and state levels and has motivated many more political action groups. Two things explain this phenomenon. First, while economists ...


Unentrapped, William W. Bratton Jan 2009

Unentrapped, William W. Bratton

Faculty Scholarship at Penn Law

No abstract provided.


Neoclassicism And The Separation Of Ownership And Control, Herbert J. Hovenkamp Jan 2009

Neoclassicism And The Separation Of Ownership And Control, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

"Separation of ownership and control" is a phrase whose history will forever be associated with Adolf A. Berle and Gardiner C. Means' The Modern Corporation and Private Property (1932), as well as with Institutionalist economics, Legal Realism, and the New Deal. Within that milieu the large publicly held business corporation became identified with excessive managerial power at the expense of stockholders, social irresponsibility, and internal inefficiency. Neoclassical economists both then and ever since have generally been critical, both of the historical facts that Berle and Means purported to describe and of the conclusions that they drew. In fact, however, within ...


Shareholder Primacy's Corporatist Origins: Adolf Berle And The Modern Corporation, William W. Bratton, Michael L. Wachter Jan 2008

Shareholder Primacy's Corporatist Origins: Adolf Berle And The Modern Corporation, William W. Bratton, Michael L. Wachter

Faculty Scholarship at Penn Law

No abstract provided.


Private Equity's Three Lessons For Agency Theory, William W. Bratton Jan 2008

Private Equity's Three Lessons For Agency Theory, William W. Bratton

Faculty Scholarship at Penn Law

No abstract provided.


The Equilibrium Content Of Corporate Federalism, William W. Bratton, Joseph A. Mccahery Jan 2006

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

Faculty Scholarship at Penn Law

No abstract provided.


Supersize Pay, Incentive Compatibility, And The Volatile Shareholder Interest, William W. Bratton Jan 2006

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

Faculty Scholarship at Penn Law

No abstract provided.


Dividends, Noncontractibility, And Corporate Law, William W. Bratton Jan 1997

Dividends, Noncontractibility, And Corporate Law, William W. Bratton

Faculty Scholarship at Penn Law

No abstract provided.


An Inquiry Into The Efficiency Of The Limited Liability Company: Of Theory Of The Firm And Regulatory Competition, William W. Bratton, Joseph A. Mccahery Jan 1997

An Inquiry Into The Efficiency Of The Limited Liability Company: Of Theory Of The Firm And Regulatory Competition, William W. Bratton, Joseph A. Mccahery

Faculty Scholarship at Penn Law

No abstract provided.


Self-Regulation, Normative Choice, And The Structure Of Corporate Fiduciary Law, William W. Bratton Jan 1993

Self-Regulation, Normative Choice, And The Structure Of Corporate Fiduciary Law, William W. Bratton

Faculty Scholarship at Penn Law

No abstract provided.


The First Great Law & Economics Movement, Herbert J. Hovenkamp Jan 1990

The First Great Law & Economics Movement, Herbert J. Hovenkamp

Faculty Scholarship at Penn Law

Beginning in the 1880s American economists turned their attention to the law in a way unprecedented in American thought. Some legal academics in turn incorporated economics into their thinking about the law. Whether their output or its impact were great enough to warrant calling their efforts a law and economics "movement" is worth debating. This essay argues that there was such a movement.

Four things account for the increasing interest in law and economics at the turn of the century: (1) the widespread application of evolutionary models to the development of both law and economic theory; (2) the influence of ...


The New Economic Theory Of The Firm: Critical Perspectives From History, William W. Bratton Jul 1989

The New Economic Theory Of The Firm: Critical Perspectives From History, William W. Bratton

Faculty Scholarship at Penn Law

No abstract provided.