Law and Economics Commons^™

Banking And The Social Contract, Mehrsa Baradaran

Notre Dame Law Review

This Article asserts that there are three major tenets of the social contract: (1) safety and soundness, (2) consumer protection, and (3) access to credit. Regulators can and should require banks to meet standards in these areas to benefit society even if these measures reasonably reduce bank profits. Implicit in the social contract is the idea that each party must give up something in the exchange. This Article provides policymakers not only the appropriate narrative and justifications needed to frame their regulatory philosophy, but it also provides important textual support from the most prominent acts of banking legislation to give …

Investment Treaties And Industrial Policy: Select Case Studies On State Liability For Efforts To Encourage, Shape And Regulate Economic Activities In Extractive Industries And Infrastructure, Lise Johnson

Columbia Center on Sustainable Investment Staff Publications

This paper, prepared in connection with a February 2014 conference organized by the UN Economic Commission for Africa, discusses some of the implications that investment treaties have for investments in infrastructure and the extractive industries. It focuses on liability for government conduct (1) in connection with tenders and negotiations; (2) when responding to questions regarding the legality of the investment; (3) in using performance requirements to leverage benefits and capture spillovers from the investment; (4) changing the legal framework governing an investment in response to evolving needs, circumstances, and interests; (5) administering the investment; and (6) requesting, and responding to …

Comparative Effectiveness Research As Choice Architecture: The Behavioral Law And Economics Solution To The Health Care Cost Crisis, Russell Korobkin

Michigan Law Review

With the Patient Protection and Affordable Care Act (“ACA”) set to dramatically increase access to medical care, the problem of rising costs will move center stage in health law and policy discussions. “Consumer directed health care” proposals, which provide patients with financial incentives to equate marginal costs and benefits of care at the point of treatment, demand more decisionmaking ability from consumers than is plausible due to bounded rationality. Proposals that seek to change the incentives of health care providers threaten to create conflicts of interest between doctors and patients. New approaches are desperately needed. This Article proposes a government-facilitated …

The Chapter 11 Efficiency Fallacy, Diane Lourdes Dick

BYU Law Review

This Article challenges the persistent claim that Chapter 11’s increasing utilization of market mechanisms will help facilitate economically efficient resolutions of corporate financial distress. Using two recent case studies, I show that, in fact, these mechanisms are used by stakeholders with existing market power to take control of the restructuring process and extract rents at the expense of other constituents: creditors, equity holders, and—in the case of companies that receive governmental bailouts—taxpayers. These distortionary effects are obscured by a dominant, neoclassical legal paradigm that ignores institutional and political dynamics. I advance a new explanatory model that draws upon modern social …

Ceo & Employee Pay Discrepancy: How The Government's Policies Have Encouraged The Gap, David R. Meals

The Journal of Business, Entrepreneurship & the Law

This paper examines the role of the U.S. Government in the CEO versus worker pay gap, both in contributing to its creation and the ability to reverse it. To better understand this issue, this paper includes a survey of current U.S. and foreign CEO compensation practices, a survey of theories proposed to explain the divergence between U.S. and foreign CEO compensation, a review of the social and business impact of excessive CEO compensation, and identifies socioeconomic theories regarding the excessive CEO pay trend. This is followed by a review of the history of attempted solutions along with newly enacted and …

Transfer Pricing: Un Practical Manual – China, Richard Thompson Ainsworth, Andrew Shact

Faculty Scholarship

Any contemporary Chinese transfer pricing assessment needs to consider the United Nation (UN) Practical Manual on Transfer Pricing for Developing Countries released in May 2013. In particular, Chapter 10 discusses Country Practices and presents China’s most up to date transfer pricing policy statement.

