Law and Economics Commons^™

Global Changes In Regulating Corporate Auditors: A Comparative Assessment, Richard Thompson Ainsworth

Faculty Scholarship

Auditor independence was a global concern of financial regulators in the 1990's. Some observers saw this in a positive light, a natural development. Adjusting auditor independence rules was a manifestation of global convergence in corporate governance structures. New rules, especially rules leaning toward a harmonized system were welcome.

There was a more sobering view. This view held that global regulators were less concerned with convergence than they were with a sense of impending disaster. Things had gone too far. Significant, maybe even radical change was needed. The independence of corporate auditors had eroded; trust had been fundamentally compromised in the …

Copyright Law And Digital Millennium Copyright Act, Neda Ballard Panula

Honors Capstones

Capstone submitted as a graduation requirement for the BSU Honors Program.

Brief Of Keith N. Hylton As Amicus Curiae In Support Of Petitioners In Greg Johnson, Et Al. V. Ford Motor Company, Keith N. Hylton

Faculty Scholarship

This Court last addressed the legal framework for setting the amount of punitive damages in Adams v. Murakami (1991) 54 Cal.3d 105. In Adams, this Court declined to reach the argument advanced by the Association for California Tort Reform advocating “the profitability of the defendant’s misconduct” as the appropriate financial measure in fixing punitive damages. Id. at 116 n.7. For this argument to be advanced by such a pro-defendant trade association is hardly an anomaly. It appears typical, evidently based on the sensible assumption that in the setting of punitive damages, a focus on a defendant’s illicit profits will frequently …

The Economics Of Limited Liability: An Empirical Study Of New York Law Firms, Scott Baker, Kimberly D. Krawiec

ExpressO

Since the rapid rise in organizational forms for business associations, academics and practitioners have sought to explain the choice of form rationale. Each form contains its own set of default rules that inevitably get factored into this decision, including the extent to which each individual firm owner will be held personally liable for the collective debts and obligations of the firm. The significance of the differences in these default rules continues to be debated. Many commentators have advanced theories, most notably those based on unlimited liability, profit-sharing, and illiquidity, asserting that the partnership form provides efficiency benefits that outweigh any …

Evaluating The Role Of Brown Vs. Board Of Education In School Equalization,, Orley C. Ashenfelter, William J. Collins, Albert Yoon

Princeton Law and Public Affairs Research Paper Series

In this paper we study the long-term labor market implications of school resource equalization before Brown and school desegregation after Brown. For cohorts born in the South in the 1920s and 1930s, we find that racial disparities in measurable school characteristics had a substantial influence on black males’ earnings and educational attainment measured in 1970, albeit one that was smaller in the later cohorts. When we examine the income of male workers in 1990, we find that southern-born blacks who finished their schooling just before effective desegregation occurred in the South fared poorly compared to southern-born blacks who followed behind …

Whistle Blowing, Ben Depoorter, Jef De Mot

George Mason University School of Law Working Papers Series

For law enforcement purposes corruption and fraud are hard battles. Because of the highly secretive and premeditated nature of these crimes, prime witnesses are themselves often implicated in the fraudulent transaction. Promises of immunity and whistle blowing rewards are often required to resolve these information asymmetries. These insights have set a trend, both in scholarship and law enforcement practice, towards reward-based approaches (carrots), as an alternative or complement to punishment based deterrence (sticks). Applying the U.S. False Claims Act (FCA) as an analytical framework, we provide a critical review of the efficiency limitations of whistle blowing. More specifically, the formal …

The Law And Economics Of Cybersecurity: An Introduction, Mark F. Grady, Francesco Parisi

George Mason University School of Law Working Papers Series

One of the most controversial theoretical issues of our time is the governance of cybersecurity. Computer security experts, national security experts, and policy analysts have all struggled to bring meaningful analysis to cybersecurity; however, the discipline of law & economics has yet to be fully applied to the issue. This introduction presents work by leading national scholars who examine this complex national security challenge from a law and economics perspective. The focus spans from a discussion of pure market solutions to public-private issue analysis, providing a valuable basis for policy considerations concerning the appropriate governmental role on the issue of …

Putting Humpty Dumpty Back Together: Pricing In Anticommons Property Arrangements, Ben Depoorter, Sven Vanneste

George Mason University School of Law Working Papers Series

Recently, a new theory has drawn considerable attention in the literature on common property. A number of scholars have pointed to the danger of excessive propertization in the context of what are termed "anticommons" property regimes. Although this theory has found its way into numerous legal and economic applications, the empirical and cognitive foundations of the theory of fragmentation remain unexplored. Based on experimental data, this Article conducts an investigation into the social and personal processes involved in the anticommons.

