Law Commons^™

Information Costs And The Civil Justice System, Keith N. Hylton

Faculty Scholarship

Litigation is costly because information is not free. Given that information is costly and perfect information prohibitively costly, courts will occasionally err. Finally, the fact that information is costly implies an unavoidable degree of informational asymmetry between disputants. This paper presents a model of the civil justice system that incorporates these features and probes its implications for compliance with the law, efficiency of law, accuracy in adjudication, trial outcome statistics, and the evolution of legal standards. The model’s claims are applied to and tested against the relevant empirical and legal literature. (JEL: D74, K10, K13, K41)

Criminal Deterrence: A Review Of The Missing Literature, Alex Raskolnikov

Faculty Scholarship

This review of the criminal deterrence literature focuses on the questions that are largely missing from many recent, excellent, comprehensive reviews of that literature, and from the literature itself. By “missing” I mean, first, questions that criminal deterrence scholars have ignored either completely or to a large extent. These questions range from fundamental (the distributional analysis of the criminal justice system), to those hidden in plain sight (economic analysis of misdemeanors), to those that are well-known yet mostly overlooked (the role of positive incentives, offender’s mental state, and celerity of punishment). I also use “missing” to refer to the areas …

Economic Theory Of Criminal Law, Keith N. Hylton

Faculty Scholarship

Economic theory of criminal law consists of normative and positive parts. Normative economic theory, which began with writings by Beccaria and Bentham, aims to recommend an ideal criminal punishment scheme. Positive economic theory, which appeared later in writings by Holmes and Posner, aims to justify and to better understand the criminal law rules that exist. Since the purpose of criminal law is to deter socially undesirable conduct, economic theory, which emphasizes incentives, would appear to be an important perspective from which to examine criminal law.

Positive economic theory, applied to substantive criminal law, seeks to explain and to justify criminal …

Does Crime Pay? Cartel Penalties And Profits, John M. Connor, Robert H. Lande

All Faculty Scholarship

This article seeks to answer a fundamental antitrust question: does crime pay? Do the current overall levels of U.S. cartel sanctions adequately discourage firms from engaging in illegal collusion? Seven years ago our research showed that the unfortunate answer was clearly that, yes, criminal collusion usually is profitable! The expected costs (in terms of criminal fines and prison time, civil damages, etc.) was significantly less than expected gains to the price fixers. Sadly, the most recent data re-affirm this conclusion.

The great majority of companies participating in illegal cartels make a profit even after they pay all the penalties. The …

Deterrence And Antitrust Punishment: Firms Versus Agents, Keith N. Hylton

Faculty Scholarship

Antitrust enforcement regimes rely on penalties against two groups of actors for deterrence: penalties against the violating firm and penalties against the violating firm's agents. Here, I examine the economics of punishing agents versus firms. My area of application is antitrust, but the argument applies generally to other fields in which the government has the choice of punishing the agent, the firm, or both. This analysis suggests that whenever the firm has an incentive, given existing penalties, to engage in some illegal act that may result in relatively modest punishment for its agents, the firm can almost always induce its …

Policing The Firm, D. Daniel Sokol

UF Law Faculty Publications

Criminal price fixing cartels are a serious problem for consumers. Cartels are hard both to find and punish. Research into other kinds of corporate wrongdoing suggests that enforcers should pay increased attention to incentives within the firm to deter wrongdoing. Thus far, antitrust scholarship and policy have ignored this insight in the cartel context. This Article suggests how to improve antitrust enforcement by focusing enforcement efforts on changing the incentives of internal firm compliance.

Rational Criminal Addictions, Manuel A. Utset

Scholarly Publications

No abstract provided.

Toward An Empirical And Theoretical Assessment Of Private Antitrust Enforcement, Joshua P. Davis, Robert H. Lande

All Faculty Scholarship

The dominant view in the antitrust field is that private enforcement cases, and especially class actions, accomplish little or nothing positive but, on the contrary, are counterproductive. Despite strongly worded convictions, that view has been premised on anecdotal, self-serving and insufficiently substantiated claims. Indeed, the authors' 2008 study of 40 private cases appears to constitute the only systematic effort to gather information about a significant number of private antitrust actions. That study generated a great deal of controversy, including questioning of our conclusions by high officials at the Department of Justice and by Professor Daniel Crane at the University of …

The Extraordinary Deterrence Of Private Antitrust Enforcement: A Reply To Werden, Robert H. Lande, Joshua P. Davis

All Faculty Scholarship

Our article, "Comparative Deterrence from Private Enforcement and Criminal Enforcement of the U.S. Antitrust Laws," 2011 B.Y.U. L. Rev. 315, documented an extraordinary but usually overlooked fact: private antitrust enforcement deters a significant amount of anticompetitive conduct. Indeed, the article showed that private enforcement "probably" deters even more anticompetitive conduct than the almost universally admired anti-cartel enforcement program of the United States Department of Justice.

