Law and Economics Commons^™

Who Gets A Seat At The Table? Stakeholder Participation In Sec Rulemaking, Yuliya Guseva, Irena Hutton, Adam C. Pritchard, Joseph Grundfest

Law & Economics Working Papers

We study how public participation shapes financial regulation using a novel dataset of 453 SEC rules proposed between 1995 and 2024. We collect over 81,000 public comments and 5,600 meetings between regulators and stakeholders related to those rules. Using large language models, we identify participants and extract structured measures of comment content and tone. We document asymmetries in stakeholder participation: retail investors dominate comment volume with shorter submissions, while institutional actors engage primarily through detailed comments and meetings with the SEC officials. Input from sophisticated stakeholders is more likely to be incorporated into the final rule release and informs rule …

Effects Of The Reverse Charge Mechanism On Vat Gaps, Albrecht Bohne, James R. Hines Jr., Antonios Koumpias, Annalisa Tassi

Law & Economics Working Papers

The purpose of this paper is to evaluate the effect of reverse-charge mechanism (RCM) implementation on VAT compliance using an overall, countrylevel measure of VAT compliance, the VAT gap. The VAT gap is defined as the overall difference between expected and realized VAT revenues and is a broader measure than outcomes employed in previous research, incorporating all types of VAT evasion. Exploiting the staggered adoption of RCM across Europe and the size of industries targeted by RCM, we compare changes in the VAT gap before and after RCM implementation. Evidence from difference-in-differences, event study, and heterogeneous treatment effects estimators indicates …

Antara Idealisme Dan Pragmatisme: Hukum Yang Efisien Sebagai Sarana Pembangunan, Reynaldi S. Prayoga

Jurnal Hukum & Pembangunan

This articles aims to analyze the Development Law Theory through the lens of efficiency in Economic Analysis of Law (EAL), particularly by employing the concept of welfare maximization and offering legal criteria as a means of development. The Development Law Theory formulated by Mochtar Kusumaatmadja emphasizes the function of law as an instrument of social reform to support national development. In practice, however, the will of those in power claimed to be part of the development agenda has often been justified through the use of legal instruments, thereby riskingthe obscuring of social objectives of development itself. This is due to …

Mutual Fund Fees, Stewart L. Brown

William & Mary Business Law Review

Investors pay billions annually in fees for actively managed mutual funds, despite the availability of far superior, cost-effective alternatives like index funds. Mutual funds, with their unique legal structure, insulate management fees from competitive pressures, thereby enabling fund sponsors to maintain high fees. Contrary to the assumption that legal, regulatory, and governance mechanisms adequately protect investors, this Article demonstrates that such safeguards are largely ineffective. The competitive forces that would ordinarily drive fee reductions are rendered impotent by structural conflicts of interest, ineffective regulatory oversight, and the passive role of independent directors. Fund sponsors capitalize on economies of scale, reaping …

Does Law Constitute Society?, Jeremy K. Kessler

Faculty Scholarship

The resistance of capitalist inequality to legal reform has led a growing number of scholars to reconsider the explanatory virtues of Marxist legal thought. But what are those virtues? Some scholars hold that what makes Marxist legal thought special is its ability to explain the development of legal relationships in terms of the development of extra-legal relationships — specifically, the relations of production as they adapt to changes in the productive forces. Other scholars argue that this focus on the causal process by which extra-legal change (or stasis) drives legal change (or stasis) is too reductive. They contend that Marxist …

Consumers, Laborers, And Antitrust, Oh My! Why Labor Considerations Should Be Examined In Antitrust Law Through The Lens Of U.S. V. Bertelsmann Se & Co. Kgaa, Jodi Nicole Kain

University of Miami Business Law Review

Imagine the disappointing feeling of walking into a bookstore and finding shelves filled with only a narrow and non-diverse selection of titles. This feeling nearly became a reality when the Department of Justice (“DOJ”) won an action blocking a proposed merger between mega publishing houses Penguin Random House and Simon & Schuster in the case United States v. Bertelsmann SE & Co. KGaA (2021) (“Bertelsmann”). The DOJ claimed that the merger would harm consumers by reducing the diversity of books available and directly harm authors—the creative labor force—by limiting competition for publishing deals and suppressing their compensation. For the first …

Bankruptcy Judging After Williamson, Vincent S.J. Buccola

BYU Law Review

This Essay asks how bankruptcy judges ought to orient their substantial, statutory discretion in business reorganization cases. The motivating observation is that bankruptcy law enacts a kind of forced integration of productive assets. To shed light on the contemporary problems that bankruptcy judges face, I thus look to two classic approaches to the economic theory of the firm—from Oliver Williamson and from Oliver Hart. I conclude that nonjudicial institutions have largely surmounted the problems to which their theories point, leaving a different, and probably narrower, set of issues to worry about. Bankruptcy judges who have a notion that their job …

