Law and Economics Commons^™

Economic Inequality And College Admissions Policies, David Orentlicher

Scholarly Works

As economic inequality in the United States has reached unprecedented heights, reformers have focused considerable attention on changes in the law that would provide for greater equality in wealth among Americans. No doubt, much benefit would result from more equitable tax policies, fairer workplace regulation, and more generous spending policies.

But there may be even more to gain by revising college admissions policies. Admissions policies at the Ivy League and other elite American colleges do much to exacerbate the problem of economic inequality. Accordingly, reforming those policies may represent the most effective strategy for restoring a reasonable degree of economic …

Do Credit-Based Insurance Scores Proxy For Income In Predicting Auto Claim Risk?, Darcy Steeg Morris, Daniel Schwarcz, Joshua C. Teitelbaum

Georgetown Law Faculty Publications and Other Works

Auto insurers often use credit-based insurance scores in their underwriting and rating processes. The practice is controversial—many consumer groups oppose it, and most states regulate it, in part out of concern that insurance scores proxy for policyholder income in predicting claim risk. We offer new evidence on this issue in the context of auto insurance. Prior studies on the subject suffer from the limitation that they rely solely on aggregate measures of income, such as the median income in a policyholder's census tract or zip code. We analyze a panel of households that purchased auto and home policies from a …

Inside Safe Assets, Anna Gelpern, Erik F. Gerding

Publications

“Safe assets” is a catch-all term to describe financial contracts that market participants treat as if they were risk-free. These may include government debt, bank deposits, and asset-backed securities, among others. The International Monetary Fund estimated potential safe assets at more than $114 trillion worldwide in 2011, more than seven times the U.S. economic output that year.

To treat any contract as if it were risk-free seems delusional after apparently super-safe public and private debt markets collapsed overnight. Nonetheless, safe asset supply and demand have been invoked to explain shadow banking, financial crises, and prolonged economic stagnation. The economic literature …

The Right To Regulate (Cooperatively), Alexia Brunet Marks

Publications

The growing number of new technologies in food production— such as nanotechnology, genetic modification, animal cloning, and irradiation—are garnering different regulatory responses around the world. Based on their threshold for tolerating risk, countries are asserting their national right to regulate at home using labeling, quarantine, and outright bans on foods. But domestic regulation has its limits in a free trade environment. Countries that are not mindful of treaty obligations could face legal liability, as seen in the recent litigation between Uruguay and Philip Morris International. In short, traditional models of international regulatory cooperation (IRC) are failing to provide countries with …

Fossil Fuel Abolition: Legal And Social Issues, Karl S. Coplan

Elisabeth Haub School of Law Faculty Publications

This Article will examine the practical, ethical, legal, and socio-political implications of fossil fuel abolition. First, the Article will consider the practical, ethical, and legal arguments in favor of fossil fuel abolition. Then, the Article will examine possible legal means and authorities to implement abolition in the United States, as well as potential legal objections to fossil fuel abolition. Finally, the Article will consider legal abolition’s capacity to effect the far-reaching changes in our socioeconomic system that a ban on fossil fuels will entail. The Article also will compare the climate reform movement to other social law reform movements in …

Competition Law For A Post-Scarcity World, Salil K. Mehra

Texas A&M Law Review

Writers, economists and IP scholars have hailed signs of an incipient shift to a post-scarcity world. Driving this change are rapid decreases not only in marginal cost, but also in the fixed or first-unit costs of production. Whether these changes become economy-wide, or remain confined to a subset of industries, they have dramatic implications for competition law and policy. This Article is the first to address these implications. In particular, because of the incentive for incumbent firms to engage in what may be termed “anti-disruption” – as examples such as the Apple/e-books antitrust case and the regulatory responses to Uber …

The Dialectics Of Bank Capital: Regulation And Regulatory Capital Arbitrage, Erik F. Gerding

Publications

This article outlines the reasons that banks and other financial institutions engage in regulatory capital arbitrage and the techniques they use to do so. Regulatory capital arbitrage describes transactions and structures that firms use to lower the effective regulatory “tax rate” of regulatory capital requirements. To the extent that these regulations force financial institutions to internalize the externalities created by their potential insolvency (including systemic risk externalities), the incentives to engage in regulatory capital arbitrage will persist. Financial institutions employ a range of complex transactions and structures, including securitization, to engage in regulatory capital arbitrage.