The results confirm the theoretical proposition that anticommons deadweight losses increase with the degree of complementarity between individual parts and …

The Unsolvable Dilemma Of A Paretian Policymaker, Giuseppe Dari-Mattiacci, Nuno Garoupa

George Mason University School of Law Working Papers Series

In this paper, we argue that social decisionmaking is subject to a fundamental conflict between consistency and completeness. We show that a consistent welfarist method of policy assessment, that is, one that never violates the Pareto principle, may be incomplete in the sense of being incapable of providing a solution to important social welfare problems.

Judicial Power & Civil Rights Reconsidered, David E. Bernstein, Ilya Somin

George Mason University School of Law Working Papers Series

Michael Klarman's "From Jim Crow to Civil Rights: The Supreme Court and the Struggle for Racial Equality" is an important contribution to the scholarly literature on both the history of the civil rights struggle and judicial power more generally. Klarman argues that for much of the twentieth century, the Supreme Court was very reluctant to rule in favor of African American civil rights claimants, and had little impact when it did.

Klarman is right to reject traditional accounts that greatly exaggerated the Supreme Court's willingness and ability to protect minorities. However, he overstates his case. The Court's views on the …

Screening, Plea Bargains And The Innocent Problem, Oren Gazal

Law & Economics Working Papers Archive: 2003-2009

Courts in common law countries reject plea-agreements only when the agreed upon sentence is seen as exceedingly lenient. This judicial intervention is designed to ensure that plea-bargaining does not undermine deterrence. Many legal scholars argue against this policy, claiming that courts should prohibit plea-bargaining all together. They argue that the plea-bargaining system increases the risk of wrongful convictions. Economists often criticize this judicial intervention as well, but for a different reason. Rather than advocating the abolition of plea-bargaining, many economists argue that the courts should accept all plea-agreements without review. They claim that plea-bargaining can help ensure an efficient use …

Does Soft Dollar Brokerage Benefit Portfolio Investors: Agency Problem Or Solution?, Stephen M. Horan, D. Bruce Johnsen

George Mason University School of Law Working Papers Series

With soft dollar brokerage, institutional portfolio managers pay brokers “premium” commission rates in exchange for rebates they use to buy third-party research. One hypothesis views this practice as a reflection of the agency problem in delegated portfolio management; another views it as a contractual solution to the agency problem that aligns the incentives of investors, managers, and brokers where direct monitoring mechanisms are inadequate. Using a database of institutional money managers, we find that premium commission payments are positively related to risk-adjusted performance, suggesting that soft dollar brokerage is a solution to agency problems. Moreover, premium commissions are positively related …

A Culturally Correct Proposal To Privatize The British Columbia Salmon Fishery, D. Bruce Johnsen

George Mason University School of Law Working Papers Series

Canada now faces two looming policy crises that have come to a head in British Columbia. The first is long-term depletion of the Pacific salmon fishery by mobile commercial ocean fishermen racing to intercept salmon under the rule of capture. The second results from Canadian Supreme Court case law recognizing and affirming “the existing aboriginal and treaty rights of the aboriginal peoples of Canada” under Section 35(1) of the Constitution Act, 1982. This essay shows that the economics of property rights provides a joint solution to these crises that would promote the Canadian commonwealth by way of a privatization auction …

Plea Bargains Only For The Guilty, Oren Gazal, Oren Bar-Gill

Law & Economics Working Papers Archive: 2003-2009

A major concern with plea bargains is that innocent defendants will be induced to plead guilty. This paper argues that the law can address this concern by providing prosecutors with incentives to select cases in which the probability of guilt is high. By restricting the permissible sentence reduction in a plea bargain the law can preclude plea bargains in cases where the probability of conviction is low (L cases). The prosecutor will therefore be forced to – (1) select fewer L cases and proceed to trial with these cases; or (2) select more cases with a higher probability of conviction …

The Coordinated Effects Of Mergers In Differentiated Products Market, Kai-Uwe Kuhn

Law & Economics Working Papers Archive: 2003-2009

No abstract provided.

