Law and Economics Commons^™

The Regulation Of Intercountry Adoption, Mary E. Hansen, Daniel Pollack

ExpressO

As of January 2006, the United States was the only major receiver of children through intercountry adoption that had not implemented the 1993 Hague Convention on Intercountry Adoption. The U.S. signed the Hague Convention in 1994, but did not pass implementing legislation until 2000. Regulations pursuant to the legislation were proposed in 2003, but final regulations did not go into effect until March 2006. The slow pace was partly the result of Congressional wrangling over designation of a regulator and partly the result of a prolonged conversation between the designated regulator and the adoption community over specific regulations.

Finalization of …

The Chameleon Effect: Beyond The Bonding Hypothesis For Cross-Listed Securities, Cally Jordan

ExpressO

This paper is based on a presentation made at the New York Stock Exchange Conference on the Future of Global Equity Trading, March 12, 2004, Sarasota, FL.

Looking back, was it a momentary enthusiasm? The dramatic increase in cross-listed securities, particularly in the United States, was one of the remarkable phenomena of the 1990s capital markets. The bonding, or corporate governance, hypothesis was one of the more intriguing theories to surface to explain the phenomenon. Cross-listing, the hypothesis suggested, might be a bonding mechanism by which firms, incorporated in a jurisdiction with “weak protection” of minority shareholder rights or poor …

Comparative Foreign Direct Investment Law: Determinants Of The Legal Framework And The Level Of Openness And Attractiveness Of Host Economies, Jean-Yves P. Steyt

Cornell Law School LL.M. Student Research Papers

Foreign direct investment, henceforth denoted FDI, constitutes a basic component of the ongoing economic globalization. The latter phenomenon refers to the increasing economic interdependence of countries in the sense that today goods, services, capital and technologies are exchanged or diffused on a truly global market, accompanied by an unprecedented cross-border flow of human resources.

A large majority of states on every continent have been liberalizing or further liberalizing their investment policies and laws over the last decades. The substantial impact and role of international instruments and organizations on this progressive liberalization process has been stressed on both the global and …

The Authentic Consent Model: Contractarianism, Creditors' Bargain, And Corporate Liquidation, Riz Mokal

ExpressO

The first part of this article asks if the Creditors’ Bargain Model, long employed by insolvency scholars as the starting point for many an analysis, can explain or justify even the most distinctive and fundamental feature of insolvency law. After examining the defining features of the model’s construction, the role of self-interest and consent in it, and its ex ante position, it is concluded that the Bargain model can neither explain nor legitimate the coercive collective liquidation regime.

The second part of the article develops an alternative model to analyse and justify insolvency law. The starting premise is that all …

Administrative Receivership And Administration - An Analysis, Riz Mokal

ExpressO

This paper argues that the Enterprise Act 2002 has changed the way those dealing with distressed companies are required to behave much more significantly than most commentators realise. The motivation for this change lies in the ways in which administrative receivership is destructive of social value (in terms of unnecessary job losses and other resource misallocations). The paper identifies three such ways, all linked with the fact that receivership ties the office-holder’s duties to the interests of the debtor’s main bank. This is undesirable because the bank (a) is usually oversecured and thus has little incentive, once receivership is underway, …

The Valuation Of Distressed Companies - A Conceptual Framework, Michael Crystal Qc, Riz Mokal

ExpressO

It is often crucial to ascertain the value of a distressed company. Those interested in the company’s undertaking require this information to determine what should be done with the company’s business, and how the value in the company’s estate should be distributed amongst them. In this article, addressed primarily to the parties to corporate reorganisation proceedings in the UK and their advisers, we provide a conceptual framework within which these questions might be answered.

The first part of the article identifies the bases on which a company’s business might be valued. Drawing upon economic theory, empirical evidence, and the sophisticated …

When Is Two A Crowd? The Impact Of Federal Action On State Environmental Regulation, Jonathan H. Adler

ExpressO

This article seeks to identify the ways in which federal actions can influence state regulatory choices in the context of environmental policy. The federal government may directly influence state policy choices by preempting state policies or by inducing state cooperation through the use of various incentives and penalties for state action. The federal government may indirectly, and perhaps unintentionally, influence state policy choices as well. Federal policies may encourage greater state regulation by reducing the costs of initiating regulatory action or by placing issues on state policy agendas. Federal regulation may also discourage or even “crowd-out” state-level regulatory action by …

Economic Analysis Of Law And Economics, Oren Gazal-Ayal

ExpressO

The academic world is wonderful. Like few other professionals, we can choose what we want to do and what questions we think are important, which in our line of work means choosing what topics we want to research. But what influences our choices? This paper examines what drives scholars to select Law and Economics (L&E) as a topic for research. It does so by implementing the methodology of many L&E papers – by assuming that regulation and incentives matter.

