Law and Economics Commons^™

I Am Become Meme, Manipulator Of Markets: An Analysis Of Elon Musk’S Tweets Under The Anti-Manipulation Provisions Of U.S. Securities Laws, Noah Schottenbauer

Minnesota Journal of Law, Science & Technology

No abstract provided.

Is The Us Exit Tax Constitutional?, Reuven S. Avi-Yonah

Law & Economics Working Papers

The recent US Supreme Court decision in Moore vs. United States raised the possibility that the Court would declare that realization is required for a tax provision to be constitutional. The US exit tax on expatriations is the most likely vehicle for a post-Moore constitutional challenge to taxation without realization because (a) it involves individual taxpayers; (b) it does not involve attribution, because the tax is imposed directly on the expatriating taxpayer, and (c) it involves precisely the kind of tax that was the direct target of the Moore litigation, namely a mark to market tax on rich taxpayers (the …

Uptier Debt Exchange Transactions: A Winner-Take-All Battle In The Leveraged Loan Market, Angela Chang

Brooklyn Law Review

This Note explores the legal implications of uptier debt exchange transactions (UDETs) in the syndicated loan market. These transactions are restructuring strategies that allow distressed companies to exchange existing debt for “superpriority” debt, often to the detriment of excluded creditors. The Bankruptcy Code aims to balance debtor relief with creditor rights, but, as this Note demonstrates, UDETs exploit ambiguities in credit agreements to shift priorities in favor of certain lenders. This Note examines the pivotal case of In re Serta Simmons Bedding, LLC, a decision which highlighted the need for creditors to reassess whether the flexibility of their credit agreements …

The Economic Rhetoric Of Carbon Pricing, Jeff Todd

Brooklyn Law Review

Economists overwhelmingly prefer the carbon pricing instruments of carbon taxes and cap-and-trade programs as the most cost-effective way to reduce greenhouse gases and combat climate change. By contrast, US lawmakers have largely eschewed carbon pricing, and legal scholars have mixed views about implementing it. In order for legal scholars to better understand economic studies on carbon pricing and incorporate those studies into their own climate change scholarship, this Article turns to the rhetoric of economics. Economists view problems like climate change through the metaphor of the market, so they embrace carbon pricing because it is a market-based approach that corrects …

Should The United States Abandon Citizenship-Based Taxation?, Reuven S. Avi-Yonah

Law & Economics Working Papers

President Trump proposed during the election campaign to end the "double taxation" of American citizens living overseas. To which the answer is, what double taxation? Americans living overseas already benefit from three significant provisions that in most cases prevent any double taxation, and because of these most of them do not have any U.S. tax liability. Those who do are typically wealthier, derive income from investments or from high wages, and are not subject to foreign tax because they live in tax havens or in countries that do not tax rich immigrants on foreign source income, and they do not …

Taking The Sting Out Of The Slap On The Wrist: Why The Tax Cuts And Jobs Act Deductibility Carve-Outs Under I.R.C. Section 162(F) Are Hurting The Average American Taxpayer, Rachel Pritzlaff

University of Miami Business Law Review

The Section 162(f) carve-outs created under the Tax Cuts and Jobs Act of 2017 should concern all taxpayers. Where there were no exceptions previously, now both civil and criminal wrongdoers have the potential to deduct the payments they make in restitution for their actions from their taxable income as a business loss. These carve-outs represent government spending for the benefit of individuals and corporations behaving badly and at the expense of the average American taxpayer. The government is leaving tax revenue on the table by allowing deductibility for fines and penalties, which negatively impacts the federal “power of the purse.” …

Sanctioning Negligent Bankers, Kyle D. Logue, W. Robert Thomas, Jeffery Y. Zhang

Law & Economics Working Papers

Over just one week in 2023, depositor runs at a few U.S. banks threatened a worldwide banking crisis. Afterwards, the United States would suffer three of the biggest bank failures in the nation’s history; in Europe, Credit Suisse became the largest financial institution to fail since the 2007-2008 Global Financial Crisis. Stunned by this lightning-fast panic, lawmakers, regulators, and academics have called for significant changes to the U.S. financial regulatory framework. Leading among these proposals are calls to improve supervisory oversight of banks, to tighten existing regulations on banks, and to increase deposit insurance limits. But these proposals alone are …

