Law and Economics Commons^™

Managerial Entrenchment And Shareholder Wealth Revisited: Theory And Evidence From A Recessionary Market, Jay B. Kesten

Scholarly Publications

Does managerial entrenchment create or destroy shareholder value? This Article presents both theory and evidence that the answer to this question is not monolithic, but rather depends on factors that vary greatly with the macroeconomic climate, such as firm profitability, takeover frequency, and valuation of takeover premiums. The mainstream view, both of academics and market participants, is that entrenchment reduces accountability to shareholders and amplifies agency costs, thus decreasing shareholder wealth. Two influential studies (Bebchuk, Cohen & Ferrell (2009) and Gompers, Ishii & Metrick (2003)) present empirical evidence consistent with this conclusion, finding statistically significant negative correlations between entrenchment and …

Is Cap-And-Trade Fair To The Poor? Short-Sighted Households And The Timing Of Consumption Taxes, Manuel A. Utset, Brian Galle

Scholarly Publications

No abstract provided.

The State Of The American Child: Securing Our Children’S Future: Hearing Before The Subcomm. On Children & Families Of The S. Comm On Health, Educ., Labor & Pensions, 111th Cong., Nov. 18, 2010 (Statement Of Professor Peter B. Edelman, Geo. U. L. Center), Peter B. Edelman

Testimony Before Congress

You have asked me to reflect on the achievements and disappointments of recent decades with regard to child poverty in our country, on lessons learned, and on what we need to do going forward.

It is impossible to understand child poverty trends without placing them in a context of what has happened to the American economy and to the distribution of income and wealth. Except for the last half of the 1990s, the economic history of the past four decades has been one of near‐stagnation for people with jobs that pay below the median wage in the country ‐‐ the …

Does An Economic Crisis Merit A Prima Facie Finding Of "Exigent Circumstances" Or Other Emergency Relief? The Impact Of The Credit Counseling Provision Of Bapcpa Upon Distressed Homeowners In A Severe National Economic Downturn, 44 J. Marshall L. Rev. 129 (2010), Gloria J. Liddell, Pearson Liddell Jr., Michael J. Highfield

UIC Law Review

No abstract provided.

The Currency Of White Women's Hair In A Down Economy, Bridget J. Crawford

Elisabeth Haub School of Law Faculty Publications

This short essay is a reflection on the relationship between the economy and women’s hair. I suggest that examining women’s spending on hair care products during uncertain financial conditions provides insight into the gendered aspects of the economy. As the economy has declined, sales of home hair-care products targeted toward white women have increased. Major news outlets report on salon customers trying to stretch out the time between their regular $250 hair salon treatments. Certain women turn to home hair dyes to maintain conforming appearances. In popular culture, to have white skin and gray hair is to be old (unemployable …

National Security And The Shadows Of Judicial "Common Sense", Alexander A. Reinert

Articles

The article critiques Peter Margulies's analysis of cognitive biases in judicial decision-making within national-security cases, particularly his proposed evidentiary presumption to address these biases. While acknowledging Margulies's contribution to the discussion, the article argues that his characterization of cases and proposed solution may oversimplify the complexities of judicial deference and interventionism. It suggests that the central issue in these cases is not excessive deference or interventionism but rather the government's resistance to transparency and the disclosure of sensitive information. The article advocates for a more nuanced approach, emphasizing managed discovery processes to balance national-security concerns with constitutional rights.

In Search Of "Laissez-Faire Constitutionalism", Matthew Lindsay

All Faculty Scholarship

This article is a response to Professor Jed Shugerman’s Economic Crisis and the Rise of Judicial Elections and Judicial Review, HARVARD LAW REVIEW (2010). Professor Shugerman argues that the widespread adoption of judicial elections in the 1850’s and the embrace by the first generation of elected judges of countermajoritarian rationales for judicial review helped to effect a transition from the active, industry-building state of the early nineteenth century to the "laissez-faire constitutionalism" of the Lochner era. This response argues that Professor Shugerman overstates the causal relationship between the elected judiciary’s robust constitutional defense of "vested rights" and the iconic, if …

The Politics And Psychology Of Gasoline Taxes: An Empirical Study, Shi-Ling Hsu

Scholarly Publications

Economists are beginning to form a consensus that a carbon tax is the most effective and cost-effective way to reduce global greenhouse gas emissions. The insight of economists and other policy analysts is that, in the greenhouse gas context, the design of cap-and-trade programs creates so many opportunities for rent-seeking that they may not be very cost-effective, and may not reduce greenhouse gas emissions at all. Carbon tax proposals are appealing because they are so simple and sensible that rent-seeking would have to be very audacious to succeed.