Legal scholars face very different academic incentives in different parts of the world. In some countries, the academic standards for appointment, …

Zoning And Eminent Domain Under The New Minimum Scrutiny, John H. Ryskamp

ExpressO

Recently the Supreme Court has made it clearer that minimum scrutiny is a factual analysis. Whether in any government action there is a rational relation to a legitimate interest is a matter of determining whether there is a policy maintaining important facts. This has come about in the Court’s emerging emphasis on developing fact-based criteria for determining government purpose. Thus, those who want to affect zoning and eminent domain outcomes should look to what the Court sees as important facts, and whether government action is maintaining those facts with its proposed land use or eminent domain action.

Managing Risk On A $25 Million Bet: Venture Capital, Agency Costs, And The False Dichotomy Of The Corporation, Robert P. Bartlett Iii

ExpressO

An implicit dichotomy of the corporation exists in legal scholarship. On one side of the dichotomy rests the publicly-held corporation suffering from a significant conflict of interest between its managers and dispersed shareholders; on the other side, the closely-held corporation plagued by inter-shareholder conflict.

This Article argues that understanding the agency problems that can exist within a firm demands a rejection of this traditional dichotomy and the theories of the firm built upon it. Using venture capital finance, this Article demonstrates for the first time how this dichotomy obscures how all firms - public and private - often face the …

Final Offer Arbitration In The New Era Of Major League Baseball, Spencer B. Gordon

ExpressO

This article provides a comprehensive analysis of the economic, athletic, and social impact of final offer salary arbitration in Major League Baseball (“MLB”). The article delves into the motivations, fluctuations, and evolution of the player-owner relationship and free agency. The commentary then focuses on the distinguishing features and intricacies of final offer arbitration. Although salary arbitration in the context of Major League Baseball is a topic oft discussed in the law review setting, the analysis rarely reaches the level exhibited in this article. Moreover, most articles on the subject were written between 1996 and 2000 when the 1994 players’ strike …

Finding New Constitutional Rights Through The Supreme Court’S Evolving “Government Purpose” Test Under Minimum Scrutiny, John H. Ryskamp

ExpressO

By now we all are familiar with the litany of cases which refused to find elevated scrutiny for so-called “affirmative” or “social” rights such as education, welfare or housing: Lindsey v. Normet, San Antonio School District v. Rodriguez, Dandridge v. Williams, DeShaney v. Winnebago County. There didn’t seem to be anything in minimum scrutiny which could protect such facts as education or housing, from government action. However, unobtrusively and over the years, the Supreme Court has clarified and articulated one aspect of minimum scrutiny which holds promise for vindicating facts. You will recall that under minimum scrutiny government’s action is …

Using Capture Theory And Chronology In Eminent Domain Proceedings, John H. Ryskamp

ExpressO

Capture theory--in which private purpose is substituted for government purpose--sheds light on a technique which is coming into greater use post-Kelo v. New London. That case affirmed that eminent domain use need only be rationally related to a legitimate government purpose. Capture theory focuses litigators' attention on "government purpose." That is a question of fact for the trier of fact. This article shows how to use civil discovery in order to show the Court that private purpose has been substituted for government purpose. If it has, the eminent domain use fails, because the use does not meet minimum scrutiny. This …

A Common Tragedy: Condemnation And The Anticommons, Robert L. Scharff

ExpressO

Abstract: Economic development of land may be suboptimal where multiple parties have the legal right to exclude use of the property in question. Michael Heller labeled this phenomenon the ‘anticommons.’ It has been argued that condemnation of private property for economic development is a potentially efficiency-enhancing solution to the anticommons problem. Until recently, this argument was largely academic. However, with the recent Supreme Court decision in Kelo v. City of New London, condemnation for economic development is now a valid policy choice. In this paper, I argue that the economic models used to justify condemnation are fundamentally flawed and that …

Where Do We Draw The Line? Partisan Gerrymandering And The State Of Texas, Whitney M. Eaton

University of Richmond Law Review

No abstract provided.

