Law and Economics Commons^™

The Unaffordable Health Care Act - A Reponse To Professors Bagley And Horwitz, Douglas A. Kahn, Jeffrey H. Kahn

Articles

The Patient Protection and Affordable Care Act of 2010 has stirred considerable controversy. In the public debate over the program, many of its proponents have defended it by focusing on what is sometimes called the “free-rider” problem. In a prior article, we contended that the free-rider problem has been greatly exaggerated and was not a significant factor in the congressional decision to adopt the Act. We maintained that the free-rider issue is a red herring advanced to trigger an emotional attraction to the Act and distract attention from the actual issues that favor and disfavor its adoption. In a recently …

Dodd-Frank For Bankruptcy Lawyers, Douglas G. Baird, Edward R. Morrison

Faculty Scholarship

The Dodd-Frank financial reform legislation creates an “Orderly Liquidation Authority” (OLA) that shares many features in common with the Bankruptcy Code. This is easy to overlook because the legislation uses a language and employs a decision-maker (both borrowed from bank regulation) that will seem foreign to bankruptcy lawyers. Our task in this essay is to identify the core congruities between OLA and the Code. In doing so, we highlight important differences and assess both their constitutionality and policy objectives. We conclude with a few thoughts on the likelihood that OLA will contribute to market stability.

Financial Stability Is A Volume Business: A Comment On The Legal Infrastructure Of Ex Post Consumer Debtor Protections, Anna Gelpern

Georgetown Law Faculty Publications and Other Works

Professor Melissa B. Jacoby's essay pays homage to Stewart Macaulay's classic study of the Magnuson-Moss Warranty Act, a U.S. federal consumer protection law that, according to Macaulay, was virtually unknown to the lawyers whose clients needed it the most. The moral of Macaulay's study is that even good consumer protection laws on the books often fail to deliver in action for complex cultural, institutional, and economic reasons. Yet reducing Professor Jacoby's essay to this very important moral undersells its contribution. A fragmented infrastructure for legal service delivery of the sort she describes does not merely fail consumers more often than …

Biased Advice, Christopher Robertson

Faculty Scholarship

The modern capitalist society, characterized by decentralized decision making and increasingly sophisticated products and services, turns on relationships of epistemic reliance, where laypersons depend upon advisors to guide their most important decisions. Yet many of those advisors lack real expertise and may be biased by conflicting interests. In such situations, laypersons are likely to make suboptimal decisions that sometimes aggregate into systematic failures, from soaring health care costs to market crashes. Regulators can attempt to manage the symptoms and worst abuses, but the fundamental problem of biased advice will remain. There are many potential policy solutions, from outright bans on …

Tax Policy And The Efficiency Of U.S. Direct Investment Abroad, Mihir A. Desai, C. Fritz Foley, James R. Hines Jr.

Articles

Deferral of U.S. taxes on foreign source income is commonly characterized as a subsidy to foreign investment, as reflected in its inclusion among “tax expenditures” and occasional calls for its repeal. This paper analyzes the extent to which tax deferral and other policies inefficiently subsidize U.S. direct investment abroad. Investments are dynamically inefficient if they consistently generate less in returns to investors than they absorb in new investment funds. From 1982–2010, repatriated earnings from foreign affiliates exceeded net capital investments by $1.1 trillion in 2010 dollars, and from 1950–2010, repatriated earnings and net interest from foreign affiliates exceeded net equity …

Narrowing The Tax Gap Through Presumptive Taxation, Kyle D. Logue, Gustavo G. Vettori

Articles

Can the United States government significantly reduce the federal tax gap? This question has attracted a great deal of scholarly attention over the years and has been the focus of numerous government reports. The "tax gap" is the official term for the Treasury Department's estimate of the difference between what American taxpayers should pay to the federal government in a given tax year (that is, the amount of tax they owe, based on a reasonable interpretation of existing tax laws as applied to particular taxpayers' circumstances) and what they actually pay. This estimate is derived from painstaking and detailed audits …

Clearing And Trade Execution Requirements For Otc Derivatives Swaps Under The Frank-Dodd Wall Street Reform And Consumer Protection Act, Willa E. Gibson

Akron Law Faculty Publications

This paper examines Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act entitled the “Wall Street Transparency and Accountability Act of 2010” (the “Act”). The Act provides a comprehensive regulatory framework for swap transactions that designates the Commodities Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) as the primary regulators of the OTC derivatives swap market. The Act provides a very broad definition of swaps to include most OTC derivatives transactions, and it grants the CFTC regulatory jurisdiction over them with the exception of security-based swaps to which the SEC is granted regulatory jurisdiction. …

