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"Do Lawyers Need Economists?" Review Of Economic Transplants: On Lawmaking For Corporations And Capital Markets, Reuven S. Avi-Yonah Jul 2020

"Do Lawyers Need Economists?" Review Of Economic Transplants: On Lawmaking For Corporations And Capital Markets, Reuven S. Avi-Yonah

Reviews

Katja Langenbucher’s outstanding book seeks to address the question of why and in what ways have lawyers been importing economic theories into a legal environment, and how has this shaped scholarly research, judicial and legislative work? Since the financial crisis, corporate or capital markets law has been the focus of attention by academia and media. Formal modelling has been used to describe how capital markets work and, later, has been criticized for its abstract assumptions. Empirical legal studies and regulatory impact assessments offered different ways forward. This excellent book presents a new approach to the risks and benefits of ...


Stock Market Manipulation And Its Regulation, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg Jan 2018

Stock Market Manipulation And Its Regulation, Merritt B. Fox, Lawrence R. Glosten, Gabriel Rauterberg

Articles

More than eighty years after federal law first addressed stock market manipulation, the federal courts remain fractured by disagreement and confusion concerning manipulation law's most foundational issues. There remains, for example, a sharp split among the federal circuits concerning manipulation law's central question: Whether trading activity alone can ever be considered illegal manipulation under federal law? Academics have been similarly confused-economists and legal scholars cannot agree on whether manipulation is even possible in principle, let alone on how to properly address it in practice.


What Does Tort Law Do? What Can It Do?, Scott Hershovitz Jan 2012

What Does Tort Law Do? What Can It Do?, Scott Hershovitz

Articles

It’s not hard to describe what tort law does. As a first approximation, we might say that tort empowers those who suffer certain sorts of injuries or invasions to seek remedies from those who brought about those injuries or invasions. The challenge is to explain why tort does that, or to explain what tort is trying to do when it does that. After all, it is not obvious that we should have an institution specially concerned with the injuries and invasions that count as torts.


Free Rider – A Justification For Mandatory Medical Insurance Under Health Care Reform?, Douglas A. Kahn, Jeffrey H. Kahn Mar 2011

Free Rider – A Justification For Mandatory Medical Insurance Under Health Care Reform?, Douglas A. Kahn, Jeffrey H. Kahn

Law & Economics Working Papers

Section 1501 of the Patient Protection and Affordable Care Act added section 5000A to the Internal Revenue Code to require most individuals in the United States to purchase a minimum level of medical insurance. This requirement, which is enforced by a penalty imposed on those who fail to comply, is sometimes referred to as the “individual mandate.” A frequently stated defense of the individual mandate is that there are a vast number of persons who do not purchase medical insurance and then obtain free medical care when the need arises, and the individual mandate will require those persons (often referred ...


What Explains Insider Trading Restrictions? International Evidence On The Political Economy Of Insider Trading Regulation, Laura N. Beny Jan 2008

What Explains Insider Trading Restrictions? International Evidence On The Political Economy Of Insider Trading Regulation, Laura N. Beny

Law & Economics Working Papers Archive: 2003-2009

This article investigates the determinants of insider trading regulation across countries. The article presents a political economy analysis of such regulation that takes into account both private (distributional) and public (economic efficiency) considerations. The model cannot be tested directly because the relevant private preferences and social costs are unobservable. However, existing theories of capital market development suggest that various observable social factors can explain the diversity of insider trading policies across countries. In turn, these social factors should reveal the underlying preferences and social costs motivating such regulation.

The main finding, based on data from a cross section of countries ...


Paying To Save: Tax Withholding And Asset Allocation Among Low- And Moderate-Income Taxpayers, Michael S. Barr, Jane Dokko Nov 2007

Paying To Save: Tax Withholding And Asset Allocation Among Low- And Moderate-Income Taxpayers, Michael S. Barr, Jane Dokko

Law & Economics Working Papers Archive: 2003-2009

We analyze the phenomenon that low- and moderate-income (LMI) tax filers exhibit a “preference for over-withholding” their taxes, a measure we derive from a unique set of questions administered in a dataset of 1,003 households, which we collected through the Survey Research Center at the University of Michigan. We argue that the relationship between their withholding preference and portfolio allocation across liquid and illiquid assets is consistent with models with present-biased preferences, and that individuals exhibit self-control problems when making their consumption and saving decisions. Our results support a model in which individuals use commitment devices to constrain their ...


The Irrational Auditor And Irrational Liability, Adam C. Pritchard Jan 2006

The Irrational Auditor And Irrational Liability, Adam C. Pritchard

Articles

This Article argues that less liability for auditors in certain areas might encourage more accurate and useful financial statements, or at least equally accurate statements at a lower cost. Audit quality is promoted by three incentives: reputation, regulation, and litigation. When we take reputation and regulation into account, exposing auditors to potentially massive liability may undermine the effectiveness of reputation and regulation, thereby diminishing integrity of audited financial statements. The relation of litigation to the other incentives that promote audit quality has become more important in light of the sea change that occurred in the regulation of the auditing profession ...