The article briefly sketches how …

The Political Economy Of "Constitutional Political Economy", Jeremy K. Kessler

Faculty Scholarship

Since the early 1990s, constitutional history has experienced a renaissance. This revival had many causes, but three stand out: the Rehnquist Court's attack on formerly sacrosanct features of the "New Deal agenda"; Reagan-Era reassessments of American political development by political scientists, historians, and historical sociologists; and the frustration of constitutional scholars with the inability of legal process theory or political philosophy to produce "authoritative constitutional principles." Spurred by legal crisis and this mix of disciplinary innovation and stagnation, law professors began to tell new stories about our constitutional heritage. They focused on the sources and significance of the New Deal's …

Inclusion, Exclusion, And The "New" Economic Inequality, Olatunde C.A. Johnson

Faculty Scholarship

Is racial inequality an unwelcome intruder to the new discourse on economic inequality? The present discourse on economic inequality emphasizes decades-long trends that have increased economic inequality, whether as a result of reoccurring features in the structure of capitalist economies or more recent changes in institutional, structural, and economic conditions. Researchers direct us to the rising fortunes of the top earners and asset holders relative to the rest, the declining fortunes of the middle class harmed by stagnating wages, and the declining share of industries (like manufacturing) in the economy. This new economic inequality discourse has preoccupied economists, garnered its …

Capitalism And Risk: Concepts, Consequences, And Ideologies, Edward A. Purcell

Articles & Chapters

Politically charged claims about both "capitalism" and "risk" became increasingly insistent in the late twentieth century. The end of the post-World War II boom in the 1970s and the subsequent breakup of the Soviet Union inspired fervent new commitments to capitalist ideas and institutions. At the same time structural changes in the American economy and expanded industrial development across the globe generated sharpening anxieties about the risks that those changes entailed. One result was an outpouring of roseate claims about capitalism and its ability to control those risks, including the use of new techniques of "risk management" to tame financial …

Law And Economics: Contemporary Approaches, Martha T. Mccluskey, Frank A. Pasquale Iii, Jennifer Taub

Journal Articles

A relatively narrow version of Law and Economics has dominated public policy for several decades. This school of thought has mainly focused on neoclassical microeconomics. It fails to recognize the pluralism of contemporary economics in general, and the relevance of macroeconomics in particular. So-called “market forces” are thoroughly intertwined with law and cannot be understood without some reference to history, sociology, psychology, and other social sciences. It is time for legal scholars to develop a law and economics curriculum that catches up with the advance of economics as a discipline.

The urgent challenges of the 21st Century also call for …

Intermediary Institutions And The Sharing Economy, John Infranca

Suffolk University Law School Faculty Works

In Regulating Sharing: The Sharing Economy as an Alternative Capitalist System, Professor Rashmi Dyal-Chand challenges the assumption – implicit in the fast-growing legal literature on the “sharing economy” – that companies in this sector operate in the manner of traditional firms. Framing the sharing economy as a “nascent form of a coordinated market economy”, Dyal-Chand calls for regulation rooted in a deeper understanding of the institutions – both the technological platforms most commonly associated with the sharing economy (Uber, Airbnb, TaskRabbit, and their ilk) and a burgeoning collection of more organic and democratic organizations — that shape this economy.

This …

The Common Law Of Contract And The Default Rule Project, Alan Schwartz, Robert E. Scott

Faculty Scholarship

The common law developed over centuries a small set of default rules that courts have used to fill gaps in otherwise incomplete contracts between commercial parties. These rules can be applied almost independently of context: the market damages rule, for example, requires a court only to know the difference between market and contract prices. When parties in various sectors of the economy write sales contracts but leave terms blank, courts fill in the blanks with their own rules. As a consequence, a judicial rule that many parties accept must be "transcontextual": parties in varied commercial contexts accept the courts' rule …

Prosecuting The Cia: Does The Computer Fraud And Abuse Act Allow For Liability?, Sam Taterka

Cardozo Arts & Entertainment Law Journal

No abstract provided.

