Law and Economics Commons^™

Three Faces Of Private Property, Michael A. Heller

Articles

Private property is a rather elusive concept. Any kid knows what it means for something to be mine or yours, but grownup legal theorists get flustered when they try to pin down the term. Typically they, actually we, turn to a familiar analytic toolkit: including, for example, Blackstone's image of private property as "sole and despotic dominion"; Hardin's metaphor of the "tragedy of the commons"; and, more generally, the division of ownership into a trilogy of private, commons, and state forms. While each analytic tool has a distinguished pedigree and certain present usefulness, each also imposes a cost because it …

Critical Race Theory And Postcolonial Development Theory: Observations On Methodology, Chantal Thomas

Cornell Law Faculty Publications

No abstract provided.

Employment Discrimination, Stewart J. Schwab

Cornell Law Faculty Publications

This article first parses the multiple overlapping definitions of discrimination, including distinctions between group and individual discrimination and between segregation and discrimination in pay. The article then summarizes the major economic models of discrimination, particularly Becker’s taste-for-discrimination model and statistical-discrimination models, as well as sorting the status-production models. The discussion focuses on the conditions under which markets will tend to eliminate discrimination, noting that this occurs in a more limited range of situations than commonly recognized. The article next surveys the economic role of anti-discrimination laws, evaluating arguments that the law speeds the journey to a non-discriminatory equilibrium and that …

Subsidized Lives And The Ideology Of Efficiency, Martha T. Mccluskey

Journal Articles

No abstract provided.

United States V General Dynamics: A Reappraisal, Anthony Wylie

University Avenue Undergraduate Journal of Economics

The purpose of this paper is to examine the reasons behind Material Services’ acquisitions, the reasons why the Government contested the mergers, and how the Government erred in analyzing the case. We wish to show that the combination of the three coal firms—Material Services, Freeman Coal, and United Electric—occurred for reasons of economic efficiency and practicality, not based on any atavistic desire to monopolize and damage social welfare.

Looking At Marriage, Naomi Cahn

Michigan Law Review

In a recent book (not the subject of this Review), highly successful and popular authors John Gottman and Nan Silver set out their seven effective principles for making a marriage last. The final suggestion is that spouses should "create shared meaning, an inner life together that is rich with symbols and family rituals and that honors the hopes of both partners." In a happy marriage, the couples not only provide support for each other, but also "build a sense of purpose into their lives together." Professor Gottman has developed these principles as a result of twenty years of research and …

Private Order Under Dysfunctional Public Order, John Mcmillan, Christopher Woodruff

Michigan Law Review

Businesspeople need contractual assurance. Most transactions are less straightforward than a cash sale of an easily identifiable item. Buyers need assurance of the quality of what they are purchasing, and sellers need assurance that bills will be paid. The legal system may not always be available to provide contractual assurance - and when the law is dysfunctional, private order might arise in its place. Many developing and transition economies have dysfunctional legal systems, either because the laws do not exist or because the machinery for enforcing them is inadequate. In such countries, bilateral relationships, communal norms, trade associations, or market …

Enforcing Contracts In Dysfunctional Legal Systems: The Close Relationship Between Public And Private Orders: A Repy To Mcmillan And Woodruff, Ariel Porat

Michigan Law Review

When the public order is dysfunctional, a private order for enforcing contracts will develop. In the absence of courts, transactors will seek ways to secure performance without recourse to legal sanctions. Social and economic sanctions imposed on the party in breach, whether by the aggrieved party or by the economic and social community in which both parties operate, replace legal sanctions. These sanctions sometimes arise within a private order functioning spontaneously, as when ongoing contractual relationships prevail between the parties, or when a close-knit economic or social community exists in which information concerning breaches of contract flows freely. In other …

The Role Of Letters Of Credit In Payment Transactions, Ronald J. Mann

Michigan Law Review

Common justifications for the use of the letter of credit fail to explain its widespread use. The classic explanation claims that the letter of credit provides an effective assurance of payment from a financially responsible third party. In that story, the seller - a Taiwanese clothing manufacturer, for example - fears that the overseas buyer - Wal-Mart - will refuse to pay once the goods have been shipped. Cross-border transactions magnify the concern, because the difficulties of litigating in a distant forum will hinder the manufacturer's efforts to force the distant buyer to pay. The manufacturer-seller solves that problem by …