Applying The Indian Commerce Clause To Indian Commerce, Adam Crepelle

Northwestern University Law Review

Indian country commerce generates tens of billions of dollars annually and is a constant source of litigation. These disputes typically revolve around jurisdictional conflicts: whether states, tribes, or both possess regulatory authority over the business operating in Indian country, particularly those involving non-Indians. Despite numerous court cases, no clear legal framework has emerged, creating pervasive uncertainty regarding fundamental issues, such as state taxation of tribal transactions and the proper forum for resolving Indian country contract disputes. Interestingly, these commercial cases overlook the Indian Commerce Clause—the constitutional provision designed to address such matters.

This Article argues the Indian Commerce Clause prohibits …

Chatgpt Goes To (National)Law School, Rahul Hemrajani, Vedant Gupta, R Srivatsan, Radhika Singhal, Krishne Tanneerbavi, Shristy Chhaparia, Siddharth Johar, Srujan Sangai, Suvanssh Mahajan, Priyansh Dixit, V Sreedharan, Dhruv Holla, Gunjan Modi, Kajal Jamdare, Pratyay Amrit, Sannah Mudbidri, Ishaan Goel, Akshit Singla, Arjun Mehta, Madhav Mitruka, Mannat Mahaey, Nathaniel Warjri, Swapnil Das, Ojas Chandaniha, Yash Ahirwar, Animesh Tiwari, Aman Meena

Indian Journal of Law and Technology

This paper presents the first comprehensive empirical evaluation of Large Language Models’ (‘LLMs’) performance in Indian legal education. We compare six Artificial Intelligence (‘AI’) chatbots with law students at the National Law School of India University, Bengaluru, across four subjects: Contract Law, Corporate Law, Criminal Procedure, and Jurisprudence. Our findings show that LLMs achieve performance comparable to human students (B+ grade), with newer commercial models consistently outperforming older and open-source alternatives. We also find that while LLMs excel in theoretical subjects and structured legal analysis, they show limitations in handling jurisdiction-specific knowledge and complex scenario-based reasoning. These findings have important …

A Human Enablement Theory Of Copyright, Akshat Agrawal

Indian Journal of Law and Technology

Copyright policy, designed to protect creators and disseminators from market imperatives, has ironically deepened their market dependency. This transformation stems from two critical theoretical errors: first, the “incentives”/“reward for labour” story that mistakes protection from market pressures for market encouragement; second, market fundamentalism that treats exclusionary rights as natural and as the source of “liberty”. These misconceptions, reinforced by fallacies about pre-social creativity and physicalism, have transformed copyright from an enabler in a market society into one that commodifies creative expression itself, intensifying rather than ameliorating the economic vulnerability of cultural producers.

This theoretical misunderstanding has produced three interlocking harmful …

1981, Carliss N. Chatman

Faculty Journal Articles and Book Chapters

42 U.S.C. § 1981 should have solved a pervasive problem in American capitalism—when white economic interests do not converge with the contract rights of Black people, they are excluded from the market in a way that causes systemic harm. This Article proposes that the failure to enforce 1981 in the past may render it more harmful than beneficial in the present climate of retrenchment. The realities of racism combine with the lack of economic interest convergence to make combatting contract inequality on a contract-by-contract basis legally precarious, nearly impossible to properly evaluate, and difficult to economically incentivize. This is in …

Designing Contract Modification, Albert H. Choi, George G. Triantis

Articles

For long-term commercial contracts, modification tends to be the norm rather than the exception. While modification often takes place in response to an arrival of new information, contracting parties frequently modify the terms in response to a shift in bargaining power. In this Article, we explain how the flexibility to renegotiate in response to a shift in bargaining power can facilitate long-term contracting and thereby beneficial reliance investments and risk allocation. The prospect of modification can induce contracting parties who expect their bargaining power to improve, such as from the emergence of outside opportunities, to enter into contracts earlier and …

Purpose-Driven Compliance, Veronica Root Martinez

Faculty Scholarship

Whether it is a small brokerage firm in Ann Arbor, Michigan, a private university in Cambridge, Massachusetts, or a multinational conglomerate head-quartered in New York City, organizations understand that they are required to fulfill a range of compliance obligations. Compliance programs today tend to have two important characteristics in common. First, the notion that perfect compliance is an impossible goal is a key component of the understandings and expectations of many firms’ compliance programs. Second, organizations have almost uniformly adopted compliance programs in areas where enforcement activity has been significant—like in the areas of antibribery and anticorruption, anti-money laundering, antitrust, …

Reporting Materiality Under The Sec Cybersecurity Disclosure Rules: How Corporate Boards Balance Duty And Risk For Cyber Threats And Incidents, Deborah Slattery-Pereira

American University Business Law Review

The Security Exchange Commission’s (SEC) cybersecurity rules require that public companies disclose a material cyber threat or incident and the impact of the incident on the company’s business Corporate boards must disclose any cyber-related information that would affect a reasonable shareholder’s investment decisions. These rules delegate to the corporate board and management the decision of which cybersecurity events qualify as material to investors. Directors and officers must also decide when and how to disclose to the SEC, and what information to report.

