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Full-Text Articles in Law
Compensating Market Value Losses: Rethinking The Theory Of Damages In A Market Economy, Steven L. Schwarcz
Compensating Market Value Losses: Rethinking The Theory Of Damages In A Market Economy, Steven L. Schwarcz
Steven L Schwarcz
The BP Gulf oil spill and the Toyota car recalls have highlighted an important legal anomaly that has been overlooked by scholars—judicial inconsistency and confusion in ruling whether to compensate for the loss in market value of wrongfully affected property. This article seeks to understand the anomaly and, in the process, build a stronger foundation for enabling courts to decide when—and in what amounts—to award damages for market value losses. To that end, the article analyzes the normative rationales for generally awarding damages, adapting those rationales to derive a theory of damages that not only covers market value losses of …
Marginalizing Risk, Steven L. Schwarcz
Marginalizing Risk, Steven L. Schwarcz
Steven L Schwarcz
A major focus of finance is reducing risk on investments, a goal commonly achieved by dispersing the risk among numerous investors. Sometimes, however, risk dispersion can cause investors to underestimate and under-protect against risk. Risk can even be so widely dispersed that rational investors individually lack the incentive to monitor it. This article examines the market failures resulting from risk dispersion, and analyzes when government regulation may be necessary or appropriate to limit these market failures. The article also examines how such regulation should be designed, including the extent to which it should limit risk dispersion in the first instance.