Letters Of Credit As Signals: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Clayton P. Gillette

Michigan Law Review

Why would buyers and sellers transact with each other through a third party that charges a significant fee for its services and that typically is authorized to make payment notwithstanding noncompliance with the very prerequisites that it has been engaged to monitor? This is the puzzle that Ronald Mann's provocative and nuanced article purports to explain. Under the traditional story about the esoteric world of letters of credit, these transactions allow distant buyers and sellers to circumvent obstacles that would otherwise frustrate long-distance transactions. The traditional story explains that these credits induce buyers to approve payment prior to receiving conforming …

Reconciling The Old Theory And The New Evidence: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Jacob I. Corré

Michigan Law Review

Ronald Mann's thorough research and rigorous analysis provide compelling evidence that the commercial letter of credit does not further the fundamental purpose traditionally associated with it. Equally persuasive are his hypotheses about the functions that letters of credit actually serve in the real world. The objective statistics are startling. An overwhelming majority of letter of credit seller-beneficiaries make at least initial presentations to issuing or correspondent banks that by the express terms of the letter of credit do not entitle the seller to payment. Without a waiver from its customer, the issuing bank is legally entitled to, and surely will …

Informality As A Bilateral Assurance Mechanism: Comments On Ronald Mann's 'The Role Of Letters Of Credit In Payment Transactions', Avery Wiener Katz

Michigan Law Review

Ronald Mann's study of documentary defects in the presentation of commercial letters of credit is a valuable contribution to the commercial law literature in at least three respects. First, it offers a detailed and thorough empirical survey of an important though specialized aspect of commercial practice. Mann collected and coded a data sample of 500 randomly selected letter-of-credit transactions, personally evaluating each transaction to determine whether the documentary presentation by the beneficiary of the letter of credit (i.e., the seller) complied with the letter's formal terms. Then, for each case in which he found one or more documentary defects, Mann …

Empirical Insight And Some Thoughts On Future(S) Investigation: Comments On Mark West's 'Private Ordering At The World's First Futures Exchange', A.W. Brian Simpson

Michigan Law Review

Some considerable number of years ago, when I was in Chicago, I had a plan to undertake a general study of the origins of futures markets. They fascinated me for a variety of reasons, one being their bizarre nature: traders meeting together, usually in some form of ring, in order to sell, on a huge scale, quantities of commodities which they neither possess, nor intend to possess, to other traders, who have not the least wish to receive such commodities, and nowhere to put them if they did. At first sight it appears a weird perversion of the institution of …

A Public Choice Approach To Private Ordering: Rent-Seeking At The World's First Futures Exchange: Comments On Mark West's 'Private Ordering At The World's First Futures Exchange', Omri Yadlin

Michigan Law Review

The literature on private ordering systems has expanded exponentially over the last decade. Yet, very few scholars have actually attempted to define the term "private ordering" - a failure that sometimes leads to confusion. Some scholars identify private ordering with non-state ordering. According to this view, the private legal systems Robert Ellickson, Lisa Bernstein, McMillan & Woodruff, Mark West, and others have investigated are "private" simply because their norms are not manufactured or enforced by the state. The alternative view emphasizes the decentralized feature of private ordering systems. Robert Ellickson, for example, studied "how people manage to interact to mutual …

Rethinking Relationship-Specific Investments: Subcontracting In The Japanese Automobile Industry, Yoshiro Miwa, J. Mark Ramseyer

Michigan Law Review

Longer ago than either of us cares to remember, one of us attended junior high in Tokyo. On Saturdays, he worked at a printed circuit factory. Or maybe "factory" makes it all sound too grand. A small building in back of a gas station, it had three or four punch presses. The "president" supervised matters (though he actually spent more time hanging out at the gas station), together with a sidekick who did assorted odd jobs besides. Several middle-aged women with no apparent technical education or skill ran the presses. The junior high kid spent his time trimming the sheets …