Virginia's Next Challenge: Economic And Educational Opportunity, Mark R. Warner

University of Richmond Law Review

No abstract provided.

Labor And Employment Law, Thomas M. Winn Iii, Lindsey H. Dobbs

University of Richmond Law Review

No abstract provided.

The Situational Character: A Critical Realist Perspective On The Human Animal, Jon Hanson, David Yosifon

Faculty Publications

This Article is dedicated to retiring the now-dominant "rational actor" model of human agency, together with its numerous "dispositionist" cohorts, and replacing them with a new conception of human agency that the authors call the "situational character." This is a key installment of a larger project recently introduced in an article titled

The Situation: An Introduction to the Situational Character, Critical Realism, Power Economics, and Deep Capture. That introductory article adumbrated, often in broad stroke, the central premises and some basic conclusions of a new approach to legal theory and policy analysis. This Article provides a more complete version of …

Bankruptcy Law And Inefficient Entitlements, Irit Haviv-Segal

ExpressO

The question as to the justification of bankruptcy law remains unanswered. The literature tends to emphasize the conflict and inability to compromise between the different normative outlooks of the insolvency law system. A deeper reflection on the existing theories of bankruptcy law reveals, however, that all theories share the same starting point: All theories share the understanding that efficiency considerations justify the enforcement of contractual bankruptcy arrangements. When the social theories call for increased levels of coercion and redistribution, these theories rely on normative considerations of distributive justice and rehabilitation values. They by no means rely on efficiency grounds. This …

Encumbered Shares, Shaun Martin, Frank Partnoy

University of San Diego Law and Economics Research Paper Series

The fundamental assumptions in the law and economics literature about shareholder voting and the one-share/one-vote rule are flawed. The classic view is that share ownership is necessary and sufficient to create voting rights and that such rights should be directly proportional to share ownership. We demonstrate that this assumption is unfounded, both for shares that are “economically encumbered” (held by shareholders who are not pure residual claimants; e.g., a shareholder who owns one share and is also short one or more shares) as well as shares that are “legally encumbered” (held or associated with more than one shareholder; e.g., shares …

Strict Liability For Gatekeepers: A Reply To Professor Coffee, Frank Partnoy

University of San Diego Law and Economics Research Paper Series

This article responds to a proposal by Professor John C. Coffee, Jr. for a modified form of strict liability for gatekeepers. Professor Coffee’s proposal would convert gatekeepers into insurers, but cap their insurance obligations based on a multiple of the highest annual revenues the gatekeepers recently had received from their wrongdoing clients. My proposal, advanced in 2001, would allow gatekeepers to contract for a percentage of issuer damages, after settlement or judgment, subject to a legislatively-imposed floor. This article compares the proposals and concludes that a contractual system based on a percentage of the issuer’s liability would be preferable to …

Theory And Practice Of Competition Advocacy At The Ftc, James C. Cooper, Paul A. Pautler, Todd J. Zywicki

George Mason University School of Law Working Papers Series

This article was prepared as part of a recent symposium celebrating the Ninetieth Anniversary of the founding of the Federal Trade Commission. In addition, fall 2004 marks the Thirtieth Anniversary of a pivotal moment in the establishment of the modern advocacy program at the FTC, Chairman Lewis Engman’s speech on the economic burden that inefficient transportation regulation policies were imposing on the American economy. Although the FTC has been involved in advocacy activities since its founding, Engman’s speech symbolized a new aggressiveness on the part of the FTC in using its expertise to work with other governmental actors at all …

Does The Tax Law Discriminate Against The Majority Of American Children: The Downside Of Our Progressive Rate Structure And Unbalanced Incentives For Higher Education?, Lester B. Snyder