Carousel Fraud In The Eu: A Digital Vat Solution, Richard Thompson Ainsworth

Faculty Scholarship

Recent reports from the UK's Office for National Statistics estimate (as of May 11, 2006) that Missing Trader Intra-community Fraud (MTIC) may exceed 10 billion pounds this year.

Carousel fraud, a variant of MTIC where the same goods are sold over and over again, exploits the lingering non-certified, non-digital attributes of the EU VAT. The UK believes that carousel fraud cost the Exchequer between 1.12 and 1.9 billion pounds in the 2004-05 financial year. This article proposes that carousel fraud be eliminated in the EU through selective insertion of Digital VAT functionality into the present system. In other words, it …

Valuing Cultural Differences In Behavioral Economics, Justin D. Levinson, Kaiping Peng

ExpressO

Behavioral economic research has tended to ignore the role of cultural differences in economic decision-making. The authors suggest that a systematic bias affects existing behavioral economic theory-- cognitive biases are often assumed to be universal. To examine how cultural background informs economic decision-making, and to test framing effects, morality effects, and out-group effects in a cross-cultural study, the authors conducted an experiment in the United States and China. The experiment was designed to test cultural and cognitive effects on a fundamental economic phenomenon-- how people estimate the financial values of objects over time.

Results of the experiment demonstrated dramatic cultural …

Incomplete Contracts In A Complete Contract World, Scott A. Baker, Kimberly D. Krawiec

ExpressO

This paper considers the role that contract doctrine should play in facilitating optimal investment in contractual relationships. All contracts are incomplete in the sense that they do not specify the optimal actions for the buyer and seller in every future contingency. This incompleteness can lead to both under and over-investment in resources specifically targeted to the needs of the other contracting party. To solve these investment problems, economists and legal scholars have looked to complicated contractual solutions and the ownership of assets.

This Article offers another solution: contract doctrine. Specifically, we propose a contractual default rule applicable to all contract …

Managers' Fiduciary Duties In Financially Distressed Corporations: Chaos In Delaware (And Elsewhere), Christopher W. Frost, Rutheford B. Campbell

ExpressO

In this article, the authors consider the nature of corporate managers’ fiduciary duties in periods when the company is in financial distress. This matter is important not only to corporate managers, who need clear rules regarding their duties, but also to equity and debt investors, who must understand the nature of corporate fiduciary duties in order to price the capital that they contribute to the enterprise and allocate the financial risks of loss to the most efficient risk bearer from among the investors.

Unfortunately, courts – especially the important Delaware courts – have made a mess of all of this. …

The United States' Experience With Energy-Based Tax Incentives: The Evidence Supporting Tax Incentives For Renewable Energy, Mona L. Hymel

ExpressO

Developing sustainable markets for renewable energy technologies presents complex challenges. Financial, institutional and informational obstacles impede advancement of these technologies. Tax incentives are often utilized to assist policy makers in dealing with these challenges. Because tax incentives and subsidies generally decrease governmental revenues, understanding their costs and benefits is critical in determining policy choices. For almost 90 years the United States has granted tax incentives, direct subsidies and other support to the energy industry in an effort to enhance U.S. energy supplies. Historically, those incentives targeted only the petroleum industry. Since the late 1970s, however, Congress has enacted incentives to …

Should Internet Protocol-Enabled Video Service Provided Over A Telephone Network Be Regulated As A Cable Service?, Hal J. Singer, J Gregory Sidak, Robert W. Crandall

ExpressO

We examine whether, on legal or policy grounds, Internet protocol-enabled video services provided over a telephone network should be regulated as a cable service. We evaluate the history of cable regulation and the services that Congress envisioned to be regulated when it first drafted legislation establishing a regulatory framework for cable television services in 1984. We then examine numerous differences between the IP-enabled video services delivered over a telephone network and those that Congress envisioned when regulating cable television service in 1984 and in subsequent years when it revised the Cable Act of 1984. Finally, we find that municipal franchise …

Antitrust Governance, Yane Svetiev

ExpressO

In this article, the author argues that antitrust law has entered a new phase of its controversial existence. The role of antitrust in moderating inter-firm relationships depends both on the problems of the underlying market regime and the institutional capacity of antitrust decision-makers to respond to those challenges. For much of the 20th century, the model firm was hierarchical: vertical integration within the business organization was a way of achieving transaction cost efficiencies and delivering higher levels of output at lower prices. Recognition of this fact transformed antitrust from its traditional focus on concentrated power, to a policy focused on …