Carbon tax proposals, however, have divided economists from almost everybody else. In …

Cost Containment And The Patient Protection And Affordable Care Act, David Orentlicher

Scholarly Works

In this article, Professor Orentlicher discusses the need for containing costs, as well as increasing access, for health case in the United States. He argues that for decades, the U.S. health care system has grappled with two key problems - inadequate access to coverage and increasingly unaffordable health care costs. During the debate that led to the enactment of the Patient Protection and Affordable Care Act, public officials recognized the need to address the problems of both access and cost, but in the end, the Act does far more about increasing access than it does about cutting costs. Professor Orentlicher …

Baseball's Moral Hazard: Law, Economics, And The Designated Hitter Rule, Dustin E. Buehler, Steve P. Calandrillo

Articles

No subject prompts greater disagreement among baseball fans than the designated hitter rule, which allows teams to designate a player to hit for the pitcher. The rule increases the number of hit batsmen, and some have suggested this effect is a result of "moral hazard," which recognizes that persons insured against risk are more likely to engage in dangerous behavior. Because American League pitchers do not bat, they allegedly are not deterred by the full cost of making risky, inside pitches—namely, retribution during their next at bat.

Using a law-and-economics approach, this Article concludes that the designated hitter rule creates …

Penalizing Punitive Damages: Why The Supreme Court Needs A Lesson In Law And Economics, Steve P. Calandrillo

Articles

The recent landmark Supreme Court decision addressing punitive damages in the infamous Exxon Valdez oil spill case has brought the issue of punitive awards back into the legal limelight. Modern Supreme Court jurisprudence, most notably BMW of North America, Inc. [517 U.S. 559 (1996)], State Farm [538 U.S. 408 (2003)], Philip Morris [549 U.S. 346 (2007)], and now Exxon Shipping Co. [128 S.Ct. 2605 (2008)] in 2008, has concluded that such judgments are justified to punish morally reprehensible behavior and to send a message to evildoers. The Court, however, has increasingly emphasized that the U.S. Constitution's Due Process Clause presumptively …

Coordinating Sanctions In Torts, Kyle D. Logue

Articles

This Article begins with the standard Law and Economics account of tort law as a regulatory tool or system of deterrence, that is, as a means of giving regulated parties the optimal ex ante incentives to minimize the costs of accidents. Building on this fairly standard (albeit not universally accepted) picture of tort law, the Article asks the question how tort law should adjust, if at all, to coordinate with already existing non-tort systems of regulation. Thus, if a particular activity is already subject to extensive agency-based regulation (whether in the form of command-and-control requirements or in the form of …

Bail-Ins Versus Bail-Outs: Using Contingent Capital To Mitigate Systemic Risk, John C. Coffee Jr.

Faculty Scholarship

Because the quickest, simplest way for a financial institution to increase its profitability is to increase its leverage, an enduring tension will exist between regulators and systemically significant financial institutions over the issues of risk and leverage. Many have suggested that the 2008 financial crisis was caused because financial institutions were induced to increase leverage because of flawed systems of executive compensation. Still, there is growing evidence that shareholders acquiesced in these compensation formulas to cause managers to accept higher risk and leverage. Shareholder pressure then is a factor that could induce the failure of a systemically significant financial institution. …

The Attack On Nonprofit Status: A Charitable Assessment, James R. Hines Jr., Jill R. Horwitz, Austin Nichols

Articles

American nonprofit organizations receive favorable tax treatment, including tax exemptions and tax-deductibility of contributions, in return for their devotion to charitable purposes and restrictions not to distribute profits. Recent efforts to extend some or all of these tax benefits to for-profit companies making social investments, including the creation of the new hybrid nonprofit/for-profit company form known as the Low-Profit Limited Liability Company, threaten to undermine the vitality of the nonprofit sector and the integrity of the tax system. Reform advocates maintain that the ability to compensate executives based on performance and to distribute profits when attractive investment opportunities are scarce …

