Law JournalFeeds

Litigation and settlement under judicial agency

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics

Levent Koçkesen, Murat Usman

We model the settlement of a legal dispute when the trial outcome depends on the behavior of a strategically motivated judge. A defendant, who is uninformed about the level of harm that he has caused, makes a take-it-or-leave-it offer to an informed plaintiff. If the parties cannot agree on a settlement and the case goes to trial, the judge decides how much effort to exert in discovering the actual damages. We show that, under very general assumptions, this model exhibits multiple equilibria. In some equilibria, the judge exerts less effort and more cases settle out of court, whereas in others the opposite occurs. We also show that the judge prefers the low effort equilibria with high settlement rate and argue that a “managerial judge” could easily steer the parties towards low effort equilibria. This may be deemed undesirable, since in low-effort equilibria, the terms of the settlement heavily favor the informed plaintiff, and this in turn induces over-investment in ex ante preventive care by the defendant.

Highlights

► We study the settlement of a legal dispute under asymmetric information. ► If the case goes to trial, the judge needs to exert effort to discover true damages. ► Under general conditions this model exhibits multiple equilibria. ► The judge and the informed party are better off in the low effort equilibria. ► A managerial judge may help parties select the low effort equilibria.

Unjust laws and illegal norms

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics

Emanuela Carbonara, Francesco Parisi, Georg von Wangenheim

Due to a variety of circumstances, lawmakers occasionally create laws whose aims are perceived as outright unjust by the majority of the people. In other situations, the law may utilize improper means for the pursuit of a just goal. In all such cases, lawmaking processes generate rules that do not reflect the values of the underlying population. In these cases individuals may face legal commands or prohibitions that conflict with their sense of justice or fairness. Individuals can oppose unjust laws through protest. Social opposition to unjust laws may trigger social norms that can have countervailing effects on legal intervention. The dynamic effects of these phenomena are the object of this paper.

Highlights

► We study the feedback mechanism between law and social norms using a dynamic setup. ► When laws depart from current social values we may observe backlash effects. ► A law sanctioning socially admissible behavior may increase that behavior. ► Laws trying to bend unwanted social norms may reinforce them. ► Differently from expressive laws, laws that backlash may create social divide.

On the optimality of a duty-to-rescue rule and the cost of wrongful intervention

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Bertrand Crettez, Regis Deloche

In common law legal systems, there is no legal duty to rescue persons in danger. By contrast in code-based legal systems, the principle of duty to rescue does apply. What is behind this difference? To answer this question, we develop a new model extending the reach and strength of the standard civic duty game by taking into account the cost of wrongful intervention. We use this model to analyze and compare three policy options: doing nothing, adopting a duty-to-rescue rule, and encouraging would-be rescuers. We show that a duty-to-rescue rule is more likely to be welfare enhancing when the cost of inappropriately intervening is low, and that, in certain cases, encouraging would-be rescuers is preferred by a representative citizen to both a duty-to-rescue rule and no-rule. Finally, we offer an explanation for the choices made in the USA and France as to whether to use rescue laws.

Highlights

► In civil (common) law countries, the principle of duty to rescue does (not) apply. ► We examine this difference by taking into account the cost of wrongful intervention. ► We compare three policy options: rule, no rule, and encouraging would-be rescuers. ► We explain the choices made in the USA and France as to whether to use rescue laws.

Socially optimal liability rules for firms with natural monopoly in contestable markets

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 2

Atsushi Tsuneki

This article considers the problem of socially efficient liability rules for firms in contestable markets where natural monopoly prevails due to decreasing average cost. If the fixed cost that pushes the entry-limiting price above marginal cost is large relative to the level of external harm of firms, the negligence regime is socially superior to the strict liability regime. In the opposite case, the strict liability rule may be socially superior.

Highlights

► We model contestable markets with natural monopoly due to decreasing average cost. ► We examine the welfare effect of liability rules for firms. ► If the fixed cost that pushes the entry-limiting price above marginal cost is large relative to the level of external harm of firms, the negligence regime is socially superior to the strict liability regime. ► In the opposite case, the strict liability rule may be socially superior.

Hate groups and hate crime

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Matt E. Ryan, Peter T. Leeson

This paper is the first to investigate the relationship between hate groups and hate crime empirically. We do so using panel data for the U.S. states between 2002 and 2008. Contrary to conventional wisdom, we find little evidence that hate groups are associated with hate crime in the United States. We find somewhat stronger evidence that economic hardship may be related to hate crime. However, evidence for the potential importance of economic factors remains weak. Further, we find that demographic variables are not significantly related to hate crime in the United States. Our results leave the question of what factors may drive hate crime in America unresolved. But they cast doubt on the popular perception that hate groups are among them.

Highlights

► This paper is the first to investigate the relationship between hate groups and hate crime empirically. ► We find little evidence that hate groups are associated with hate crime in the United States. ► We find somewhat stronger evidence that economic hardship may be related to hate crime. ► Further, we find that demographic variables aren’t significantly related to hate crime in the United States. ► Our results cast doubt on the popular perception that hate groups are an important contributor to hate crime in America.

Merger simulations with observed diversion ratios

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 2

Lars Mathiesen, Øivind Anti Nilsen, Lars Sørgard

One approach to merger simulations used in antitrust cases is to calibrate demand from market shares and a few additional parameters. When the products involved in the merger case are differentiated along several dimensions, actual diversion ratios may be very different from those calculated from market shares. This again may affect the predicted post-merger price effects. This article shows how merger simulation can be performed using observed diversion ratios. To illustrate the potential effects of this approach we use diversion ratios from a local grocery market in Norway. In this case diversions from the acquired to the acquiring stores were considerably smaller than suggested by market shares, and the predicted average price increase from the acquisition was 40% lower using this model rather than a model based upon market shares. This analysis also suggests that even a subset of observed diversion ratios may significantly change the prediction from a merger simulation based upon market shares.

Research highlights

► Diversion ratios are useful in defining how closely firms compete. ► Diversion ratios improve estimated price effects of horizontal mergers. ► Data from a local grocery market in Norway is used for illustration. ► Even a small subset of diversion ratios change predictions from a merger simulation.

Welfare enhancing regulation exemptions

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Murat C. Mungan

Sanctions for regulation violations are used to deter conduct which could potentially result in great social harms. This practice over-deters low-risk entities and under-deters high-risk entities, which leads to social losses. This paper analyzes whether and how such social losses can be mitigated. I show that this can be achieved by allowing regulatees to purchase passes exempting them from regulations at appropriate prices, although they remain liable for any harm they cause.

Editorial Board

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 2

The certification hypothesis of fairness opinions for acquiring firms

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Pierfrancesco La Mura, Marc Steffen Rapp, Bernhard Schwetzler, Andreas Wilms

Abstract We study the certification role of fairness opinions in corporate transactions in a simple non-cooperative setting with asymmetric information and possibly misaligned managerial incentives, and discuss the effect of different regulatory scenarios. Specifically, we compare three settings: one in which no third-party fairness opinion is available, one in which the management is required to obtain a fairness opinion before any transaction, and one in which the management’s decision to require a fairness opinion is voluntary. We compare shareholder value in each of the three scenarios and discuss implications for the optimal design of regulatory environments for fairness opinions.

Highlights

► We study the certification role of fairness opinions in corporate transactions. ► Our model, a simple non-cooperative setting, allows for asymmetric information and possibly misaligned managerial incentives. ► We analyze the effect of different regulatory scenarios on shareholder value and discuss implications for optimal regulation.

Medical malpractice and physician liability under a negligence rule

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 3

Donald J. Wright

Abstract A model of costly medical malpractice claims, based on Bayes Rule, is developed to examine the effects of physicians being liable for actual damage under a negligence rule. This model is consistent with empirical evidence concerning the pattern of claims. It is shown that compensating actual damage does not provide physicians with appropriate incentives to spend the second best optimal amount of time with patients or to treat the second best optimal number of patients. As a result, too much medical malpractice occurs relative to the second best social optimum.

Highlights

► A model of costly medical malpractice claims, based on Bayes Rule, is developed to examine the effects of physicians being liable for actual damage under a negligence rule. ► This model is consistent with empirical evidence concerning the pattern of claims. ► It is shown that compensating actual damage does not provide physicians with appropriate incentives to spend the second best optimal amount of time with patients or to treat the second best optimal number of patients. ► As a result, too much medical malpractice occurs relative to the second best social optimum.

