Law and Economics Commons^™

Knowledge, Legitimacy, Efficiency And The Institutionalization Of Dispute Settlement Procedures At The World Trade Organization And The World Intellectual Property Organization, Michael P. Ryan

Northwestern Journal of International Law & Business

International legal research regarding international economic dispute settlement tends to be a-theoretical. A theoretically-grounded analytic framework is employed in this article which draws from scholarship from political science, sociology, and economics regarding institutions and international governmental organizations. The knowledge-legitimacy-efficiency analytic framework is applied in this article to studies of General Agreement on Tariffs and Trade (GA TT)/World Trade Organization (WTO) dispute settlement in order to relate this relevant scholarship to the economic field under primary study, Internet domain names. GA TT/WTO knowledge regarding international trade law has thickened through multi-lateral trade negotiations and dispute settlement decisions. The WTO's legitimacy is …

Implications For Foreign Direct Investment In Sub-Saharan Africa Under The African Growth Opportunity Act, Rebecca Trent

Northwestern Journal of International Law & Business

In the wake of the September 11th attacks on the United States, there has been an outcry in the media over the economic, social, and political rights of individuals in less developed nations. The need to integrate developing nations into the global economy has been called for, not only for sheer humanitarian reasons, but also as a means to prevent catastrophic actions by those who feel left out when it comes to globalization. It is said that "rich countries will pay a price" if they cannot find ways to integrate developing nations into the international economy and that "security depends …

Turning Competition On Its Head: Economic Analysis Of The Ec's Decision To Bar The Ge-Honeywell Merger, Paul Jin

Northwestern Journal of International Law & Business

On July 3, 2001, the Commission of the European Communities ("Commission") rejected the proposed $45 billion merger between The General Electric Company ("GE") and Honeywell International, Inc. ("Honeywell"), which U.S. antitrust regulators had approved. Of the some 400 mergers involving U.S. companies reviewed by the Commission since 1990, only one had ever been barred. In that instance, however, U.S. authorities had also blocked the proposed transaction. Thus, the failed GE-Honeywell merger marked the first time the Commission had blocked a merger involving U.S. companies that had been approved by U.S. authorities. The Commission's move to block the GE-Honeywell merger brought …

A Safety Net In The E-Marketplace: The Safe Harbor Principles Offer Comprehensive Privacy Protection Without Stopping Data Flow, William J. Kambas

ILSA Journal of International & Comparative Law

In May of 2000, the FTC, under Chairman Robert Pitofsky, concluded that industry self-regulation was not effective in protecting consumer privacy and in a report to Congress the FTC expressed the view "that legislation [was] necessary to ensure further implementation of consumer data protection devices."

How To Construct An Underclass, Or How The War On Drugs Became A War On Education, Eric D. Blumenson, Eva Nilsen

Faculty Scholarship

The war on drugs has spawned a second front-a war on education. The casualties of this war are all poor or lower-income people who cannot afford to buy a private education. This article details the consequences of this other war, and explores some legislative and litigation strategies for reclaiming educational opportunity for all Americans. First, however, we must set out in more detail the laws and policies that now deploy educational privation as punishment in public schools, colleges, and prisons.

Gendered Shades Of Property: A Status Check On Gender, Race & Property, Laura M. Padilla

Faculty Scholarship

This article explores the relationship between gender, race and property.Women in the United States continue to be economically disadvantaged, and women of color are even more disadvantaged. This article will open with a review of laws, past and present, which have shaped women's rights to own, manage and transfer property. It will then provide a status check of where women, including women of color, stand in the United States relative to the rest of the population vis-a-vis income and other indicators of economic well-being. The article will then discuss why economic inequality persists, trotting out the usual reasons of discrimination …

Reciprocal Fairness, Strategic Behavior & Venture Survival: A Theory Of Venture Capital-Financed Firms, Manuel A. Utset

Scholarly Publications

No abstract provided.

