Law and Economics Commons^™

State Action Antitrust Exemption Collides With Deregulation: Rehabilitating The Foreseeability Doctrine, Elizabeth Trujillo

Faculty Scholarship

The state action antitrust exemption, also known as the state action immunity doctrine, is used by antitrust defendants to shield themselves against antitrust liability in instances where their anticompetitive conduct, if not under the aegis of state policy, would have been deemed a violation of federal antitrust law. Under the Midcal test, a court may grant state action immunity to a defendant if it is proven that the alleged anticompetitive conduct is pursuant to a clearly-articulated state policy and has been actively supervised by the state.

This paper evaluates the role, function, and definition of the state action exemption in …

Legal Ground Rules In Coordinated And Liberal Market Economies, Katharina Pistor

Faculty Scholarship

This chapter seeks to explain the affinity between the nature of economic systems: coordinated market economies (CMEs) and liberal market economies (LMEs) on the one hand, and legal origin (civil vs common law systems) on the other. It starts with the simple observation that LMEs tend to be common law jurisdictions, and CMEs civil law jurisdictions. It proposes that the affinity between economic and legal system offers important insights into the foundations of different types of market economies and, in particular, differences in the scope of the state vs the powers of the individual. The main argument is that the …

Penalty Defaults In Family Law: The Case Of Child Custody, Margaret F. Brinig

Journal Articles

This paper considers whether an amendment to state divorce laws that strengthens its joint custody preference operates as a traditional default rule, specifying what most divorcing couples would choose or as a penalty default rule the parties will attempt to contract around.

While the Oregon statutes that frame our discussion here, like most state laws, do not state an explicit preference for joint custody, shared custody is certainly encouraged by Section 107.179, which refers cases in which the parties cannot agree on joint custody to mediation and by Section 107.105, which requires the court to consider awarding custody jointly. In …

Property Rules And Liability Rules, Once Again, Keith N. Hylton

Faculty Scholarship

In recent years, new articles presenting rigorous analyses of bargaining incentives have overturned some of the fundamental claims made by Calabresi and Melamed in their seminal article on property rules and liability rules published in 1972. In particular, the proposition that property rules are socially preferable to liability rules when transaction costs are low appears to be either no longer valid or severely weakened under the new analyses. This paper reexamines the property rule versus liability rule question in light of the contributions of the recent bargaining theory literature. In contrast to this literature, I find that the fundamental propositions …

The Digital Vat (D-Vat), Richard Thompson Ainsworth

Faculty Scholarship

The most sustained U.S. tax policy debate of the past 30 years concerns proposals to replace and/ or supplement the Federal Income Tax with a consumption tax. Public finance economists and legal tax policy scholars challenged and defended the current income tax system on grounds of fairness, efficiency, and simplicity.

This debate over revamping the national taxing scheme has not been argued purely in the academic forum. Concrete legislative proposals have been advanced for a national retail sales tax, a European-style Value Added Tax, as well as a whole host of what David Bradford calls "the two-tiered consumption taxes."

From …

Foreword: Law, Business, And Economic Development - Current Issues And Age-Old Battles, Eric J. Gouvin

Faculty Scholarship

On March 24, 2006, the Western New England College School of Law and School of Business jointly hosted the First Annual Academic Conference sponsored by the Western New England College Law and Business Center for Advancing Entrepreneurship. The Conference capped a year of exciting developments at the Law and Business Center, which is the College's contribution to the entrepreneurship infrastructure in the greater Springfield, Massachusetts area. Economists have understood for some time that small businesses are an important engine of economic development and vitality. Across the United States, 25 million small businesses employ more than half the country's workers, create …

The Economics Of Open Access Law Publishing, Jessica D. Litman

Articles

The conventional model of scholarly publishing uses the copyright system as a lever to induce commercial publishers and printers to disseminate the results of scholarly research. Recently, we have seen a number of high-profile experiments seeking to use one of a variety of forms of open access scholarly publishing to develop an alternative model. Critics have not quarreled with the goals of open access publishing; instead, they've attacked the viability of the open access business model. If we are examining the economics of open access publishing, we shouldn't limit ourselves to the question whether open access journals have fielded a …

The Law And Economics Of Contracts, Benjamin E. Hermalin, Avery W. Katz, Richard Craswell

Faculty Scholarship

This paper, which will appear as a chapter in the forthcoming Handbook of Law and Economics (A.M. Polinsky & S. Shavell, eds.), surveys major issues arising in the economic analysis of contract law. It begins with an introductory discussion of scope and methodology, and then addresses four topic areas that correspond to the major doctrinal divisions of the law of contracts. These areas include freedom of contract (i.e., the scope of private power to create binding obligations), formation of contracts (both the procedural mechanics of exchange, and rules that govern pre-contractual behavior), contract interpretation (what consequences follow when agreements are …

