Law Commons^™

Delaware’S Relevance In Chapter 22: Who Is “Courting Failure” Now?, Ruth S. Lee

Ruth S Lee

This study presents surprising new statistical evidence that contributes to the current “over-heated” academic debate about the Delaware courts’ role in Chapter 11 failure. In 2001, Professor LoPucki published an influential article suggesting that when large corporations file for bankruptcy under Chapter 11, they fail at a dramatically higher rate in Delaware courts than in other jurisdictions. He attributed this to corruption. His article enraged many academics and practitioners, and ignited many articles in the past two decades. This study presents startling evidence that while Chapter 11s filed in Delaware courts did have much higher failure rates from 1991-1996, after …

Reconsidering Competition, Maurice E. Stucke

College of Law Faculty Scholarship

In light of the financial crisis and the empirical findings from behavioral economics, policymakers should reconsider the fundamental question: what is competition? Only in understanding competition can one understand what competition can or cannot achieve under certain circumstances.

This Article reexamines one premise of competition, namely the extent to which firms, consumers, and the government are rational and act with perfect willpower. In varying this assumption, this Article maps four scenarios of competition.

Competition authorities should revisit their conception of competition, including the underlying assumptions, to better understand the competitive dynamics in different industries. In engaging in this review, competition …

Reconsidering Antitrust's Goals, Maurice E. Stucke

College of Law Faculty Scholarship

Antitrust policy today is an anomaly. On the one hand, antitrust is thriving internationally. On the other hand, antitrust’s influence has diminished domestically. Over the past thirty years, there have been fewer antitrust investigations and private actions. Today the Supreme Court complains about antitrust suits, and places greater faith in the antitrust function being subsumed in a regulatory framework. So what happened to the antitrust movement in the United States?

Two import factors contributed to antitrust policy’s domestic decline. The first is salience, especially the salience of the U.S. antitrust goals. In the past thirty years, enforcers and courts abandoned …

Development Lending To Municipalities By The World Bank Group, Asheesh Bhalla

Asheesh Bhalla

The World Bank Group has recently shifted its development lending policies to have a greater focus on lending to municipalities and developing financial institutions and systems of market creation at the local level. The author reviews this policy shift, and the consequences of such policy changes on local government institutions and law.

The Cost Of Democratization: Beyond Economists' Explanations Of Credit Card Debt, Andrea Freeman

Andrea Freeman

The credit card industry’s business model relies on the payment of fees and high interest rates by the poorest consumers to generate profits and subsidize credit card use by the richest. Industry studies indicate that African Americans and Latinos pay higher interest rates and more penalty fees than whites. Compounding credit card debt disparities are recent census statistics revealing that whites now have a median wealth twenty times higher than African Americans and eighteen times higher than Latinos. Despite the high social costs of deepening inequalities, law and economics and behavioral economics have largely ignored their contribution to market failure …

Scamlaw And The Macroeconomy, Alan J. Meese

Popular Media

No abstract provided.

Governing China’S Financial Disputes In The Aftermath Of The Global Financial Crisis Of 2008, Shahla F. Ali, Robin (Hui) Huang

Shahla F. Ali

In light of the recent global financial crisis of 2008, this article critically compares how China’s national arbitration commissions and local courts are responding to new challenges brought about by an increase in the number of banking related disputes. Drawing on comparative case analysis, the article examines the operation of CIETAC and the Shanghai Courts financial dispute resolution mechanisms in resolving financial disputes. Drawing on insights from selected case findings, the article provides insight into which institution is in the best position to handle financial-related cases, discusses prospects for coordination between the two and sets out proposals for further reform. …

Corporate Leadership And The Unfinished Diversity Movement, Evan M. Roberts Mr.

Evan M Roberts Mr.

This comment explores topics relating to diversity in the board room. It begins by covering the benefits a diverse board brings to firm, focusing on the business case rationales of saving firms money, strengthening core business concepts and corporate governance and increasing shareholder value. Next, the comment explores why, despite the apparent value a divers e board brings to a firm, corporations remain largely homogenized at the highest levels. Current legal, social and economic principles such as tournament theory and labor market externalities appear to shed light on what specific problems diversity advocates must contend with if they hope to …

The Creation And Destruction Of Price Cartels: An Evolutionary Theory, William Bradford

william bradford

This Article sketches the goals of antitrust law, describes the causes and effects of anticompetitive pricing generally and supracompetitive pricing specifically, explains the inability of antitrust law to suppress some instances of supracompetitive pricing, establishes the importance of trust between firms as a necessary condition for supracompetitive pricing, and illustrates how the strategic exchange of information is crucial to the creation and destruction of trust and thus to the evolution and devolution of price cartels. Part II develops a positive theory that explains and predicts the evolution and devolution of price cartels as a function of the ability of rival …

The Giants Among Us, Robin Feldman, Thomas Ewing

Robin C Feldman

The patent world is undergoing a change of seismic proportions. A small number of entities have quietly amassed vast treasuries of patents. These are not the typical patent trolls that we have come to expect. Rather, these entities have participants such Apple, Google, Microsoft, Sony, the World Bank, and non-profit institutions. The largest and most secretive of these has accumulated a staggering 30,000-60,000 patents.