The delisting decision: The case of buyout offer with squeeze-out (BOSO)

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Isabelle Martinez, Stéphanie Serve

In this paper, we exploit the specificity of going-private transactions that are initiated by the historic controlling shareholders (i.e. voluntary delistings). In Continental Europe, the majority of firms that become private do so following a buyout offer with squeeze-out (BOSO); using this mechanism, the controlling shareholder can cash out minorities and take the firm private. We argue that the decision to go private results from a cost–benefit analysis. Moreover, we pay particular attention to the consequences and the related costs of compliance resulting from the passage of the French Financial Security Law (FSL) in 2003. A quantitative study was performed using a unique dataset spanning 1997–2006. This data set consists of 140 French firms, of which 70 were voluntarily delisted via BOSO and 70 were industry-matched control firms. Univariate analysis and logistic regressions support the cost–benefit analysis: when listing benefits decrease because of weak liquidity and/or weak analyst coverage, it seems better for the firm to go private. Furthermore, the inherent characteristics of delisted firms (i.e. performance, leverage, and risk as measured by the beta factor) appear to be important driving factors of delisting. The passage of the FSL has strengthened the impact of these characteristics on the decision to go private. Mature firms that have weak performance and low specific risk and that are not financially constrained by debt will decide to go private because they cannot afford the listing status anymore. Finally, we show that the driving factors of delisting differ according to the identity of the controlling shareholder; specifically, the level of risk appears to be the strongest determinant for family firms, while non-family firms also consider their own financial structure.

Highlights

► In this study we focus on going private transactions initiated by the historical controlling shareholders. ► We use a cost–benefit framework to analyze the decision to go private. ► We analyze the European mechanism of delisting called buyout offer with squeeze out (BOSO). ► When listing benefits decrease (weak liquidity, weak analyst coverage), it seems better for the firm to go private. ► A low performance, a low leverage ratio and a low beta also appear to be important determinants of delisting.

A unified model of settlement and trial expenditures: The Priest–Klein model extended

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 3

Marc Poitras, Ralph Frasca

Settlement and trial expenditures are crucially interrelated. The literature on settlement, however, takes no account of models of trial. In this paper, we develop a unified model of settlement and trial expenditures. We do this by discarding the usual assumption of settlement models that trial costs are constant across cases. Instead, we follow the literature on trial by permitting trial costs to vary with the legal merit of the plaintiff’s case. Our approach can be used to extend standard models of settlement such as the well-known Priest–Klein model as well as models based on asymmetric information. As a demonstration, we extend the Priest–Klein model and generally overturn that model’s canonical results. In particular, we show that even in a fully symmetric model, predicted win rates at trial can deviate substantially from 50 percent. Furthermore, win rates will vary in response to legal reforms that shift the decision standard.

Highlights

► Develop a unified model of case selection and trial expenditure. ► Demonstrate by extending Priest–Klein model to include endogenous trial costs. ► Overturn Priest–Klein model’s canonical results.

Choosing the scope of trade secret law when secrets complement patents

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Elisabetta Ottoz, Franco Cugno

We present a model where an incumbent firm has a proprietary product whose technology consists of at least two components, one of which is patented while the other is kept secret. At the patent expiration date, an entrant firm will enter the market on the same technological footing as the incumbent if it is successful in duplicating, at certain costs, the secret component of the incumbent’s technology. Otherwise, it will enter the market with a production cost disadvantage. We show that under some conditions a broad scope of trade secret law is socially beneficial.

Highlights

► We present a model where an innovation is jointly protected by patents and secrets. ► When patents expire, a competitor tries to duplicate the secret. ► We show that a strong legal protection of trade secret may be socially beneficial. ► This is because it allows society to save on duplication costs.

Does court-supervised reorganization work? Evidence from post-confirmation firm failure

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 3

Bart Leyman, Koen J.L. Schoors, Peter Coussement

Unlike the US Chapter 11, the Belgian reorganization legislation requires that distressed firms remain temporarily under court-supervision during the post-confirmation stage. Using a hand-collected sample of firms, we analyze the likelihood of business failure and the time to failure during this period. Less viable firms are more likely to fail and do faster so, indicating relatively effective reorganization proceedings. Firms that are indebted to highly secured banks or owe high sums of unpaid taxes are more likely to fail. Judicial discretion affects the likelihood of failure only in a subsample of sole proprietorships.

Highlights

► Unlike US Chapter 11 legislation, the Belgian reorganization legislation requires that distressed firms remain temporarily under court-supervision during the post-confirmation stage. ► We analyze the likelihood of failure and the time to failure during this period. ► Less viable firms are more likely to fail and do faster so, indicating relatively effective reorganization proceedings. ► Firms that are indebted to highly secured banks or owe high sums of unpaid taxes are more likely to fail. ► Judicial discretion affects the likelihood of failure in a subsample of sole proprietorships.

Editorial Board

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Corporate acquisition process: Is there an optimal cash-equity payment mix?

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Hubert de La Bruslerie

This paper examines the combination of cash and share payments proposed in the corporate acquisition process. Particularly, it analyzes the conditions of an optimal mixed payment in the context of an asymmetry of information. Using a model, we highlight that setting the conditions of payment is an endogenous part of a takeover agreement between the acquirer and the target. Our contribution is to show how, in the acquisition process, the setting of the cash percentage is a key element for conveying private information on the gains of synergy and the gains that result from the transaction. In our model, we internalize asymmetries of information and possible exaggeration biases. Both will influence the joint setting of a mixed payment scheme.

Highlights

► This paper examines the combination of cash and share payments in the context of an acquisition process. ► We highlight that setting the conditions of payment is an endogenous part of a takeover agreement between the acquirer and the target. ► The mix of payment conveys private information on the gains of synergy and the gains that result from the transaction. ► In the model, we internalize asymmetries of information and possible exaggeration biases.

The economics of efficiency and the judicial system

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Giovanni B. Ramello, Stefan Voigt

Evaluating human life using court decisions on damages for pain and suffering

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Andrea Leiter, Magdalena Thöni, Hannes Winner

This paper provides a framework to evaluate human life based on civil court decisions on damages for pain and suffering. Using judgements from Germany and Austria over the last 25 years, we calculate an average Value of Damages for Pain and Suffering (VDPS) of about EUR 1.79 millions, with a minimum (maximum) of around EUR 0.67 (4.62) millions. Our approach also allows to calculate the value of body parts and body functions, which might be of interest if information on the benefit of an individual’s change in life quality is not (entirely) available.

Highlights

► We provide an alternative to evaluate human life based on damages for pain and suffering. ► The average Value of Damages for Pain and Suffering (VDPS) is about EUR 1.79 millions. ► We compare the VDPS with the conceptual framework of the VSL and QALY.

Talent matters: Judicial productivity and speed in Japan

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

J. Mark Ramseyer

To study the determinants of judicial productivity and speed (measured by published opinions), I examine all 348 trial-court civil medical malpractice opinions published in Japan between 1995 and 2004. For comparative purposes, I add 120 randomly selected civil judgments from the same period. The data cover 706 judges (about a third of the Japanese bench). I find: (A) Productivity (measured as published opinions per year on the bench) correlates with apparent intellectual ability and effort. The judges who attended the most selective universities, who passed the bar exam most quickly, and who were chosen by the courts for an elite career track publish the most opinions. (B) Adjudicatory speed (measured as time from filing to decision, for published opinions) may correlate with apparent ability and effort too (the evidence is weaker), but institutional experience counts as well. As the courts acquired increasing experience with malpractice cases, the pace of adjudication quickened.

The Coase theorem reconsidered: The role of alternative activities

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Graciela Kuechle, Diego Rios

The main statement put forth by Coase in his essay on the problem of social cost (Coase, 1960) is that given zero transactions costs, the assignment of entitlements to perform actions that cause negative externalities does not prevent the agents from reaching an efficient outcome through bargaining. Coase’s argument decisively depends upon the agents having resources to bargain. Since rents, understood as the return to a certain activity in excess of its opportunity cost, are natural providers of such resources, they play a vital role in the logic of the Coase theorem. It has been recently argued (Halpin, 2007) not only that Coase provides an incomplete analysis of rents but also that he is committed to a flawed argument over rents by neglecting the role of alternative activities. This paper recasts Coase’s argument in the presence of rents and alternative activities to show that the theorem can be vindicated.

Highlights

► We analyze the role of rents and alternative activities in the Coase theorem. ► Zero rents fail to disprove the theorem once the long run equilibrium is reached. ► Previous rejections of the theorem rely on Pareto inefficient initial allocation. ► This starting condition and not the entitlement causes the switch of activity. ► When alternative activities are correctly taken into account the theorem holds.

Court output, judicial staffing, and the demand for court services: Evidence from Slovenian courts of first instance

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Valentina Dimitrova-Grajzl, Peter Grajzl, Janez Sustersic, Katarina Zajc

We contribute to the scant empirical literature on court activity by examining how judicial staffing and caseload influence court output in Slovenia, a post-socialist EU member state struggling with implementing an effective judicial system. Unlike the majority of the existing literature, we attempt to tackle endogeneity problems that arise in estimation of the determinants of court output. In addition to controlling for court fixed effects to address endogeneity due to unobserved court-level heterogeneity, an instrumental variables approach based on a plausible assumption of sequential exogeneity of our regressors allows us to address the problem of reverse causality between court output and both caseload and judicial staffing. Our findings suggest that ignoring endogeneity issues may lead to erroneous policy conclusions about the expected impact of resources, as proxied by judicial appointments, devoted to the court system. Our results imply that the primary driving force of output of Slovenian courts is the demand for their services.

