Law and Economics Commons^™

The Dog That Didn't Bark: Private Investment Funds And Relational Contracts In The Wake Of The Great Recession, Robert C. Illig

Michigan Business & Entrepreneurial Law Review

In the aftermath of the subprime mortgage crisis, the contract rights of numerous hedge funds and venture capital funds were breached. These contracts were complex and sophisticated and had been negotiated at great time and expense. Yet despite all of the assumptions of neo-classical contracts theory, nothing happened. Practically none of these injured parties sued to enforce their rights. Professor Illig uses this dearth of litigation to conduct a form of natural experiment as to the value of contract law. Discrete market participants contracted before the crash and then pursued their rights in court afterwards, while relational market participants contracted …

The 'Justice Deficit' Debate In Eu Private Law: New Directions, Daniela Caruso

Faculty Scholarship

This essay outlines the ongoing debate on the justice deficit of EU private law – the ‘social justice’ debate – and then points at an underexplored avenue of inquiry that is essential for this debate to stay meaningful and constructive. Future research should aim to calibrate EU private law to the socio-economic asymmetries of the EU market, and to counterbalance the uneven weight of uniform rules, where they appear desirable, with proper compensatory mechanisms.

New Private Law Theory And Tort Law: A Comment, Keith N. Hylton

Faculty Scholarship

This comment was prepared for the Harvard Law Review symposium on “The New Private Law,” as a response to Benjamin Zipursky’s principal paper on torts. I find Zipursky’s reliance on Cardozo’s Palsgraf opinion as a foundational source of tort theory troubling, for two reasons. First, Cardozo fails to offer a consistent theoretical framework for tort law in his opinions, many of which are difficult to reconcile with one another. Second, Palsgraf should be understood as an effort by Cardozo to provide greater predictability, within a special class of proximate cause cases, by reallocating decision-making power from juries to judges. It …

An Economic Perspective On Preemption, Keith N. Hylton

Faculty Scholarship

This Essay has two goals. The first is to present an economic theory of preemption as a choice among regulatory regimes. The optimal regime choice model is used to generate specific implications for the court decisions on preemption of products liability claims. The second objective is to extrapolate from the regime choice model to consider its implications for broader controversies about preemption.

China In Africa: What The Policy Of Nonintervention Adds To The Western Development Dilemma, Madison Condon

Faculty Scholarship

Chinese investment activity in Africa has skyrocketed in recent years, outpacing every other nation except South Africa. China finances more infrastructure projects in Africa than the World Bank and provides billions of dollars in low-interest loans to the continent’s emerging economies. These loans and investments are typically made in exchange for securing access to natural resources. Based on its principles of nonintervention and respect for sovereignty, China gives this money with little or no strings attached. The West, which typically conditions its loans on initiatives like democracy promotion and corruption reduction, has labeled China a “rogue donor,” whose actions will …

Defensive Medicine And Obstetric Practices, Michael D. Frakes

Faculty Scholarship

Using data on physician behavior from the 1979–2005 National Hospital Discharge Surveys (NHDS), I estimate the relationship between malpractice pressure, as identified by the adoption of non-economic damage caps and related tort reforms, and certain decisions faced by obstetricians during the delivery of a child. The NHDS data, supplemented with restricted geographic identifiers, provides inpatient discharge records from a broad enough span of states and covering a long enough period of time to allow for a defensive medicine analysis that draws on an extensive set of variations in relevant tort laws. Contrary to the conventional wisdom, I find no evidence …

The Law And Economics Of Fluctuating Criminal Tendencies And Incapacitation, Murat C. Mungan

Maryland Law Review

No abstract provided.

The Irony Of At&T V. Concepcion, Colin P. Marks

Faculty Works

This Essay explores the possible dual readings of Concepcion in light of the FAA and its interpretation, including Supreme Court precedents. This Essay concludes that though there is support for interpreting the Concepcion decision narrowly, it is more likely that a broader interpretation was intended, but the metes and bounds of this opinion have yet to be explored. Nonetheless, under this broad interpretation, the effect on consumers will be to discourage individuals from seeking redress for their claims. Indeed, the decision may actually encourage businesses to breach contractual obligations with impunity when the individual sums owed are too small to …

A License To Grow: Ending State, Local, And Some Federal Barriers To Innovation And Growth In Key Sectors Of The U.S. Economy, Brian J. Broughman, Brink Lindsey, Anthony J. Luppino, Karl S. Okamoto, Mark C. Suchman, Robert E. Litan, Larry E. Ribstein