Investing thousands of hours of research and using publicly available sources, we pieced together a detailed picture of these giants and their activities. We consider the potential positive effects, including facilitating rewards for forgotten inventors, creating …

The Cost Of Democratization: Beyond Economists' Explanations Of Credit Card Debt, Andrea Freeman

Andrea Freeman

The credit card industry’s business model relies on the payment of fees and high interest rates by the poorest consumers to generate profits and subsidize credit card use by the richest. Industry studies indicate that African Americans and Latinos pay higher interest rates and more penalty fees than whites. Compounding credit card debt disparities are recent census statistics revealing that whites now have a median wealth twenty times higher than African Americans and eighteen times higher than Latinos. Despite the high social costs of deepening inequalities, law and economics and behavioral economics have largely ignored their contribution to market failure …

Rising Together: Clarifying The International Environmental Marketing Claim Regulatory Landscape So That Developing Country Exporters May More Effectively Market Their Environmentally Responsible Products, Jeffrey J. Minneti

Jeffrey J Minneti

This article focuses attention on national and international state and non-state actor environmental marketing claim criteria setting bodies to assess whether and to what extent the actors consider developing country interests in their schemes. Finding that many firm-specific and industry-specific non-state actors fail to offer any consideration of developing country interests in their standardization and certification schemes, likely because they lack any legal obligation to do, the article suggestes two clarifications to the World Trade Organization’s Agreement on Technical Barriers to Trade (TBT), that will at least incentivize non-state actors to integrate developing country interests into their schemes. First, the …

Judicial Intervention As Risk Reduction, Juliet P. Kostritsky

Juliet P Kostritsky

JUDICIAL INTERVENTION AS RISK REDUCTION J. P. Kostritsky Employing an economics-based consequentialist approach to contract interpretation (focusing on the prospective effect and the factors that might justify intervention) this Article attempts to identify the precise parameters of an optimal framework for contract interpretation. Such a framework would seek to maximize gains from trade. The issue in such cases is always, given the words the parties used, what is the best (surplus maximizing) interpretation of the bargain. Courts can achieve that interpretation by, in part, minimizing the interpretive risk that parties face when they draft an express contract but fail to …

Rescission In Texas, A Suspect Remedy, George P. Roach

George P Roach

Rescission in Texas, A Suspect Remedy

Equitable remedies are sometimes overlooked even when favorable ex post changes in values or operating performance warrant their serious consideration. Due to liberalized standards for pleading and electing alternative remedies, rescission in Texas can provide a windfall to the claimant in comparison to standard monetary damages especially after favorable ex post changes. Texas courts are aware of the windfall incentive and can treat the claimant’s plea for rescission as suspect or opportunistic. Litigators on either side of a plea for rescission should consider how their case supports or refutes the suspicion that rescission would …

Corruption As Institution Among Small Businesses In Africa, Thomas A. Kelley Iii

Thomas A Kelley III

Suddenly it seems that US-funded international aid programs are all about building rational, predictable institutions to stimulate business in poor countries. The Millennium Challenge Corporation (MCC), a relatively new and increasingly important US aid organization, and the more venerable United States Agency for International Development (USAID), are initiating programs in poor countries around the world based on the assumption that their future stability and prosperity depends on unleashing and guiding the entrepreneurial spirit of small and medium-sized enterprises, and that this can be accomplished by improving the institutions – most particularly the laws and legal enforcement mechanisms – that regulate …

Et Tu Lisa Jackson? An Economic Case For Why The Epa’S Sweeping Environmental Regulatory Agenda Hurts Animal Welfare On Factory Farms, David E. Solan

David E Solan

Over the last several years, animal protection groups have increasingly partnered with environmentalists to ratchet up the environmental regulation of factory farms. This alliance has manifested itself in two primary ways: first, leading animal protection groups have supported the bold activism of Lisa Jackson, the Administrator of the EPA, in seeking to lasso factory farms into compliance with environmental laws; and second, these groups have engaged in a litigation strategy of suing factory farms under environmental statutes.