Credit Where It Counts: Maintaining A Strong Community Reinvestment Act, Michael S. Barr May 2005

Credit Where It Counts: Maintaining A Strong Community Reinvestment Act, Michael S. Barr

Law & Economics Working Papers Archive: 2003-2009

The Community Reinvestment Act (CRA) has helped to revitalize low- and moderate-income communities and provided expanded opportunities for low- and moderate-income households. Recent regulatory steps aimed at alleviating burdens on banks and thrifts are unwarranted, and may diminish small business lending as well as community development investments and services. This policy brief explains the rationale for CRA, demonstrates its effectiveness, and argues that the recent regulatory proposals should be withdrawn or significantly modified.


Institutions And Inclusion In Saving Policy, Michael S. Barr, Michael Sherraden May 2005

Institutions And Inclusion In Saving Policy, Michael S. Barr, Michael Sherraden

Law & Economics Working Papers Archive: 2003-2009

No abstract provided.


Modes Of Credit Market Regulation, Michael S. Barr May 2005

Modes Of Credit Market Regulation, Michael S. Barr

Law & Economics Working Papers Archive: 2003-2009

No abstract provided.


Credit Where It Counts: The Community Reinvestment Act And Its Critics, Michael S. Barr Apr 2005

Credit Where It Counts: The Community Reinvestment Act And Its Critics, Michael S. Barr

Law & Economics Working Papers Archive: 2003-2009

Despite the depth and breadth of U.S. credit markets, low- and moderate-income communities and minority borrowers have not historically enjoyed full access to credit. The Community Reinvestment Act (CRA) was enacted in 1977 to help overcome barriers to credit that these groups faced. Scholars have long leveled numerous critiques against CRA as unnecessary, ineffectual, costly, and lawless. Many have argued that CRA should be eliminated. By contrast, I contend that market failures and discrimination justify governmental intervention and that CRA is a reasonable policy response to these problems. Using recent empirical evidence, I demonstrate that over the last decade ...


The Deregulation Of International Trucking In The European Union: Form And Effect, Francine Lafontaine, Laura M. Valeri Apr 2005

The Deregulation Of International Trucking In The European Union: Form And Effect, Francine Lafontaine, Laura M. Valeri

Law & Economics Working Papers Archive: 2003-2009

This paper examines how the deregulation of the international road transport industry in Western Europe has affected 1- the total quantity of cross-border road transport in the region; 2- the degree to which shippers outsource rather than integrate vertically their cross-border transport needs; and 3- the extent to which different countries participate in international road freight transport in Western Europe. Not surprisingly, we find that deregulation has had a large positive effect on the amount of international road transport net of the effect of the trade ties that grew over time among European Union countries. Moreover, consistent with the fact ...


Globalization, Law & Development: Introduction And Overview, Michael S. Barr, Reuven S. Avi-Yonah Apr 2005

Globalization, Law & Development: Introduction And Overview, Michael S. Barr, Reuven S. Avi-Yonah

Law & Economics Working Papers Archive: 2003-2009

No abstract provided.


Microfinance And Financial Development, Michael S. Barr Apr 2005

Microfinance And Financial Development, Michael S. Barr

Law & Economics Working Papers Archive: 2003-2009

No abstract provided.


The Coordinated Effects Of Mergers In Differentiated Products Market, Kai-Uwe Kuhn Nov 2004

The Coordinated Effects Of Mergers In Differentiated Products Market, Kai-Uwe Kuhn

Law & Economics Working Papers Archive: 2003-2009

No abstract provided.


Sex, Shame, And The Law: An Economic Perspective On Megan's Law, Doron Teichman Sep 2004

Sex, Shame, And The Law: An Economic Perspective On Megan's Law, Doron Teichman

Law & Economics Working Papers Archive: 2003-2009

This Article focuses on the question, how should policymakers aiming to minimize the cost of sanctioning utilize legal and nonlegal sanctions when designing a system of criminal sanctions. After presenting the general economic case for the use of nonlegal sanctions the article turns to present a model of shaming, which unlike existing models, incorporates the endogenous effects of legal and nonlegal sanctions. This model demonstrates that tailoring an efficient regime that combines legal and nonlegal sanctions might be more difficult than previously perceived by law and economics scholars. A specific case study presented in this article is of the current ...