China is not an Organization for Economic Cooperation and Development (OECD) member nor has it formally adopted the OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. Chapter 10 makes it very clear that China is charting a different transfer pricing course in at least nine important areas. China believes that: 1. significant comparability adjustments are …

Dilution At The Patent And Trademark Office, Jeremy N. Sheff

Michigan Telecommunications & Technology Law Review

This Article undertakes the first systematic investigation of trademark dilution in registration practice before the US Patent and Trademark Office (PTO). The Article consists of three distinct descriptive empirical analyses. In the first, I present a new hand-coded dataset of all 453 Trademark Trial and Appeal Board (TTAB) dispositions of dilution claims through June 30, 2014, and report that dilution has been necessary to the PTO’s refusal of exactly three registrations in over a decade. In the second part, I apply algorithmic coding of the recently released PTO Casefiles Dataset to demonstrate that concurrent registration of identical marks to different …

Taking On Water: Local Government, Eminent Domain, And The Foreclosure Crisis, Brian Cullin

University of Baltimore Journal of Land and Development

The 2008 Financial Crisis and the ensuing Great Recession sent shockwaves throughout the U.S. and global economy, wreaking havoc from Wall Street to Main Street. The Crisis harkened economic contraction, high unemployment, and elevated rates of home foreclosure. While the financial industry recovered, spelling an end to one crisis, another continues - the Foreclosure Crisis. The rate of home foreclosure, already ominously on the rise before 2008 and growing in intensity and breadth in the aftermath of the Financial Crisis, provides the foundation for this paper. This article examines an innovative public-private partnership between a private firm, Mortgage Resolution Partners …

The Rise Of The Dark Side: Dark Pool Trading And The Two-Tiered Implication, Katerina Ruth Mills

Electronic Theses and Dissertations

The United States equity market is made up of both private and public trading venues, creating a framework dark and light trading liquidity. Private or non-publicly visible liquidity is housed in dark venues while liquidity visible to the public sits in light locations. Light markets follow strict real-time public reporting requirements for trade volume and price; their dark counterparts execute transactions without a real-time reporting requirement. The informational asymmetries that result from this difference in reporting create a "two-tiered" market. The dark sector's participants know both the public and dark, private, trade volumes and price, while the public participating in …

Stuck Between A Rock And A Hard Place: Are Public Accounting Firms Subject To Diverging Standards Of Conduct Between Federal Courts And The Pcaob In Securities Fraud Claims?, Pierre Ciric

Journal of Business & Technology Law

No abstract provided.

Niche Markets And Their Lessons, Cally Jordan

Faculty Papers & Publications

Markets are full of nooks and crannies. Out of the glare of the big economies and their public exchanges, markets specializing by financial product, activity, or industry thrive, often attracting little by way of formal regulatory oversight. But there is another kind of specialized market, one which is geographically and politically determined albeit internationally focused. Luxembourg, Ireland, Dubai, Bahrain, Malaysia, Singapore, Switzerland, among others, these are some of the world’s niche markets.

It is a hard business being a niche market, operating in a competitive and often unforgiving environment, engaging in constant repositioning and facing inherent limitations on growth. Surprisingly, …

Reforming Capitalism Through Law And Regulation, 47 J. Marshall L. Rev. 1269 (2014), Richard Delgado

UIC Law Review

No abstract provided.

Does The Prisoner's Dilemma Refute The Coase Theorem?, 47 J. Marshall L. Rev. 1289 (2014), Enrique Guerra-Pujol, Orlando Martínez-García

UIC Law Review

No abstract provided.

Bitcoin: The Economic Case For A Global, Virtual Currency Operating In An Unexplored Legal Framework, Jonathan B. Turpin

Indiana Journal of Global Legal Studies

Bitcoin is a virtual currency created by programmers, which is produced at a predetermined and knowable rate to simulate a limited resource. Its value is derived from the trust of its users and is protected by its limited nature and the cryptography by which the currency is secured and authenticated. Bitcoin has been, and continues to be, used by some for the purchase of illegal substances and in furtherance of crimes. Because Bitcoin is not issued by a central bank or government, its use entails risks, both legal and otherwise, that have not previously been explored. Nonetheless, Bitcoin possesses significant …

Access To Health Care As An Incentive For Healthy Behavior, Lindsay Wiley

Scholarly Articles in Law Reviews & Journals

Hundreds of thousands of lives have been saved by vehicle safety standards. For many years, the auto industry fought the adoption of even the most basic standards tooth and nail, arguing that driver responsibility was the key to preventing auto accidents. In doing so, vehicle manufacturers "reinforceled] certain common sense ideas about traffic safety"-that drivers were responsible for car accidents and that vehicle design could not do much to make serious crashes survivable-"and suppressled] others." Auto insurers-who bear much of the economic cost of car crashes through a combination of first party and liability insurance-initially joined auto manufacturers in pushing …

The G20 And Africa: A Critical Assessment, Daniel D. Bradlow

Scholarly Articles in Law Reviews & Journals

The increased globalisation over the last 20 years has made effective global economic governance more important than ever. This period has witnessed the rise of a number of new international governance actors, such as the Group of Twenty (G-20) and the Financial Stability Board. The paper proposes a five-part test to evaluate how the existing global governance actors serve the interests of all stakeholders in the global economy.

