Law and Economics Commons^™

Legal Transitions, Rational Expectations, And Legal Progress, Kyle D. Logue

Law & Economics Working Papers Archive: 2003-2009

This paper was written for a symposium on legal transitions. The central question in the transitions literature is whether or to what extent the government should provide compensation for (or seek in some way to ameliorate) the losses of wealth occasioned by unexpected changes in the law or social policy. This Article argues that the prevailing normative framework for evaluating legal transitions - the consequentialist or economic framework - relies critically on two assumptions: the assumption that private parties (whose incentives are sought to be affected by the choice of transition norm) will behave with rational expectations and the assumption …

The Economics Of Litigation And Arbitration: An Application To Franchise Contracts, Christopher R. Drahozal, Keith N. Hylton

Faculty Scholarship

If we define the deterrence benefits from contract enforcement as avoided harms net of avoidance costs, we should expect contracting parties to choose the dispute resolution forum that provides the greatest difference between deterrence benefits and dispute resolution costs for every type of dispute. We apply this general framework to franchise contracts and conduct an empirical analysis of the determinants of arbitration agreements among franchising parties. Although it is obvious that contracting parties have an incentive to choose arbitration in order to reduce dispute-resolution costs, there have been no studies of the importance of deterrence concerns. We examine the deterrence …

Against Preemption: How Federalism Can Improve The National Legislative Process, Roderick Hills

Law & Economics Working Papers Archive: 2003-2009

How easily should courts infer that federal statutes preempt state law? An ongoing debate exists on the question in Congress and among scholars and judges. One side calls for judges to protect federalism by adopting a rule of statutory construction that would bar preemption absent a clear statement of preemptive intent. Opponents argue against such a "clear statement" rule by arguing that state control over preemptable topics is often presumptively inefficient, because common-law juries lack expertise and because states are prone to imposing external costs on their neighbors. This article sidesteps these debates over preemption and instead argues that, quite …

Social Security Reform: An Expository Report, Nathan J. Voss

Honors Capstones

Capstone submitted as a graduation requirement for the BSU Honors Program.

Insuring Against Terrorism And Crime, Saul Levmore, Kyle D. Logue

Law & Economics Working Papers Archive: 2003-2009

The attacks of September 11th produced staggering losses of life and property. They also brought forth substantial private insurance payouts, as well as federal relief for the City of New York and for the families of individuals who perished on that day. The losses suffered in and after the attacks, and the structure of the relief effort, have raised questions about the availability of insurance against terrorism, the role of government in providing for, subsidizing, or ensuring the presence of such insurance, and the interaction between relief and the incentives for future precaution taking. In response to such losses, and …

The Unique Jurisprudence Of Letters Of Credit: Its Origin And Sources, Gao Xiang, Ross P. Buckley

San Diego International Law Journal

This Article seeks to illumine the legal nature of the letter of credit instrument, and catalogue the various sources of law and rules that can govern it; and, by doing so, render a service to those who must quickly come to grips with letter of credit law. The Article is in two parts. The first part examines the legal nature of the letter of credit by looking at its definition, operation, and history and by comparing it with negotiable instruments and contracts. The second part considers the rules, customs, and regulations governing letters of credit and introduces the two fundamental …

The Stateless Corporation Finds A Home: Alienage Jurisdiction And Dependent Overseas Territories - J.P. Morgan Chase Bank V. Traffic Stream (Bvi) Infrastructure Limited, Michael Cornell Dypski

San Diego International Law Journal

The purpose of this Article is to discuss the evolution of the alienage jurisdiction statute and the status of overseas dependent territories in light of the recent Supreme Court decision. Part I of this Article will provide a brief historical background of 28 U.S.C. § 1332 and its purpose. Part II will discuss the concepts of the state and statelessness, as well as the role of dependent territories in international affairs. Part III will discuss and analyze the various federal decisions seemingly at loggerheads with each other on the issue of federal jurisdiction over dependent territories. Finally, Part IV will …

Economic Inequality And The Role Of Law, Richard L. Kaplan

Michigan Law Review

In this ambitious book, famed commentator and analyst Kevin Phillips attempts nothing less than a political history of American economic life with a specific focus on the wealthy. Succeeding far more often than not, Phillips interweaves the development of American technology with the rise and fall of economic fortunes, crafting a compelling tale with significant implications for the formulation of public policy and the laws that implement such policy. Festooned with more than seventy charts and graphs, the book explains how wealth has been accumulated throughout the entire history of the United States. It is full of intriguing insights and …

The New Leviathan, Dennis Patterson

Michigan Law Review

Reputation in any field is an elusive phenomenon: part notoriety, part honor, part fame, part critical assessment. Even in legal scholarship it has an uneven, unpredictable quality. It is hard to imagine a book by a law professor that has had more immediate impact on world leaders than Philip Bobbitt's The Shield of Achilles. Much of the national-security strategy devised by the U.S. administration after the September 11 attacks expresses ideas Bobbitt conceived long before; and from a different point on the political spectrum is the Archbishop of Canterbury, whose televised nationwide address in January explicitly took the book as …