Equilibrium implications of fiscal policy with tax evasion: A long run perspective

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics

Francesco Busato, Bruno Chiarini, Guido M. Rey

This paper studies equilibrium effects of fiscal policy within a dynamic general equilibrium model where tax evasion and underground activities are explicitly incorporated. In particular, the paper analytically measures (both from a theoretical and empirical viewpoint) of how much the underground sector mitigates the distortionary impact of fiscal policies, while lessening the drop (rise) of aggregate production after contractionary (expansionary) tax shifts.

Examining the efficiency of the U.S. courts of appeals: Pathologies and prescriptions

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Robert K. Christensen, John Szmer

Until recently (e.g. Lindquist, 2007), few studies have examined the factors that might affect aspects of judicial efficiency, including the time it takes a court to decide a case. In our analysis of a sample of U.S. Courts of Appeals decisions from 1971 to 1996, we examined a variety of potential causes of inefficiency, or pathologies, before suggesting a series of prescriptions.

Author Index (Volume 31, 2011)

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

The effect of rules shifting supreme court jurisdiction from mandatory to discretionary—An empirical lesson from Taiwan

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Theodore Eisenberg, Kuo-Chang Huang

Theoretical works suggest that granting a supreme court discretion in choosing the cases to be decided on the merits could shift dockets away from traditional case-based adjudication and towards issue-based adjudication. According to this prediction, legislatures can recast supreme courts’ roles in society by modifying jurisdictional rules. This study tests this prediction empirically. Using a newly assembled data set on appeals terminated by the Taiwan Supreme Court for the period 1996–2008, we study the effect of jurisdictional-source procedural reform, a switch from mandatory jurisdiction to discretionary jurisdiction in 2003, on the Taiwan Supreme Court’s performance. Our study shows that the 2003 reform failed to transform the function of the Court from correcting error to a greater role in leading the development of legal doctrine as intended by the legislature. Our findings suggest that a supreme court can adjust the way it conducts business according to its own preference and the role it defines for itself, which are influenced both by the background against which it operates and the inertia of its members’ working habits. Our study informs policy-makers that merely amending procedural rules, without more, is unlikely to change the function of a supreme court. Our findings also suggest that statutorily dictated mandatory jurisdiction may not be implemented by a high court faced with caseload pressure.

Inducing corporate complian A compound corporate liability regime

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Sharon Oded

Corporate liability regimes have two major social goals: (i) inducing corporations to internalize all social ramifications of their activity; and (ii) inducing corporations to prevent, deter, and report their employee misconduct. The scholarly polemic has shown that none of the liability regimes recognized thus far in the literature efficiently satisfies both social goals. Following a Law and Economics approach, this paper develops an innovative regime that may comprise an optimal corporate liability framework in most settings. The Compound Corporate Liability Regime developed in this paper is a two-layer strict liability regime. Under this regime, corporations that self-report their employee misconduct incur a sanction that is reduced by the variable enforcement costs saved due to their self-reporting. Such a liability framework aligns social and corporations’ interests, and thereby satisfies both social goals of corporate liability regimes.

Optimization, path dependence and the law: Can judges promote efficiency?

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Alain Marciano, Elias L. Khalil

The thesis that judges could (voluntarily or not) promote efficiency through their decisions has largely been discussed since Posner put it forward in the early 1970s. There nonetheless remains a methodological aspect that has never (to our knowledge) been analyzed in relation to the judges-and-efficiency thesis. We thus show that both promoters and critics of the judges-and-efficiency thesis similarly use a definition of optimization in which history, constraints and path-dependency are viewed as obstacles that must be removed to reach the most efficient outcome. This is misleading. Efficiency cannot be defined in absolute terms, as a “global ideal” that would mean being free from any constraint, including historically deposited ones. That judges are obliged to refer to the past does not mean that they are unable to make the most efficient decision because constraints are part of the optimization process; or optimization is necessarily path-dependent. Thus, the output of legal systems cannot be efficient or inefficient per se. This is what we argue in this paper.

Aggregate litigation and regulatory innovation: Another view of judicial efficiency

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Giovanni B. Ramello

In this article, we argue that aggregate litigation and the court system can not only restore the protection of victims and the production of deterrence, but also play a pivotal role in stimulating regulatory innovation. This is accomplished through a reward system that seems largely to mimic the institutional devices used in other domains, such as intellectual property rights, by defining a proper set of incentives. Precisely the described solution relies on creating a specific economic framework able to foster economies of scale and grant a valuable property right over a specific litigation to an entrepreneurial individual, who in exchange provides the venture capital needed for the legal action, and produces inputs and focal points for amending regulations. In this light, aggregate litigation thus can be equally seen as an incubator for regulation.

A note on the optimality of (even more) incomplete strict liability

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 2

Florian Baumann, Tim Friehe, Kristoffel Grechenig

This paper starts from the premise that liability is incomplete and establishes that firms may nevertheless invest excessively in care. This may justify a (further) reduction in the level of liability from a social standpoint, thereby arguing against seeking to approach full compensation as close as possible. In our framework, firms are liable under product liability, but also invest in care to prevent consumers’ switching to competitors. Affecting the partition of consumers by means of care-taking is not desirable from a social standpoint. Consequently, it may be optimal to reduce liability below a given level of incomplete compensation in order to adjust firms’ care incentives.

Research highlights

► Liability is often incomplete. ► Nevertheless, firms may invest excessively in care due to market forces. ► Thus, it may be socially optimal to further reduce the level of liability.

On the optimal number of courts

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Stefan Voigt

This is the first paper to investigate whether the number of high courts in a country has systematic effects both on the quality of its legal system and on its level of economic development more generally. It is theorized that due to the division of labor and a higher degree of specialization, high courts might be advantageous in terms of court productivity. Yet, they might also be disadvantageous in terms of a less coherent legal system. It is empirically tested whether the positive or the negative effects prevail. Results show that a larger number of high courts never has any positive effects on very broad outcome variables; indeed, with regard to some of these, a greater number of high courts is correlated with worse outcomes.

Trading when you cannot trade: Blackout periods in Italian firms

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 3

Barbara Petracci

This paper is part of the general debate concerning corporate governance. It focuses on a mechanism of self-regulation geared at avoiding market abuses: the use of blackout periods during which insiders are temporarily prohibited from trading on the market. Data concerning corporate characteristics, blackout periods, and internal dealing, seem to indicate that companies with a large number of independent directors and a consistent ability to monitor are more likely to adopt blackout periods. However, the research shows that during 2003 insiders did not comply with Italy’s Code of Best Practice; they did not totally refrain from trading during the assigned blackout periods. All three variables measuring frequency trading – the numbers of transactions carried out, of active insiders, and of shares traded – were statistically significant during the specified blackout periods. Therefore, this paper could have practical implications for policy makers. If they decide to adopt self-regulation to fight market abuses, they must be aware that a law is only as effective as its enforcement.

Highlights

► Our research is the first investigating blackout periods in Italian firms. ► We use the information contained in the internal dealing declarations. ► We use a unique dataset hand-collected. ► Greater monitoring powers increase the implementation of blackout periods. ► We verify that blackout periods were not successfully implemented during 2003.

Who walks out? Entrepreneurship in a global economy

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Juan Pablo Couyoumdjian

Modern entrepreneurially driven capitalism is embedded in a global economy. Crucially, in this environment entrepreneurship must be viewed as a mobile resource. Entrepreneurs can thus “vote-with-their-feet” when deciding where to establish their businesses. The institutional context for entrepreneurship is a key determinant of an agent’s decision to migrate. In this paper we put forward a new framework for an examination of the relationship between institutional quality and entrepreneurship. We then offer an exploration on the problem of entrepreneurship in an economy that is open to the international movement of goods and services, capital and, above all, labor, especially talented labor.

Highlights

► In a global economy entrepreneurship must be viewed as a mobile resource. ► Entrepreneurs can “vote-with-their-feet” when deciding where to establish their businesses. ► The institutional context for entrepreneurship is a key determinant of an agent’s decision to migrate. ► We put forward a new framework for an examination of the relationship between institutional quality and entrepreneurship. ► The migration of entrepreneurs is an important issue.

Editorial Board

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 3

Don’t Say You’re Sorry Unless You Mean It: Pricing apologies to achieve credibility

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Murat C. Mungan

Remorse and apologies by offenders have not been rigorously analyzed in the law and economics literature. This is perhaps because apologies are regarded as ‘cheap talk’ and are deemed to be non-informative of an individual’s conscious state. In this paper, I develop a formal framework in which one can analyze remorse and apologies. I argue that legal procedures can be designed to price apologies, such that only truly remorseful individuals apologize. Hence, apologies would not be mere ‘cheap talk’ and could send correct signals regarding an offender’s true conscious state, making them credible. This will lead victims, upon receiving apologies, to forgive offenders more frequently. Moreover, pricing apologies does not negatively impact the possibility of achieving optimal deterrence. An (arguably negative) effect of pricing apologies is its elimination of insincere apologies. If it is assumed that apologies, even if insincere, carry rehabilitative and/or palliative benefits, then the optimality of pricing apologies depends on a trade-off between achieving credibility and increasing such rehabilitative and palliative benefits.

