Social and Behavioral Sciences Commons^™

The Firm As Cartel Manager, Herbert J. Hovenkamp, Christopher R. Leslie

All Faculty Scholarship

Antitrust law is the primary legal obstacle to price fixing, which is condemned by Section 1 of the Sherman Act. Firms that engage in price fixing may try to reduce their probability of antitrust liability in a number of ways. First, members of a price-fixing conspiracy go to great lengths to conceal their illegal activities from antitrust enforcers. Second, because Section 1 condemns only concerted action, firms may structure their relationship to appear to be the action of a single entity that is beyond the reach of Section One.

In its American Needle decision the Supreme Court held that the …

The Political Economy Of Fraud On The Market, William W. Bratton, Michael L. Wachter

All Faculty Scholarship

No abstract provided.

Promoting The Buildout Of New Networks Vs. Compelling Access To The Monopoly Loop: A Clash Of Regulatory Paradigms, Christopher S. Yoo

All Faculty Scholarship

No abstract provided.

Antitrust And Innovation: Where We Are And Where We Should Be Going, Herbert J. Hovenkamp

All Faculty Scholarship

For large parts of their history intellectual property law and antitrust law have worked so as to undermine innovation competition by protecting too much. Antitrust policy often reflected exaggerated fears of competitive harm, and responded by developing overly protective rules that shielded inefficient businesses from competition at the expense of consumers. By the same token, the IP laws have often undermined rather than promoted innovation by granting IP holders rights far beyond what is necessary to create appropriate incentives to innovate.

Perhaps the biggest intellectual change in recent decades is that we have come to see patents less as a …

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 …

Breaching The Mortgage Contract: The Behavioral Economics Of Strategic Default, Tess Wilkinson-Ryan

All Faculty Scholarship

Underwater homeowners face a quandary: Should they make their monthly payments as promised or walk away and save money? Traditional economic analysis predicts that homeowners will strategically default (voluntarily enter foreclosure) when it is cheaper to do so than to keep paying down the mortgage debt. But this prediction ignores the moral calculus of default, which is arguably much less straightforward. On the one hand, most people have moral qualms about breaching their contracts, even when the financial incentives are clear. On the other hand, the nature of the lender-borrower relationship is changing and mortgage lenders are increasingly perceived as …

The Insignificance Of Proxy Access, Marcel Kahan, Edward B. Rock

All Faculty Scholarship

No abstract provided.

At The Conjunction Of Love And Money: Comment On Julie A. Nelson, Does Profit-Seeking Rule Out Love? Evidence (Or Not) From Economics And Law, William W. Bratton

All Faculty Scholarship

No abstract provided.

Reconsidering International Tax Neutrality, Michael S. Knoll

All Faculty Scholarship

For decades, U.S. international tax policy has shifted back and forth between territorial-source-exemption taxation and worldwide-residence-credit taxation. The former is generally associated with capital import neutrality (CIN) and the latter with capital export neutrality (CEN). One reason why national tax policy has shifted back and forth between those benchmarks is because it is widely accepted that a tax system cannot simultaneously satisfy both CEN and CIN unless tax rates on capital are harmonized across jurisdictions. In this essay, I argue that the international tax literature contains two different and conflicting definitions for CIN. Under one definition, which goes back at …

Are Those Who Ignore History Doomed To Repeat It?, Peter Decherney, Nathan Ensmenger, Christopher S. Yoo

All Faculty Scholarship

In The Master Switch, Tim Wu argues that four leading communications industries have historically followed a single pattern that he calls “the Cycle.” Because Wu’s argument is almost entirely historical, the cogency of its claims and the force of its policy recommendations depends entirely on the accuracy and completeness of its treatment of the historical record. Specifically, he believes that industries begin as open, only to be transformed into closed systems by a great corporate mogul until some new form of ingenuity restarts the Cycle anew. Interestingly, even taken at face value, many of the episodes described in the …