On The Demise Of Shareholder Primacy ( Or, Murder On The James Trains Express), Eric Talley

Faculty Scholarship

The hypothetical introduced by Vice Chancellor Leo Strine's Essay exposes an important arena of corporate governance where adherence to the traditional norm of "shareholder primacy" is particularly troublesome. In fact, it is hard to find an analogous domain of corporate governance law that is as jarringly discontinuous as that found in the factual circumstances suggested by Strine's hypothetical. Explicitly, the legal scrutiny accorded to managers who resist a hostile acquisition depends critically on whether a court invokes the Revlon doctrine or the Unocal doctrine as the appropriate governing standard. Under the former (and its progeny), shareholder primacy arguments carry …

Playing Favorites With Shareholders, Stephen J. Choi, Eric Talley

Faculty Scholarship

One of the most vexing historical debates in corporate law concerns whether regulations or markets are better equipped to address managerial agency costs within public corporations. Although corporate law scholars have traditionally favored immutable legal imperatives as an elixir for misaligned incentives,an increasing number of commentators place greater faith in market mechanisms to accomplish the same task. While many such mechanisms operate simultaneously (including markets for output, labor, and capital), perhaps none has received more attention than the oft-celebrated "market for corporate control" as a means for achieving deterrence. By providing a constant and credible risk of hostile acquisitions, the …

Discretion In Long-Term Open Quantity Contracts: Reining In Good Faith, Victor P. Goldberg

Faculty Scholarship

Long-term contracts often promise to deliver the seller's full output, the buyer's requirements, or some variation on these. For example, an electric utility might enter into a thirty year contract with a coal mine promising that it will take all the coal needed to supply a particular generating plant. These open quantity contracts have raised two issues. The first is whether the promise was illusory. If the utility had no duty to take any coal, a court could have found that there was no consideration and, therefore, no contract. While there was a time when full output and requirements contracts …

Endowment Effects Within Corporate Agency Relationships, Jennifer H. Arlen, Matthew L. Spitzer, Eric L. Talley

Faculty Scholarship

Behavioral economics is an increasingly prominent field within corporate law scholarship. A particularly noteworthy behavioral bias is the "endowment effect" – the observed differential between an individual's willingness to pay to obtain an entitlement and her willingness to accept to part with one. Should endowment effects pervade corporate contexts, they would significantly complicate much common wisdom within business law, such as the presumed optimality of ex ante agreements. Existing research, however, does not adequately address the extent to which people manifest endowment effects within agency relationships. This article presents an experimental test for endowment effects for subjects situated in an …

It's A Question Of Market Access, Kyle W. Bagwell, Robert W. Staiger, Petros C. Mavroidis

Faculty Scholarship

In this paper, we argue that market access issues associated with the question of the optimal mandate of the World Trade Organization should be separated from nonmarket access issues. We identify race-to-the-bottom and regulatory-chill concerns as market access issues and suggest that the WTIO should address these concerns. We then describe ways that WTO principles and procedures might be augmented to do so. As for nonmarket access issues, we argue that as a general matter these are best handled outside the WTO, and that, while implicit links might be encouraged, explicit links between the WTO and other labor and environmental …

Trade And Poverty In The Poor Countries, Jagdish N. Bhagwati, T.N. Srinivasan

Faculty Scholarship

While freer trade, or “openness” in trade, is now widely regarded as economically benign, in the sense that it increases the size of the pie, the recent anti-globalization critics have suggested that it is socially malign on several dimensions, among them the question of poverty.

Their contention is that trade accentuates, not ameliorates, and that it deepens, not diminishes, poverty in both the rich and the poor countries. The theoretical and empirical analysis of the impact of freer trade on poverty in the rich and in the poor countries is not symmetric, of course. We focus here only on the …

Understanding Enron: "It's About Gatekeepers, Stupid", John C. Coffee Jr.

Faculty Scholarship

What do we know after Enron's implosion that we did not know before it? The conventional wisdom is that the Enron debacle reveals basic weaknesses in our contemporary system of corporate governance. Perhaps, this is so, but where is the weakness located? Under what circumstances will critical systems fail? Major debacles of historical dimensions – and Enron is surely that – tend to produce an excess of explanations. In Enron's case, the firm's strange failure is becoming a virtual Rorschach test in which each commentator can see evidence confirming what he or she already believed.