Bank Fragility After Mergers, Jeffrey Jou, Teng Wang, Jeffery Y. Zhang

Law & Economics Working Papers

Do banks become more fragile after merging? By constructing a novel forward-looking measure of fragility and exploiting staggered interstate banking deregulation as exogenous shocks to bank mergers, we show that the loan portfolios of merged U.S. banks become more vulnerable to adverse economic conditions. However, merger size matters. The increase in fragility is driven almost entirely by mega-mergers of large banks, suggesting the presence of moral hazard. In addition, we find that increased geographic or portfolio diversification following mergers does not offset the increase in fragility. If anything, mergers between large banks that have significantly dissimilar portfolios can actually worsen …

Designing Contract Modification, Albert H. Choi, George Triantis

Law & Economics Working Papers

For long-term commercial contracts, modification tends to be the norm rather than the exception. While modification often takes place in response to an arrival of new information, contracting parties frequently modify the terms in response to a shift in bargaining power. In this paper, we explain how the flexibility to renegotiate in response to a shift in bargaining power can facilitate long-term contracting and thereby beneficial reliance investments and risk allocation. The prospect of modification can induce contracting parties who expect their bargaining power to improve, such as from the emergence of outside opportunities, to enter into contracts earlier and …

Can You Take Me Higher? How The Big Three Benefit From The Dominance Of Index Providers, J.B. Heaton

William & Mary Business Law Review

The entrenched and highly profitable business of licensing indices for passive management is puzzling. The largest equity indices, like the S&P 500 and FTSE Russell 1000, are merely market-capitalization-weighted portfolios without meaningful creative input. The largest passive fund managers could offer and promote “private label” market-capitalization-weighted funds at lower cost—certainly zero and possibly with a basis point or two rebate—at a huge savings for end-investors.

I explore a plausible explanation for the strange dominance of index providers. I explain how index providers are akin to a “hub” in a hub-and-spoke relationship that facilitates a form of price-fixing in the market …

The End(S) Of Bankruptcy Exceptionalism: Purdue Pharma And The Problem Of Social Debt, Jonathan C. Lipson, Pamela Foohey

Cardozo Law Review

The Supreme Court’s recent 5-4 decision in the controversial chapter 11 bankruptcy reorganization of opioid-maker Purdue Pharma ends the use of nonconsensual third-party “releases,” which discharge (eliminate) liabilities of nondebtors who may share liability with a corporate debtor. Although the majority opinion is correct that the Bankruptcy Code does not permit this, it failed to recognize the problematic exceptionalism of the lower courts which approved those releases or the “social” qualities of Purdue Pharma’s mass tort liability.

Bankruptcy exceptionalism has been a contested concept since it emerged over fifteen years ago and reflects a willingness to bend the rule of …

Biomanipulation, Laura K. Donohue

Georgetown Law Faculty Publications and Other Works

Scientific and technological advances in the latter part of the twentieth century transformed the field of biometrics. Carleton Simon, for instance, first postulated using retinal vasculature for biometric identification in 1935, but it was not until forty years later that an Eyedentify patent brought the idea to fruition. In 1937, John Henry Wigmore anticipated using oscilloscopes to identify individuals by speech patterns. Decades later, digitization and speech processors made voiceprint identification possible. In the 1970s, biological discoveries similarly led to the development of deoxyribonucleic acid (DNA) sequencing. And while Alphonse Bertillon in the late nineteenth century postulated iris distinctions, it …

Read But Not Understood? An Empirical Analysis Of Consumer Comprehension In Homeowners Insurance, Daniel Schwarcz, Brenda J. Cude, Kyle D. Logue, German Marquez Alcala

Law & Economics Working Papers

Modern contract law assumes that consumers meaningfully assent to the standard forms that govern their daily lives. However, this assumption is widely regarded as a legal fiction for two key reasons: first, most consumers do not read standard forms, and second, even those who do often struggle to fully comprehend their terms and implications. While the lack of consumer reading has been well-documented through empirical research, consumers’ ability to comprehend standard form contracts has received surprisingly little attention.