Cultivating Justice For The Working Poor: Clinical Representation Of Unemployment Claimants, Colleen F. Shanahan

Faculty Scholarship

The combination of current economic conditions and recent changes in the United States' welfare system makes representation of unemployment insurance claimants by clinic students a timely learning opportunity. While unemployment insurance claimants often share similarities with student attorneys, they are unable to access justice as easily as student attorneys, and as a result, face the risk of severe poverty. Clinical representation of unemployment claimants is a rich opportunity for students to experience making a difference for a client, and to understand the issues of poverty and justice that these clients experience along the way. These cases reveal that larger lessons …

Law As Asymmetric Information: Theory, Application, And Results In The Context Of Foreign Direct Investment In Real Estate, Patrick J. Glen

Georgetown Law Faculty Publications and Other Works

In his seminal 1970 article on lemon markets, George Akerlof posited the possibility of market failure in the presence of asymmetric information regarding a good’s value. In the intervening four decades, the importance of accurate valuation information has grown as transnational trade has boomed. The aim of the instant article is to assess the potential impact on transnational trade of asymmetric information regarding the legal attributes of a given good. Inaccurate or asymmetric information regarding relevant legal attributes may give rise to the same problem of market failure that Akerlof initially posited. If buyers are unsure of the ownership of …

Optimal Class Size, Opt-Out Rights, And "Indivisible" Remedies, Jay Tidmarsh, David Betson

Journal Articles

Prepared for a Symposium on the ALI’s Aggregate Litigation Project, this paper examines the ALI’s proposal to permit opt-out rights when remedies and “divisible,” but not to permit them when remedies are “indivisible.” Starting from the ground up, the paper employs economic analysis to determine what the optimal size of a class action should be. We demonstrate that, in some circumstances, the optimal size of a class is a class composed of all victims, while in other cases, the optimal size is smaller. We further argue that courts should consider optimal class size in determining whether to certify a class, …

Foreign Citizens In Transnational Class Actions, Jay Tidmarsh, Linda Sandstrom Simard

Journal Articles

This Article addresses an increasingly important question: When, if ever, should foreign citizens be included as members of an American class action? The existing consensus holds that courts should exclude from class membership those foreign citizens whose country does not recognize an American class judgment. Our analysis begins by establishing that this consensus is flawed. Rather, to minimize the costs associated with relitigation in a foreign forum, we must distinguish between foreign claimants who are likely to commence a subsequent foreign proceeding from those who are unlikely to do so; distinguishing between those who come from recognizing and nonrecognizing countries …

Property Rights In Land, Agricultural Capitalism, And The Relative Decline Of Pre-Industrial China, Taisu Zhang

Faculty Scholarship

No abstract provided.

Who Pays? Who Benefits? Unfairness In American Health Care, Clark C. Havighurst, Barak D. Richman

Faculty Scholarship

American-style health insurance greatly amplifies price-gouging opportunities for health care providers, who inflate prices both to enrich themselves and to subsidize and expand the nation’s health care enterprise. To the extent that lower- and middle-income Americans with private health coverage pay premiums that go to support and expand the system, they are subject to an unfair (regressive) “head tax” levied by unaccountable entities for ostensibly public but also private purposes. Lower-income premium payers also often pay for costly health coverage designed to suit the economic interests and values of professional and other elites rather than their own. They also appear …

The Creativity Effect, Christopher Buccafusco, Christopher Jon Sprigman

Faculty Scholarship

This Article reports the first experiment to demonstrate the existence of a valua­tion anomaly associated with the creation of new works. To date, a wealth of social science research has shown that the least amount of money that owners of goods are willing to accept to part with their possessions is often far greater than the amount that purchasers would be willing to pay to obtain them. This phenomenon, known as the endowment effect, may create substantial inefficiencies in many markets. Our experi­ment demonstrates the existence of a related "creativity effect." We show that creators of works value their creations …