Economic Development, Competition Policy, And The World Trade Organization, Bernard Hoekman, Petros C. Mavroidis

Faculty Scholarship

At the recent WTO ministerial meeting in Doha, Qatar, WTO members called for the launch of negotiations on disciplines relating to competition, on the basis of explicit consensus on modalities to be agreed at the 5th WTO ministerial in 2003. Discussions in WTO since 1997 have revealed little support for ambitious multilateral action. Proponents of WTO antitrust disciplines currently propose an agreement that is limited to ‘core principles’ – nondiscrimination, transparency, and provisions banning ‘hard core’ cartels. We argue that an agreement along such lines will create compliance costs for developing countries while not addressing the anticompetitive behavior of firms …

A New Old Look At Terrorism Insurance: Jack Hirshleifer's War Damage Insurance After Fifty Years, Peter Siegelman

Faculty Articles and Papers

No abstract provided.

Racing Towards The Top?: The Impact Of Cross-Listing And Stock Market Competition On International Corporate Governance, John C. Coffee Jr.

Faculty Scholarship

Cross-listing by foreign issuers onto U.S. exchanges accelerated during the 1990s, bringing international market centers into competition for listings and draining liquidity from some regional markets. Although cross-listing has traditionally been explained as an attempt to break down market segmentation and to increase investor recognition of the cross-listing firm, the globalization of financial markets and instantaneous electronic communications render these explanations increasingly dated. A superior explanation is "bonding": Issuers migrate to U.S. exchanges because by voluntarily subjecting themselves to the United States's higher disclosure standards and greater threat of enforcement (both by public and private enforcers), they partially compensate for …

Law Enforcement Under Incomplete Law: Theory And Evidence From Financial Market Regulation, Chenggang Xu, Katharina Pistor

Faculty Scholarship

This paper studies the design of law-making and law enforcement institutions based on the premise that law is inherently incomplete. Under incomplete law, law enforcement by courts may suffer from deterrence failure, defined as the social-welfare loss that results from the regime's inability to deter harmful actions. As a potential remedy a regulatory regime is introduced. The major functional difference between courts and regulators is that courts enforce law reactively, that is only once others have initiated law enforcement procedures, while regulators enforce law proactively, i.e. on their own initiative. Proactive law enforcement may be superior in preventing harm. However, …

A Control-Based Approach To Shareholder Liability For Corporate Torts, Nina A. Mendelson

Articles

Some commentators defend limited shareholder liability for torts and statutory violations as efficient, even though it encourages corporations to overinvest in and to externalize the costs of risky activity. Others propose pro rata unlimited shareholder liability for corporate torts. Both approaches, however, fail to account fully for qualitative differences among shareholders. Controlling shareholders, in particular, may have lower information costs, greater influence over managerial decisionmaking, and greater ability to benefit from corporate activity. This Article develops a control-based approach to shareholder liability. It first explores several differences among shareholders. For example, a controlling shareholder can more easily curb managerial risk …

The Investor Confidence Game, Lynn A. Stout

Cornell Law Faculty Publications

Academic discussions of securities policy often assume that investors are hyperrational and distrustful actors who do not need the protections of the securities laws to avoid being defrauded. The time has come to recognize the limitations of this assumption and to consider as well the possibility and implications of investor trust. Experienced policymakers and businesspeople (and certainly experienced con artists) have long known that trust is a potent force in explaining and manipulating investor behavior. They are right. They are right to believe that investor confidence-meaning investor trust-is important to the market. They are right to think that trust has …

Mixed Signals: Rational-Choice Theories Of Social Norms And The Pragmatics Of Explanation, W. Bradley Wendel

Cornell Law Faculty Publications

The question of how societies secure cooperation and order in the absence of state enforced sanctions has long vexed law and economics scholars. Recently the concept of social norms--informally enforced rules of behavior--has occupied the attention of a large number of these theorists, who are concerned with understanding why economically rational actors would bother to follow rules whose costs seem to outweigh their benefits. Because of the prestige (or at least trendiness) of law and economics, it seems that now everyone in the legal academy is talking about social norms. This burgeoning scholarship is closely related to a wider concern …

Globalization In Financial Services - What Role For Gats?, Chantal Thomas

Cornell Law Faculty Publications

No abstract provided.