An Economic Approach To The Regulation Of Direct Marketing, Daniel R. Shiman

Federal Communications Law Journal

The growing ubiquity of electronic media and the almost total absence of cost in mass distributions of direct marketing have exacerbated the problem of the increasing intrusion of direct marketing into the privacy of citizens. The Author proposes utilization of a microeconomic social welfare analysis to guide policymakers in determining what forms of direct media should be regulated and what the most effective forms of regulation are likely to be. Sending and receiving costs provide the key factors in determining the extent of the "welfare-reducing marketing" and "marketing aversions," but the Author points to a number of other factors as …

Applied Freakonomics: Explaining The Crisis Of Volume, Thomas E. Baker

The Journal of Appellate Practice and Process

No abstract provided.

Demand And Supply Trends In Federal And State Courts Over The Last Half Century, Richard A. Posner

The Journal of Appellate Practice and Process

No abstract provided.

Who Will Control Frankenstein?: The Korean Chaebol's Corporate Governance, Jeong Seo

Cardozo Journal of International and Comparative Law

In a chaebol, because a dominant family exercises control with only a small equity-holding, a sharp disparity exists between cashflow rights and voting rights. The controller reduces managerial agency costs but creates his own agency costs. Furthermore, the disparity exacerbates the controller's agency costs. Outsider shareholders' voting rights are ineffectual in eradicating this problem. Therefore, external monitoring devices over the chaebol controller are required.

Korea has relied on government regulation-including attempts to change chaebols' ownership structures-to address this problem. Unfortunately, without well-functioning capital markets, the regulation has proved ineffective. As observed in the SK scandal, a market for …

Specific Investment: Explaining Anomalies In Corporate Law, Margaret M. Blair, Lynn A. Stout

Cornell Law Faculty Publications

This Article has two goals: to praise Professor Robert Clark as a remarkable corporate scholar, and to explore how his work has helped to advance our understanding of corporations and corporate law. Clark wrote his classic treatise at a time when corporate scholarship was dominated by a principal-agent paradigm that viewed shareholders as the principals or sole residual claimants in public corporations and treated directors as shareholders' agents. This view naturally led contemporary scholars to believe that the chief economic problem of interest in corporate law was the "agency cost" problem of getting corporate directors to do what shareholders wanted …

Vanquishing Copyright Pirates And Patent Trolls: The Divergent Evolution Of Copyright And Patent Laws, Robert E. Thomas

ExpressO

In the last decade copyright law has followed an almost linear path of increasing legal protections for copyright holders’ battle against digital piracy. By contrast, proposed changes in patent law are decidedly anti-patent holder due to efforts to battle patent trolls – companies that acquire and use patent portfolios to extract payoffs from technology companies. Patent law reform faces a far more contentious path and will likely lose several of its most significant provisions. This paper analyzes efforts to change the laws of copyright and patent using James Q. Wilson’s theory of regulation. With little concerted opposition, copyright law has …

Formal Versus Informal Allocation Of Land In A Commons: The Case Of The Macarthur Park Sidewalk Vendors, Gregg Kettles

ExpressO

Sidewalk vendors are becoming a more common presence in cities in Latin America and the United States. Vendor demand for the best sidewalk vending spots increasingly exceeds supply, making necessary a system to allocate space in what is essentially an open access commons. This paper presents an empirical study of two very different systems of allocation that have been adopted in the city of Los Angeles, California, a formal one imposed by the city on legal vendors when they were unable to come up with one on their own, and a second that was embraced by illegal vendors across the …

Commodification And Contract Formation: Placing The Consideration Doctrine On Stronger Foundations, David S. Gamage

ExpressO

Under the traditional consideration doctrine, a promise is only legally enforceable if it is made in exchange for something of value. This doctrine lies at the heart of contract law, yet it lacks a sound theoretical justification – a fact that has confounded generations of scholars and created a mess of case law.

This paper argues that the failure of traditional justifications for the doctrine comes from two mistaken assumptions. First, previous scholars have assumed that anyone can back a promise with nominal consideration if they wish to do so. We show how social norms against commodification limit the availability …