Law Commons^™

Rediscovering The Economics Of Loss Causation , Richard Kaplan, Madge Thorsen, Scott Hakala

ExpressO

Abstract This article explores the economic principles and theories underlying loss causation in the context of securities fraud litigation. It explains the difference between “investment loss” and recoverable “inflationary loss” and posits that the latter consists of the difference between inflation in stock prices caused by the fraud at the time of purchase and inflation in the price at the time of sale. It reviews scenarios in which inflationary loss due to fraud may occur and would be recognized as a matter of economic theory as well as a matter of law. It urges that Dura v. Broudo Pharmaceuticals, 125 …

Extending Predation Analysis To Monopolist's Bundled Discounts Under Section 2: An Economic, Legal, And Comparative Perspective, Seth B. Chertok

ExpressO

In LePage’s v. 3M, the Third Circuit decided the first case at the federal appellate court level that dealt with the subject of bundled discounts by a monopolist under Section 2 of the Sherman Act in the period following the U.S. Supreme Court’s decision in Brooke Group Ltd. v. Brown & Williamson Tobacco Corporation. Prior to the decision in Brooke Group, the Third Circuit had only once before addressed this topic in Smithkline Corp. v. Eli Lilly and Company. Smithkline is only significant because it nearly suggested that any bundled discount, regardless of whether above or below cost, was anti-competitive. …

The Dual Purpose Of The American Jobs Creation Act Of 2004, Dennis J. Kokenos

ExpressO

The American Jobs Creation Act of 2004 claims to help bring offshore investments back to the United States. In reality, the AJCA does much more. The AJCA of 2004 makes adjustments to the U.S. tax code which helps bring the U.S. in line with existing international trade obligations as well as stimulating the U.S economy.

Did Reform Of Prudent Trust Investment Laws Change Trust Portfolio Allocation?, Max M. Schanzenbach, Robert H. Sitkoff

Law and Economics Papers

This paper investigates the effect of changes in state prudent trust investment laws on asset allocation in noncommercial trusts. The old prudent man rule favored “safe” investments

such as government bonds and disfavored “speculation” in stock. The new prudent investor rule, now widely adopted, relies on modern portfolio theory, freeing the trustee to invest based on risk and return objectives reasonably suited to the trust and in light of the composition of the trust portfolio as a whole. Using state- and institution-level panel data from 1986-1997, we find that after a state’s adoption of the new prudent investor rule, trust …

Recalibrating The War On Terror By Enhancing Development Practices In The Middle East, Kevin J. Fandl

ExpressO

This research paper suggests that the cart has been placed before the horse, that democratization and open markets in the Middle East are more likely the result of effective development than the catalyst for it. The war on terror has been justified by the United States as an effective means of reducing the possibility of terrorist attacks. This paper analyzes the validity of those justifications by reviewing the linkage between democracy and economic growth and that between democracy and peace.

The paper begins by hypothesizing that the war on terror and forced democratization of the Middle East are leading to …

Detection Avoidance, Chris William Sanchirico

ExpressO

In practice, the problem of law enforcement is half a matter of what the government does to catch violators and half a matter of what violators do to avoid getting caught. In the theory of law enforcement, however, although the state’s efforts at "detection" play a decisive role, offenders’ efforts at "detection avoidance" are largely ignored. Always problematic, this imbalance has become critical in recent years as episodes of corporate misconduct spur new interest in punishing process crimes like obstruction of justice and perjury. This article adds detection avoidance to the existing theoretical frame with an eye toward informing the …

Digital Wars -- Legal Battles And Economic Bottlenecks In The Digital Information Industries, Curt A. Hessler

ExpressO

The Digital Age has spawned major legal battles over the fundamental principles of intellectual property law and antitrust law. These diverse struggles can best be analyzed using the basic norm of "value added" from neo-classical normative economics. This analysis suggests that current intellectual property doctirnes provide excessive protection and current antitrust doctrines remain awkward in dealing with the cross-market leveraging of monopoly power in the presence of "natural monopolies" created by network effects.

