Law and Economics Commons^™

Reaching Out For Green Policies: National Environmental Policies In The Wto Legal Order, Petros C. Mavroidis

Faculty Scholarship

The WTO does not squarely address the issue of jurisdictional ambit of national policies (affecting trade). And yet, absent some agreement as to what trading nations can and cannot do, the WTO loses much of its effectiveness. In the absence of explicit regulation of the issue in the WTO contract, one would reasonably expect WTO Members to behave in line with the postulates governing allocation of jurisdiction embedded in public international law. WTO practice evidences neither an explicit acceptance nor a refusal of these rules.

Market Efficiency After The Financial Crisis: It's Still A Matter Of Information Costs, Ronald J. Gilson, Reinier Kraakman

Faculty Scholarship

Contrary to the views of many commentators, the Efficient Capital Market Hypothesis ("ECMH"), as originally framed in financial economics, was not "disproven" by the Subprime Crisis of 2007-2008, nor has it been shown to be irrelevant to the project of regulatory reform of financial markets. To the contrary, the ECMH points to commonsense reforms in the wake of the Crisis, some of which have already been adopted. The Crisis created a lot of losers – from individual investors to pension funds and German Landesbanken – who purchased mortgage-backed securities that they did not, and perhaps could not, understand, and it …

Three Discount Windows, Kathryn Judge

Faculty Scholarship

It is widely assumed that the Federal Reserve is the lender of last resort in the United States and that the Fed's discount window is the primary mechanism through which it fulfills this role. Yet, when banks faced liquidity constraints during the 2007-2009 financial cfisis (the Cisis), the discount window played a relatively small role in providing banks much needed liquidity. This is not because banks forewent government-backed liquidity; rather, they sought it elsewhere. First, they increased their reliance on collateralized loans, known as advances, from the Federal Home Loan Bank System, a little-known government-sponsored enterprise that grew in size …

Everything Must Stay In Place - President Business, The Lego Movie, Tamara Belinfanti

Other Publications

No abstract provided.

A Unified Framework For Competition Policy And Innovation Policy, Keith N. Hylton

Faculty Scholarship

I describe a model of competition law enforcement that treats competition and innovation policy as the inseparable partners they ought to be. The enforcement authority determines an optimal punishment knowing that if it sets the penalty too high it will reduce firms’ incentives to invest in innovation, and if firms do not invest, new goods and new markets will not be created. The authority therefore moderates the penalty in order to maintain innovation incentives. The implications of this framework for competition policy and for innovation policy are quite different from what is commonly observed today. I discuss implications for competition …

Actavis, The Reverse Payment Fallacy, And The Continuing Need For Regulatory Solutions, Daniel A. Crane

Articles

The Actavis decision punted more than it decided. Although narrowing the range of possible outcomes by rejecting the legal rules at the extremes and opting for a rule of reason middle ground, the opinion failed to grapple with the most challenging issues of regulatory policy raised by pharmaceutical patent settlements. In particular, it failed to clearly delineate the social costs of permitting and disallowing patent settlements, avoided grappling with the crucial issues of patent validity and infringement, and erroneously focused on “reverse payments” as a distinctive antitrust problem when equally or more anticompetitive settlements can be crafted without reverse payments. …

The Burden Of Deciding For Yourself: The Disutility Caused By Out-Of-Pocket Healthcare Spending, Christopher Robertson, David Yokum

Faculty Scholarship

As part of a larger "consumer-directed healthcare movement," cost-sharing mechanisms, such as copays and deductibles, cause patients to pay out of pocket for a portion of the costs of the healthcare they consume. Cost sharing is intended to reduce costs by changing consumption behavior, and it has been shown to be an effective though incomplete solution to the problem of unsustainable cost growth. It is controversial nonetheless. This Essay distinguishes three different normative problems with cost sharing (including underinsurance, deterrence of high-value care, and a tax on sickness), which can all be fixed through more precision in the design of …

Toward A Regulatory Framework For Third-Party Funding Of Litigation, Keith N. Hylton

Faculty Scholarship

Because third-party funding and sales of legal rights are equivalent in terms of their economics, I examine arrangements in which third-party sales of legal rights are permitted today; those arrangements include waiver, subrogation, and settlement agreements. These existing arrangements provide valuable lessons for the appropriate regulatory approach to third-party financing of litigation.

The Margin Of Appreciation In International Investment Law, Julian Arato

Articles

Investment treaties tend to say nothing, or only very little, about the appropriate standard of review for arbitrating disputes between sovereign states and foreign investors. Most treaties do not address whether states should be afforded any deference in their own assessment of their treaty obligations. Neither do they specify the converse, that state action must be strictly reviewed. They are simply silent – and their silence has been interpreted in innumerable ways by different tribunals. This interpretive chaos has generated calls for a unified approach – one that would resolve the uncertain and fragmented status quo, while being sufficiently flexible …

Understanding Insurance Anti-Discrimination Laws, Ronen Avraham, Kyle D. Logue, Daniel Schwarcz

Articles

Insurance companies are in the business of discrimination. Insurers attempt to segregate insureds into separate risk pools based on the differences in their risk profiles, first, so that different premiums can be charged to the different groups based on their differing risks and, second, to incentivize risk reduction by insureds. This is why we let insurers discriminate. There are limits, however, to the types of discrimination that are permissible for insurers. But what exactly are those limits and how are they justified? To answer these questions, this Article (a) articulates the leading fairness and efficiency arguments for and against limiting …

Towards A Universal Framework For Insurance Anti-Discrimination Laws, Ronen Avraham, Kyle D. Logue, Daniel Schwarcz