Highlights

► A credible apology system can be designed by pricing apologies. ► When apologies are priced, remorseful offenders can relieve their guilty consciences by sending credible signals to their victims, which will lead victims to forgive remorseful offenders more frequently. ► When there are no sizeable benefits attached to insincere apologies, pricing regimes are optimal. ► When there are rehabilitative and palliative benefits attached to insincere apologies, the optimality of pricing regimes depends on a trade-off between achieving credibility and increasing rehabilitative and palliative benefits attached to insincere apologies. ► Results hold regardless of whether or not sanctions are costly to impose.

Does competition stimulate drug utilization? The impact of changes in market structure on US drug prices, marketing and utilization

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Gautier Duflos, Frank R. Lichtenberg

Microeconomic theory implies that the demand for prescription drugs should be inversely related to drug prices and directly related to marketing expenditure. Changes in market structure due to patent expiration or other factors is likely to reduce both the average price of a drug and marketing expenditure, so the effect of increased competition on total utilization of a drug is theoretically indeterminate. We use longitudinal, molecule-level data on virtually all prescription drugs sold during the period 2000–2004 to analyze the impact of changes in market structure (primarily resulting from patent expiration) on U.S. drug prices, marketing, and utilization. Price and marketing expenditure both decline by about 50–60% in the years immediately following generic entry, but the number of prescriptions remains essentially constant during those years. The two effects of increased competition on utilization – positive (via price), and negative (via marketing) – almost exactly offset one another, so the net effect of patent expiration on drug utilization is zero.

Highlights

► Conventional view: monopolies restrict output and competition will expand output. ► We assess the impact of changes in market structure on U.S. drug prices, marketing and utilization. ► The study uses an extensive amount of data that virtually cover all US prescription over 2000–2004. ► Results: price and marketing decline following entry, but utilization remains constant. ► The net effect of competition on drug utilization is 0.

Explaining uniformity in rule design: The role of citizen participation in enforcement

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Timo Goeschl, Ole Jürgens

Uniform rules incur high aggregate compliance costs when agents are sufficiently heterogeneous. Despite this, uniformity remains a common feature in regulation. Focusing on the monitoring stage of enforcement, this paper highlights an underappreciated benefit of uniform rules. Uniformity of regulation can enhance the productivity of monitoring. We illustrate the general mechanism by showing that in the presence of members of the public that are willing and able to report violations to the regulator at a cost to themselves, uniform rules allow substituting third-party participation for costly own monitoring. However, socially desirable acts may have to be punished to generate deterrence for undesirable acts. Individualizing monitoring and enforcement and citizens acting on welfare considerations do not improve on the outcome.

Highlights

► The paper highlights an underappreciated benefit of uniformity in regulation. ► Motivated citizens can participate in the monitoring of agents. ► Subjecting all agents to the same rule makes detection of violations easier for citizens. ► The reduced monitoring costs for the regulator can outweigh the losses from uniformity. ► Individualized enforcement and welfare-oriented citizens do not improve on the outcome.

The rise and fall of the polluter-pays principle in developing countries

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Barbara Luppi, Francesco Parisi, Shruti Rajagopalan

The polluter-pays principle stipulates that the person who damages the environment must bear the cost of such damage. A number of developing countries have recently extended this principle to create an obligation on the state to compensate the victims of environmental harm. This variation of the polluter-pays principle is aimed at ensuring victims’ compensation when polluters cannot be identified or are insolvent and at providing stronger incentives for local governments’ monitoring of environmentally risky activities. These regimes hold local governments primarily or jointly-and-severally liable for environmental damage and allow them to act in subrogation against the polluters. In this paper we study the effect of these forms of governmental liability on the polluters’ incentives and on aggregate levels of environmental harm. We develop an economic model to study the conditions under which governmental liability may be preferable to direct polluters’ liability as an instrument of environmental protection. We conclude by suggesting that these variations of the polluter-pays regime may be desirable in environments characterized by widespread poverty, high interest rates, judicial delays and uncertainty in adjudication.

Highlights

► Some developing countries adopted governmental liability for environmental harm. ► This liability form affects polluters’ incentives and aggregate environmental harm. ► Governmental liability may be preferable to direct polluters’ liability. ► Governmental liability is preferable for widespread poverty and high interest rate. ► This is also true in the presence of judicial delay and adjudication uncertainty.

Strategic delegation and “judicial couples” in the Italian Constitutional Court

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics

Fabio Padovano, Nadia Fiorino

We analyze the selection of the Justice Reporter by the Justice President of the Italian Constitutional Court, the most important form of agenda setting power and act of delegation in decisions of constitutional (il)legitimacy. We estimate a series of econometric models that evaluate the relative importance of the determinants of the creation of these “judicial couples”, namely, professional background, political affiliation, age, etc. Professional background is shown to be an important determinant of the creation of the couples, more so with time, although the onset of the Second Republic has reduced its importance. This analysis sheds light into the inner workings of the Italian Constitutional Court and the actual processes through which its jurisprudence is generated.

The costs of avoiding accidents: Selective compliance and the ‘Peltzman effect’ in Italy

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics

Simona Benedettini, Antonio Nicita

We empirically investigate the deterrent and offsetting effects of the introduction of a point-record driving license (PDRL) in Italy. We find that the PDRL resulted in a sharp reduction of seat belt offenses, and in a noticeable decrease of road accidents. However, the reduction in occupant fatalities and injuries was associated with an increase in non-occupant ones, suggesting a remarkable “Peltzman effect”. We then discuss whether a given enforcement design, by inducing drivers to make the best use of safety resources already available to them, may generate more external costs than would otherwise occur.

Highlights

► The introduction of PRDL system in Italy resulted to play a deterrent role on drivers’ behavior. ► Such deterrent effect has been however ‘selective’ in Italy, increasing use of seat belt, leaving almost unaffected other driving behaviors. ► PRDL, whereas reducing fatalities on the aggregate, has nonetheless generated additional fatalities (for non-occupants), as the result of offsetting behavior.

On price discrimination, parallel trade and the availability of patented drugs in developing countries

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Mainak Mazumdar, Dyuti S. Banerjee

This paper examines the effect of product Patent Act and parallel trade on the availability of an essential drug in the developing countries. Price discrimination by a Multinational Corporation (MNC) alleviates the problem of non-availability of the drug in a developing country compared to uniform pricing strategy. Incorporating an upstream–downstream market structure we show that in the presence of parallel trade ‘a form of arbitrage’ by traders the MNC cannot successfully discriminate the prices for its product. The analysis however, indicate that if the market size of the developing nation is relatively large, then with Cournot competition among the traders, the manufacturer earns higher profit by allowing parallel trade than by perfectly discriminating the prices for its product. Under Bertrand competition, the strategy to allow parallel trade always dominates the strategy to restrain it.

Does it pay to pollute? Shareholder wealth consequences of corporate environmental lawsuits

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 3

Zuobao Wei, Feixue Xie, Richard A. Posthuma

In this paper, we employ the event study methodology to examine shareholder wealth consequences of corporate environmental lawsuits filed in the US Circuit Courts from 1980 to 2001. We find that stocks of defendant firms experience significant negative abnormal returns around the lawsuit filing dates. When the plaintiffs are government entities, the abnormal returns of the defendant stocks are significantly negative. On the other hand, when the plaintiffs are individuals or nonpublic business entities, the abnormal returns are statistically insignificant. When lawsuits are filed under EPA’s superfund statute, defendant firms experience significant loss in equity value. For shareholders of the average firm in our sample, the empirical evidence suggests that it does not pay to pollute if the firm is sued.

Highlights

► Defendant firm stocks react negatively to the filing of environmental lawsuits. ► When the plaintiffs are government agencies or publicly traded firms, defendant firms experience significant loss in equity value. ► When lawsuits are filed under EPA’s superfund statute, defendant firms experience significant loss in equity value.

Breaks in the breaks: An analysis of divorce rates in Europe

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics

Rafael González-Val, Miriam Marcén

This paper explores the frequency of permanent shocks in divorce rates for 16 European countries during the period 1930–2006. We examine whether the divorce rate is a stationary series, exhibits a unit root, or is stationary around a process subject to structural breaks. A clear finding from this analysis is that not all shocks have transitory effects on the divorce rate. Our results provide evidence of both stationarity around occasional shocks that have permanent effects, and of a unit root, where all shocks have a permanent effect on the divorce rate. All of the permanent shocks are positive, and most are grouped in the 1970s. These shocks can be related to major events that occurred throughout Europe at that time: the divorce law reforms, suggesting that those policies play an important role in the movement of European divorce rates.

Highlights

► This paper explores the frequency of permanent shocks in divorce rates for 16 European countries. ► We analyse whether a structural break in a divorce rate can be associated with a special event. ► The permanent changes can be associated with the changes in European divorce laws. ► Our results add support to the research suggesting a permanent impact of divorce laws on divorce rates.