From Harm To Robustness: A Principled Approach To Vice Regulation, Jim Leitzel

ExpressO

John Stuart Mill’s harm principle maintains that adult behavior cannot justifiably be subject to social coercion unless the behavior involves harm or a significant risk of harm to non-consenting others. The absence of harms to others, however, is one of the distinguishing features of many manifestations of “vices” such as the consumption of alcohol, nicotine, recreational drugs, prostitution, pornography, and gambling. It is with respect to vice policy, then, that the harm principle tends to be most constraining, and some current vice controls, such as prohibitions on drug possession and prostitution, violate Mill’s precept. In the vice arena, we seem …

Rediscovering The Economics Of Loss Causation , Richard Kaplan, Madge Thorsen, Scott Hakala

ExpressO

Abstract This article explores the economic principles and theories underlying loss causation in the context of securities fraud litigation. It explains the difference between “investment loss” and recoverable “inflationary loss” and posits that the latter consists of the difference between inflation in stock prices caused by the fraud at the time of purchase and inflation in the price at the time of sale. It reviews scenarios in which inflationary loss due to fraud may occur and would be recognized as a matter of economic theory as well as a matter of law. It urges that Dura v. Broudo Pharmaceuticals, 125 …

Extending Predation Analysis To Monopolist's Bundled Discounts Under Section 2: An Economic, Legal, And Comparative Perspective, Seth B. Chertok

ExpressO

In LePage’s v. 3M, the Third Circuit decided the first case at the federal appellate court level that dealt with the subject of bundled discounts by a monopolist under Section 2 of the Sherman Act in the period following the U.S. Supreme Court’s decision in Brooke Group Ltd. v. Brown & Williamson Tobacco Corporation. Prior to the decision in Brooke Group, the Third Circuit had only once before addressed this topic in Smithkline Corp. v. Eli Lilly and Company. Smithkline is only significant because it nearly suggested that any bundled discount, regardless of whether above or below cost, was anti-competitive. …

The Law And Economics Of Wardrobe Malfunction, Keith Brown, Adam Candeub

BYU Law Review

No abstract provided.

Did Reform Of Prudent Trust Investment Laws Change Trust Portfolio Allocation?, Max M. Schanzenbach, Robert H. Sitkoff

Law and Economics Papers

This paper investigates the effect of changes in state prudent trust investment laws on asset allocation in noncommercial trusts. The old prudent man rule favored “safe” investments

such as government bonds and disfavored “speculation” in stock. The new prudent investor rule, now widely adopted, relies on modern portfolio theory, freeing the trustee to invest based on risk and return objectives reasonably suited to the trust and in light of the composition of the trust portfolio as a whole. Using state- and institution-level panel data from 1986-1997, we find that after a state’s adoption of the new prudent investor rule, trust …

Model Of Time-Inconsistent Misconduct: The Case Of Lawyer Misconduct, Manuel A. Utset

Scholarly Publications

No abstract provided.

Share Price As A Poor Criterion For Good Corporate Law, Lynn A. Stout

Cornell Law Faculty Publications

Academics, reformers, and business leaders all yearn for a single, objective, easy-to-read measure of corporate performance that can be used to judge the quality of public corporation law and practice. This collective desire is so powerful that it has led many commentators to grab onto the first marginally plausible candidate: share price.

Contemporary economic and corporate theory, as well as recent business history, nevertheless warn us against unthinking acceptance of share price as a measure of corporate performance. This Essay offers a brief reminder of some of the many reasons why stock prices often fail to reflect true corporate performance, …

How High Do Cartels Raise Prices? Implications For Optimal Cartel Fines, John M. Connor, Robert H. Lande

All Faculty Scholarship

This Article examines whether the current penalties in the United States Sentencing Guidelines are set at the appropriate levels to deter cartels optimally The authors analyze two data sets to determine how high on average cartels raise prices. The first consists of every published scholarly economic study of the effects of cartels on prices in individual cases. The second consists of every final verdict in a US. antitrust case in which a neutral finder of fact reported collusive overcharges. They report average overcharges of 49% and 31% for the two data sets, and median overcharges of 25% and 22%. They …

Recalibrating The War On Terror By Enhancing Development Practices In The Middle East, Kevin J. Fandl

ExpressO

This research paper suggests that the cart has been placed before the horse, that democratization and open markets in the Middle East are more likely the result of effective development than the catalyst for it. The war on terror has been justified by the United States as an effective means of reducing the possibility of terrorist attacks. This paper analyzes the validity of those justifications by reviewing the linkage between democracy and economic growth and that between democracy and peace.

The paper begins by hypothesizing that the war on terror and forced democratization of the Middle East are leading to …

Detection Avoidance, Chris William Sanchirico

ExpressO

In practice, the problem of law enforcement is half a matter of what the government does to catch violators and half a matter of what violators do to avoid getting caught. In the theory of law enforcement, however, although the state’s efforts at "detection" play a decisive role, offenders’ efforts at "detection avoidance" are largely ignored. Always problematic, this imbalance has become critical in recent years as episodes of corporate misconduct spur new interest in punishing process crimes like obstruction of justice and perjury. This article adds detection avoidance to the existing theoretical frame with an eye toward informing the …

Identity And Market For Loyalties Theories: The Case For Free Information Flow In Insurgent Iraq, Paul D. Callister

ExpressO

When monopoly control over the flow of information is lost, the unavoidable consequence is destabilization. Information flow through a society can be understood as a market—not a market exchanging cash for goods, but loyalty for identity. Hence the market is called the “Market for Loyalties"--so labeled by an economics of information theory first developed by Prof. Monroe Price, of Cardozo Law School, and Director of the Howard M. Squadron Program in Law, Media and Society, to explain government regulation of radio, TV, cable and satellite broadcasting.