The Article aims to challenge the popular wisdom among the animal protection community that increased collaboration with the environmental movement confers mutual benefits. …

A Consequentialist Approach To Interpretation, Probabilistic Mechanisms, And Risk: Let’S Not Limit Courts’ Techniques Of Common Law Adjudication; Rethinking Judicial Intervention From Contracts To The Chrysler Bankruptcy, Juliet P. Kostritsky

Juliet P Kostritsky

Employing an economics-based consequentialist approach to contract interpretation (focusing on the prospective effect and the factors that might justify intervention) this Article attempts to identify the precise parameters of an optimal framework for contract interpretation. Such a framework would seek to maximize gains from trade. The issue in such cases is always, given the words the parties used, what is the best (surplus maximizing) interpretation of the bargain. Courts can achieve that interpretation by, in part, minimizing the interpretive risk that parties face when they draft an express contract but fail to completely resolve all possible issues. This Article uses …

Electromagnetic Pulse And The U.S. Food Security Paradigm: Assumptions, Risks, And Recommendations, Maximilian Leeds

Maximilian Leeds

This paper analyzes the systemic dangers posed to the U.S. economy by an electromagnetic pulse (EMP), either naturally occurring or maliciously generated, from a food security perspective. Section I examines the modern structure of the U.S. food supply chain, analyzing the just-in-time international distribution model and criticizing it as vulnerable to systemic shock and cascade failure. Section II examines the function and history of the electromagnetic pulse, assesses its potential to serve as a catalyst for systemic breakdown in the domestic food supply chain, and explores the current state of food security planning in the United States pertaining to this …

The Case Against The Dodd-Frank Act’S Living Wills: Contingency Planning Following The Financial Crisis, Nizan Geslevich Packin

Nizan Geslevich Packin

The Dodd-Frank Act’s “living will” requirement mandates that systemically important financial institutions develop wide-ranging strategic analyses of their business affairs, and submit comprehensive contingency plans for reorganization or resolution of their operations to regulators. The goal is to mitigate risks to the financial stability of the US and encourage last-resort planning, which will allow for a rapid and efficient response in the event of an emergency. Beyond the general framework set forth in the Dodd-Frank Act, very little is known about living wills; no legal literature currently exists on what the concept entails, and regulators have not yet created any …

Economic Evolution, Jurisdictional Revolution, Dustin Buehler

Dustin Buehler

In June 2011, the Supreme Court issued its first personal jurisdiction decision in two decades. In J. McIntyre Machinery, Ltd. v. Nicastro, the Court considered whether the placement of a product in the “stream of commerce” subjects a nonresident manufacturer to personal jurisdiction in states where the product is distributed. The Court issued a fractured opinion with no majority rule, with some justices expressing reluctance to “refashion basic jurisdictional rules” without additional information on “modern-day consequences.” This Article explores the consequences of these rules by providing the first law-and-economics analysis of personal jurisdiction. A descriptive analysis initially demonstrates that jurisdictional …

The End Of Mortgage Securitization? Electronic Registration As A Threat To Bankruptcy Remotenes, John P. Hunt, Richard Stanton, Nancy Wallace

John P Hunt

A central tenet of asset securitization in the United States—that assets are bankruptcy remote from their sponsors—may be threatened by innovations in the transfer of mortgage loans from the loan-originators (sponsors) to the legal entities that own the mortgage pools (the Special Purpose Vehicles (SPVs)). The major legal argument advanced in the paper is that because the mortgage is an interest in real property, the bankruptcy-remoteness rules applicable to real property, including § 544(a)(3) of the Bankruptcy Code, create a risk to the bankruptcy remoteness of mortgage transactions unless proper recording occurs. We review the traditional mortgage transfer process and …

"Systemic Poverty As A Cause Of Recessions", Robert Ashford

Robert Ashford

This article argues that the failure to address and ameliorate systemic poverty is a major cause of recessions. Recessions occur (and sub-optimal employment and growth persist) when a critical mass of market participants come to believe that the distribution of future earning capacity is not sufficient to purchase what can be produced despite the physical and technological capacity to employ available labor and capital to produce more over the same period even at lower unit cost. The essence of systemic poverty is widespread inadequate earning capacity. In recessionary periods, with rising unemployment, the problem of inadequate earning capacity (which perennially …

To Empower, Prohibit, Or Delegate?: Regulatory Strategies For Modernizing The Consumer Credit Market, Yoon-Ho Alex Lee, K. Jeremy Ko

Yoon-Ho A Lee

A number of proposals currently exist to bolster regulation in the market for consumer credit products. How should regulators evaluate their various options? Our diagnosis of the market—based on a review of empirical evidence and economic models—is that consumer are failing to minimize the economic cost of debt as a result of lack of information, lack of expertise, or lack of self-awareness. Consequently, the market lacks competitive dynamics and fails to eliminate welfare-reducing products. We view the space of regulatory options as a triangle with three nodes—empowerment, prohibition, or delegation—depending on whether a particular decision regarding consumer credit arrangement should …