The test is based on five factors indicating good global governance. These are the goals relating to global economic governance being followed by the governance entity, respect for applicable international legal principles, …

The Parallel March Of The Ginis: How Does Taxation Relate To Inequality And What Can Be Done About It?, Reuven S. Avi-Yonah

Law & Economics Working Papers

The United States currently has one of the highest levels of inequality among industrialized economies. In addition, numerous scholars have shown that social mobility in the United States is significantly lower than it was in the period between 1945 and 1970, when inequality was also declining. The combination of these trends is dangerous because it risks transforming the US into a society where small elites capture most of the gains, a pattern in which growth cannot be sustained over time (Acemoglu and Robinson 2012, Zingales 2012). The level of inequality in the US after taxes and transfers are taken into …

Selling State Borders, Joseph Blocher

Faculty Scholarship

Sovereign territory was bought and sold throughout much of American history, and there are good reasons to think that an interstate market for borders could help solve many contemporary economic and political problems. But no such market currently exists. Why not? And could an interstate market for sovereign territory help simplify border disputes, resolve state budget crises, respond to exogenous shocks like river accretion, and improve democratic responsiveness? Focusing on the sale of borders among American states, this Article offers constitutional, political, and ethical answers to the first question, and a qualified yes to the second.

The Failed Promise Of User Fees: Empirical Evidence From The United States Patent And Trademark Office, Michael D. Frakes, Melissa F. Wasserman

Faculty Scholarship

In an attempt to shed light on the impact of user-fee financing structures on the behavior of administrative agencies, we explore the relationship between the funding structure of the Patent and Trademark Office (PTO) and its examination practices. We suggest that the PTO’s reliance on prior grantees to subsidize current applicants exposes the Agency to a risk that its obligatory costs will surpass incoming fee collections. When such risks materialize, we hypothesize, and thereafter document, that the PTO will restore financial balance by extending preferential examination treatment—i.e., higher granting propensities and/or shorter wait times—to some technologies over others.

A Behavioral Justification For Escalating Punishment Schemes, Murat C. Mungan

Scholarly Publications

The standard two-period law enforcement model is considered in a setting where individuals usually, but not exclusively, commit crimes only after comparing expected costs and benefits. Where escalating punishment schemes are present, there is an inherent value in keeping a clean criminal record; a person with a record may unintentionally become a repeat offender if he fails to exert self-control, and be punished more severely. If the punishment for repeat offenders is sufficiently high, one may rationally forgo the opportunity of committing a profitable crime today to avoid being sanctioned as a repeat offender in the future. Therefore, partial deterrence …

(Sub)Urban Poverty And Regional Interest Convergence, Patience A. Crowder

Marquette Law Review

Poverty has expanded from America’s urban cores to its inner and outer suburban rings. In the midst of spreading hardship, new opportunities for confronting questions of regional equity are emerging, such as how best to govern our regional spaces for the benefit of all regional constituents, including the poor, middle class, and affluent. To date, governance theories have proven inadequate to this task. In the parlance of the current regional governance discourse, localists, regionalists, and new regionalists need a framework to make a reality of their seemingly disparate and inconsistent visions of local versus regional interests. Localists champion the autonomy …

Opening The Floodgates Of Small Customer Claims In Finra Arbitration: Finra V. Charles Schwab & Co., Inc., Teresa J. Verges

Cardozo Journal of Conflict Resolution

When the Supreme Court held over twenty-five years ago that customers could be compelled to arbitrate their federal securities claims against their brokers, the vast majority of financial firms in the U.S. inserted pre-dispute arbitration provisions ("PDAAs") in agreements with their customers requiring them to arbitrate any claims arising out of their brokerage relationship. Since Sheerson/ Am. Express, Inc. v. McMahon, investor advocacy groups, scholars, and legislators have called for Congressional action to eliminate mandatory arbitration in securities cases, but the closest Congress has come to such elimination has been to punt this issue to the Securities and Exchange …

Speculative Tech: The Bitcoin Legal Quagmire & The Need For Legal Innovation, Paul H. Farmer Jr.