Guido Calabresi’s economic analysis of law, Coase and the Coase theorem

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Alain Marciano

Calabresi and Coase, two of the founding fathers of the “law and economics” movement are frequently, and paradoxically, put on the same footing for having put forward the same results. The purpose of this paper is to investigate this proximity by analyzing Calabresi’s works published in the 1960s. The argument we develop is that differences, and similarities, are deeper than what is usually assumed. First, methodologically, it can be said that Calabresi envisaged an economic analysis of liability rules while Coase adopted a law and economics perspective. Then, analytically, it can be shown that Calabresi proposed an “invariance” thesis. We compare it to Coase’s results and to Stigler’s Coase theorem and show that the “invariance” thesis can indeed be found in Coase’s “The Problem of Social Cost” but was absent from Stigler’s version of the Coase theorem—that was restricted to an “efficiency” thesis. We also show that Calabresi moved from the “invariance” to the “efficiency” thesis when he established a “Coase axiom”. However, Calabresi, just like Coase and Stigler, but for different reasons, believed that the axiom is theoretically valid but “in fact inaccurate”.

Highlights

► Methodologically, Calabresi has developed an economic analysis of law different from Coase’s law and economics. ► In “The Problem of Social Cost”, Coase put forward an “invariance” and an “efficiency” thesis. ► When he “invented” the Coase theorem, Stigler insisted on “efficiency” only. ► In 1961, Calabresi has put forward an “invariance” thesis in 1961—liability rules do not affect the allocation of resources. ► After 1965 (in particular in 1968), Calabresi moved to an “efficiency” thesis too.

Do parachutes discipline managers? An analysis of takeover battles

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics

Oliver Fabel, Martin Kolmar

We analyze a Tullock-type takeover contest between two CEOs. To deter wasteful influence activities in shareholder optimum, the parachute compensates the (potentially) foregone earnings of the contestant whose incentives to invest in such activities are strongest. Therefore, the parachute is “golden”, but must be calculated net of all influence and separation costs. Notably, this solution arises in equilibrium with uncoordinated shareholder decisions. Further, equilibrium severance pay does not depend on structures or levels of pre-merger manager compensations. Shareholders are always indifferent between dismissing either of the two managers.

Highlights

► We analyze a takeover battle as a contest between two managers. ► Costly influence activities affect the probability to head the merged firm. ► In joint shareholder optimum severance pay crowds out until all influence activities. ► Contractual severance pay claims only select a particular CEO as head of the new firm. ► Severance pay does not depend on differences in compensation structures or levels.

Technology and torts: Memory costs, nondurable precautions and interference effects

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 4

Jef De Mot, 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 new technologies on the rate of litigation.

Highlights

► We examine the influence of nondurable precaution technologies on the expansion of tort awards. ► We present a formal model on durable and non-durable precaution technology that focuses on memory costs. ► Tort law perpetuates the expansion of awards because liability exposure creates interference. ► The interference effects may increase the potential problem of socially excessive suits. ► The overall effect of new technologies on the rate of litigation in ambiguous.

Why not adopt a loser-pays-all rule in criminal litigation?

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics

Luciana Echazu, Nuno Garoupa

In this paper we consider the potential effects that the application of a loser-pays-all rule may have on criminal litigation, including the decision to prosecute, criminal deterrence and legal error. We find that the effects of fee shifting on deterrence and on miscarriage of justice go in opposite directions. We also look at the effects of this rule on the rate of settlements (plea-bargaining) and when one party is wealth-constrained. We apply the insights of our model to current policy discussions such as the use of RICO proceedings and the financing of enforcement authorities in the United States.

Cross-border Mergers and Acquisitions in different legal environments

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 3

Isabel Feito-Ruiz, Susana Menéndez-Requejo

The aim of this paper is to analyze the influence of the legal and institutional environment on bidder firm returns around the announcement date of cross-border Mergers and Acquisitions (M&As). The database includes 469 M&As of European (221 cross-border and 248 domestic) listed firms, with target firms being worldwide public or private firms (40 countries), over the 2002–2006 period. Shareholders of acquiring firms place greater value on cross-border M&A announcements than on domestic ones. The stronger (weaker) the legal and institutional environment of the acquirer firm country in comparison with that of the target firm country, the more positive (negative) the effect on acquiring-firm shareholders’ valuation of M&As.

Highlights

► Acquiring-firm shareholders positively value the M&A announcements. ► Cumulative Average Abnormal Return (CAAR), in (−1,+1), is 0.99% for the whole sample. ► The stronger (weaker) the legal and institutional environment of the acquirer firm country, the more positive (negative) the effect on acquiring-firm shareholders’ valuation of M&As.

Social Wealth and Optimal Care

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics

Giuseppe Dari-Mattiacci, Eric Langlais

When accidents result in noncompensable losses, a monetary payment is not enough to compensate the victim. We study the characteristics of optimal levels of care and distribution of risk under these circumstances and show that care depends on the aggregate wealth of society but does not depend on wealth distribution. We then examine whether ordinary liability rules, regulation, insurance, taxes and subsidies can be used to implement the first-best outcome (in terms of both care and risk). Finally, our results are discussed in the light of fairness considerations (second best) and in the special case of accidents between individuals and a firm.

Semi-collusion in media markets

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2011
Source:International Review of Law and Economics, Volume 31, Issue 2

Ralf Dewenter, Justus Haucap, Tobias Wenzel

Abstract This paper explores the effects that collusion can have in newspaper markets where firms compete for advertising as well as for readership. We compare three modes of competition: (i) competition in the advertising and the reader market, (ii) semi-collusion over advertising (with competition in the reader market), and (iii) (full) collusion in both the advertising and the reader market. We find that semi-collusion leads to less advertising (but higher advertising prices) and lower copy prices which is beneficial for readers. Under certain circumstances, semi-collusion may even benefit advertisers as newspaper circulation is higher. In addition, total welfare may rise due to semi-collusion. Results under full collusion are ambiguous. However, even under full collusion newspaper copy prices may decrease and welfare may increase.

Research highlights

► Readers benefit most if newspapers collude over advertising, but compete in prices. ► Even full collusion benefits readers if the advertising market is sufficiently large. ► With shrinking advertising markets collusion becomes more likely to harm readers.► Collusion can improve total welfare due to indirect network effects. ► Welfare effects of (semi-)collusion are more ambiguous than in other markets.

Crime and unemployment: Evidence from Europe

admin — Sun, 20 May 2012 08:25:03 +0000

Publication year: 2012
Source:International Review of Law and Economics, Volume 32, Issue 1

Duha T. Altindag

I investigate the impact of unemployment on crime using a country-level panel data set from Europe that contains consistently measured crime statistics. Unemployment has a positive influence on property crimes. Using earthquakes, industrial accidents and the exchange rate movements as instruments for the unemployment rate, I find that 2SLS point estimates are larger than OLS estimates.

Highlights

► Unemployment has a positive influence on property crimes. ► Earthquakes, industrial accidents and exchange rate movements are used as instruments for the unemployment rate. ► 2SLS point estimates are larger than OLS estimates.

To Show Virtue Her Own Feature

admin — Sat, 19 May 2012 00:14:44 +0000

About seven years ago, I had a wonderful day job—I was a professor at the Boyd School of Law at University of Nevada, Las Vegas. But, I also had a great night job (no, I wasn’t a cocktail waiter or a blackjack dealer)—I acted with a repertory theater company that performed Shakespeare in the park. One year we performed Hamlet, and I played two roles—the ghost of Hamlet’s father, and the Player King. The Player King was the lead actor in the play within the play that Hamlet wrote. The Player King was brash, insecure, a junior varsity pretty boy, and a total ham. It was the role that I was born to play.

And, in Hamlet, the character of Hamlet gave the Player King advice on how to be an actor. This teenage punk prince, born with a silver spoon in his mouth, is telling me, the Player King, how to act. His advice went like this:

Speak the speech, I pray you, as I pronounced it to
you, trippingly on the tongue . . . .
. . . Nor do not saw the air
too much with your hand, thus, but use all gently;
for in the very torrent, tempest, and . . .
. . . whirlwind of passion, you must acquire and beget
a temperance that may give it smoothness. . . .
. . . .
Be not too tame neither, but let your own discretion
be your tutor: suit the action to the word, the
word to the action; with this special observance, that you o’erstep not
the modesty of nature: for any thing so overdone is
[removed] from the purpose of playing, whose end . . .
. . . was and is, to hold . . . the
mirror up to nature; to show virtue her own feature . . . .¹

My character was insulted by Hamlet’s words, but a funny thing happened to the actor. The words from my night job started seeping into my day job. For a long time, I had believed that the role of the professor is professing. I thought that this professor gig was about knowledge transmission rather than learner empowerment. I used the Socratic Method as a default, and, far too often, I wanted to be the one articulating all the intelligent insights in the class. But maybe Hamlet had something to teach me—like an actor, maybe a professor should be “hold[ing] . . . the mirror up to nature; to show virtue her own feature.”²

Now, that’s a bit deeper than I usually like to think, but I wanted to explore it more. If I’m holding a mirror up to nature, does that mean that I should be putting the outside world in the mirror to show to my students? That certainly didn’t make me feel comfortable. I wasn’t sure I had that knowledge. First, if I possessed deep, unique insight into how the world truly is, why wasn’t I making more money? Second, I believe that knowledge is socially constructed, so any world I put in that mirror is going to be filtered by me. In short, if I was supposed to be the lighthouse, this beacon of absolute truth, then a lot of ships were going to crash on the shore.