University of San Diego Law and Economics Research Paper Series

Our graduate income tax structure provides an incentive to shift income to lower-bracket family members. However, some parents have much more latitude to shift income to their children than do others. Income derived from services and private business-by far the majority of American income-is less favored than income derived from publicly traded securities. The rationale given for this discrimination is that parents in services or private business, as opposed to those in securities, do not actually part with control of their property. This article explores these tax broader (yet subtle) tax benefits and their impact on the majority of children …

Estate Tax Repeal And The Budget Process, Karen C. Burke, Grayson M.P. Mccouch

University of San Diego Law and Economics Research Paper Series

This article examines the Bush Administration’s proposal, as part of its proposed fiscal year 2005 budget, to extend permanently the repeal of the federal estate tax. The article considers the budgetary impact of permanent estate tax repeal and discusses procedural impediments to use of the reconciliation process for permanent tax cuts. The article also notes the possibility of a durable compromise solution involving retention of the estate tax with lower rates and a higher exemption.

Rents, Dissipation, And Lost Treasures With N Parties, Giuseppe Dari-Mattiacci, Eric Langlais, Francesco Parisi

George Mason University School of Law Working Papers Series

The rent-seeking literature is unanimous on the fact that, in a rent-seeking context, the rent dissipation increases with the number of potential participants. In this paper we analyze the participants' choice to enter the game and their levels of efforts. We show that the usual claim - that the total dissipation approaches the entire value of the rent - applies only when participants are relatively weak. In the presence of strong competitors, the total dissipation actually decreases, since participation in the game is less frequent. We also consider the impact of competitors' exit option, distinguishing between redistributive rent-seeking and productive …

Lawmaking By Public Welfare Professionals, Margaret F. Brinig

ExpressO

In an era of shrinking state and local resources for domestic violence prevention and detection, governments face a critical question of how to best allocate scarce funds. This paper suggests some answers for treating violence by caregivers and presents a model for evaluating other programs. To reach our conclusions, we analyzed data and survey results supplied by more than 1700 county-level adult protective services (APS) authorities.

We found that some expensive programs produce very few results in terms of reporting, investigating, and substantiating elder abuse. For example, requiring a specific education or experience level (and therefore guaranteeing higher salaries) or …

An Ex-Ante View Of The Battle Of The Forms: Inducing Parties To Draft Reasonable Terms, Omri Ben-Shahar

Law & Economics Working Papers Archive: 2003-2009

This paper focuses on one type of ex-ante effect of the battle of the forms: the incentive to draft reasonable boilerplate terms. It argues that the experience with the battle-of-the-forms rule under the CISG reinforces what we already know, that existing legal solutions do not provide any incentive for the parties to draft reasonable forms. The paper suggests that the goal of inducing parties to draft reasonable terms can be significantly promoted by a third rule, a variant of the “best-shot” rule proposed by Victor Goldberg. Under the version labeled the “reasonable-shot” rule, the court would resolve the battle of …

Seventeen Famous Economists Weigh In On Copyright: The Role Of Theory, Empirics, And Network Effects, Stan Liebowitz, Stephen Margolis

ExpressO

The case of Eldred v. Ashcroft, which sought to have the Copyright Term Extension Act (CTEA, aka Sonny Bono Copyright Act) declared unconstitutional, was recently decided by the Supreme Court. A remarkable group of seventeen economists including five Noble laureates, representing a wide spectrum of opinion in economics, submitted an amicus curie brief in support of Eldred. The economists condemned CTEA on the grounds that the revenues earned during the extension are so heavily discounted that they have almost no value, while the extended protection of aged works creates immediate monopoly deadweight losses and increases the costs of creating new …

The Limitations Of Retirement Plan Law, Peter M. Van Zante

ExpressO

It is widely believed that employers determine whether or not their employees receive retirement benefits and the type and amount of any benefits that are received. This belief is mistaken. While sponsorship of a retirement plan is a voluntary choice on the part of the sponsoring employer and the sponsoring employer directly controls the type of plan and the level of benefits provided, the employer's choices on these matters are controlled by its employees' preferences for different forms of compensation. An employer must spend the funds available for employee compensation so as to provide its employees with those forms of …

What We Teach When We Teach About Race: The Problem Of Law And Pseudo-Economics, Steven A. Ramirez

Journal of Legal Education

No abstract provided.