This Article addresses the latter issue by empirically examining whether providing excerpts from the dominant standard form homeowners insurance policy improves consumer …

The Role Of Unrealized Gains And Borrowing In The Taxation Of The Rich, Edward Fox, Zachary Liscow

Law & Economics Working Papers

As deficits rise and concerns about tax avoidance by the rich increase, we study how unrealized gains and borrowing affect Americans’ income taxes. We have four main findings: First, measuring “economic income” as currently-taxed income plus new unrealized gains, the income tax base captures 60% of economic income of the top 1% of wealth-holders (and 71% adjusting for inflation) and the vast majority of income for lower wealth groups. Second, adjusting for unrealized gains substantially lessens the degree of progressivity in the income tax, although it remains largely progressive. Third, we quantify for the first time the amount of borrowing …

Altering Rules: The New Frontier For Corporate Governance, Gabriel Rauterberg, Sarath Sanga

Law & Economics Working Papers

Corporate law has taken a contractarian turn. Shareholders are increasingly contracting around its foundational rules—statutory rights, the fiduciary duty of loyalty, even the central role of the board—and Delaware courts are increasingly enforcing these contracts. In the one case where they did not, the legislature swiftly overruled the decision and adopted a new statutory provision permitting boards to completely cede their powers to a shareholder by contract. These developments have sparked a polarized debate, with some calling for a return to mandatory rules, while others push for total contractual freedom.

We argue, however, that the solution lies neither in rigid …

The Healing Power Of Antitrust, Theodosia Stavroulaki

Northwestern University Law Review

Millions of Americans live in hospital deserts—communities where people lack geographic access to hospitals and primary care physicians. People living in these deserts often miss doctor appointments, delay necessary care, and stop adhering to their treatment. In this way, hospital deserts exacerbate the health disparities plaguing America. This Article demonstrates that hospital deserts are not inevitable but the result of several business strategies—including noncompete agreements and merging with competitors—and antitrust enforcers’ unwillingness to recognize these harmful practices as antitrust violations. To cure the issue of hospital deserts, this Article makes three proposals. First, antitrust enforcers and the courts should expand …

Khrushchevka: A Historical And Economic Analysis Of Russian Housing, Privatization, And Urban Renewal In Putin’S Russia, Victoria A. Faulkner

Swarthmore Undergraduate History Journal

The Moscow Urban Renewal Initiative (Инициатива обновления городов Москвы, 2017-) is the joint project of President Vladimir Putin (1999-2008, 2012-) and Moscow Mayor Sergey Sobyanin (2010-) to remove dilapidated housing structures in Moscow. Since 2017, the programme has already displaced about 20,000 Muscovites, with plans to displace 1.5 million more by its completion goal of 2032. These displacements have revealed significant economic deficiencies in the post-Soviet market economy of the Russian Federation. Delays in the programme due to the COVID-19 pandemic have only escalated issues further – as has the War on Ukraine. Understanding the importance of the Moscow Urban …

Introduction—Corporate And Securities Law Responses To Climate Change: Law And Political Economy Perspectives, Sarah C. Haan, Faith Stevelman

Scholarly Articles

This introductory essay has two parts. First, we address differences between the Law and Economics perspective and the Law and Political Economy (LPE) perspective on business and securities law and climate change. For example, an LPE approach—with its concern for discerning winners and losers and how power operates through law—rejects the facile separation of public and private law concerns. LPE repudiates the common notion that business law is and should solely be about maximizing shareholder wealth, with all else falling to government ex post. Indeed, elsewhere we have written about this as a misleading and harmful “separate spheres” conceit (Stevelman …