But, maybe there was a better interpretation. Maybe, just maybe, I should be showing the mirror to the students, to show each of you the virtue in your features—your intelligence and passion, your love of learning, and your quest for justice. Maybe this was the way to go from knowledge transmission to learner empowerment. And this interpretation immediately felt right. From my vantage point, I never felt comfortable in the “Sage on the Stage” role; I’d much rather be the “Guide on the Side.”³ From a pedagogical perspective, this also felt right. I always felt, as both a student and a professor, that the classroom was a radical space of possibility.⁴ In the best classes, anything felt possible and no question seemed unanswerable—we grappled with ideas, rethought our assumptions, and examined our mental models of reality. It wasn’t the professor’s class or the students’ class, but our class. Sharing the power in the classroom would allow students to feel engaged, empowered, and connected to each other; this didn’t have to be adversarial, and it didn’t have to be about me hoarding all the power in the classroom.

Plus, this fit with my personal beliefs. I’m an absolute sucker for the poetry of Walt Whitman, and I share his view that “your very flesh shall be a great poem.”⁵ I wanted to share in the poetry of my students and maybe share a poem or two of my own. I remembered how I felt as a law student—awkward, riddled with self-doubt, fearing failure (I’m sure I’m the only law student who ever felt this way)—and didn’t want that in my classroom. So, it was decided, seven years ago: I would make my class a mirror reflecting the virtue of my students. Now that was a good day’s work. I could have thought about how to accomplish that end, but I lived in Vegas, so I went to the Bellagio and played poker until 3:00 a.m. instead.

But, at some point, I needed to figure out how to turn this vision into a reality in the classroom. I assumed that this insight would just naturally flow to my teaching. My new insight would allow me to speak “trippingly on the tongue”⁶ and empower everyone in the room. I stepped up to the podium with a head full of lightning, but I left the podium with a hat full of rain. Hamlet’s advice mocked me: in the very torrent, tempest, and whirlwind of passion, I did not acquire a temperance that would give it smoothness; I was just sawing the air with my hands.⁷ It’s one thing to say, as I do, that my goal is to make you the best advocate in whatever room you’re in; it’s another to help you get there. It’s one thing to say, as I do, that my class is about lawyering and not law; it’s another to make that true. You learn a great deal when you fail to realize your vision. You learn about courage; you learn about dignity; you learn about grace. In my case, I learned that I do not possess courage, dignity, or grace. I really started to have doubts that I could make my vision a reality.

I started to think about my mentors and how they taught me. Let me tell you about two mentors I had. Perhaps the best legal mentor I ever had when I was a lawyer was someone I’ll call Big Man. Big Man started a firm with four friends that eventually became a firm of 150 lawyers. He’s one of the best trial attorneys in the country. One day, when I was a second-year associate, he called me into his office. In the firm, this was called the Hand of God—you were going to work with Big Man, and he had hand chosen you for a task. And, boy, did I learn from him. I went from being a lawyer to an advocate over the span of that one case. One problem: not only couldn’t he pronounce my last name, he didn’t even want to learn it. For some odd reason, he called me “Tolstoy”. Maybe he called every Slavic person he met Tolstoy. I don’t know. I remember one day, after we had been working on the case for months, I heard him screaming at a secretary down the hall: “Where’s Tolstoy?!” The frightened secretary had no idea whom he was talking about. He kept screaming, “Where’s Tolstoy?” until, somehow, she said meekly, “You mean Pavel?” “Yeah,” said Big Man, “where’s Pavel Tolstoy?” This is the person from whom I learned to be a persuasive, effective advocate: a brilliant man who treated me like a fungible good—I was freely exchangeable or replaceable. That’s not the mentor Pavel Tolstoy wanted to be.

I contrast that with the biggest mentor in my life—my father. My father, a farmer with an eighth grade education, fought in the Polish Army in World War II, was captured and spent time in a Soviet gulag in Siberia for two years, and, when he was released, became a mercenary to continue to fight the Nazis—he fought with the British at the Battle of Monte Cassino. He fought in a war and saw his friends die around him; he went to a prison camp and saw his friends die around him; he decided to fight again and, again, saw his friends die around him. If anyone deserved to be bitter, it was my father. Yet, he was the funniest, most charming man you would ever meet. I remember asking him how he could always be so positive when he experienced more pain than any person should. He told me (delivered in a strong Slavic accent), “Nothing can make me what I am not.” He knew who he was, he was true to it, and he didn’t allow the world to crush it. And, throughout his life, he was—and remains, despite his passing—my North Star, guiding me in all manners of my life. I remember calling him once from law school, complaining about how hard everything was. He said (again, delivered in a strong Slavic accent): “Yes, reading book very hard. Ideas—very, very, hard. Try digging ditch in Siberia!” He said it with a smile, but that’s some tough love. Nonetheless, he showed me that he survived, and that I possessed that strength as well. And, through the way he lived his life, he proved to me that nothing can make me what I am not. That’s the mentor I wanted to be.

So, I went back to the drawing board to think about how I could conduct a class that would show students the virtue of their own feature. I started thinking about my learning objectives; I was reverse engineering—what do I want us to walk away with after class? My first conclusion was that I needed to broaden my learning objectives because too much of my time in the class was focused on the four corners of a case. Not that I have a problem with case holdings—I’m a big fan of them—but it’s only one tool in the toolbox. I felt that I needed to focus more on creativity, practical judgment, factfinding, persuasively advocating, speaking, listening, strategic planning, the ability to see the world from the eyes of others, integrity, self-evaluation, passion, and engagement.⁸ You know—the stuff lawyers do. The only way I could see to do that was to create a natural, critical learning environment. By natural, I mean I would give students authentic, real-world tasks. By critical, I mean we would not only examine our understanding of the law, its application, and its synthesis, but also try to provoke an imagination that leads to possibilities and solutions. Students would be reasoning rather than memorizing. The content wouldn’t be the end; it would be a means by which to advance learning outcomes. Content would be used to teach how to learn.

My second conclusion was to revisit the Socratic Method. I know—what the heck? Wasn’t that what I was just running from? Why am I embracing it again? The Socratic Method—my star-crossed lover—wherever I turned, there she was. I turned to the Socratic Method because I realized that to make this work, I needed to give the students a good problem, guide them through it, focus on higher-order thinking (such as evaluating and synthesizing), and leave the students to come up with the next question on their own. People learn best when they answer their own questions and receive feedback on their efforts. In this way, knowledge is constructed, not received. The Socratic Method, done with respect and with humor, could do that. The Socratic Method that I had previously utilized, however, was a game of “Guess what Pavel is thinking today”:

Pavel: Well, Student, let’s do problem 7. What’s Pavel thinking today?
Student: Um, that this is hearsay?
Pavel: No, that is not what Pavel is thinking today!

I had to aspire to do better, to build a process where we think about what the law is, why it’s that way, and how we influence it. This change could allow students to develop learning skills and the confidence to use them. I had to trust that you do not need to be an expert before interacting with the law—it’s not like welding, where the blowtorch can hurt a novice welder. The law rarely leaves visible scars. I wanted students to explore material, handle it, relate it to their own life experiences, and feel challenged by it.⁹

But I did not want them to feel belittled. I didn’t want the invisible scars that come from that I-just-don’t-get-this feeling. My third conclusion, then, was that I would open my teaching method to all learning styles, so that different types of learners would not be shut out of the process. Hamlet echoes in my ears again: be not too tame—suit the action to the word, the word to the action.¹⁰ Some things are best taught through the Socratic Method. Some things are not. If I’m going to test you on what the Mona Lisa looks like, I should show you a picture of the Mona Lisa (“Um, I don’t have a picture, but she’s a brunette, in her thirties, kinda sly look on her face”). But even if the Socratic Method is a good way of teaching something, you must circle back to that learning objective to cater to different learning styles—show a movie clip for the visual learners, do a brainstorming exercise for the kinesthetic learners, and/or lecture in a way that assists read/write learners. Keep circling back to your learning objectives in different ways so that students can try it on their own, get confused, receive feedback, and try it again. That, to me, is how you move from novice to expert.

My fourth and final conclusion was that I would teach with passion, humor, and respect. Let us go back to Hamlet again: do not o’erstep the modesty of nature, for any thing so overdone drifts from the purpose of playing.¹¹ And “modesty” is the operative word here. Like my father, to my own self I’d be true.¹² I’ve never felt like some high priest of arcane legal mysteries. I’m a person who needs to be confused before I can reach a higher level of understanding (for example, it took me two years to figure out Parking Structure #3). But that background influences my classroom. I certainly trust that my students want to learn and absolutely are able to learn. I trust that if you enjoy the classroom environment, you’ll learn better. But my trust goes deeper than that. I trust that I can be candid with you about my journey. I trust that we can teach one another. Perhaps most importantly, I trust that we can do great things together—that we can create a radical space of possibility.¹³

And you have always rewarded that trust, making me a better professor and person. I am very aware and so deeply humbled by the student support I received when the Rutter Committee was deciding who would receive this award. I was even more humbled by all the individual messages I received from many of you after winning the award. This is the third law school at which I’ve won a teaching award, and, due to your openness and kindness, it means the most to me. I want to show you that I mean what I say, so I’ll announce today that I will be donating a portion of my very generous honorarium to UCLA’s Law Fellows program so that they can continue the important work that they do. It’s the least I can do to express my gratitude for your support and for all the ways you’ve influenced me.