Hoffman V. Red Owl Stores And The Limits Of The Legal Method, Robert E. Scott

Faculty Scholarship

According to the overwhelming majority view, promissory estoppel is not an appropriate ground for legally enforcing statements made during preliminary negotiations unless there is a “clear and unambiguous promise” on which the counterparty reasonably and foreseeably relies. Bill Whitford and Stewart Macaulay were among the first scholars to note the apparent absence of such a promise in the case of Hoffman v. Red Owl Stores. Several years ago, after studying the trial record, I concluded that the best explanation for the breakdown in negotiations was the fundamental misunderstanding between the parties as to the amount and nature of Hoffmann’s …

Energy Policy For An Economic Downturn: A Proposed Petroleum Fuel Price Stabilization Plan, Thomas W. Merrill, David M. Schizer

Faculty Scholarship

A compelling case can be made for reducing America's consumption of petroleum fuels. Nearly all analysts think that the way to slash consumption of petroleum fuels is through an end-user tax. There is, however, widespread public opposition to higher gasoline taxes. Furthermore, in a recession the appropriate fiscal policy is to cut taxes, not to raise them. This paper proposes a method of stabilizing petroleum fuel prices at a sufficiently high level, without reducing aggregate consumer purchasing power. We introduce a revenue-neutral petroleum fuel price stabilization plan, called the "PFPS" plan for short Under this plan, a government surcharge on …

Governing Gambling In The United States, Maria E. Garcia

CMC Senior Theses

The role risk taking has played in American history has helped shape current legislation concerning gambling. This thesis attempts to explain the discrepancies in legislation regarding distinct forms of gambling. While casinos are heavily regulated by state and federal laws, most statutes dealing with lotteries strive to regulate the activities of other parties instead of those of the lottery institutions. Incidentally, lotteries are the only form of gambling completely managed by the government. It can be inferred that the United States government is more concerned with people exploiting gambling than with the actual practice of wagering.

In an effort to …

The 8% Solution - Or How Good Are The Calculation Economics By The Federal Circuit In Lucent V. Microsoft?, 9 J. Marshall Rev. Intell. Prop. L. 797 (2010), W. Lesser

UIC Review of Intellectual Property Law

Lucent v. Microsoft brought to the fore again the complexity of infringement damage estimates. Differences in approaches were laid open in this case with the trial court jury settling $358 million in damages against Microsoft and the appeals court striking down the value as lacking substantial evidence. Damages were established on the “reasonable royalty” basis for a product which was neither licensed nor sold. This article contends that the appeals court took too narrow a view of economics in its analysis of the software sector. Specifically, the court seems to have applied a “perfect competition” model to a sector which …

From Reconstruction To Obama: Understanding Black Invisibility, Racism In Appalachia, And The Legal Community's Responsibility To Promote A Dialogue On Race At The Wvu College Of Law, Brandon Stump

Law Faculty Articles and Essays

This Note focuses on legal education in the United States and West Virginia in particular. Discussions on race, racism, and American law should take place in every legal classroom where race is relevant to the subject being discussed as a way to bridge gaps between communities. This is especially true for the West Virginia University College of Law ("College of Law"), which sits in the third whitest state in the country. The College of Law is the only law school in the state, and a majority of students at the College of Law are white and West Virginian. Thus, at …

Antitrust Censorship Of Economic Protest, Hillary Greene

Faculty Articles and Papers

Antitrust law accepts the competitive marketplace, its operation, and its outcomes as an ideal. Society itself need not and does not. Although antitrust is not in the business of evaluating, for example, the “fairness” of prices, society can, and frequently does, properly concern itself with these issues. When dissatisfaction results, it may manifest itself in an expressive boycott: a form of social campaign wherein purchasers express their dissatisfaction by collectively refusing to buy. Antitrust should neither participate in nor censor such normative discourse. In this Article, I explain how antitrust law impedes this speech, argue why it should not, and …