The Accuracy And Manipulability Of Lost Profits Damages Calculations: Should The Trier Of Fact Be "Reasonably Certain"?, Jonathan T. Tomlin, David Merrell

ExpressO

The accuracy and manipulability of calculations for lost profits damages are critical determinants of the ability of harmed parties to receive just compensation in a wide range of legal cases including antitrust, fraud, false advertising, intellectual property infringement, and breach of contract. They are also important determinants of the deterrent effects of the law. Using a sample of over 5,000 U.S. firms, we show that simple damages methods are capable of being substantially inaccurate. We also show that damages methods in general are highly susceptible to manipulation. In the absence of reasonable justifications for why particular data sets and methods …

An Economic Assessment Of Damage Caps In Medical Malpracitce Litigation Imposed By State Laws And The Implications For Federal Policy And Law, Paul Wazzan

ExpressO

Many states have implemented laws which limit non-economic (e.g., pain and suffering) damages as a result of medical malpractice. These laws are seen by proponents as reducing medical malpractice insurance costs and preserving access to health care – especially for lower income individuals. Opponents believe that individuals are harmed through being prevented from seeking a full measure of redress for medical malpractice incidents, by reducing access to the court system, and that these laws simply enrich insurance companies and doctors.

Federal lawmakers are currently studying the potential effect of uniform medical malpractice damage limits at the national level. It is …

Organizational Form As Status And Signal, Kimberly D. Krawiec

ExpressO

In this Article, the author analyzes the reactions of 147 New York City law firms to the 1994 enactment of the New York Limited Liability Partnership statute, which provided New York law firm partners with the first convenient mechanism to limit their personal liability for partnership debts. Using both quantitative and qualitative evidence, she evaluates whether the behavior of New York law firms supports the signaling theory of organizational form—that is, the theory that firms use the partnership form to signal to the marketplace that they provide high quality legal services, due to either superior monitoring or to profit sharing. …

Bankruptcy Abuse: An Empirical Study Of Consumer Exemptions Cases, Bernard Trujillo

ExpressO

On April 20, 2005, the President of the United States signed a sweeping legislative overhaul of the consumer bankruptcy system. The bankruptcy reform legislation is based on an empirical assertion: that sophisticated debtors with the means to re-pay their debts were instead filing for bankruptcy and acquiring a discharge, thereby abusing the bankruptcy system.

This Article presents the results of an empirical study of bankruptcy court doctrine in consumer exemptions proceedings over a twenty-year period. The findings suggest a serious empirical flaw in the premise of the bankruptcy reform legislation. The study shows that the bankruptcy system minimizes abuse by …

Digital Wars -- Legal Battles And Economic Bottlenecks In The Digital Information Industries, Curt A. Hessler

ExpressO

The Digital Revolution has created the apparent anomaly that information, though very cheap to create and near costless to share, is managed by industries that are increasingly concentrated and roiled by endless legal warfare. This paper surveys the major legal battles by subjecting all of them to the familiar norm of "maximizing economic value added", as defined by neo-classical "welfare economics". The various legal wars are traced to defects and confusions in current legal approaches to intellectual property (the "property wars") and to antitrust doctrines (the "monopoly wars").

Breaking The Bank: Revisiting Central Bank Of Denver After Enron And Sarbanes-Oxley, Celia Taylor

ExpressO

No abstract provided.

Do Institutions Really Matter? Assessing The Impact Of State Judicial Structures On Citizen Litigiousness, Jeff L. Yates, Paul Brace, Holley Tankersley

ExpressO

No abstract provided.

An Analysis Of The Duties And Obligations Of The International Legal Community To The Eradication Of Poverty And Growth Of Sustainable Development In Light Of The Jus Cogens Nature Of The Declaration Of The Right To Development, Freda R. Murray-Bruce

ExpressO

This paper examines the copious problem of world poverty affecting half of the world’s population in the South and assesses the international legal obligations of the international legal community, viz., developed states, transnational corporations and the international financial institutions of the IMF, World Bank and WTO to the eradication of poverty and the growth of sustainable development, in view of the inviolability and peremptory nature of the Charter of the UN, and the international human rights provisions arising therefrom. To this extent, we examine the 1986 General Assembly Declaration on the Right to Development, along with the other International Bill …