Reaffirming Relationship-Specific Investments: Comments On Miwa And Ramseyer's 'Rethinking Relationship-Specific Investments', Scott E. Masten

Michigan Law Review

I, too, have a work-related anecdote from my youth to relate. During one summer break from college, I had a job on the night shift in the canning plant of a Coca-Cola bottling franchisee in my hometown in New Hampshire. The process of canning tonic (known as "soda" outside of New England) consisted of three stages, beginning with the fabrication of cans in a room at one end of the building and concluding with the filling and sealing operations in a room at the other end. In between, workers in a third room inspected cans as they arrived by conveyor …

Exploring The Battle Of The Forms In Action, Daniel Keating

Michigan Law Review

Like many commercial law professors, I have long been fascinated with the workings of the Uniform Commercial Code's section 2-207, the "battle of the forms" provision. There are two features of that section, one internal and one external, that make it such an intriguing statute to ponder. The internal source of fascination with section 2-207 is that it provides a classic model for teaching students about the intricacies of statutory construction. There is probably no other provision within U.C.C. Article 2 that provides more confusion to law students and more challenge to the instructor than does section 2-207. There is …

Commercial Norms And The Fine Art Of The Small Con: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Douglas G. Baird

Michigan Law Review

The standard battle-of-the-forms story, often rehearsed in the classroom, is one in which merchants try to take advantage of their contracting opposites. A seller wants to escape the obligations that come with implied terms and seeks to disclaim them in its acknowledgment form. Its buyers do not realize they have been had until after the goods fail. Only then do they read the seller's form and discover that they are without remedy. Conspicuously absent in Dan Keating's fine article, however, is any evidence that supports this story. Some of his merchants talk about putting favorable terms in their forms, but …

The Sound Of One Form Battling: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Richard Craswell

Michigan Law Review

Daniel Keating has provided a thoughtful and useful study of the way that businesses form contracts. In particular, he has given us a good deal of data concerning the problem known as the "battle of the forms." Commercial lawyers have, of course, been wrangling over this problem for decades, so it is no small accomplishment to be able to offer a useful contribution. In Part I below, I describe more precisely just what Keating's data does and does not illuminate. Parts II and III then focus on a particular contracting practice that Keating has identified: the practice of getting both …

The Limits Of Empiricism: What Facts Tell Us: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Dennis Patterson

Michigan Law Review

The conventional legal academic wisdom about empiricism is that empirical information is by-and-large a good thing, that we need more of it, and that empirical analysis is preferable to many scholarly alternatives now on offer in the law review literature. I do not dispute the proposition that, all things considered, empirical information is a good thing. What I question is the notion that empirical information necessarily leads to knowledge. Put differently, it is one thing to marshal the facts, and another to know what to make of the facts. I shall raise these points both in a general way and …

On The Use Of Practitioner Surveys In Commercial Law Research: Comments On Daniel Keating's 'Exploring The Battle Of The Forms In Action', Avery Wiener Katz

Michigan Law Review

As Daniel Keating's principal article attests, the literature on U.C.C. section 2-207 and the "battle of the forms" is both vast and intricate. 1 That fact, together with the distinguished array of commentators assembled here, makes it unlikely that I will be able to say anything substantially original on that subject. Accordingly, in the spirit of this overall symposium, I will focus the bulk of my remarks not on the substantive issues raised by Keating's article, but on his methodology. In particular, I will suggest that Keating's empirical method - the free-form, oral interview conducted personally by the principal researcher …

Balance-Of-Payments Crises In The Developing World: Balancing Trade, Finance And Development In The New Economic Order, Chantal Thomas

Cornell Law Faculty Publications

No abstract provided.