Along those lines, I want to thank the Rutter family for establishing this award and for their commitment to legal education. There are so many people within the UCLA community I want to thank, but I don’t want to add twenty minutes to this speech, so thank you all—you are wonderful friends and mentors. However, let me specifically say thank you to my family, for their love, support, and understanding. I absolutely would not be standing here without you. And, thank you to the students of UCLA Law: your virtues are so obvious to me that holding the mirror to you makes this a truly great job. It sure beats digging a ditch in Siberia. Thank you.

William Shakespeare, Hamlet act 3, sc. 2. ↩

Id. ↩
See generally Alison King, From Sage on the Stage to Guide on the Side, 41 C. Teaching 30 (1993). ↩
I first encountered the terminology “radical space of possibility” in the work of bell hooks. See bell hooks, Teaching to Transgress: Education as the Practice of Freedom 12 (1994). ↩
Walt Whitman, Leaves of Grass, at vii (David S. Reynolds ed., Oxford Univ. Press 2005) (1855) (“[A]nd your very flesh shall be a great poem and have the richest fluency not only in its words but in the silent lines of its lips and face and between the lashes of your eyes and in every motion and joint of your body . . . .”). ↩
William Shakespeare, Hamlet act 3, sc. 2. ↩
Id. ↩
The skills mentioned are part of a list crafted in Marjorie Maguire Shultz & Sheldon Zedeck, Final Report—Identification, Development, and Validation of Predictors for Successful Lawyering 15–16 (2009), available at http://papers.ssrn.com/ sol3/papers.cfm?abstract_id=1353554. In their work, Shultz & Zedeck interviewed hundreds of lawyers in order to identify “effectiveness factors” that related to competent lawyering. Their analysis confirmed what I always instinctually believed: The definition of “thinking like a lawyer” should be broadened to encompass all the skills necessary to practice law, and the classroom should develop all the tools a lawyer will need in her legal toolbox. ↩
The idea that students should actively construct their knowledge rather than passively receive it is a core tenet of constructivism, a prominent educational theory that focuses on learner-centered teaching. See Maryellen Weimer, Learner-Centered Teaching 8–17 (2002). ↩
William Shakespeare, Hamlet act 3, sc. 2. ↩
Id. ↩
My father never read Shakespeare, but I know that he would bless the advice that Polonius gives to his son, Laertes, in Hamlet:

This above all: to thine ownself be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.

Id. at act 1, sc. 3. ↩

An insightful exploration of the role of trust in the classroom can be found in Ken Bain, What the Best College Teachers Do 18, 135–149 (2004). ↩

John Oberdiek, "Method and Morality in the New Private Law of Torts"

admin — Fri, 18 May 2012 15:46:31 +0000

John Oberdiek, “Method and Morality in the New Private Law of Torts” 125 Harv. L. Rev. 189 (2012).

Keith N. Hylton, "New Private Law Theory and Tort Law: A Comment"

admin — Fri, 18 May 2012 15:45:37 +0000

Keith N. Hylton, “New Private Law Theory and Tort Law: A Comment” 125 Harv. L. Rev. 173 (2012).

Emily Sherwin, "Comments on Stephen Smith’s Duties, Liabilities, and Damages"

admin — Fri, 18 May 2012 15:45:09 +0000

Emily Sherwin, “Comments on Stephen Smith’s Duties, Liabilities, and Damages” 125 Harv. L. Rev. 164 (2012).

Thomas W. Merrill, "Property as Modularity"

admin — Fri, 18 May 2012 15:44:22 +0000

Thomas W. Merrill, “Property as Modularity” 125 Harv. L. Rev. 151 (2012).

Eric R. Claeys, "Exclusion and Private Law Theory: A Comment on Property as the Law of Things"

admin — Fri, 18 May 2012 15:43:51 +0000

Eric R. Claeys, “Exclusion and Private Law Theory: A Comment on Property as the Law of Things” 125 Harv. L. Rev. 133 (2012).

Richard A. Epstein, "Unifying Copyright: An Instrumentalist’s Response to Shyamkrishna Balganesh"

admin — Fri, 18 May 2012 15:43:02 +0000

Richard A. Epstein, “Unifying Copyright: An Instrumentalist’s Response to Shyamkrishna Balganesh” 125 Harv. L. Rev. 120 (2012).

Abraham Drassinower, "Copyright Is Not About Copying"

admin — Fri, 18 May 2012 15:40:10 +0000

Abraham Drassinower, “Copyright Is Not About Copying” 125 Harv. L. Rev. 108 (2012).

Robert J. Sampson, "When Things Aren’t What They Seem: Context and Cognition in Appearance-Based Regulation"

admin — Fri, 18 May 2012 15:39:41 +0000

Robert J. Sampson, “When Things Aren’t What They Seem: Context and Cognition in Appearance-Based Regulation” 125 Harv. L. Rev. 97 (2012).

Robert F. Bauer, "The Varieties of Corruption and the Problem of Appearance: A Response to Professor Samaha"

admin — Fri, 18 May 2012 15:38:44 +0000

Robert F. Bauer, “The Varieties of Corruption and the Problem of Appearance: A Response to Professor Samaha” 125 Harv. L. Rev. 91 (2012).

Orin S. Kerr, "Defending Equilibrium-Adjustment"

admin — Fri, 18 May 2012 15:38:07 +0000

Orin S. Kerr, “Defending Equilibrium-Adjustment” 125 Harv. L. Rev. 84 (2011).

"Recent Publications"

admin — Fri, 18 May 2012 15:31:14 +0000

“Recent Publications” 125 Harv. L. Rev. 1884 (2012).

"Congress Restricts Guantánamo Transfers, Prompting Constitutional Signing Statement Objection. — National Defense Authorization Act for Fiscal Year 2012, Pub. L. No. 112-81, 125 Stat. 1298 (2011) (to be codified in scattered sections of the U.S. Code)."

admin — Fri, 18 May 2012 15:30:19 +0000

“Congress Restricts Guantánamo Transfers, Prompting Constitutional Signing Statement Objection. — National Defense Authorization Act for Fiscal Year 2012, Pub. L. No. 112-81, 125 Stat. 1298 (2011) (to be codified in scattered sections of the U.S. Code).” 125 Harv. L. Rev. 1876 (2012).

"Ninth Circuit Holds that Teacher Speech in School-Related Settings Is Necessarily Government Speech. — Johnson v. Poway Unified School District, 658 F.3d 954 (9th Cir. 2011)."

admin — Fri, 18 May 2012 15:28:52 +0000

“Ninth Circuit Holds that Teacher Speech in School-Related Settings Is Necessarily Government Speech. — Johnson v. Poway Unified School District, 658 F.3d 954 (9th Cir. 2011).” 125 Harv. L. Rev. 1868 (2012).

"Ninth Circuit Affirms 262-Month Sentence Based on Uncharged Murder. — United States v. Fitch, 659 F.3d 788 (9th Cir. 2011). "

admin — Fri, 18 May 2012 15:28:22 +0000

“Ninth Circuit Affirms 262-Month Sentence Based on Uncharged Murder. — United States v. Fitch, 659 F.3d 788 (9th Cir. 2011). ” 125 Harv. L. Rev. 1860 (2012).

"Second Circuit Declines to Extend Ricci v. DeStefano. — Briscoe v. City of New Haven, 654 F.3d 200 (2d Cir. 2011)."

admin — Fri, 18 May 2012 15:27:31 +0000

“Second Circuit Declines to Extend Ricci v. DeStefano. — Briscoe v. City of New Haven, 654 F.3d 200 (2d Cir. 2011).” 125 Harv. L. Rev. 1852 (2012).

"Ninth Circuit Holds Female Plaintiffs Brought Valid Excessive Force Claims Against Police Officers Who Tased Them. — Mattos v. Agarano, 661 F.3d 433 (9th Cir. 2011) (en banc)."

admin — Fri, 18 May 2012 15:27:01 +0000

“Ninth Circuit Holds Female Plaintiffs Brought Valid Excessive Force Claims Against Police Officers Who Tased Them. — Mattos v. Agarano, 661 F.3d 433 (9th Cir. 2011) (en banc).” 125 Harv. L. Rev. 1844 (2012).

"Independence, Congressional Weakness, and the Importance of Appointment: The Impact of Combining Budgetary Autonomy with Removal Protection"

admin — Fri, 18 May 2012 15:26:31 +0000

“Independence, Congressional Weakness, and the Importance of Appointment: The Impact of Combining Budgetary Autonomy with Removal Protection” 125 Harv. L. Rev. 1822 (2012).

"The Perils of Fragmentation and Reckless Innovation"

admin — Fri, 18 May 2012 15:26:03 +0000

“The Perils of Fragmentation and Reckless Innovation” 125 Harv. L. Rev. 1799 (2012).