The Same Side Of Two Coins: The Peculiar Phenomenon Of Bet-Hedging In Campaign Finance, Jason Cohen

ExpressO

The paper addresses the propensity of large donors to give to competing candidates or competing party organizations during the same election cycle – for example, giving money to both Bush and Kerry during the 2004 presidential race – a practice here termed 'bet-hedging.' Bet-hedging is analyzed in strategic and game-theoretic terms. The paper explores the prevalence of bet-hedging, the possible motivations behind the practice, and the informational concerns surrounding it. The paper argues that bet-hedging, out of all donation practices, carries with it a uniquely strong implication of ex post favor-seeking: if a donor prefers one side over the other, …

The Problematics Of The Pareto Principle, Daniel A. Farber

ExpressO

The Pareto Principle asserts in one form that an outcome which is unanimously preferred by individuals should be chosen by society; or in another form that an outcome should be chosen if it is preferred by at least one individual and the remaining members of society are indifferent. It is little wonder that this principle, which has the ring of a self-evident truth, has been the “gold standard” for law and economics. Despite its appeal, however, the Pareto Principle has limitations that are irrelevant in some spheres such as corporate law, but that may have serious import for fields such …

Deterring Roper’S Juveniles: Why Immature Criminal Youth Require The Death Penalty More Than Adults – A Law & Economics Approach, Moin A. Yahya

ExpressO

In Roper v. Simmons, the United States Supreme Court declared the death penalty for juveniles unconstitutional. It relied on three reasons, one of which concerns this article, namely the theory that juveniles are less culpable and deterrable than adults. The Court relied on the American Medical Association’s amicus brief which purported to show scientifically that juveniles had less developed brains than adults. The Court characterized juveniles as being risk-lovers who highly preferred the present over the future, who loved gains no matter how risky but did not care for losses, and who could not engage in proper cost-benefit analysis, because …

How And Understanding Of The Second Personal Standpoint Can Change Our Understanding Of The Law: Hart's Unpublished Response To Exclusive Legal Positivism, Robin B. Kar

ExpressO

This Article describes recent developments in moral philosophy on the “second personal standpoint,” and argues that they will have important ramifications for legal thought. Moral, legal and political thinkers have, for some time now, understood important distinctions between the first personal perspective (of deliberation) and the third personal perspective (of observation, cause and effect), and have plumbed these distinctions to great effect in their thought. This distinction is, in fact, implicit the law and economics movement’s “rational actor” model of decision, which currently dominates much legal academic thought. Recent developments in value theory due to philosopher Stephen Darwall suggest, however, …

Lost In Translation: The Economic Analysis Of Law In The United States And Europe, Kenneth G. Dau-Schmidt

ExpressO

In this essay, we examine the reasons why the economic analysis of law has not flourished in European countries as it has in the U.S. In particular, we focus on three European countries - the United Kingdom (U.K.), Germany, and France. We argue that differences in culture, the legal system and the academy have led to differing degrees of success of the law and economics movement in each country. We speculate that, although there is currently less interest in the economic analysis of the law in Europe than in the United States, European interest could dramatically increase if scholars adopt …

Is It A Subsidy? An Evaluation Of China's Currency Regime And Its Compliance With The Wto, Matthew R. Leviton

ExpressO

No abstract provided.

Can Regulation Of Insider Trading Be Effective?, Alexandre Padilla

ExpressO

While there is a very prolific literature showing that the regulation of insider trading is by and large ineffective when it comes to discourage individuals from trading on non-public information, almost no work has been done on whether insider trading regulation can be effective. This paper attempts to fill that gap by investigating whether the regulation of insider trading can be effective. First, we show why insider trading regulation cannot be effective. Second, we see to what extend the empirical studies are consistent with our analysis.

Ireland's New Responsibility: Refugees Buy The Irish Another Round, Shae D. Armstrong

ExpressO

Over the previous decade, Ireland's economic boom has attracted asylum seekers from around the globe to this small island nation. Ireland's economic explosion created growing pains for industrial sectors of the Irish economy. Ireland’s continued willingness to diversify its neighborhoods will promote even greater economic prosperity. Furthermore, refugees will satisfy several of the economic demands of Ireland’s massively growing economy. Asylum seekers granted refugee status in Ireland will satisfy present labor shortages in Ireland. Also, these refugees will allow Ireland to establish an economic partnership with non-EU countries that have a propensity to export asylum seekers.