Faculty Works

This white paper outlines some of the remaining state barriers and a few federal ones and how they prevent disruptive innovations by entrepreneurs and established firms alike that potentially could bring new and more efficient business models to the market. In the case of the legal sector, the barriers we identify not only adversely affect legal innovation, but also impede innovation in other sectors of the economy. Similarly, in health care, pharmaceuticals, K-12 education, the financing of growth businesses, and many consumer services, legal obstructions hinder innovation and the provision of efficient, affordable, high-quality services and products. We conclude by …

Pathway To Minority Shareholder Protection: Derivative Actions In The People's Republic Of China, Donald C. Clarke, Nicholas C. Howson

Book Chapters

Using a dataset of Chinese judicial opinions arising in over fifty cases, this paper analyses the development and current implementation of shareholder derivative actions in the courts of the People’s Republic of China (“PRC”), both before and after the derivative lawsuit was explicitly authorized in the PRC’s 2006 Company Law effective January 1, 2006. In addition, we describe the very unique ecology of enterprise organization and corporate governance in modern China, and critique the formal design of the derivative action and offer reform suggestions. We find the design of the Chinese derivative lawsuit to be, in some respects, innovative and …

The Law And Economics Of Fluctuating Criminal Tendencies And Incapacitation, Murat C. Mungan

Scholarly Publications

Economic analyses of criminal law are frequently and heavily criticized for being unable to explain many criminal law rules and doctrines people find intuitively just. Existing economic models cannot properly explain, for instance, why criminal law distinguishes between (1) repeat offenders and first-time offenders, (2) murder and voluntary manslaughter, and (3) remorseful and non-remorseful offenders.

This Article proposes a richer economic theory of crime that captures the rationales behind these practices and potentially behind many other important criminal law principles and doctrines. Unlike an overwhelming majority of previous economic analyses, my theory accounts not only for the deterrent effect of …

High-Powered (Mis)Incentives And Venture-Capital Contractors, Manuel A. Utset

Scholarly Publications

No abstract provided.

Achieving Reproductive Justice In The International Surrogacy Market, Seema Mohapatra

Faculty Scholarship

Men and women are increasingly seeking surrogacy arrangements outside of their home country, mainly due to legal restrictions or the high cost of surrogacy in their home countries. Global surrogacy raises numerous issues including the economic status of women involved in surrogacy arrangements, poverty, issues related to what motherhood means and how women from different ethnic, socioeconomic, class, and national backgrounds interact in the global surrogacy market. This essay analyzes whether reproductive justice exists in the current international surrogacy market. Reproductive justice refers to the normative concept that all women, regardless of their ethnic, racial, national, social, or economic backgrounds, …

The $1.75 Trillion Lie, Lisa Heinzerling, Frank Ackerman

Michigan Journal of Environmental & Administrative Law

A 2010 study commissioned by the Office of Advocacy of the U.S. Small Business Administration claims that federal regulations impose annual economic costs of $1.75 trillion. This estimate has been widely circulated, in everything from op-ed pages to Congressional testimony. But the estimate is not credible. For costs of economic regulations, the estimate reflects a calculation that rests on a misunderstanding of the definition of the relevant data, flunks an elementary question on the normal distribution, pads the analysis with several years of near-identical data, and fails to recognize the difference between correlation and causation. For costs of environmental regulation, …

Keynes Was Right!, Kenneth G. Dau-Schmidt

Indiana Law Journal

Labor and Employment Law Under the Obama Administration: A Time for Hope and Change? Symposium held November 12-13, 2010, Indiana University Maurer School of Law, Bloomington, Indiana.

The Influence Of Law And Economics Scholarship On Contract Law: Impressions Twenty-Five Years Later, Jeffrey L. Harrison

UF Law Faculty Publications

This is an update of a work done in conjunction with a contract law conference 25 years ago. My specific assignment was to assess the impact of law and economics scholarship on contract law. I responded by conducting an empirical study of judicial citations to selected law and economics works in order to ascertain the extent to which judges seemed to be relying on the teachings of law and economics. In effect, the effort was part of a general question that concerns all law professors: Does scholarship matter? I have repeated the study with respect to the scholarship sample selected …

Transparency And Financial Regulation In The European Union: Crisis And Complexity, Caroline Bradley

Articles

No abstract provided.