Banking The Poor: Policies To Bring Low-Income Americans Into The Financial Mainstream, Michael S. Barr Sep 2004

Banking The Poor: Policies To Bring Low-Income Americans Into The Financial Mainstream, Michael S. Barr

Law & Economics Working Papers Archive: 2003-2009

Low-income households in the United States often lack access to bank accounts and face high costs for conducting basic financial transactions through check cashers and other alternative financial service providers. These families find it more difficult to save and plan financially for the future. Living paycheck to paycheck leaves them vulnerable to medical or job emergencies that may endanger their financial stability, and lack of longer-term savings undermines their ability to improve skills, purchase a home, or send their children to college. High-cost financial services and inadequate access to bank accounts may undermine widely-shared societal goals of reducing poverty, moving ...


Economic Theories Of Bundling And Their Policy Implications In Abuse Cases: An Assessment In Light Of The Mircrosoft Case, Kai-Uwe Kuhn Sep 2004

Economic Theories Of Bundling And Their Policy Implications In Abuse Cases: An Assessment In Light Of The Mircrosoft Case, Kai-Uwe Kuhn

Law & Economics Working Papers Archive: 2003-2009

No abstract provided.


Banking The Poor, Michael S. Barr Mar 2004

Banking The Poor, Michael S. Barr

Law & Economics Working Papers Archive: 2003-2009

Low-income households often lack access to banking accounts and face high costs for transacting basic financial services through check cashers and other alternative financial service providers. These families find it more difficult to save and plan financially for the future. Living paycheck to paycheck leaves them vulnerable to medical or job emergencies that may endanger their financial stability, and lack of longer-term savings undermines their ability to improve skills, purchase a home, or send their children to college. Additionally, high cost financial services and inadequate access to bank accounts may undermine widely-shared societal goals of reducing poverty, moving families from ...


Credible Coercion, Oren Bar-Gill, Omri Ben-Shahar Mar 2004

Credible Coercion, Oren Bar-Gill, Omri Ben-Shahar

Law & Economics Working Papers Archive: 2003-2009

The ideal of individual liberty and autonomy requires that society provide relief against coercion. In the law, this requirement is often translated into rules that operate “post-coercion” to undo the legal consequences of acts and promises extracted under duress. This Article argues that these ex-post anti-duress measures, rather than helping the coerced party, might in fact hurt her. When coercion is credible—when a credible threat to inflict an even worse outcome underlies the surrender of the coerced party—ex post relief will only induce the strong party to execute the threatened outcome, to the detriment of the coerced party ...


"Agreeing To Disagree": Filling Gaps In Deliberately Incomplete Contracts, Omri Ben-Shahar Jan 2004

"Agreeing To Disagree": Filling Gaps In Deliberately Incomplete Contracts, Omri Ben-Shahar

Law & Economics Working Papers Archive: 2003-2009

This Article develops a new standard for gap filling in incomplete contracts. It focuses on an important class of situations in which parties leave their agreement deliberately incomplete, with the intent to further negotiate and resolve the remaining issues. In these situations, neither the traditional no-enforcement result nor the usual gap filling approaches accord with the parties’ partial consent. Instead, the Article develops the concept of pro-defendant gap-fillers, under which each party is granted an option to enforce the transaction supplemented with terms most favorable (within reason) to the other party. A deliberately incomplete contract with pro-defendant gap fillers transforms ...


Why We Need The Independent Sector: The Behavior, Law, & Ethics Of Not-For-Profit Hospitals, Jill R. Horwitz Jan 2004

Why We Need The Independent Sector: The Behavior, Law, & Ethics Of Not-For-Profit Hospitals, Jill R. Horwitz

Law & Economics Working Papers Archive: 2003-2009

Among the major forms of corporate ownership, the not-for-profit ownership form is distinct in its behavior, legal constraints, and moral obligations. A new empirical analysis of the American hospital industry, using eleven years of data for all urban general hospitals in the country, shows that corporate form accounts for large differences in the provision of specific medical services. Not-for-profit hospitals systematically provide both private and public goods that are in the public interest, and that other forms fail to provide. Two hypotheses are proposed to account for the findings, one legal and one moral. While no causal claims are made ...


Behavioral Economics And The Sec, Stephen Choi, Adam C. Pritchard Jan 2003

Behavioral Economics And The Sec, Stephen Choi, Adam C. Pritchard

Law & Economics Working Papers Archive: 2003-2009

Investors face myriad investment alternatives and seemingly limitless information concerning those alternatives.Not surprisingly, many commentators contend that investors frequently fall short of the ideal investor posited by the rational actor model. Investors are plagued with a variety of behavioral biases (such as, among others, the hindsight bias, the availability bias, loss aversion, and overconfidence). Even securities market institutions and intermediaries may suffer from biases, led astray by groupthink and overconfidence. The question remains whether regulators should focus on such biases in formulating policy. An omnipotent regulatory decisionmaker would certainly improve on flawed investor decisionmaking. The alternative we face, however ...