The Functionalism Of Legal Origins, Ralf Michaels

Faculty Scholarship

This article, written on request for the centennial issue of Ius Commune Europaeum, connects the economic literature on legal origins (La Porta et al) and the World Bank's Doing Business reports with discussions in comparative law about the functional method. It finds that a number of parallels and similarities exist, and that much of the criticism that has been voiced against functionalism should apply, mutates mutants, also to these more recent projects. The attraction that these projects have derive not, it is argued, from their methodological sophistication, but instead from "the strange lure of economics" and from the ostentatious objectivity …

Brand Or Anti-Brand?, Stacey Dogan

Shorter Faculty Works

How many law review articles begin with a scene from Wayne’s World? For Sonia Katyal, such an opening is par for the course. Since she entered the scene a decade ago, Katyal’s scholarship has celebrated irreverence, and examined the ways in which the law tolerates, enables, and often discourages commentary on dominant culture, icons, and in this case, brands. This essay – written for a symposium on advertising and the law at SUNY Buffalo Law School – continues the Katyal tradition.

The Distortionary Effect Of Evidence On Primary Behavior, Alex Stein, Gideon Parchomovsky

Faculty Scholarship

No abstract provided.

The Future Of Digital Communications Research And Policy, Scott Wallsten

Federal Communications Law Journal

Symposium: Essays from Time Warner Cable's Research Program on Digital Communications.

Cheaters Shouldn't Prosper And Consumers Shouldn't Suffer: The Need For Government Enforcement Against Economic Adulteration Of 100% Pomegranate Juice And Other Imported Food Products, Michael T. Roberts

Journal of Food Law & Policy

In the modern global food system - marked by the trade flow of a variety of food products and ingredients from multiple locations in the world - economically motivated adulteration has emerged as a growing menace that threatens the health and wellbeing of consumers, the economic livelihoods of honest purveyors of food in the global marketplace, and the integrity and viability of national food regulatory systems. Economic adulteration is a form of cheating that includes the padding, diluting, and substituting of food product. Although this cheating is rooted in past food systems, the new paradigm for economic adulteration - a …

European Union Food Law Update, Emilie H. Leibovitch

Journal of Food Law & Policy

This EU Food Law Update will focus on the recent developments in the areas of genetically modified organisms, novel foods, feed safety, transmissible spongiform encephalopathy, salmonella and food borne diseases, food additives, organic farming, food contact materials, and labeling.

A Bittersweet Deal For Consumers: The Unnatural Application Of Preemption To High Fructose Corn Syrup Labeling Claims, Josh Ashley

Journal of Food Law & Policy

The recent rise of consumer consciousness regarding the health qualities of foods and beverages has become something akin to common knowledge. Reflecting this rise, studies reveal that labels regarding the health qualities of a food are more likely to increase sales. And among the health labels consumers prefer, labels describing the product as natural top the list. One website reports that according to a recent study, 31.3-percent of respondents thought that "100% natural" was the best description to read on a label, compared with only 14.2-percent who thought that "100% organic" was the best description. "All natural ingredients" was the …

United States Food Law Update: Health Care Reform, Preemption, Labeling Claims And Unpaid Interns: The Latest Battles In Food Law, A. Bryan Endres, Nicholas R. Johnson, Michaela N. Tarr

Journal of Food Law & Policy

This edition of the Food Law Update explores four legal issues arising in the first half of 2010 reflective of the diverse nature of the food law specialist. As the national debate surrounding the merits of health care reform dominated the legislative agenda, this article first will discuss the food labeling rules embedded within section 4205 of the Patient Protection and Affordable Care Act of 2010. The authors then analyze the preemptive reach of the Federal Food, Drug, and Cosmetic Act and the Meat Inspection Act with respect to three separate California statutes regarding animal welfare standards, retail labels on …

Produce Exceptionalism: Examining The Leafy Greens Marketing Agreement And Its Ability To Improve Food Safety, Varun Shekhar

Journal of Food Law & Policy

Isolated food safety crises are not uncommon occurrences in the United States. Indeed, the history of public scares indicates a pattern of deficiencies in the safety of the American food supply. In the early 20th century, the public learned of the squalid conditions of meatpacking facilities through muckraking publications such as Upton Sinclair's The Jungle. In the 1980s, a 60 Minutes report documented research finding carcinogenic properties of a widespread pesticide, traces of which were commonly found in apple-based products. In the 1990s, widespread media reports of beef tainted with E. coli led to both product recalls unprecedented in scope …

Reconsidering Federalism And The Farm: Toward Including Local, State And Regional Voices In America's Food System, Margaret Sova Mccabe