Labor And Environment Entwined: A Radical Green New Deal And Just Transition In Applachia, Anne Marie Lofaso, Nicholas F. Stump

Faculty Articles and Other Publications

In this Article, Professor Lofaso and Professor Stump propose a genuinely transformative Green New Deal and Just Transition in Appalachia. The Article opens by tracing the long history of the Appalachian labor and environmental movements. Next, the Article interrogates the common contention that the Appalachian environmental and labor movements are opposed. While this contention has substantial truth, more complex forces have been at work in the region. Fossil fuel industry elites, for instance, have wielded exaggerated “jobs versus environment” rhetoric to maximize profits and quash emergent solidarities among local workers, residents, and activists.

This Article contends that a key solution …

The Great War (Taylor's Version): Examining The New Era Of Recording Artists & Master Recording Ownership, Victoria B. Villanueva

Journal of Legislation

In 2019, Taylor Swift took to social media to voice her unease with the recent sale of her entire master recording catalogue to Ithaca Holdings, a sale that allegedly occurred without her explicit permission. Following a series of negotiations, holdouts, and ultimate deadlock, Swift made the critical and costly decision to re-record and re-release each of those six albums under her sole ownership in an effort to reclaim them as her own work—re-recordings publicly denoted by “Taylor’s Version”. This highly-publicized feud brought to the public’s attention a decades-long conflict between the recording artist and the recording company, one that has …

Voting Matters: Materiality Considerations And The Shareholder Vote, Renee M. Jones

Seattle University Law Review

For the shareholder franchise to have meaning, shareholders must have access to relevant information to inform their voting decisions. The securities laws’ disclosure requirements play an essential role in informing the shareholder vote.

This Essay focuses on the question of the materiality of information in the context of shareholder voting. It addresses the question of whether ESG-related information is material, positioning the materiality inquiry within the context of shareholders’ voting decisions. It explores the definition of materiality with a focus on the “reasonable investor” concept embedded within the definition. The Essay argues that the implicit expectations of many commentators that …

Muzaffer Eroğlu, Matthias Finger, And Emin Köksal (Ed.), The Economics And Regulation Of Digitalisation: The Case Of Türkiye, Routledge 2024, 296 P., Hanna Stakheyeva

Yearbook of Antitrust and Regulatory Studies

In an age where digital transformation profoundly influences governance, commerce, and public policy, The Economics and Regulation of Digitalisation: The Case of Türkiye presents a timely and authoritative examination of Türkiye’s evolving digital ecosystem. Edited by Muzaffer Eroğlu (Boğaziçi University), Matthias Finger (İTÜ), and Emin Köksal (Bahçeşehir University), this multidisciplinary volume offers a rigorous analysis of digitalisation processes across diverse sectors—including infrastructure, FinTech, and social media—while critically addressing Türkiye’s legal and regulatory responses, particularly in the realm of competition law in digital markets. What sets this work apart is its dual focus: it positions Türkiye within broader global digital trends …

(D)Evolution Of International Commercial Arbitration In Mexico, Edwin N. Á. Román

Arbitration Brief

The 1990s were a time of vibrant international rulemaking in the field of international economic law, during which Mexico transformed from a closed to an open economy. In 1993, Mexico adopted the 1985 UNICITRAL Model Law on International Commercial Arbitration. In 2011, Mexico amended its commercial code by introducing a specific proceeding to enforce and set aside arbitration awards titled “Juicio Especial sobre Transacciones Comerciales y Arbitraje.” Alongside these amendments, Mexico became an internationally relevant jurisdiction for the recognition and enforcement of foreign arbitral awards. This article analyzes the evolution of the Mexican Supreme Court of Justice’s jurisprudence concerning international …

Third-Party Funding In Treaty-Based Arbitration: Towards A More Transparent And Responsible System?, Margie-Lys Jaime R.