The SEC Cybersecurity Rules increase compliance and litigation costs for public companies, as shareholders can use this information …

Cloudy Oversight: How Administrative Conflict Over International Airline Alliances’ Antitrust Immunity Harms Consumers Of Commercial Air Transportation., Hamin Jeong

American University Business Law Review

Antitrust law governs and guides how regulatory agencies should scrutinize unfair, monopolistic corporate behavior. However, when several different agencies are tasked with enforcing the same legal principles, different interpretations of such principles inevitably arise.

 The U.S. Department of Justice (DOJ) acts as the main body that enforces antitrust actions in the domestic airline industry, but there is an exception to the general rule. Congress delegated the U.S. Department of Transportation (DOT) the authority to grant antitrust immunity to international airline alliances, which form when domestic and foreign airlines partner to increase flight services between their respective nations.

However, as codified …

Ai In The Vault: Ai Act's Impact On Financial Regulation, Maria Lucia Passador

Loyola University Chicago Law Journal

The AI Act, a pioneering legislative framework, classifies AI systems based on their risk levels and mandates stringent requirements for high risk systems to ensure transparency, accountability, and protection of fundamental rights. This Article further addresses the critical intersection of AI technology and prudential supervision, highlighting the significant roles of the AI Office, and the AI Board in the governance and oversight of AI applications in finance.

Despite existing literature focusing on the integration of AI in banking supervision and the associated risks, gaps remain in understanding how these regulatory frameworks can effectively oversee AI's transformative impact on financial markets. …

Out Of Sight Is Out Of Mind? Experimentally Testing A Gradually Materializing Public Bad, Alexander Egberts, Christoph Engel, Joshua Fairfield

Scholarly Articles

Many social ills can be modeled as a public bad. In such scenarios, private benefit is often immediate, while the public damage takes some time to materialize. In this experiment, we investigate the behavioral effects caused by such delays in the realization of collective harm. By manipulating the weight with which the damages caused by group contributions are carried over to the next round, we alter the number of periods required for the social damage to unfold fully. We keep constant the economic consequences of contributions between treatments (by introducing a multiplier for the damage) and between periods (by deducting …

Toys As Evidence, Randall K. Johnson

Faculty Works

This Essay asks and answers a single question, which was posed during a recent symposium at the National Museum of Toys & Miniatures. Could the study of revealed preferences, which is the idea that observed behaviors are the best indicator of one’s beliefs, improve our collective understanding about what constitutes unlawful discrimination in certain U.S. markets? A possible answer, which is informed by the Brown v. Board of Education decision, is the study of revealed preferences may improve our collective understanding for three reasons.

One reason is the study of revealed preferences provides a window into how some producers and …

Control Capture And Competition, D. Daniel Sokol, Robert J. Rhee

UF Law Faculty Publications

This Essay identifies an emerging problem in antitrust law and policy, particularly in the technology industry. Antitrust doctrine has historically revolved around internal control of firm, i.e., equity acquisition. It focuses on the capture of internal control. Mergers and acquisitions trigger regulatory review. In these deals, the locus of anticompetitive behavior lies in ownership and internal governance. However, one can capture control through various ways. An emerging problem in antitrust law is external exertion of control through contract. Competition can be stifled, and thus price, non-price, and innovation factors can be controlled or manipulated through the levers of control existing …

Serendipity And Self-Regulation: The Evolution Of Cryptocurrency-Based Exchange-Traded Products, Onnig H. Dombalagian

American University Business Law Review

Cryptocurrency enthusiasts rejoiced last year when the Securities and Exchange Commission (SEC) approved the listing of bitcoin-based and ether-based exchange-traded products (ETPs). For over a decade, cryptocurrency entrepreneurs have sought to trade cryptocurrency products on traditional securities exchanges.  Listing bitcoin and ether ETPs gave retail investors an easily accessible, transparent, and perhaps, more cost-efficient means of investing in cryptocurrencies while reducing the credit and custodial risks of dealing with unregistered digital asset exchanges or digital asset intermediaries. The listing of cryptocurrency ETPs may also represent a substantial step toward completing the marketplace for financial transactions in bitcoin and ether.

 There …