Articles

Discrimination in insurance is principally regulated at the state level. Surprisingly, there is a great deal of variation across coverage lines and policyholder characteristics in how and the extent to which risk classification by insurers is limited. Some statutes expressly permit insurers to consider certain characteristics, while other characteristics are forbidden or limited in various ways. What explains this variation across coverage lines and policyholder characteristics? Drawing on a unique, hand-collected data-set consisting of the laws regulating insurer risk classification in fifty-one U.S. jurisdictions, this Article argues that much of the variation in state-level regulation of risk classification can in …

Concentrated Ownership And Corporate Control: Wallenberg Sphere And Samsung Group, Hwa-Jin Kim

Articles

Samsung Group’s success cannot be attributed to its corporate governance structure, at least thus far. The corporate governance of Samsung has been rather controversial. As the group faces the succession issue the corporate governance has become as crucial as their new products and services. Samsung has discovered a role model on the other side of the planet, Wallenberg Sphere in Sweden. Much effort has been made to learn about Wallenberg’s arrangements and key to its success. However, a fundamental difference between the institutions in Sweden and Korea has made the corporate structures of the two groups radically different. Wallenberg uses …

The Direct Costs From Npe Disputes, Michael J. Meurer, James Bessen

Faculty Scholarship

In the past, “non-practicing entities” (NPEs), popularly known as “patent trolls,” have helped small inventors profit from their inventions. Is this true today or, given the unprecedented levels of NPE litigation, do NPEs reduce innovation incentives? Using a survey of defendants and a database of litigation, this paper estimates the direct costs to defendants arising from NPE patent assertions. We estimate that firms accrued $29 billion of direct costs in 2011. Although large firms accrued over half of direct costs, most of the defendants were small or medium-sized firms. Moreover, an examination of publicly listed NPEs indicates that little of …

Information And Causation In Tort Law: Generalizing The Learned Hand Test For Causation Cases, Keith N. Hylton

Faculty Scholarship

This paper discusses the economics of causation in tort law, describing precise implications for precautionary incentives when courts are and are not perfectly informed. With precautionary incentives identified, we can ask whether the causation inquiry enhances welfare, and if so under what conditions. Perhaps the most important innovation applies to the Hand Formula. When causation is an issue, the probability of causal intervention should be part of the Hand test, and the generalized Hand test offers a method of distinguishing significant classes of causation cases. I close with implications for the moral significance of causation and for economic analysis of …

Confronting Chaos: The Fiscal Constitution Faces Federal Shutdowns And (Almost) Debt Defaults, Charles Tiefer

All Faculty Scholarship

Recent events raise the question of whether two near-failures in what scholars call the "Fiscal Constitution" may plunge the government into paralysis or chaos. In October 2013, a lapse in congressional appropriations shut the government down for two weeks. The shutdown furloughed hundreds of thousands of federal employees. It caused some agencies, such as the Internal Revenue Service ("IRS"), virtually to close their doors and to curtail their services.

Simultaneously, and potentially even more devastating, the House of Representatives (alternatively "House") firmly refused during an extremely tense countdown to raise the statutory debt ceiling of the government. When the government …

The Economics Of The Restatement And Of The Common Law, Keith N. Hylton

Faculty Scholarship

Perhaps the most optimistic view of the American Law Institute's Restatement project was provided at its inception by Benjamin Cardozo:

When, finally, it goes out under the name and with the sanction of the Institute, after all this testing and retesting, it will be something less than a code and something more than a treatise. It will be invested with unique authority, not to command, but to persuade. It will embody a composite thought and speak a composite voice. Universities and bench and bar will have had a part in its creation. I have great faith in the power of …

A Court For The One Percent: How The Supreme Court Contributes To Economic Inequality, Michele Gilman

Utah Law Review

This Article explores the United States Supreme Court’s role in furthering economic inequality. The Occupy Wall Street movement in 2011 not only highlighted growing income and wealth inequality in the United States, but also pointed the blame at governmental policies that favor business interests and the wealthy due to their outsized influence on politicians. Numerous economists and political scientists agree with this thesis. However, in focusing ire on the political branches and big business, these critiques have largely overlooked the role of the judiciary in fostering economic inequality. The Court’s doctrine touches each of the major causes of economic inequality, …

Public Utility And The Low-Carbon Future, William Boyd

Publications

Substantial reductions in global power sector emissions will be needed by midcentury to avoid significant disruption of the climate system. Achieving these reductions will require greatly increased levels of financing, technological innovation, and policy reform. In the United States, the scale and complexity of the overall challenge have raised important questions regarding prevailing regulatory and business models, with much scrutiny directed at the traditional practice of public utility regulation. Recognizing the many valid criticisms leveled against public utility regulation and the important questions raised about the viability of traditional utility business models, particularly in the face of substantial growth in …

Classcrits Mission Statement, Justin Deystone, Angela P. Harris, Martha Mccluskey, Athena Mutua, James Pope, Ann Tweedy

Publications

No abstract provided.

Penalty Default Licenses: A Case For Uncertainty, Kristelia A. García

Publications

Research on the statutory license for certain types of copyright-protected content has revealed an unlikely symbiosis between uncertainty and efficiency. Contrary to received wisdom, which tells us that in order to increase efficiency, we must increase stability, this Article suggests that uncertainty can actually be used to increase efficiency in the marketplace. In the music industry, the battle over terrestrial performance rights--that is, the right of a copyright holder to collect royalties for plays of a sound recording on terrestrial radio--has raged for decades. In June 2012, in a deal that circumvented the statutory license for sound recordings for the …