Journal of Food Law & Policy

Why is the relationship between our food system and federalism important to American law and health? It is important simply because federal law controls the American food system. This essay considers how federal law came to structure our food system, and suggests that though food is an essential part of our national economy, the dominating role of the federal government alienates citizens from their food system. It does so by characterizing food as a primarily economic issue, rather than one that has ethical, health, and cultural components. However, state and local governments have much to offer in terms of broadening …

Policy Relevant Heterogeneity In The Value Of Statistical Life: New Evidence From Panel Data Quantile Regressions, W. Kip Viscusi, Thomas J. Kniesner, James P. Ziliak

Vanderbilt Law School Faculty Publications

We examine differences in the value of statistical life (VSL) across potential wage levels in panel data using quantile regressions with intercept heterogeneity. Latent heterogeneity is econometrically important and affects the estimated VSL. Our findings indicate that a reasonable average cost per expected life saved cut-off for health and safety regulations is $7 million to $8 million per life saved, but the VSL varies considerably across the labor force. Our results reconcile the previous discrepancies between hedonic VSL estimates and the values implied by theories linked to the coefficient of relative risk aversion. Because the VSL varies elastically with income, …

The Visible Hand: Coordination Functions Of The Regulatory State, Robert B. Ahdieh

Faculty Scholarship

We live in a coordination economy. As one surveys the myriad challenges of modern social and economic life, an ever increasing proportion is defined not by the need to reconcile competing interests, but by the challenge of getting everyone on the same page. Conflict is not absent in these settings. It is not, however, the determinative factor in shaping our behaviors and resulting interactions. That essential ingredient, instead, is coordination.

Such coordination is commonly understood as the function of the market. As it turns out, however, optimal coordination will not always emerge, as if led “by an invisible hand.” Even …

Reframing Antitrust In Light Of Scientific Revolution: Accounting For Transaction Costs In Rule Of Reason Analysis, Alan J. Meese

Faculty Publications

This Article contends that modern rule of reason analysis, informed by workable competition’s partial equilibrium trade-off paradigm, is suitable for evaluating only a subset of agreements that may reduce transaction costs. The Article distinguishes between “technological” and “non-technological” transaction costs. Technological transaction costs entail the bargaining and information costs first emphasized by Ronald Coase, while non-technological transaction costs result from more fundamental departures from perfect competition, departures creating a risk of opportunism that accompanies relationship-specific investments. Modern law does accurately assess restraints that may reduce technological transaction costs—costs that are analogous to the sort of production costs recognized by the …

China's Development Of International Economic Law And Wto Legal Capacity Building, Pasha L. Hsieh

Research Collection Yong Pung How School Of Law

This article examines legal and institutional aspects of the evolution of China’s approach to the dispute settlement mechanism of the World Trade Organization (WTO). It begins by analyzing the impact of China’s changing attitude toward international law on the escalation of international economic law research. In particular, the article provides the first detailed examination of China’s efforts to strengthen public–private cooperation in building its WTO legal capacity. China established think tanks to bridge the information and communication gaps between the government and industries. To develop its WTO lawyers, the Chinese government has consistently required international law firms to collaborate with …

Imperfect Alternatives: Networks, Salience, And Institutional Design In Financial Crises, Robert B. Ahdieh

Faculty Scholarship

With the benefit of hindsight — and some aspiration to foresight — it is useful to consider the type of regulatory regime that might best address financial crises. What could policymakers have done to prevent the recent crisis? And once the crisis started, what interventions might have alleviated it? These questions have been widely debated, with an eye to both substantive policy and the design of effective regulatory institutions. This Article speaks to the latter project — one of comparative institutional analysis — though with a framework that implicates our substantive policy choices as well. It begins with an account …

Stability, Integration And Political Modalities: Some American Reflections On The European Project After The Financial Crisis, David A. Westbrook

Contributions to Books

Published as Chapter 22 in Making Transnational Law Work in the Global Economy: Essays in Honour of Detlev Vagts, Pieter H. F. Bekker, Rudolf Dolzer & Michael Waibel, eds.

To those of us concerned with transnational law, and especially the role of German law on the global stage, it does not need saying that Professor Detlev Vagts is highly deserving of that Germanic and traditional scholarly honour, a Festchrift. (In this context, ‘does not need saying’ of course means ‘should be said repeatedly’.) We all owe Detlev Vagts, and as a Germanic traditionalist, I would be delighted to contribute to …