What (If Anything) Can Economics Say About Equity?, Daniel A. Farber

Michigan Law Review

Does economics have anything to teach us about the meaning of fairness? The leading practitioners of law and economics disagree. Judge Richard Posner argues that economics is largely irrelevant to distributive issues. Posner maintains that the most useful economic measure of social welfare is cost-benefit analysis (which he calls wealth maximization). But, he observes, this economic measure "ratifies and perfects an essentially arbitrary distribution of wealth." Given an ethically acceptable initial assignment of wealth, rules based on economic efficiency may have some claim to be considered fair. On the critical issue of distributional equity, however, Posner apparently believes that economics …

Consuming Government, Richard Schragger

Michigan Law Review

In his ambitious new book, William Fischel, a Professor of Economics at Dartmouth College, gives us a new political animal: "The Homevoter." The homevoter is simply a homeowner who votes (p. ix). According to Fischel, she is the key to understanding the political economy of American local government. By implication, she is the key to understanding state and national government as well. Homeowners warrant special attention because "residents who own their own homes have a stake in the outcome of local politics that make them especially attentive to the public policies of local government" (p. ix). That is because local …

Orchestrated Experimentalism In The Regulation Of Work, Orly Lobel

Michigan Law Review

Since the advent of the New Deal vision, work and the workplace have undergone dramatic changes. Policies and institutions that were designed to provide good working conditions and voice for workers are no longer fulfilling their promise. In Working in America: A Blueprint for the New Labor Market ("Blueprint"), four MIT economists take on the challenge of envisioning a new regulatory regime that will fit the realities of the new market. The result of several years of deliberation with various groups in business and labor, academia, and government, Blueprint provides a thoughtful yet unsettling vision of the future of work. …

Appellate Courts Inside And Out, Maxwell L. Stearns

Michigan Law Review

While the United States Supreme Court has been the object of seemingly endless scholarly commentary, the United States Courts of Appeals are just now coming into their own as a subject of independent academic inquiry. This is an important development when one considers that the vast bulk of relevant precedents governing most federal court litigation comes not from the Supreme Court, but rather from the United States Courts of Appeals. Because relatively few courts of appeals decisions are reviewed in the Supreme Court, with rare exception, the federal circuit courts provide the functional equivalent of that Court's proverbial "last word." …

Opening Trade In Financial Services – The Chile And Singapore Examples: Hearing Before The H. Subcomm. On Domestic And International Monetary Policy, Trade And Technology, 108th Cong., Apr. 1, 2003 (Statement Of Daniel K. Tarullo, Prof. Of Law, Geo. U. L. Center), Daniel K. Tarullo

Testimony Before Congress

No abstract provided.

The Uncertain Psychological Case For Paternalism, Jeffrey J. Rachlinski

Cornell Law Faculty Publications

The Economic Ambiguity (And Possible Irrelevance) Of Tax Transition Rules, Eric D. Chason

Faculty Publications

No abstract provided.

Competing For The People's Affection: Federalism's Forgotten Marketplace, Todd E. Pettys

Vanderbilt Law Review

In recent years, the United States Supreme Court frequently has invoked federalism principles when reviewing federal legislation but has failed to articulate an overarching vision of federal-state relations. The Court has relied instead on seemingly disparate premises, including a local-national distinction that some believe is disingenuous, notions of "commandeering" and political accountability that some believe are poorly rationalized, and a conception of state dignity that critics charge is ill suited for a nation in which the people are sovereign. The Court does occasionally recite the perceived benefits of federalism, but those benefits are framed at such a high level of …

How To Improve Regulatory Accounting : Costs, Benefits, And Impacts Of Federal Regulations: Testimony Before The H. Subcomm. On Energy Policy, Natural Resources, And Regulatory Affairs, Of The H. Comm. On Government Reform, Hearing On Regulatory Accounting, 108th Cong., Mar. 11, 2003 (Statement Of Lisa Heinzerling, Prof. Of Law, Geo. U. L. Center), Lisa Heinzerling

Testimony Before Congress

No abstract provided.

Encryption Regulation In The Wake Of September 11, 2001: Must We Protect National Security At The Expense Of The Economy?, Matthew Parker Voors

Federal Communications Law Journal

This Note argues that although privacy and economic concerns have ruled the encryption debate during the past decade, the move toward increased privacy on the Internet and relaxed encryption regulation, designed to promote electronic commerce, comes at the expense of national security and the protection of Americans' safety. The Article begins with historical information about encryption and an examination of how businesses use encryption to secure their communications and financial transactions on the Internet. This Section also observes that this technology is employed by terrorist organizations to accomplish the same goal: to send private communications. The Author next details the …

The Diaspora Of Ethnic Economies: Beyond The Pale?, Lan Cao

William & Mary Law Review

No abstract provided.

