Law and Economics Commons^™

Some Antitrust Foundations Of Payment Card Associations, Koki Arai

ExpressO

In this study we analyze platforms and rejections in two-sided markets with network externalities, using the specific context of a payment card association. We look at the cooperative antitrust determination of the interchange fee by member banks, using a framework in which banks and merchants may have market power and consumers and merchants decide rationally on whether to buy or accept a payment card developed by Rochet and Tirole (2002). After showing the welfare implications of a cooperative determination of the interchange fee and antitrust conduct, we describe in detail the factors affecting merchant resistance, compare cooperative and for-profit business …

Good Faith In The Cisg: Interpretation Problems In Article 7, Benedict C. Sheehy

ExpressO

ABSTRACT: This article examines the dispute concerning the meaning of Good Faith in the CISG. Although there are good reasons for arguing a more limited interpretation or more limited application of Good Faith, there are also good reasons for a broader approach. Regardless of the correct interpretation, however, practitioners and academics need to have a sense of where the actual jurisprudence is going. This article reviews every published case on Article 7 since its inception and concludes that while there is little to suggest a strong pattern is developing, a guided pattern while incorrect doctrinally is preferable to the current …

On The Misuse Of The Nash Bargaining Solution In Law And Economics, Abraham L. Wickelgren

ExpressO

Bargaining plays a very important role in a great deal of legal scholarship, particularly in law and economics scholarship. Scholars often assume that the Nash bargaining solution determines the bargaining outcome, where the parties equally split the joint benefit created by the agreement. This solution, however, is inappropriate when parties have outside options, alternatives that only provide a payoff if the bargainer terminates the original bargaining. Most legal bargaining problems involve outside options. This article explains why the Nash bargaining solution generates an inappropriate outcome in this situation. Then, it examines several different prior articles that have used the Nash …

The Same Side Of Two Coins: The Peculiar Phenomenon Of Bet-Hedging In Campaign Finance, Jason Cohen

ExpressO

The paper addresses the propensity of large donors to give to competing candidates or competing party organizations during the same election cycle – for example, giving money to both Bush and Kerry during the 2004 presidential race – a practice here termed 'bet-hedging.' Bet-hedging is analyzed in strategic and game-theoretic terms. The paper explores the prevalence of bet-hedging, the possible motivations behind the practice, and the informational concerns surrounding it. The paper argues that bet-hedging, out of all donation practices, carries with it a uniquely strong implication of ex post favor-seeking: if a donor prefers one side over the other, …

A Public Choice Theory Of Criminal Procedure, Vikramaditya S. Khanna, Keith N. Hylton

ExpressO

We provide a more persuasive justification for the pro-defendant bias in Anglo-American criminal procedure than the most commonly forwarded justifications to date. The most commonly forwarded rationale for the pro-defendant bias is that the costs of false convictions – specifically, the sanctioning and deterrence costs associated with the erroneous imposition of criminal sanctions – are greater than the costs of false acquittals. We argue that this rationale provides at best a partial justification for the extent of pro-defendant procedural rules. Under our alternative justification, pro-defendant protections serve primarily as constraints on the costs associated with improper enforcement or rent seeking …

Media Policy Out Of The Box: Content Abundance, Attention Scarcity, And The Failures Of Digital Markets, Ellen P. Goodman

ExpressO

No abstract provided.

Affirmative Action: More Efficient Than Color Blindness, Abraham L. Wickelgren

ExpressO

One of the most compelling reasons against affirmative action is the principle of color blindness, that is, the idea that race is an irrelevant characteristic that should not affect higher education admissions or hiring decisions. Despite its intuitive appeal, this paper shows that adherence to this principle impedes economic efficiency when there has been past discrimination based on color. Past discrimination creates inefficiencies in the economy that persist across generations. Because of this persistence, race is not an irrelevant characteristic for firms and universities looking to hire or admit the best candidates. Affirmative action, not color-blindness, is necessary to reduce …

Evaluating Work: Enforcing Occupational Safety And Health Standards In The United States, Canada And Sweden, Daniel B. Klaff

ExpressO

The United States’ occupational safety and health enforcement system is breaking down. Klaff argues that much of this breakdown has to do with a fundamental lack of worker participation in the United States’ safety and health system. Klaff makes his case by comparing and contrasting the history and enforcement schemes of the United States, Canada, and Sweden. After arguing for economic rights as human rights, Klaff concludes by offering a set of recommendations for the United States’ occupational safety and health system based upon his value-centered analysis.