The Bizarre Law & Economics Of 'Business Roundtable V. Sec', Grant M. Hayden, Matthew T. Bodie

All Faculty Scholarship

Corporations are legal entities designed to foster certain kinds of collective economic activity. The decisionmaking power within a corporation ultimately rests with a board of directors elected by shareholders. Shareholders, however, do not use anything like a conventional ballot in these elections; instead, they fill out a “proxy ballot,” delivered to them by the incumbent board. This proxy ballot lists only the incumbent board’s chosen nominees, very often the board members themselves. If a shareholder wants to run for director or propose another nominee for the board, she needs to provide all other shareholders with a separate proxy ballot — …

The Great Recession, The Resulting Budget Shortfalls, The 2010 Elections And The Attack On Public Sector Collective Bargaining In The United States, Kenneth G. Dau-Schmidt, Winston Lin

Articles by Maurer Faculty

American public sector unions and collective bargaining have been subjected to a vicious attack under the auspices of balancing government budgets, promoting "equity" between private and public employees and limiting the impact of "special interests" on government policy. The American and world financial crisis of 2007 resulted in the Great Recession of 2008 and substantial budget shortfalls for local and national governments world-wide. This financial crisis and the resulting disintegration of aggregate demand and employment are eerily similar to the financial crisis and collapse that led to the Great Depression of the 1930’s. However, unlike the calamity of the 1930’s, …

Becoming Too Small To Bail? Prospects For Workers In The 2011 Economy And 112th Congress, Lonnie Golden

Indiana Law Journal

Labor and Employment Law Under the Obama Administration: A Time for Hope and Change? Symposium held November 12-13, 2010, Indiana University Maurer School of Law, Bloomington, Indiana

Labor Policy And The Great Recession: An Economist's Perspective, Elyce J. Rotella

Indiana Law Journal

Labor and Employment Law Under the Obama Administration: A Time for Hope and Change? Symposium held November 12-13, 2010, Indiana University Maurer School of Law, Bloomington, Indiana.

The Criminalization Of The Theft Of Trade Secrets: An Analysis Of The Economic Espionage Act, Nicola Searle

IP Theory

No abstract provided.

The End Of Forgetting And "Administrative Rights" To Our Online Personas, Jamie R. Lund

IP Theory

No abstract provided.

Accountability And The Bureau Of Consumer Financial Protection, Susan Block-Lieb

Faculty Scholarship

Some industry and political actors oppose the Consumer Financial Protection Bureau (CFPB) on the grounds that its institutional design ensures its lack of accountability. Specifically, opponents point to the CFPB’s regulatory and financial independence and to the fact that a single director heads the Bureau rather than a bipartisan panel of commissioners. But to focus on the Bureau’s financial independence and single director misses the distinctive political deal struck when Congress created the CFPB. The CFPB has been uniquely and intentionally structured to insulate it not only from interest group influence and executive interference, but also from congressional control, while …

Sec V. Byers, David M. Brown

NYLS Law Review

No abstract provided.

A Financial Economic Theory Of Punitive Damages, Robert J. Rhee

Faculty Scholarship

This Article provides a financial economic theory of punitive damages. The core problem, as the Supreme Court acknowledged in Exxon Shipping Co. v. Baker, is not the systemic amount of punitive damages in the tort system; rather, it is the risk of outlier outcomes. Low frequency, high severity awards are unpredictable, cause financial distress, and beget social cost. By focusing only on offsetting escaped liability, the standard law and economics theory fails to account for the core problem of variance. This Article provides a risk arbitrage analysis of the relationship between variance, litigation valuation, and optimal deterrence. Starting with …

Billions Of Tax Dollars Spent Inflating The Housing Bubble: How And Why The Mortgage Interest Deduction Failed, Rebecca N. Morrow

Fordham Journal of Corporate & Financial Law

The mortgage interest deduction is an incredibly popular, politically well-supported and hugely expensive tax incentive. Yet economic studies consistently show that the mortgage interest deduction fails to advance its fundamental purpose. It does not increase the rate of homeownership. On the contrary, to the extent that it is effective in influencing human behavior, it does so by inflating home prices and encouraging borrowing against equity. These effects – inflated home prices and excessive borrowing – contributed to the economic crisis of 2008. In the years leading up to the crisis, Americans spent billions of tax dollars further inflating a dangerously …

A Tale Of Two Standards: Economics Applied To Patent Law’S Fluctuating Utility Requirement, Brian A. Harris

Student Works

No abstract provided.

The Eleventh Annual Albert A. Destefano Lecture On Corporate, Securities & Financial Law At The Fordham Corporate Law Center: Are Federal Judges Competent? Dilettantes In An Age Of Economic Expertise, The Honorable Jed Rakoff

Fordham Journal of Corporate & Financial Law

The title of my little talk here tonight is “Are

Federal Judges Competent?” This naturally raises the question of whether I am competent to answer that question. I put this question to myself, and, after careful consideration of both sides of the argument, concluded that I am competent to determine whether I am competent. As H. L. Mencken once said, “A judge is a law student who grades his own exams.”

Pangloss's Copyright, Derek E. Bambauer

Cardozo Arts & Entertainment Law Journal

No abstract provided.