Law Commons^™

Leveraging Paraguay’S Hydropower For Sustainable Economic Development, Perrine Toledano, Nicolas Maennling

Columbia Center on Sustainable Investment Staff Publications

While internationally Paraguay is known for being the largest hydropower exporter in the world, the domestic economy suffers from regular outages and high system losses. The country is largely dependent on agricultural production, which has led to volatile economic performances in the past resulting from climatic circumstances and commodity price fluctuations. To address these two key policy challenges, the Government of Paraguay has approached The Earth Institute to: 1) explore the potential of a climate risk management system and sustainable agriculture activities to mitigate environmental vulnerability and 2) develop a high-level strategic plan to use Paraguay’s vast hydropower resources for …

On Solid Ground: Toward Effective Resource-Based Development, Lisa E. Sachs

Columbia Center on Sustainable Investment Staff Publications

The small island-state of Timor-Leste exemplifies the challenge of resource-based development for a poor country well-endowed with a valuable natural resource. Timor-Leste, which gained its independence in 2002, has accumulated $13 billion in its petroleum fund in less than a decade. Some of the largest multinational oil companies are operating in the country, and the revenues continue to flow. And yet, while Timor-Leste has seen very notable improvements in its development indicators in the past few years, it continues to face a massive challenge of converting financial wealth into economic development. There are also heated debates about how to spend …

Tax Advice For The Second Obama Administration, Michael J. Graetz

Faculty Scholarship

Delivered January 18, 2013 as the keynote address at a conference cosponsored by Pepperdine Law School and Tax Analysts.

Health And Financial Fragility: Evidence From Car Crashes And Consumer Bankruptcy, Edward R. Morrison, Arpit Gupta, Lenora M. Olson, Lawrence Cook, Heather Keenan

Faculty Scholarship

This paper assesses the importance of adverse health shocks as triggers of bankruptcy filings. We view car crashes as a proxy for health shocks and draw on a large sample of police crash reports linked to hospital admission records and bankruptcy case files. We report two findings: (i) there is a strong positive correlation between an individual's pre-shock financial condition and his or her likelihood of suffering a health shock, an example of behavioral consistency; and (ii) after accounting for this simultaneity, we are unable to identify a causal effect of health shocks on bankruptcy filing rates. These findings emphasize …

The Dignity Of Equality Legislation, Olatunde C.A. Johnson

Faculty Scholarship

In Congressional Power to Effect Sex Equality, Patricia Seith argues that legal and social science commentary on the ratification failure of the Equal Rights Amendment ("ERA") does not properly account for the legislative gains achieved by the Economic Equity Act ("Equity Act"). In drawing attention to the Equity Act, Seith's account challenges common explanations of the source of women's equality gains, particularly the narratives offered by legal commentators who typically focus on the role of the Constitution and the courts. As Seith points out, the conventional account in legal history focuses on the effectuation of a "de facto ERA," …

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. …

The Tragedy Of The Anticommons: A Concise Introduction And Lexicon, Michael Heller

Faculty Scholarship

This article gives a concise introduction to the ‘tragedy of the anticommons.’ The anticommons thesis is simple: when too many people own pieces of one thing, nobody can use it. Usually, private ownership creates wealth. But too much ownership has the opposite effect – it leads to wasteful underuse. This is a free market paradox that shows up all across the global economy. If too many owners control a single resource, cooperation breaks down, wealth disappears, and everybody loses. Conceptually, underuse in an anticommons mirrors the familiar problem of overuse in a ‘tragedy of the commons.’ The field of anticommons …

The Agency Costs Of Agency Capitalism: Activist Investors And The Revaluation Of Governance Rights, Ronald J. Gilson, Jeffrey N. Gordon

Faculty Scholarship

Equity ownership in the United States no longer reflects the dispersed share ownership of the canonical Berle-Means firm. Instead, we observe the reconcentration of ownership in the hands of institutional investment intermediaries, which gives rise to "the agency costs of agency capitalism." This ownership change has occurred because of (i) political decisions to privatize the provision of retirement savings and to require funding of such provision and (ii) capital market developments that favor investment intermediaries offering low-cost diversified investment vehicles. A new set of agency costs arises because in addition to divergence between the interests of record owners and the …

Technological Innovation, International Competition, And The Challenges Of International Income Taxation, Michael J. Graetz, Rachael Doud

Faculty Scholarship

Because of the importance of technological innovation to economic growth, nations strive to stimulate and attract the research and development ("R&D") that leads to that innovation and to make themselves hospitable environments for the holding of intellectual property ("IP"). Tax policies have taken center stage in their efforts to accomplish these goals and to capture a share of the income from technological innovations.