Technology And Learning By Factory Workers: The Stretch-Out At Lowell, 1842, James Bessen

Faculty Scholarship

In 1842 Lowell textile firms increased weaving productivity by assigning three looms per worker instead of two. This marked a turning point. Before, weavers at Lowell were temporary and mostly literate Yankee farm girls; afterwards, firms increasingly hired local residents, including illiterate and Irish workers. An important factor was on-the-job learning. Literate workers learned new technology faster, but local workers stayed longer. These changes were unprofitable before 1842, and the advantages of literacy declined over time. Firm policy and social institutions slowly changed to permit deeper human-capital investment and more productive implementation of technology

Should We All Be Welfare Economists?, Richard H. Fallon Jr.

Michigan Law Review

On what normative foundation should the edifice of law and public policy be built? What are proper grounds for claims of individual right, and how, generally, do those grounds relate to considerations of individual well-being and social welfare? In this Essay, I argue that individual well-being and a related concept of social welfare should be important considerations in the design of legal rules, but not the exclusive ones. When the notion of well-being receives substantive content, the most plausible and attractive definitions all allow a distinction between what will best promote a person's well-being and what that person might rationally …

Behavioral Economics And The Sec, Stephen Choi, Adam C. Pritchard

Law & Economics Working Papers Archive: 2003-2009

Investors face myriad investment alternatives and seemingly limitless information concerning those alternatives.Not surprisingly, many commentators contend that investors frequently fall short of the ideal investor posited by the rational actor model. Investors are plagued with a variety of behavioral biases (such as, among others, the hindsight bias, the availability bias, loss aversion, and overconfidence). Even securities market institutions and intermediaries may suffer from biases, led astray by groupthink and overconfidence. The question remains whether regulators should focus on such biases in formulating policy. An omnipotent regulatory decisionmaker would certainly improve on flawed investor decisionmaking. The alternative we face, however, is …

Pain-And-Suffering Damages In Tort Law: Revisiting The Theoretical Framework And The Empirical Evidence, Ronen Avraham

Law & Economics Working Papers Archive: 2003-2009

Should there be pain-and-suffering damages in tort law? Most legal economists who wrote on the subject that there should not be pain-and-suffering damages in tort law. A minority of scholars thought the decision of whether tort law should provide pain-and-suffering damages is an empirical, or an experimental, question that cannot be armchair-theorized. Yet, all scholars who have done empirical or experimental work to explore the desirability of pain-and-suffering damages reached the conclusion that it is undesirable. In this paper I argue that the majority view cannot serve as a policy-making aid. I side with the minority of scholars who argue …

How Long Must One Stay In The Usvi To Be Considered A "Resident" To Qualify For The 90% Residency Tax Credit?, Beckett G. Cantley

Florida State University Journal of Transnational Law & Policy

No abstract provided.

The New Economic Constitution In China: A Third Way For Competition Regime?, Youngjin Jung, Qian Hao

Northwestern Journal of International Law & Business

This article will discuss the basic features of the competition regime China is ready to set up, as envisioned in its draft of the anti-monopoly law. By comparing different antimonopoly systems worldwide and their relevance to China's idiosyncrasies in its antimonopoly law, this article intends to promote a better understanding of China's emerging antitrust regime by providing illustrative comments and legislative suggestions. Part II of this article will focus on the economic and legal contexts of the drafting of the antimonopoly law in order to illuminate the unique priorities of the Chinese lawmakers. Part III will highlight the distinctive traits …

Law And Macroeconomics Of The New Deal At 70 , Steven A. Ramirez

Maryland Law Review

No abstract provided.

The Law And Economics Of Critical Race Theory, Mitu Gulati, Devon W. Carbado

Faculty Scholarship

Legal academics often perceive law and economics (L&E) and critical race theory (CRT) as oppositional discourses. Using a recently published collection of essays on CRT as a starting point, we argue that the understanding of workplace discrimination can be furthered through a collaboration between L&E and CRT. L&E's strength is in its attention to incentives and norms, specifically its concern with explicating how norms incentivize behavior. Its limitation is that it treats race as exogenous and static. Thus, the literature fails to consider how institutional norms affect, and are affected by, race. To put the point another way, L&E does …

Pay It Forward: A Proactive Model To Resolving Construction Defects And Market Failure, 38 Val. U. L. Rev. 1 (2003), Debra Pogrund Stark, Andrew Cook

UIC Law Open Access Faculty Scholarship

No abstract provided.

Market Fundamentalism's New Fiasco: Globalization As Exhibit In The Case For A New Law And Economics, Steven A. Ramirez

Michigan Journal of International Law

Review of Globalization and Its Discontents by Joseph E. Stiglitz