“Politics As Markets” Reconsidered: Economic Theory, Competitive Democracy And Primary Ballot Access , David N. Schleicher

ExpressO

No abstract provided.

In The Minds Of Men: A Theory Of Compliance With The Laws Of War, William C. Bradford

ExpressO

Whether, and, if so, why states elect to comply with international law are now the most central questions within the international legal academy. A skein of theories has been woven over the last decade to explain and predict state compliance, and a number of factors, including, inter alia, a desire to generate reciprocity, an interest in reducing transaction costs, normative commitments, domestic considerations, the degree of domestic incorporation of international legal regimes, reputational concerns, and fear of punishment, are purported to be causally linked.

However, as the study of international legal compliance ["ILC"] has matured, intramural divisions have been compounded …

Law, Economics, And The Theory Of The Firm, Michael J. Meurer

Faculty Scholarship

Economic analysis of the law assumes the "shadow of the law" influences the behavior of businesses. Thus, business people consider the costs and benefits of contract litigation when they make decisions about contract performance, they consider the costs of tort litigation when they make investments in safety, they consider the costs of violating a regulation when they make decisions about regulatory compliance, and so on. Economic models of law typically abstract from organizational detail and treat businesses as if they are represented by a single manager who controls the firm's behavior and acts to maximize its profit. This abstraction simplifies …

The Mechanics Of Judicial Vote Switching , H. Ron Davidson

ExpressO

In a handful of cases, including one from last Term, the United States Supreme Court was divided between upholding, remanding, and overturning a lower court decision, with no majority in favor of any of these three dispositions. In each of these cases, at least one Justice switched his or her vote to achieve a majority. With the Supreme Court taking ever fewer cases and producing increasingly complicated split decisions, we may expect this pattern to recur more often. This Article, drawing upon game theory and public choice scholarship, addresses how and why this practice of strategic vote switching emerged.

Governance Structures, Legal Systems, And The Concept Of Law, Lewis A. Kornhauser

Chicago-Kent Law Review

Debate over the concept of law currently contrasts conceptual and interpretive accounts. This Article begins to elaborate a social-scientific conception of law as a subset of a concept of a governance structure. To begin, it distinguishes institutional structures, realized institutions, and functioning institutions. Governance structures consist of institutional structures that perform central tasks of governance. Dworkin's interpretive conception of law extends over the domain of functioning institutions; positivist, conceptual accounts of law extend over the domain of institutional structures. From this perspective legal systems may be best understood as governance structures that satisfy the political value legality; different concepts of …

Functional Law And Economics: The Search For Value-Neutral Principles Of Lawmaking, Francesco Parisi, Jonathan Klick

Chicago-Kent Law Review

Functional law and economics, which draws its influence from the public choice school of economic thought, stands as a bridge between the strictly positivist and normative approaches to law and economics. While the positive school emphasizes the inherent efficiency of legal rules and the normative school often views law as a solution to market failure and distributional inequality, functional law and economics recognizes the possibility for both market and legal failure. That is, while there are economic forces that lead to failures in the market, there are also structural forces that limit the law's ability to remedy those failures on …

Legal Analysis Of Economics: Solving The Problem Of Rational Commitment, Bruce Chapman

Chicago-Kent Law Review

This Article offers a "legal analysis of economics" in contradistinction to the prevailing "economic analysis of law." The economic problem that forms the subject matter of the theoretical legal analysis is the problem of rational commitment. The difficulty here is that an agent can have a reason, or a preference, to commit to do something that he will have no reason actually to do, or which will be contrary to preference when the time comes actually to do it. Familiar examples include the problem of making credible threats or promises. This Article develops an account of the rational actor that …

Gödel, Kaplow, Shavell: Consistency And Completeness In Social Decision-Making, Giuseppe Dari Mattiacci