In post-invasion Iraq, Saddam Hussein lost or monopoly control over the information market, where …

Password Theft: Rethinking An Old Crime In A New Era, Daniel S. Shamah

ExpressO

This is a discussion of the legal and economic ramifications of password theft.

The Human Face Of Resource Conflict: Property And Power In Nigeria, Karol C. Boudreaux

San Diego International Law Journal

This paper considers possible answers to these difficult questions by focusing on two issues: the evolution of legal norms in response to both endogenous and exogenous changes, and the role that African customary law and indigenous dispute resolution has played in promoting coordination and cooperation among group members, thereby reducing violent conflict. This paper explores legislative actions taken by the Nigerian government that impede the continued evolution of these relatively elastic customary legal norms. Property norms under customary Nigerian law were flexible enough to provide a wide variety of property rights and allow for the peaceful trading and reasonable protection …

Bankruptcy Law, Richard C. Maxwell, B. Webb King

University of Richmond Law Review

No abstract provided.

Labor And Employment Law, W. David Paxton, Gregory R. Hunt

University of Richmond Law Review

It was a relatively quiet year in the Virginia labor and employment law arena, with no real groundbreaking cases or legislative enactments. There were developments in case law and legislative changes, but these were more subtle this year than in years past, and for the most part, the courts confirmed, affirmed, or clarified the existing state of the law. This article discusses cases and legislative activity of note in the Virginia labor and employment law arena during the past year. Part II addresses recent cases considering employment agreements under Virginia law. Part III considers cases in the continually evolving area …

Taxation, Craig D. Bell

University of Richmond Law Review

This article reviews significant developments in the law affecting Virginia taxation. Each section covers recent legislative changes, judicial decisions, and selected opinions or pronouncements from the Virginia Department of Taxation and the Virginia Attorney General over the past year. The overall purpose of this article is to provide Virginia tax and general practitioners with a concise overview of the recent developments in Virginia taxation most likely to have an impact on their practices. This article will not, however, discuss many of the numerous technical legislative changes to the State Taxation Code of Title 58.1.

J.D., Peter Goodrich

Cardozo Law Review

No abstract provided.

The Comparative Analysis On The Presumption Of Cartel Agreements Which Is Unique In The Korean Cartel Regulation Provision, Woo-Jong Jon

ExpressO

In terms of cartel regulation, Korea has a “presumption of agreement” provision that does not exist in the United States or in the European Union (EU). This provision is Article 19(5) of the Monopoly Regulation and Fair Trade Act (MRFTA). This provision was created for the convenience of enforcement because firms made cartel agreements by more sophisticated methods as the cartel regulation became more intense. Accordingly, in the continental law of Korea the approach of the courts in relation to cartel regulation is somewhat different to the United States. However, in terms of a standard for deciding specifically what to …

Digital Wars -- Legal Battles And Economic Bottlenecks In The Digital Information Industries, Curt A. Hessler

ExpressO

The Digital Age has spawned major legal battles over the fundamental principles of intellectual property law and antitrust law. These diverse struggles can best be analyzed using the basic norm of "value added" from neo-classical normative economics. This analysis suggests that current intellectual property doctirnes provide excessive protection and current antitrust doctrines remain awkward in dealing with the cross-market leveraging of monopoly power in the presence of "natural monopolies" created by network effects.

Reform Of Public Company Disclosure In Europa, Roberta S. Karmel

Faculty Scholarship

No abstract provided.

One For All: The Problem Of Uniformity Cost In Intellectual Property Law, Michael W. Carroll

Working Paper Series

Intellectual property law protects the owner of each patented invention or copyrighted work of authorship with a largely uniform set of exclusive rights. Historically, this uniformity may have been justified in light of the relative homogeneity of market conditions applicable to protected subject matter, such as books or mechanical inventions. Technological progress since the founding has led to considerable growth in the range of inventions and expressive works to which patent and copyright law apply, respectively. In the modern context, it is clear that innovators’ needs for intellectual property protection vary substantially across industries and among types of innovation. Applying …

A Positive Externalities Approach To Copyright Law: Theory And Application, Jeffrey L. Harrison

UF Law Faculty Publications

The basic goal of copyright law is, at a general level, fairly well understood, yet the law itself seems untethered to any consistent analytical approach designed to achieve that goal. This Article has two goals. The first is to explain in some detail what copyright law might look like if it reflected economic reasoning. The second is to put to the test the question of whether copyright law is as far out of sync with economic guidelines as White-Smith Music and Eldred suggest.

In order to understand the economic approach and the inconsistency of copyright law, as well as the …