Reconceiving Corporate Personhood, Elizabeth Pollman

All Faculty Scholarship

Why is a corporation a “person” for purposes of the Constitution? This old question has become new again with public outrage over Citizens United, the recent campaign finance case which expanded corporate constitutional speech rights. This Article traces the historical and jurisprudential developments of corporate personhood and concludes that the doctrine’s origins had the limited purview of protecting individuals’ property and contract interests. Over time, the Supreme Court expanded the doctrine without a coherent explanation or consistent approach. The Court has relied on the older cases that were decided in different contexts and on various flawed conceptions of the corporation. …

Notice And Patent Remedies, Herbert J. Hovenkamp

All Faculty Scholarship

In private enforcement systems such as the one for patents, remedies perform the “public” function of determining the optimal amount of protection and deterrence. If every patent were properly granted and had just the right scope to incentivize innovation, then strict enforcement and harsh penalties for infringement would be a good idea. But in a world where too many patents are granted, their boundaries are often ambiguous and scope excessive, things are not so simple. The expected likelihood and magnitude of the penalty determines the number of infringement suits and the litigation resources that will be poured into them. As …

Coase, Institutionalism, And The Origins Of Law And Economics, Herbert J. Hovenkamp

All Faculty Scholarship

Ronald Coase merged two traditions in economics, marginalism and institutionalism. Neoclassical economics in the 1930s was characterized by an abstract conception of marginalism and frictionless resource movement. Marginal analysis did not seek to uncover the source of individual human preference or value, but accepted preference as given. It treated the business firm in the same way, focusing on how firms make market choices, but saying little about their internal workings.

“Institutionalism” historically refers to a group of economists who wrote mainly in the 1920s and 1930s. Their place in economic theory is outside the mainstream, but they have found new …

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 …

Markets And Morality, Jagdish N. Bhagwati

Faculty Scholarship

The paper addresses two issues. First, economics has evolved both as a positive science and, from moral philosophy, also as a normative discipline. Advancing the public good requires that public policy walk on both these legs. Second, the criticism has been forcefully made that markets undermine morality. This contention is refuted in several ways.

Introduction To Creation Without Restraint: Promoting Liberty And Rivalry In Innovation, Christina Bohannan, Herbert J. Hovenkamp

All Faculty Scholarship

This document contains the table of contents, introduction, and a brief description of Christina Bohannan & Herbert Hovenkamp, Creation without Restraint: Promoting Liberty and Rivalry in Innovation (Oxford 2011).

Promoting rivalry in innovation requires a fusion of legal policies drawn from patent, copyright, and antitrust law, as well as economics and other disciplines. Creation Without Restraint looks first at the relationship between markets and innovation, noting that innovation occurs most in moderately competitive markets and that small actors are more likely to be truly creative innovators. Then we examine the problem of connected and complementary relationships, a dominant feature of …

Foreword: Advances In The Behavioral Analysis Of Law: Markets, Institutions, And Contracts, Avishalom Tor

Journal Articles

Avishalom Tor, Special Editor

The collection of articles in this Special Issue is based on an international conference on Advances in the Behavioral Analysis of Law: Markets, Institutions, and Contracts that took place on December 8, 2009 at the University of Haifa Faculty of Law in Israel. The conference addressed cutting-edge legal issues at the intersection of law, economics, and psychology from a diverse set of viewpoints, bringing together scholars engaged in both theoretical and experimental behavioral analyses of law.

The Wider Context: The Future Of Capital Markets Regulation In Developed Markets, Cally Jordan

Faculty Papers & Publications

At a time of such great turbulence, looking to the future directions of capital markets and their regulation in developed economies is a particularly risky business. We are in the midst of a great sea change. Nevertheless, there are several current, and readily observable, phenomena which are likely to shape capital markets regulation in the near future. First of all, the blurring of the distinctions between developed and developing markets themselves, as well as that between domestic and international markets, has put into question the adequacy of existing regulatory frameworks. Also, the transatlantic dialogue, London – New York, has given …

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 …

Initiatives On Ip Enforcement Beyond Trips: The Anti-Counterfeiting Trade Agreement And The International Medical Products Anti-Counterfeiting Task Force, Christoph Antons, Gabriel Garcia

Dr Gabriel Garcia

No abstract provided.