Journal of Business & Technology Law

No abstract provided.

A Game Changer For The Political Economy Of Economic Development Incentives, Stephen E. Ellis, Grant M. Hayden, Cynthia L. Rogers

Faculty Journal Articles and Book Chapters

State and local governments have embraced their authority to offer economic development incentives for the purpose of attracting, retaining, or enhancing economic activity within their borders. Collectively, these programs represent an enormous, but largely overlooked, transfer of wealth from public entities to private firms. The increasing use of economic development incentives runs counter to the guidance offered by academic researchers. With their proliferation comes the increasing need for accountability in the decision-making process. The authors consider whether the duty of care standard used in corporate governance should be applied to the public decision-making context regarding economic development incentives.

The First Thing We Do, Jorge R. Roig

Scholarly Works

There is currently a concerted effort to dumb down America. In the midst of this, the American Bar Association’s Council of the Section on Legal Education and Admissions to the Bar recently agreed to propose that tenure for law professors be eliminated as a requirement for accreditation of law schools. This article analyzes the arguments for and against tenure in legal academia, and concludes that the main proposed justifications for eliminating tenure are highly questionable, at best. A lawyer is more than a legal technocrat. Lawyers are policy makers and public defenders. They are prosecutors and activists. And the development …

Incentives And Ideology, James Kwak

Faculty Articles and Papers

This is a response to Adam Levitin's article, The Politics of Financial Regulation and the Regulation of Financial Politics: A Review Essay, 127 Harv. L. Rev. 1991 (2014). Levitin discusses various reasons for regulatory capture and highlights several potential solutions that aim to change the political governance of financial regulation. In this response, I highlight the importance of ideology (in this case, the ideology of free financial markets) in producing regulatory outcomes that are good for industry, and therefore the need for solutions that mitigate ideological capture.

Corporate Law Constraints On Political Spending, James Kwak

Faculty Articles and Papers

Corporations currently can participate in electoral politics in the United States through various means: affiliated PACs, super PACs, 501(c)(6) organizations like the Chamber of Commerce, 501(c)(4) social welfare organizations, and traditional 501(c)(3) charitable organizations. Corporate law, as generally interpreted by the courts, places few constraints on the ability of corporate insiders to engage in politics as they choose. I argue that existing statutes and case law could be interpreted to impose greater constraints on corporate political activity. Political contributions should be reviewed as potential violations of the duty of loyalty whenever they could provide personal benefits to board members and …

Bitcoin And Money Laundering: Mining For An Effective Solution, Danton Bryans

Indiana Law Journal

No abstract provided.

A Nihilistic View Of The Efficient Breach, Jeffrey L. Harrison

UF Law Faculty Publications

This article began as a reaction to an article by Daniel Makovits and Alan Schwartz in the Virginia Law Review, “The Myth of the Efficient Breach. . . .” In their article they offer what they call “new defenses” of the expectation interest as a contract remedy. Much of their analysis has been anticipated by others. Plus, in my view the law and economics concepts they seem to rely on lost their legitimacy years ago. Their article was the catalyst for this broader examination of forty years of writing about the efficient breach and an assessment of where it has …

Will The Income-Based Repayment Program Enable Law Schools To Continue To Provide Harvard-Style Legal Education, Gregory S. Crespi

SMU Law Review

Legal education provided in the prevailing “Harvard-style” now costs students on average between $160,000 and $250,000 for their three years of study, the precise amount depending on the law school attended, the alternative employment opportunities foregone, and the amount of scholarship assistance provided. However, the median starting salary for full-time, entry-level legal positions has declined in recent years to only $60,000/year, and upwards of 45% of recent law graduates are now unable to obtain full-time legal employment within 9 months of their graduation, and this dismal employment situation is unlikely to significantly improve over the next few years. While the …