In a recent issue of Antitrust Bulletin, Gregory J. Werden, Scott D. Hammond, and Belinda A. Barnett challenged our analysis. They asserted that our comparison “is more misleading than informative.” It is unsurprising that they …

Accepting The Limits Of Tax Law And Economics, Alex Raskolnikov

Faculty Scholarship

This Article explores the limits of tax law and economics, attributing them to the unique complexity of the tax optimization problem. Designers of the optimal tax system must account for the impossibility of deterring socially undesirable behavior, provide for redistribution, and minimize social costs on the basis of assumptions that are laden with deeply contested value judgments, pervasive empirical uncertainty, or both. Given these challenges, it is hardly surprising that economic theory has a much weaker connection to the content of our tax laws and their enforcement than it does to the content and enforcement of many other legal regimes. …

Cartels As Rational Business Strategy: Crime Pays, John M. Connor, Robert H. Lande

All Faculty Scholarship

This article is the first to analyze whether cartel sanctions are optimal. The conventional wisdom is that the current level of sanctions is adequate or excessive. The article demonstrates, however, that the combined level of current United States cartel sanctions is only 9% to 21% as large as it should be to protect potential victims of cartelization optimally. Consequently, the average level of United States anti-cartel sanctions should be approximately quintupled.

The United States imposes a diverse arsenal of sanctions against collusion: criminal fines and restitution payments for the firms involved and prison, house arrest and fines for the corporate …

Introduction: Benefits Of Private Enforcement: Empirical Background, Robert H. Lande

All Faculty Scholarship

This short piece takes a first step toward providing the empirical bases for an assessment of the benefits of private enforcement. It presents evidence showing that private enforcement of the antitrust laws is serving its intended purposes and is in the public interest. Private enforcement helps compensate victimized consumers, and it also helps deter anticompetitive conduct. This piece demonstrates this by briefly summarizing a more detailed analysis of forty of the largest recent successful private antitrust cases.

To analyze these cases' compensation effects this presents, inter alia, the amount of money each action recovered, what proportion of the money was …

Welfare Enhancing Regulation Exemptions, Murat C. Mungan

Scholarly Publications

Sanctions for regulation violations are used to deter conduct which could potentially result in great social harms. This practice over-deters talented entities and under-deters untalented entities, which leads to social losses. This paper analyzes whether and how such social losses can be mitigated. I show that this can be achieved by allowing regulatees to purchase passes exempting them from regulations at appropriate prices.

Comparative Deterrence From Private Enforcement And Criminal Enforcement Of The U.S. Antitrust Laws, Robert H. Lande, Joshua P. Davis

All Faculty Scholarship

This article shows that private enforcement of the U. S. antitrust laws-which usually is derided as essentially worthless-serves as a more important deterrent of anticompetitive behavior than the most esteemed antitrust program in the world, criminal enforcement by the Antitrust Division of the U.S. Department of Justice.

The debate over the value of private antitrust enforcement long has been heavy with self-serving assertions by powerful economic interests, but light on factual evidence. To help fill this void we have been conducting research for several years on a variety of empirical topics. This article develops and then explores the implications of …

A Theory Of Wealth And Punitive Damages, Keith N. Hylton

Faculty Scholarship

One recurring problem in the punitive damages case law is the degree to which the wealth of the defendant should matter in the determination of a punitive award. Intuition suggests that the wealthy should pay more than the nonwealthy. On the other hand, the view has been expressed that wealth should not play a role in the determination of a punitive award. I will use examples to develop several arguments. The claim that wealth is seldom relevant to the determination of a punitive award is unsupportable. The key proposition advanced in this paper is that the defendant's wealth is relevant …

Should Tort Damages Be Multiplied?, Keith N. Hylton, Thomas J. Miceli

Faculty Scholarship

The notion that damages should be multiplied by the reciprocal of the probability of punishment is one of the basic lessons of the law and economics literature. However, the simple l/p" multiplier turns out be inapplicable in the civil damages setting. The multiplier that brings about first-best deterrence must be chosen by striking a balance between the supply of lawsuits and the need to internalize costs. Moreover, given the costs of litigation, a multiplier that minimizes overall social costs (in contrast to achieving first-best deterrence) may need to be set at a level that effectively bars many claims. This article …

Calabresi And The Intellectual History Of Law And Economics, Keith N. Hylton

Faculty Scholarship

This essay traces the vein of thought represented by Calabresi's "The Costs of Accidents", both backward in time to examine its sources, and forward to its impact on current scholarship. I focus on three broad topics: positive versus normative law and economics, positivist versus anti-positivist thinking in law, and the assumption of rationality in law and economics.

Re: Commission's Request For Comments On The Use Of Disgorgement In Antitrust Matters, Robert H. Lande

All Faculty Scholarship

This is a submission to the FTC that discusses this agency's use of disgorgement as a remedy in Antitrust matters. It strongly supports the Commission's use of the disgorgement remedy, and gives reasons why the public interest would be enhanced if the agency used this remedy more often. This document was submitted on behalf of the American Antitrust Institute.