Why Tax The Rich? Efficiency, Equity, And Progressive Taxation, Reuven S. Avi-Yonah Jan 2002

Why Tax The Rich? Efficiency, Equity, And Progressive Taxation, Reuven S. Avi-Yonah

Reviews

In Greek mythology, Atlas was a giant who carried the world on his shoulders. In Ayn Rand’s 1957 novel Atlas Shrugged, Atlas represents the “ prime movers”—the talented few who bear the weight of the world’s economy.1 In the novel, the prime movers go on strike against the oppressive burden of excessive regulation and taxation, leaving the world in disarray and demonstrating how indispensable they are to the rest of us (the “second handers” ).


E' Is For Eclectic: Multiple Perspectives On Evidence (Symposium: New Perspectives On Evidence), Richard D. Friedman Jan 2001

E' Is For Eclectic: Multiple Perspectives On Evidence (Symposium: New Perspectives On Evidence), Richard D. Friedman

Articles

A conference titled "New Perspectives on Evidence: Experts, Empirical Study and Economics" has a pronounced alliterative theme, a theme made even more apparent when, inevitably in evidentiary discourse, epistemological questions come to the fore. It is enough to make one suspect that the conference is secretly brought to you by the letter "E," hiding behind its public front, the Olin Foundation. Putting aside such conspiratorial thoughts, all these "E's" suggest the presence of a meta-"E"-Eclecticism. Indeed, I believe this conference has demonstrated the need for an eclectic approach to evidentiary problems. That should be no surprise. The ...


Linking The Visions, Donald H. Regan Jan 2000

Linking The Visions, Donald H. Regan

Articles

In my case, which may be unusual, the importance of my non-law training and commitments is not in specific contributions they make to my work in law. Rather, it is in their contributions to my being me.


A Presumption Of Innocence, Not Of Even Odds, Richard D. Friedman Jan 2000

A Presumption Of Innocence, Not Of Even Odds, Richard D. Friedman

Articles

Now I know how the Munchkins felt. Here I have been, toiling in the fields of Evidenceland for some years, laboring along with others to show how use of Bayesian probability theory can assist in the analysis and understanding of evidentiary problems.' In doing so, we have had to wage continuous battle against the Bayesioskeptics-the wicked witches who deny much value, even heuristic value, for probability theory in evidentiary analysis.2 Occasionally, I have longed for law-and-economics scholars to help work this field, which should be fertile ground for them.3 So imagine my delight when the virtual personification of ...


Economic Analysis Of Evidentiary Law: An Underused Tool, An Underplowed Field (Symposium: The Economics Of Evidentiary Law), Richard D. Friedman Jan 1998

Economic Analysis Of Evidentiary Law: An Underused Tool, An Underplowed Field (Symposium: The Economics Of Evidentiary Law), Richard D. Friedman

Articles

The law and economics movement has had a major impact on many areas of law, but rather little on the law of evidence. This is not to say that there have been no attempts to analyze evidentiary issues through an economic lens,' but such efforts are far more scattered in evidence than in other legal fields, including the closely related one of civil procedure.2 Believing that economics has value for evidentiary analysis, I suggested to the Executive Committee and Advisory Board of the Evidence Section of the Association of American Law Schools ("AALS"), when I was chairman of the ...


Takings From Freund To Fischel." Review Of Regulatory Taking: Law, Economics, And Politics, By W. A. Fischel, James E. Krier Jan 1996

Takings From Freund To Fischel." Review Of Regulatory Taking: Law, Economics, And Politics, By W. A. Fischel, James E. Krier

Reviews

The regulatory takings problem is easy to describe but difficult to resolve. The government enacts restrictions on land use that reduce the market value of the targeted parcels by a considerable amount. The restrictions are couched in terms of the police power, but actually they might amount to a taking that requires compensation, not because any of the land has been wrested away (it hasn't), but because much of the value has. Through the police power the government gets to govern for free, whereas with takings it's pay as you go. On what does the distinction-police power or ...


Toward A Partial Economic, Game-Theoretic Analysis Of Hearsay, Richard D. Friedman Jan 1992

Toward A Partial Economic, Game-Theoretic Analysis Of Hearsay, Richard D. Friedman

Articles

In this Article, I offer a fundamentally different and nondoctrinaire way of approaching hearsay questions. In brief, I take the view that the resolution of a hearsay dispute, when the declarant is not on the stand, is essentially a matter of deciding who should bear the burden of producing the declarant, or more precisely, how courts should allocate that burden. Adopting a simple procedural improvement, concerning the examination of the declarant if she is produced as a witness, allows the court to allocate the burden optimally. If live testimony by the declarant would be more probative than prejudicial, then most ...