Chicago-Kent Law Review

The recent debate on what criteria ought to guide social decision-making has focused on consistency: it has been argued that criteria contradicting one another—namely, welfare and fairness—should not be simultaneously employed in order for policy assessment to be consistent. This Article raises the related problem of completeness—that is, the question of whether or not a set of consistent criteria is capable of providing answers to all social decision problems. If not, as it is suggested might be the case, then the only way to decide otherwise undecidable issues is to simultaneously employ both welfare and fairness, which implies a certain …

The Unexpected Guest: Law And Economics, Law And Other Cognate Disciplines, And The Future Of Legal Scholarship, Thomas S. Ulen

Chicago-Kent Law Review

This Article argues that law and economics has worked a remarkable but unexpected change on legal scholarship. Many critics mistakenly claim that the most notable effect of law and economics lies in its conclusions about substantive legal rules. This Article argues that this criticism misses the far more radical effect of law and economics on the study of law—namely, its commitment to the scientific method of inquiry, a method that relies upon theorizing, then performing empirical work to verify or refute the theory, and then refining the theory in light of the results. The Article explains why this change has …

Should Law Professors Teach Public Choice Theory?, Guido Pincione

Chicago-Kent Law Review

This Article argues that various philosophically interesting objections to the use of public choice theory in legal education are misguided. Some writers hold that public choice theory, being descriptive, cannot help law students develop the interpretive skills needed by judges and lawyers. I reply that this objection rests on the false assumption that public choice theory lacks resources to accommodate rule following. Others object that public choice theory fosters cynicism and uncooperative attitudes. This rests on an unduly restrictive conception of the theory of rationality presupposed by public choice analysis. The public-choice focus on efficiency has also been disputed. In …

Fairness And Welfare From A Comparative Law Perspective, Horacio Spector

Chicago-Kent Law Review

This Article discusses the relative value of law and economics and moral philosophy to explain private law in both common law and civil law jurisdictions. It argues that the recent philosophical paradigm, which revolves around the ideas of fairness and autonomy, is intellectually continuous with the School of Rationalist Natural Law. Though this School has been directly influential on the development of civilian private law, its ascendancy on common law cannot be documented. Paradoxically, recent philosophical explanations of private law bear on common law, while legal philosophers in civil law jurisdictions still follow Kelsen's research agenda, which focuses on the …

What Legal Scholars Can Learn From Law And Economics, Anthony Ogus

Chicago-Kent Law Review

The starting point of this Article is Richard Posner's statement of regret (in 1975) that, in terms of legal scholarship, "normative analysis vastly preponderates over positive," and that this can be corrected by the economic analysis of law. I consider that the positive, predictive contribution of law and economics is still undervalued. Lawyers, practitioners and academics, have much to learn from economic analysis because so often they fail to understand the nature of the interaction between law and market phenomena. This Article explores three areas of analysis to justify this contention: the interplay between public and private incentive systems to …

Fuel Efficiency: The Disconnect Between Environmental Policy And Tax Policy, John J. Marciano

ExpressO

The recent high gas prices in America have intensified the debate over oil and gas efficiency, use, and reserves. As the national average for a gallon tops $2.10, Congress and the President strive to find a common position to foster energy independence, protect the environment, and bolster the struggling economy.

President Bush’s energy policy and recent Senate and House bills have not contemplated their effects on the environmental state of our nation or its impact on the internal revenue code. In this time of uncertainty, energy independence and measured use of resources may be at odds, but must we stray …

Solving The Punitive Damage Mismatch, Ari Behar

ExpressO

There are several reasons underlying the system of punitive damages. Application of these reasons to cases yields differing results. The reasons fall into two categories: those that support awarding additional damages to the plaintiff and those that support extracting more damages from the defendant. When the reasons in favor of extraction exceed those in favor of award, the award should be split between the plaintiff and a fund. This fund should be used to supplement awards when the reasons favoring award exceed those favoring extraction.