The Limits Of Behavioral Decision Theory In Legal Analysis: The Case Of Liquidated Damages, Robert A. Hillman

Cornell Law Faculty Publications

Discontent with the apparent tunnel vision of economic analysis of law's rational choice theory, legal scholars recently have turned with enthusiasm to "behavioral decision theory" (BDT) to enrich their understanding of how people make decisions and of the law's effect on human behavior. This article, for the first time, evaluates BDT's potential contribution to legal analysis by focusing on a single, important legal paradox: Despite contract law's freedom of contract paradigm, courts actively and enthusiastically police agreed damages provisions. Although the article finds an important place in legal analysis for this new discipline, the article raises and discusses several obstacles …

Reasons Within Passions: Emotions And Intentions In Property Rights Bargaining, Peter H. Huang

Publications

This article discusses the role of emotions (or feelings or affects) in property rights bargaining. Real world people choose bargaining strategies based upon not only rational calculations, but also their gut feelings. This article considers the impact of anger and shame on bargaining over property rights and the Coase theorem. Such emotions may depend on beliefs (expectations or assessments) about whether particular strategic decisions should or will occur. Such beliefs can be viewed as attributions over the intentions of others.

Delaware As Demon: Twenty-Five Years After Professor Cary's Polemic, Mark J. Loewenstein

Publications

No abstract provided.

Foreword: The Many Passions Of Teaching Corporations, Charles O'Kelley

Faculty Articles

Teachers of Corporations share a passion for their subject and consider this first course in the business law curriculum to have fundamental importance for all law-trained professionals. Seemingly, however, we agree on little else, including the substantive focus of the course, the nature of the course materials, and the insights that teachers should convey. In fact, Corporations differs dramatically from school to school. Some teachers focus substantial attention on unincorporated business associations, while others cover only corporation law. Some who teach exclusively about the corporation emphasize closely held firms, while others highlight the law related to publicly traded entities. Likewise, …

Securities Disclosure Regime - Challenges Posed By The Internet And Technology, Thomas Thomas Thoppil

LLM Theses and Essays

This thesis is an effort to evaluate the structural changes that have taken place in the securities market of the United States and its impact on securities disclosure regime mandated by the Federal Securities Act. Part 2 of the thesis discusses the securities disclosure regime and its underlying economic theories. This part also traces the challenges posed by technology and takes a quick look at the argument that the traditional norms are incompatible in dealing with those challenges. Part 3 deals primarily with structural developments in the securities market over the past five years by examining some of the innovative …

If Taxpayers Can't Be Fooled, Maybe Congress Can: A Public Choice Perspective On The Tax Transition Debate, Kyle D. Logue

Reviews

In When Rules Change: An Economic and Political Analysis of Transition Relief and Retroactivity , Shaviro takes the various strands of the existing literature on retroactivity and weaves them together, applying his unique combination of legal expertise, political pragmatism, and theoretical sophistication in public finance economics as well as political science. The result is a subtle, balanced, and scholarly treatise on transition relief and retroactivity that should serve as the starting point for all future research in the field. In its stated objectives, the book is admirably ambitious.

This Review will, in a broad sense, follow Shaviro's characterization of the …

Argentina And The Telecommunications Industry: The Difficult But Necessary Path Toward Liberalization, Vanessa P. Rubinstein

Northwestern Journal of International Law & Business

This article provides a synopsis of Argentina's telecommunications industry and examines the compelling reasons why Argentina must effectively liberalize the industry while eliminating its hidden protectionist policies. Part II presents a historical overview of the Argentina's telecommunications industry and analyzes Argentina's domestic laws requiring liberalization. Part III explores the main economic policy reasons for why liberalization of the Argentine telecommunications industry is essential. Part IV offers recommendations to better achieve effective development, liberalization and competition in the telecommunications industry. This article concludes that Argentina must completely liberalize its telecommunications industry for basic services, thereby abiding by its domestic legal commitments …

A Theory Of Legal Presumptions, Antonio E. Bernardo, Eric L. Talley, Ivo Welch

Faculty Scholarship

This article analyzes how legal presumptions can mediate between costly litigation and ex ante incentives. We augment a moral hazard model with a redistributional litigation game in which a presumption parameterizes how a court 'weighs' evidence offered by the opposing sides. Strong prodefendant presumptions foreclose lawsuits altogether, but also engender shirking. Strong proplaintiff presumptions have the opposite effects. Moderate presumptions give rise to equilibria in which both shirking and suit occur probabilisitically. The socially optimal presumption trades off agency costs against litigation costs, and could be either strong or moderate, depending on the social importance of effort, the costs of …