Fear And Social Capitalism: The Law And Macroeconomics Of Investor Confidence, Steven A. Ramirez

Faculty Publications & Other Works

No abstract provided.

Why Tax The Rich? Efficiency, Equity, And Progressive Taxation, Reuven S. Avi-Yonah

Reviews

In Greek mythology, Atlas was a giant who carried the world on his shoulders. In Ayn Rand’s 1957 novel Atlas Shrugged, Atlas represents the “ prime movers”—the talented few who bear the weight of the world’s economy.1 In the novel, the prime movers go on strike against the oppressive burden of excessive regulation and taxation, leaving the world in disarray and demonstrating how indispensable they are to the rest of us (the “second handers” ).

The Internet, Regulation And The Market For Loyalties: An Economic Analysis Of Transborder Information Flow, Paul D. Callister

Faculty Works

As the Internet has gained prevalence, attention has turned to its regulation. Indeed, regulation proves to be a unique and complex problem, given the Internet's lack of traditional borders and boundaries. Highlighting possible avenues of regulation, the author discusses neo-classical economic theory, specifically Monroe E. Price's market for loyalties theory. Although originally applied to the regulation of broadcasting, the author contends that the market for loyalties theory can also be applied to the Internet. Building on Professor Price's pioneering analysis, the article extends the theory to examine market elasticity's effect on the loss of monopoly control over information flow (as …

Toward A Jurisprudence Of Cost-Benefit Analysis, Michael Abramowicz

Michigan Law Review

In 1989, Cass Sunstein published an article entitled On the Costs and Benefits of Aggressive Judicial Review of Agency Action. Sunstein apparently meant the words "costs" and "benefits" in an informal sense, as the article considered the advantages and disadvantages of aggressive judicial review without pretense of explicit quantification. That article was several generations ago in Sunstein scholarship, almost 100 articles and over a dozen books. The central concerns of that article, however, are relevant to an assessment of Sunstein's latest book, whose title, The Cost-Benefit State, uses the words "costs" and "benefits" as labels for quantitative assessments of the …

Internet Television And Copyright Licensing: Balancing Cents And Sensibility, Michael A. Einhorn

Cardozo Arts & Entertainment Law Journal

No abstract provided.

How The Corporation Conquered John Bull, A.W. Brian Simpson

Michigan Law Review

This is a study of the evolution of the forms of business organization during the industrial revolution. Historians never fully agree about anything at all, and often with good reason, but there is really no doubt that the period covered by this book is one that saw major changes in agricultural and industrial production, and in commercial practice and organization. It is convenient to refer broadly to the changes which took place in terms of a revolution, industrial, agricultural, or less commonly, commercial in nature. Long before the starting date for this study, which is the date of the Bubble …

Pragmatism Regained, Christopher Kutz

Michigan Law Review

Jules Coleman's The Practice of Principle serves as a focal point for current, newly intensified debates in legal theory, and provides some of the deepest, most sustained reflections on methodology that legal theory has seen. Coleman is one of the leading legal philosophers in the Anglo-American world, and his writings on tort theory, contract theory, the normative foundations of law and economics, social choice theory, and analytical jurisprudence have been the point of departure for much of the most interesting activity in the field for the last three decades. Indeed, the origin of this book lies in Oxford University's invitation …

Poverty And Equality: A Distant Mirror, Gene R. Nichol

Michigan Law Review

In one sense, Joel Schwartz's new effort, Fighting Poverty with Virtue, is tremendously timely. Bill Clinton's Personal Responsibility and Work Opportunity Reconciliation Act of 1996 was designed to "end welfare as we know it," turning greater attention to poor people's habits than to their pocketbooks. George Bush's compassionate conservatism is meant to pick up the pace, overtly seeking "to save and change lives." The White House's ominously entitled "Office of Faith-Based and Community Initiatives" is apparently set to unleash new waves of moral reformers. Schwartz's book seeks to provide moral, philosophical and historical sustenance for these initiatives. He focuses on …