Modern Bootlegging And The Prohibition On Fair Prices: Last Call For The Repeal Of Pharmaceutical Price Gouging, Luke W. Cleland

ExpressO

This article discusses the recent passage of the Medicare Prescription Drug, Modernization and Improvement Act of 2003, and the executive and judicial decisions affecting the ability of the general public to access foreign pharmaceutical markets. The article examines the recent actions taken by the U.S. government, explore various state movements within the United States aimed at reducing pharmaceutical drug prices, outline the process of pharmaceutical drug prices in foreign countries, and advocate for a workable integration of all available mechanisms to feasibly reduce prescription drug prices for the benefit of both U.S. consumers and U.S. drug companies. As avenues to …

Extraterritoriality Of The Sherman Act And Deterrence Of Private International Cartels, John M. Connor

ExpressO

This paper argues that the facts in the vitamins cartel support decisions in the 2nd and DC circuits to permit wholly foreign direct buyers of globally cartelized products standing to sue in U.S. courts. Such an interpretation of the Sherman Act is justified by conduct that is essentially linked to the management of successful international cartels, namely, the prevention of geographic arbitrage. This paper shows that the degree of injuries imposed on U.S. consumers could not have occurred were it not for coordinated price increases in countries with weak or nonexistent anticartel laws. Moreover, this paper endeavors to demonstrate that, …

Human Development Challenges In Africa: A Rights-Based Approach, Dejo Olowu

San Diego International Law Journal

This paper examines this plethora of questions and attempts to move the theory of human development in Africa beyond the traditional confines of its macroeconomic and political propositions. The paper assesses the concept of human development within the broader discourse on the role of human rights in global development, highlighting the overall African context of the subject. Against the backdrop of remarkably increasing scholarly efforts aimed at establishing human development as a human rights question, this paper evaluates the capacity of existing and emerging human rights frameworks relevant to Africa, and identifies viable trajectories for result-oriented human development actions.

Using Architectural Constraints And Game Theory To Regulate International Cyberspace Behavior, Van N. Nguy

San Diego International Law Journal

The debate over whether cyberspace can or should be regulated is essentially dead. This is the conclusion being taught in law schools today. The battle between Judge Frank Easterbrook and Professor Lawrence Lessig over "laws" and "horses", infamous among cyberspace legal scholars, became irrelevant when geographically-based governments began regulating Internet related activities. However, debate over how the Internet should be regulated continues. One way of framing this debate is in terms of deciding how to regulate behavior in cyberspace. Professor Lessig postulated four kinds of constraints regulate behavior: (1) social norms, (2) markets, (3) law, and (4) architecture. This comment …

The New Partnership For Africa's Development: Institutional And Legal Challenges Of Investment Promotion, Victor Mosoti

San Diego International Law Journal

This paper is divided into five parts. Part I introduces NEPAD, its philosophical basis and objectives. Part II discusses the investment promotion role of NEPAD and its difference from past development thinking about Africa's problems. In Part III we discuss NEPAD's strategy for realizing investment flows into Africa, some of the NEPAD's institutional weaknesses, and the repercussions thereof in realizing the NEPAD objectives. It also highlights the potential implications of NEPAD to the regional integration plan in Africa. Taking into account the supposed political clash between NEPAD and the AU, Part IV discusses possible ways of restructuring NEPAD to enable …

Human Rights Approaches Of Corruption Control Mechanisms - Enhancing The Hong Kong Experience Of Corruption Prevention Strategies, C. Raj Kumar

San Diego International Law Journal

This Article is intended to make a case for promoting transparency in governance policies from a human rights perspective so as to argue for the development of a human right to good governance in Hong Kong. Secondly, it analyzes the work of the Independent Commission against Corruption (ICAC) in Hong Kong and addresses certain concerns in improving the efficiency of the ICAC. Thirdly, it argues that rights against corruption in Hong Kong should move beyond a law enforcement and public policy issue and attain the status of a human right. Fourthly, this Article examines the growth and development of international …

The Ethnic Question In Law And Development, Lan Cao

Michigan Law Review

World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, by Professor Amy Chua, is an analytically complex narrative of contemporary ethnic violence in the current era of globalization. Although such violence has historical roots, according to Chua it has also been fueled by free-market forces and democratization. The book is a forceful and provocative indictment of the current U.S. policy of promoting and exporting markets and democracy to developing and formerly communist, market-transitional countries. In her book, Professor Chua applies her thesis - that ethnicity, global capitalism, and democracy are a volatile mix - …

If It's Hardly Worth Doing, It's Hardly Worth Doing Right: How The Nlra's Goals Are Defeated Through Inadequate Remedies, Robert M. Worster Iii

University of Richmond Law Review

No abstract provided.