Sharing Potential And The Potential For Sharing: Open Source Licensing As A Legal And Economic Modality For The Dissemination Of Renewable Energy Technology, Jason Wiener

ExpressO

No abstract provided.

A Model For Emergency Service Of Voip Through Certification And Labeling, Patrick S. Ryan, Tom Lookabaugh, Douglas Sicker

ExpressO

Voice over Internet Protocol (VoIP) will transform many aspects of traditional telephony service, including the technology, the business models, and the regulatory constructs that govern such service. Perhaps not unexpectedly, this transformation is generating a host of technical, business, social, and policy problems. In attempting to respond to these problems, the Federal Communications Commission (FCC) could mandate obligations or specific solutions to VoIP policy issues; however, it is instead looking first to industry initiatives focused on the key functionality that users have come to expect of telecommunications services. High among this list of desired functionality is user access to emergency …

What Makes Asset Securitization "Inefficient"?, Kenji Yamazaki

ExpressO

Despite the damage caused by the recent Enron scandal , the asset securitization market has been vibrant and has become a popular financing alternative . A number of academics emphasize its merits and suggest that it is a more favorable way of financing, and Congress’s proposal to make sales of asset in securitization immune from characterization as secured transactions under the Bankruptcy Reform Act of 2001 (the “Reform Act”) almost materialized when the Enron scandal hit the scene. Conversely, there have been accusations that securitization is not a legitimate way of financing because, for example, it fosters fraudulent transactions.

Why …

An Economic Theory Of Infrastructure And Commons Management, Brett M. Frischmann

ExpressO

In this article, Professor Frischmann combines a number of current debates across many disciplinary lines, all of which examine from different perspectives whether certain resources should be managed through a regime of private property or through a regime of open access. Frischmann develops and applies a theory that demonstrates there are strong economic arguments for managing and sustaining openly accessible infrastructure. The approach he takes differs from conventional analyses in that he focuses extensively on demand-side considerations and fully explores how infrastructure resources generate value for consumers and society. As a result, the theory brings into focus the social value …

The Legal Employment Market: Determinants Of Elite Firm Placement, And How Law Schools Stack Up, Anthony M. Ciolli

ExpressO

Data collected on 15,293 law firm associates from 1295 employers who graduated from law school between 2001 and 2003 were used to develop a “total quality score” for every ABA-accredited law school, both nationally and for nine geographic regions. Quantitative methods were then used to identify factors that help explain the variation in a law school’s national career placement success at elite law firms. The findings revealed that while a law school’s academic reputation is the single biggest predictor of placement, several other factors were also highly significant. Differences in grading system, class rank disclosure policies, and the number of …

The Expansion Of Intellectual Property Rights By International Agreement: A Case Study Comparing Chile And Australia’S Bilateral Fta Negotiations With The U.S., Ralph G. Fischer

ExpressO

This paper attempts to address the ongoing debate regarding the expansion of intellectual property rights (IPRs) through international negotiations. Commentators have described three theories that purport to explain the growing scope of IPRs in international law, as reflected in international agreements: that these agreements reflect coercion by economically powerful nations; that they are the products of lobbying by multinational corporations; and that they represent autonomous, welfare-enhancing instruments that benefit all parties. The article tests these theories by using a case study comparing free trade agreement negotiations that the United States recently concluded with a less developed country, Chile, and with …

Insider Trading: Hayek, Virtual Markets And The Dog That Did Not Bark, Henry G. Manne

ExpressO

This Essay briefly reexamines the great debates on the role of insider trading in the corporate system from the perspectives of efficiency of capital markets, harm to individual investors, and executive compensation. The focus is on the mystery of why trading by all kinds of insiders as well as knowledgeable outsiders was studiously ignored by the business and investment communities before the advent of insider trading regulation. It is hardly conceivable that officers, directors, and controlling shareholders would have remained totally silent in the face of widespread insider trading if they had seen the practice as being harmful to the …