Technology & Torts: A Theory Of Memory Costs, Nondurable Precautions And Interference Effects, Ben Depoorter

Ben Depoorter

This Article examines the influence of nondurable precaution technologies on the expansion of tort awards. We provide four contributions to the literature. First, we present a general, formal model on durable and non-durable precaution technology that focuses on memory costs. Second, because liability exposure creates interference, we argue that tort law perpetuates the expansion of awards. Third, because plaintiffs do not consider the social costs of interference effects, private litigation induces socially excessive suits. Fourth, while new harm-reducing technologies likely increase accident rates, such technologies also raise the ratio of trial costs to harm, leaving undetermined the overall effect of …

Judicial Expenditures And Litigation Access: Evidence From Auto Injuries, Paul Heaton, Eric Helland

Paul Heaton

Despite claims of a judicial funding crisis, there exists little direct evidence linking judicial budgets to court utilization. Using data on thousands of auto injuries covering a 15-year period, we measure the relationship between state-level court expenditures and the propensity of injured parties to pursue litigation. Controlling for state and plaintiff characteristics and accounting for the potential endogeneity of expenditures, we show that expenditures increase litigation access, with our preferred estimates indicating that a 10% budget increase increases litigation rates by 3%. Consistent with litigation models in which high litigation costs undermine the threat posture of plaintiffs, increases in court …

Corrupção E Judiciário: A (In)Eficácia Do Sistema Judicial No Combate À Corrupção, Ivo T. Gico Jr., Carlos H. R. De Alencar

Ivo Teixeira Gico Jr.

HÁ UMA PERCEPÇÃO GENERALIZADA NO BRASIL DE QUE FUNCIONÁRIOS PÚBLICOS CORRUPTOS NÃO SÃO PUNIDOS. NÃO OBSTANTE, ATÉ O MOMENTO, NÃO HÁ EVIDÊNCIAS EMPÍRICAS QUE APÓIEM ESSA AFIRMAÇÃO E MUITOS ARGUMENTAM QUE SE TRATA DE UMA PERCEPÇÃO EQUIVOCADA DECORRENTE DO AUMENTO DE MEDIDAS ANTICORRUPÇÃO. UMA DAS PRINCIPAIS RAZÕES PARA ESSA NOTÁVEL AUSÊNCIA É A GRANDE DIFICULDADE DE SE IDENTIFICAR CASOS COMPROVADOS DE CORRUPÇÃO PARA, ENTÃO, SE AVERIGUAR SE ELES FORAM OU NÃO PUNIDOS PELO SISTEMA JUDICIAL. ESTE ARTIGO USA O SISTEMA BRASILEIRO DE RESPONSABILIDADE TRÍPLICE COMO UM EXPERIMENTO NATURAL PARA MEDIR O DESEMPENHO DO SISTEMA JUDICIAL CONTRA CORRUPÇÃO. NOSSOS RESULTADOS MOSTRAM …

On Equality: The Anti-Interference Principle, Donald J. Kochan

Donald J. Kochan

This Essay introduces the “Anti-Interference Principle” – a new term on the meaning of equality, or at least one not yet so-named in the equality lexicon – as a necessary foundation for achieving the goal of true equality. Equality has a long-standing place in the discussion of politics and jurisprudence and remains a struggle of definition today. Rather than rehash the mass of scholarship, this Essay seeks to summarize the general equality concept, and propose that the legal discourse on equality center on a requirement that governmental power must protect and respect equal treatment and opportunity, unconstrained, not equal outcomes. …

Duress, Péter Cserne

Péter Cserne

This chapter is to appear in Contact Law and Economics, part of the Elgar Encyclopedia of Law and Economics, 2nd ed. Its purpose is to provide an overview of the economic analyses of contractual duress. The focus is on the distinctive features of the economic perspective on the duress doctrine, as developed in the theoretical literature of law and economics. Along with the results of economic analysis, the legal background and some non-economic theories of duress are also briefly presented.