The Biblical Fool And The Brander: The Law And Economics Of Propertization In American Trademark Law, William P. Kratzke

Cardozo Arts & Entertainment Law Journal

Isaiah 35:8, which tells of 'fools" upon a highway who shall not err, became authority for the position that the Federal Trade Commission (FTC) should protect fools from deception. This Article examines the biblical passage in context and concludes that it does not support protection of unthinking, credulous people. Ensuing FTC orders based on witnesses' speculation of how fools would construe particular claims actually harmed fools. The FTC retreated Unfortunately, the objective of protecting fools from deception has taken over § 43(a) Lanham Act jurisprudence-but now sellers speculate in competitor lawsuits how fools will construe competitors' claims and undertake to …

Facilitating Competition By Remedial Regulation, Kristelia A. García

Publications

In music licensing, powerful music publishers have begun—for the first time ever— to withdraw their digital copyrights from the collectives that license those rights, in order to negotiate considerably higher rates in private deals. At the beginning of the year, two of these publishers commanded a private royalty rate nearly twice that of the going collective rate. This result could be seen as a coup for the free market: Constrained by consent decrees and conflicting interests, collectives are simply not able to establish and enforce a true market rate in the new, digital age. This could also be seen as …

Securitization And Post-Crisis Financial Regulation, Steven L. Schwarcz

Faculty Scholarship

There are few types of securities as internationally traded as those issued in securitization (also spelled securitisation) transactions. The post-financial crisis regulatory responses to securitization in the United States and Europe are, at least in part, political and ad hoc. To achieve a more systematic regulatory framework, this article examines how existing regulation should be supplemented by identifying the market failures that apply distinctively to securitization and analyzing how those market failures could be corrected. Among other things, the article argues that Europe’s regulatory framework for simple, transparent, and standardised (“STS”) securitizations goes a long way towards addressing complexity as …

The High Cost Of Transferring The Dream, Kim Brooks

Articles, Book Chapters, & Popular Press

This paper is part of a larger project where I use the facts in tax decisions to reveal something about who we are. It looks through a small window into the lives of the people who find themselves caught between our collective and their individual expenditure aspirations. More specifically, it explores the circumstances in which individuals find that their outstanding tax debts pose a threat to their ability to maintain ownership of their home.

In this paper I use the facts of tax cases for two ends. First, I am interested in disrupting legal knowledge hierarchies. We choose cases to …

Law And Project Finance, Krishnamurthy V. Subramanian, Frederick Tung

Faculty Scholarship

We investigate Project Finance as a private response to inefficiencies created by weak legal protection of outside investors. We offer a new illustration that law matters by demonstrating that for large investment projects, Project Finance provides a contractual and organizational substitute for investor protection laws. Project Finance accomplishes this by making cash flows verifiable through two mechanisms: (i) contractual arrangements made possible by structuring the project within a single, discrete entity legally separate from the sponsor; and (ii) private enforcement of these contracts through a network of project accounts that ensures lender control of project cash flows. Comparing bank loans …

Can Parallel Lines Ever Meet? The Strange Case Of The International Standards On Sovereign Debt And Business And Human Rights, Daniel D. Bradlow

Scholarly Articles in Law Reviews & Journals

This special issue is a cooperation of the Yale Journal of International Law and the United Nations Conference on Trade and Development (UNCTAD). It emerged from UNCTAD’s work on sovereign debt workouts, specifically from its Working Group on a Sovereign Debt Workout Mechanism (2013 to 2015). The working group developed a Roadmap and Guide for Sovereign Debt Workouts, published in 2015. It proposes an incremental approach to sovereign debt workouts that relies on the continuous, progressive development of sovereign debt restructuring practice. This work has inspired the adoption of Basic Principles for Sovereign Debt Restructuring by the United Nations General …