To Empower, Prohibit, Or Delegate?: Regulatory Strategies For Modernizing The Consumer Credit Market, Yoon-Ho A. Lee

Yoon-Ho A Lee

A number of proposals currently exist to bolster regulation in the market for consumer credit products. How should regulators evaluate their various options? Our diagnosis of the market—based on a review of empirical evidence and economic models—is that consumer are failing to minimize the economic cost of debt as a result of lack of information, lack of expertise, or lack of self-awareness. Consequently, the market lacks competitive dynamics and fails to eliminate welfare-reducing products. We view the space of regulatory options as a triangle with three nodes—empowerment, prohibition, or delegation—depending on whether a particular decision regarding consumer credit arrangement should …

Is Competition The Solution Or The Problem? An Analysis Of U.S. Mortgage Securitization, Michael N. Simkovic

Michael N Simkovic

This article’s original contribution to the literature about the causes of the U.S. mortgage crisis of the late 2000s is to analyze two important causes that have thus far only been discussed in passing. First, this article provides evidence that fragmentation of the securitization market in the mid-2000s and competition between mortgage securitizers undermined securitizers’ ability to control originators, and that such competition led to a race to the bottom on underwriting standards. Second, this article provides evidence of a shift in market power away from securitizers and toward originators during the mid-2000s, and argues that this shift in power …

Information Failures In Structured Finance And Dodd'frank's "Improvements To The Regulation Of Credit Rating Agencies", Steven R. Mcnamara

Steven R. McNamara

This article analyzes the credit rating agency reform provisions of the Dodd-Frank Act’s “Improvements to the Regulation of Credit Rating Agencies” in light of the massive failures in the ratings of structured finance securities leading up to the 2008 credit crisis. The primary cause of ratings failure was the flawed quantitative ratings models used by the rating agencies; conflicted behavior on the part of the rating agencies was also an important but secondary cause. The key mechanical flaw in the ratings models was the method used to determination correlation, a measure of the likelihood that one borrower would default in …

Anticompetitive Product Design In The New Economy, John M. Newman

John M. Newman

Claims alleging anticompetitive product design and redesign lie at the very core of one of antitrust law’s most challenging dilemmas: the intersection between innovation and regulation, invention and intervention. For over three decades, courts and scholars have struggled to determine the proper analytical framework within which to address such cases. Meanwhile, the very industries in which challenged conduct occurs have been undergoing fundamental changes.

As demonstrated by the ongoing and recent antitrust litigation involving high-technology firms Apple, Intel, and Microsoft, distinctive features characterize most product markets in what has been called the “New Economy”—and increasingly has become simply “the economy.” …

Voice Without Say: Why More Capitalist Firms Are Not (Genuinely) Participatory, Justin Schwartz

Justin Schwartz

Why are most capitalist enterprises of any size organized as authoritarian bureaucracies rather than incorporating genuinely employee participation that would give the workers real authority? Even firms with employee participation programs leave virtually all decision making power in the hands of management. The standard answer is that hierarchy is more economically efficient than any sort of genuine participation, so that participatory firms would be less productive or efficient and lose out to more traditional competitors. This answer is indefensible. After surveying the history, legal status, and varieties of employee participation, I examine and reject as question-begging the argument that the …

Do We Value Our Cars More Than Our Kids? The Conundrum Of Care For Children, Palma Joy Strand

palma joy strand

Formal child care workers in the United States earn about $21,110 per year. Parking lot attendants, in contrast, make $21,250. These relative wages are telling: The market values the people who look after our cars more than the people who look after our kids. This article delves below the surface of these numbers to explore the systemic disadvantages of those who care for children—and children themselves. The article first illuminates the precarious economic position of children in our society, with a disproportionate number living in poverty. The article then documents both that substantial care for children is provided on an …

Freedom Of Contract In An Augmented Reality: The Case Of Consumer Contracts, Scott Peppet

Scott Peppet

This Article argues that freedom of contract will take on different meaning in a world in which ubiquitous information about places, goods, people, firms and contract terms is available to contracting parties anywhere, any time. In particular, our increasingly “augmented reality” calls into question leading justifications for distrusting consumer contracts—and thereby strengthens traditional understandings of freedom of contract as enforcing contracts as written. This is largely a descriptive and predictive argument: the Article aims to introduce contract law to these technologies and consider their most likely effects. It certainly has normative implications, however. Given that the vast majority of consumer …