Designing cost-effective methods of supporting technological innovations has, however, become substantially more difficult as the world economy has become more interconnected. Where R&D is performed and where income is earned change in response to the nature and …

Idiosyncratic Risk During Economic Downturns: Implications For The Use Of Event Studies In Securities Litigation, Edward G. Fox, Merritt B. Fox, Ronald J. Gilson

Faculty Scholarship

We reported in a recent paper that during the 2008-09 financial crisis, for the average firm, idiosyncratic risk, as measured by variance, increased by five-fold. This finding is important for securities litigation because idiosyncratic risk plays a central role in event study methodology. Event studies are commonly used in securities litigation to determine materiality and loss causation. Many bits of news affect an issuer’s share price at the time of a corporate disclosure that is the subject of litigation. Because of this, even if an issuer’s market–adjusted price changes at the time of the disclosure, one cannot determine with certainty …

Becker And Foucault On Crime And Punishment – A Conversation With Gary Becker, François Ewald, And Bernard Harcourt: The Second Session, Gary S. Becker, Francois Ewald, Bernard E. Harcourt

Faculty Scholarship

In his 1979 lectures at the Collège de France, The Birth of Biopolitics, Michel Foucault discussed and analyzed Gary Becker’s economic theory of crime and punishment, originally published in The Journal of Political Economy in 1968 under the title “Crime and Punishment: An Economic Approach.” In this historic, second encounter at the University of Chicago, Gary Becker responds to Foucault’s lectures and possible critical readings of his writings on crime and punishment, in conversation with Professors François Ewald (who was, at the time in 1979, Foucault’s assistant at the Collège and one of Foucault’s closest interlocutors) and Bernard Harcourt (a …

Law In Finance, Katharina Pistor

Faculty Scholarship

Law’s relevance to finance is by now well recognized, in no small part due to the literature on "law and finance" (La Porta et al. 1998; La Porta, Lopez-de-Silanes, and Shleifer 2008) celebrated in this journal ten years ago under the heading "the new comparative economics" (Djankov et al. 2003). There will always be some debate as to whether a specific law or regulation distorts or supports markets, but few would argue today that law is irrelevant to financial markets or that they could operate entirely outside it.

This special issue takes the debate about the relation between law and …

Towards A Legal Theory Of Finance, Katharina Pistor

Faculty Scholarship

This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put them in direct tension with commitments enshrined in law or contracts. This is the case especially in times of financial crises when the full enforcement of legal commitments would result in the self-destruction of the financial system. This law-finance paradox tends to be resolved by suspending the full force of law where the survival …

Multilateral Environmental Agreements In The Wto: Silence Speaks Volumes, Henrik Horn, Petros C. Mavroidis

Faculty Scholarship

This study contributes to the debate concerning the appropriate role of multilateral environmental agreements (MEAs) in in WTO dispute settlement. Its distinguishing feature is that it seeks to address this relationship in light of the reason why the parties have chosen to separate their obligations into two bodies of law without providing an explicit nexus between them. The basic conclusion is that legislators’ silence concerning this relationship should speak volumes to WTO adjudicating bodies: MEAs should not be automatically understood as imposing legally binding obligations on WTO Members, but could be used as sources of factual information.