Arbitration Brief

Third-Party Funding (“TPF”) has become the “new kid on the block” of long-established stakeholders in international arbitration. However, despite the increasing use of TPF, few countries have undertaken the task of regulating the intervention of funders. Even in countries where the practice of TPF is regulated, it is generally in codes of conduct or non-binding instruments.

Algorithmic Speech Harm, Mateusz Grochowski

Loyola Consumer Law Review

This paper examines the potential application of product liability doctrine to content moderation and recommendation algorithms employed by social media platforms. Emerging scholarship and evolving case law suggest that product liability could provide a viable legal pathway to circumvent the limitations imposed by Section 230 of the Communications Decency Act. The article critically evaluates this proposition and delves into the doctrinal foundations of product liability to assess its capacity to address harms inflicted on consumers by algorithmic systems. A central focus of the analysis is the development of a more precise definition of the harm that users understood here as …

Unprincipled Investor Bifurcations, Anita K. Krug

American University Law Review

The investment world is full of bifurcations—that is, divisions among groups of investors that the securities laws establish for the purpose of furthering the regulatory goal of investor protection. The notion behind these bifurcations is that only more wealthy investors should be permitted to invest in riskier investment products. However, as this Article details, a more pernicious bifurcation has emerged in recent years, alongside the growing popularity of exchange-traded funds, or “ETFs.” Investing in ETFs is desirable for many investors because ETF shares, unlike shares of mutual funds, can be traded throughout the day. In addition, ETFs allow investors to …

Arbitrator Selection Default Rules, Irene M. Ten Cate

American University Law Review

This Article makes the case for changing the default settings for the selection of arbitrators in international commercial arbitration. For three-member tribunals, the rules of most international arbitration institutions provide that each party picks an arbitrator. The institution or the co-arbitrators then select the tribunal’s president. This prescription, which parties may set aside by agreement, codifies longstanding practices and corresponds to the strong preference of international arbitration insiders. Nonetheless, I argue that arbitration rules should default toward institutional selection of all arbitrators.

Switching the default nudges parties that can’t take full advantage of the arbitrator selection game—due to inexperience, lack …

A Proposal For One “Super” Independent Accountability Mechanism, Daniel D. Bradlow

Perspectives

This essay will discuss how the MDBs- for example, the World Bank Group, the African, Asian, and Inter-American Development Banks, and more recently the European Bank for Reconstruction and Development, Asian Infrastructure Investment Bank, and the New Development Bank – are dealing with the issue of accountability. It will argue that, although the MDBs have been leaders in promoting international organizational accountability, their mechanisms of accountability are not keeping up with the evolution in their operations. In the interests of promoting new and creative thinking about these issues, it will also make an ambitious proposal for how the MDBs jointly …

The Land Of Opportunity Zones: Where Opportunity Goes To Die, Hilana Said

American University Journal of Gender, Social Policy & the Law

What do a superyacht marina in West Palm Beach, Florida; the city in Minnesota that is home to the Mall of America; and a blighted East Harlem, New York, have in common? They are all opportunity zones. This may be a striking fact, considering the first two areas are affluent while the third is home to many low-income families with an average income for elderly citizens below twenty thousand dollars. The problem with the opportunity zones program, as we currently know it, is that it does not serve the right communities, and when it does, it is not always in …

Through A Glass Darkly: How Securities Disclosures Give A Distorted View Of The Economy, Gerald F. Davis

Seattle University Law Review

Our understanding of the American economy often relies on stylized facts derived from mandatory disclosures by listed corporations. Data vendors like Standard & Poor’s vacuum up 10Ks and proxy statements into databases, and scholars distill these into tentative maps. This may have been adequate for a postwar economy centered on asset-heavy manufacturers, but it is increasingly out of step with an information-based economy. Companies listed on the stock market are fewer in number and less representative than they were, light in tangible assets and people, and heavy on IP. Basic facts such as what industry they are in are increasingly …