A Legal Theory Of Finance, Katharina Pistor

Faculty Scholarship

This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally constructed and as such occupy an essentially hybrid place between state and market, public and private. At the same time, financial markets exhibit dynamics that frequently put them in direct tension with commitments enshrined in law or contracts. This is the case especially in times of financial crisis when the full enforcement of legal commitments would result in the self-destruction of the financial system. This law-finance paradox tends to be resolved by suspending the full force of law where the survival …

Sharing The Risks And Rewards Of Economic Migration, Anu Bradford

Faculty Scholarship

International cooperation on economic migration has been difficult to achieve. The interests of emigration countries ("source countries") and immigration countries ("destination countries') seem impossible to align. These countries disagree on who should migrate: source countries resist migration that leads to a brain drain, while destination countries welcome these very migrants given that they are likely to be the most productive citizens and the least likely to become fiscal burdens on the destination country. In addition, destination countries resist migration that leads to domestic unemployment through labor replacement. As a result, international economic migration remains restricted at a substantial cost to …

Freedom Of Contracts, Hanoch Dagan, Michael Heller

Faculty Scholarship

“Freedom of contracts” has two components: (1) the familiar freedom to bargain for terms within a contract and (2) the long-neglected freedom to choose from among contract types. Theories built on the first freedom have reached an impasse; attention to the second points toward a long-elusive goal, a liberal and general theory of contract law. This theory is liberal because it develops an appealing conception of contractual autonomy grounded in the actual diversity of contract types. It is general because it explains how contract values – utility, community, and autonomy – properly relate to each other across contract types. Finally, …

In The Shadow Of The Dsu: Addressing Specific Trade Concerns In The Wto Sps And Tbt Committees, Henrik Horn, Petros C. Mavroidis, Erik Wijkström

Faculty Scholarship

The paper argues that focusing only on disputes formally raised in the WTO Dispute Settlement system underestimates the extent of trade conflict resolution within the WTO. Both the SPS and TBT Committees address a significant number of ‘specific trade concerns’ (STCs) that in the overwhelming majority of cases do not become formal disputes. The STCs address differences between Members concerning the conformity of national measures in the SPS and TBT areas with these agreements. It appears as if Committee work on STCs significantly helps defuse potential trade frictions concerning national policies in the covered areas.

Updating The Competitive Tax Plan: A New Epilogue For 100 Million Unnecessary Returns, Michael J. Graetz

Faculty Scholarship

This is the first step of a new epilogue for my book 100 Million Unnecessary Returns: A Simple, Fair, and Competitive Tax Plan for the United States. In January 2012, the Tax Policy Center (TPC), pursuant to a grant from Pew Charitable Trust, published an article analyzing and estimating the parameters of the tax plan set forth in this book. TPC has now updated its estimates to take into account the January 2013 “fiscal cliff” legislation and other economic changes. Certain details of the plan have also been revised somewhat.

The competitive tax reform plan has five pieces: First, enact …

Economics Of Bankruptcy – Introduction, Edward R. Morrison

Faculty Scholarship

This essay surveys important contributions to the economics of bankruptcy. It is an introductory chapter for a forthcoming volume (from Edward Elgar Press) that compiles the work of legal scholars as well as economists working in the field of corporate finance. The essay begins with the foundational theories of Baird, Jackson, and Rea and then collects scholarly work extending, testing, or revising those theories. At various points I identify questions that merit further study, particularly empirical testing.

A Competition Act By India, For India: The First Three Years Of Enforcement Under The New Competition Act, Dorothy S. Lund

Faculty Scholarship

In 2002, India unveiled its new Competition Act. The Act substantially improves upon the previous competition regime, which regulated and condemned dominance even absent culpable conduct. Despite improvements, provisions of the Act have proven difficult for the fledgling Competition Commission (“the Commission”) to implement. For one, the Act overwhelmingly prefers rule of reason analysis to per se illegality for horizontal and vertical agreements. While this approach gives the Commission the flexibility to conduct a nuanced inquiry, the economic analysis required is challenging. So far, the Commission has struggled when applying basic antitrust economics in the hundred or so orders that …

The Moral Significance Of Economic Life, Andrzej Rapaczynski

Faculty Scholarship

Much of the modern perception of the role of economic production in human life – whether on the Left or on the Right of the political spectrum – views it as an inferior, instrumental activity oriented toward self-preservation, self-interest, or profit, and thus as essentially distinct from the truly human action concerned with moral values, justice, and various forms of self-fulfillment. This widely shared worldview is rooted, on the one hand, in the Aristotelian tradition that sees labor as a badge of slavery, and freedom as lying in the domain of politics and pure (not technical) knowledge, and, on the …