Benjamin C. Zipursky, "Palsgraf, Punitive Damages, and Preemption"

admin — Fri, 18 May 2012 15:25:27 +0000

Benjamin C. Zipursky, “Palsgraf, Punitive Damages, and Preemption” 125 Harv. L. Rev. 1757 (2012).

Stephen A. Smith, "Duties, Liabilities, and Damages"

admin — Fri, 18 May 2012 15:25:09 +0000

Stephen A. Smith, “Duties, Liabilities, and Damages” 125 Harv. L. Rev. 1727 (2012).

Henry E. Smith, "Property as the Law of Things"

admin — Fri, 18 May 2012 15:24:52 +0000

Henry E. Smith, “Property as the Law of Things” 125 Harv. L. Rev. 1691 (2012).

Shyamkrishna Balganesh, "The Obligatory Structure of Copyright Law: Unbundling the Wrong of Copying"

admin — Fri, 18 May 2012 15:24:30 +0000

Shyamkrishna Balganesh, “The Obligatory Structure of Copyright Law: Unbundling the Wrong of Copying” 125 Harv. L. Rev. 1664 (2012).

John C.P. Goldberg, "Introduction: Pragmatism and Private Law"

admin — Fri, 18 May 2012 15:24:01 +0000

John C.P. Goldberg, “Introduction: Pragmatism and Private Law” 125 Harv. L. Rev. 1640 (2012).

Adam M. Samaha, "Regulation for the Sake of Appearance"

admin — Fri, 18 May 2012 15:22:17 +0000

Adam M. Samaha, “Regulation for the Sake of Appearance” 125 Harv. L. Rev. 1563 (2012).

Casino Taxation in Tourism Resorts

admin — Thu, 17 May 2012 17:28:44 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 274-277.

Theoretical Loss and Gambling Intensity: A Simulation Study

admin — Thu, 17 May 2012 17:28:44 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 269-273.

Internet Cafes: Much Ado about Nothing—A Legal Analysis of Electronic Sweepstakes in Florida

admin — Thu, 17 May 2012 17:28:43 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 278-291.

Pruning the Licensing Thicket

admin — Thu, 17 May 2012 17:28:42 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 267-268.

What the Department of Justice Announcement Means

admin — Thu, 17 May 2012 17:28:42 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 259-266.

The New Legal Regime of Casinos and Slot Parlors in Nicaragua

admin — Thu, 17 May 2012 17:28:41 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 292-294.

Gambits

admin — Thu, 17 May 2012 17:28:41 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 257-258.

Marcello Costa (C-72/10) and Ugo Cifone (C-77/10); 2012 ECJ EUE-Lex LEXIS 58 (Court of Justice of the European Union, February 9, 2010)

admin — Thu, 17 May 2012 17:28:40 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 298-307.

Redding Rancheria v. Salazar; Case No. 11-1493 SC, 2012 U.S. Dist. LEXIS 19781 (N.D.CA., February 16, 2012)

admin — Thu, 17 May 2012 17:28:39 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 320-330.

Collazo v. Pennsylvania Gaming Control Board; Case No. 1083 C.D. 2011, 2012 Pa. Commw. Unpub. LEXIS 130 (Commonwealth Court of Pennsylvania, February 23, 2012)

admin — Thu, 17 May 2012 17:28:39 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 317-319.

Girmai v. Rincon Band of Luiseno Indians; Case No. 11CV2567 JLS (POR), 2012 U.S. Dist. LEXIS 20487 (S.D.CA., February 16, 2012)

admin — Thu, 17 May 2012 17:28:38 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 308-309.

IMT, Inc. v. City of Lumberton; Case No. COA11-813, 2012 N.C. App. LEXIS 291 (Court of Appeals of North Carolina, February 21, 2012)

admin — Thu, 17 May 2012 17:28:38 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 310-316.

United States v. Elie and Campos; Case No. S3 10 Crim. 0336 (LAK), 2012 U.S. Dist. LEXIS 15119 (S.D.N.Y., February 7, 2012)

admin — Thu, 17 May 2012 17:28:36 +0000

Gaming Law Review and Economics May 2012, Vol. 16, No. 5: 295-297.

The Costs and Benefits of Secured Creditor Control in Bankruptcy: Evidence from the UK

admin — Thu, 17 May 2012 12:27:32 +0000

The theoretical literature debates whether debtors should be permitted to contract with lenders over control rights in bankruptcy. Proponents point to coordination benefits from concentrating control rights; detractors point to inter-creditor agency costs. A recent reform of UK bankruptcy law provides an opportunity to test these theories. Until 2003, UK bankruptcy law permitted firms to give complete ex post control to secured creditors, through a procedure known as “receivership.” A bankruptcy reform then required firms to use a different procedure, “administration,” which confers greater control on unsecured creditors. We present empirical findings from a hand-coded sample of 340 bankruptcies from both before and after the change in the law. Whilst gross realizations have increased following the change in the law, these have tended to be eaten up by increased bankruptcy costs. We infer that dispersed and concentrated creditor governance in bankruptcy may be functionally equivalent.

The Interface between Competition Policy and Data Protection

admin — Wed, 16 May 2012 05:04:04 +0000

International law and Politics: International Criminal Courts and Judgments – The Case of the Special Tribunal for Lebanon

admin — Tue, 15 May 2012 17:14:59 +0000

Everywhere, politics and law intertwine. Not only is that fact obvious, but its reality is a necessary one; there is no escape from this close relationship. The ways in which politics and law interact impacts the quality of the legal system operating in any given society. The quality of a legal system is also dependent on the system’s internal structure and operation. The assessment of this quality is the central element of the notion of Rule of Law.

This article will undertake an examination of the emergence of international criminal Tribunals, and other traits of the international criminal law regime, as problematic instances of political considerations eclipsing legal tools or institutions. This phenomenon is possible both because of the internal characteristics of international law, and because of the dynamics of international politics. In any case, the result affects the potential and the impact of Rule of Law in international law.

Section I will briefly discuss the possibility and the appropriateness of establishing a relationship between the notion of Rule of Law and international law. Section II will overview a general assessment of the political choices made in relation to the creation and functioning of international Tribunals. Finally, Section III will present a closer look at the case of the Special Tribunal for Lebanon.

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000

Throughout the history of commerce, product reputation has fueled economic growth. Product reputation boosts consumer confidence, ensures a consumer’s positive commercial experience, and rewards producers for superior craftsmanship. Yet, a product’s quality reputation is not inherent or easy to obtain, it consists of intangible characteristics that take substantial time and resources to develop. Intellectual property (IP) protections for goods’ reputations are essential to protecting the mutual investments and benefits producers and consumers make and derive from their economic activity. Geographical indications (GI) are one form of IP protection for reputations that provide producers the exclusive right to use the geographical region of their goods’ origin, for which the reputation of the goods has developed, in both labeling and advertising.

Although most nations have domestic legal protection and enforcement procedures for GIs through trademark, certification mark, or sui generis GI legal protections, comprehensive and effective international GI protections have yet to be established. Many countries have divergent and often uncompromising views as to the level of protection countries should provide to other countries’ GIs. Over the past decade, this debate has been centered around ongoing multilateral and bilateral efforts to expand international GI protections beyond those provided in the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In November 2001, WTO members declared their intention to expand TRIPS’ GI protections. However, all proposals for implementing TRIPS Plus protections have failed.

Due to the failed attempts to implement multilateral TRIPS Plus protections, bilateral and regional free trade agreements (FTA) have become the main alternative means for countries to implement international TRIPS Plus GI protections. In numerous FTAs, countries and trade blocs have or are in the process of adopting bilateral and multilateral international TRIPS Plus GI protections.

Out of the numerous enacted and pending FTAs, few have more significance than the currently negotiated European Union-India Bilateral Trade and Investment Agreement (EU-India BTIA). The EU-India BTIA is one of the largest FTAs ever conceived on an economic and social scale. The EU and India have two of the five largest economies in the world (in size GDP) and their citizens represent nearly one-quarter of the world’s population.

The EU-India BTIA will have a substantial impact on international GI protections. Over 1,400 GIs are currently or soon-to-be registered in the EU and India, including many of the world’s most well known goods such as “Darjeeling tea” and “Roquefort cheese.” The EU-India BTIA will also potentially be one of the first bilateral FTAs with TRIPS Plus GI provisions between developed and developing countries that have both domestic TRIPS Plus and sui generis GI protection systems.

Beyond simply being the first FTA of its kind, the EU-India BTIA has the potential to impact two different, yet equally important issues in international GI protection. First, if the EU-India BTIA’s TRIPS Plus GI provisions are able to accommodate both the EU and India’s own domestic TRIPS Plus GI protections, the agreement’s GI provisions may provide a blueprint for future FTAs between developed and developing world TRIPS Plus GI proponents. Although many developing countries, including India, Kenya, and Sri Lanka, among others, have called for international TRIPS Plus GI reforms, many feel that international GI protection expansions should include protections particularly important to developing world countries, including GI protections for traditional indigenous goods and fair access to international GI protections and enforcement. By establishing provisions to provide such protections, the EU-India BTIA may help to guide developed and developing countries to establish greater international TRIPS Plus GI protections.

Secondly, the EU-India BTIA’s GI provisions could also act as a possible solution between Anglo-American and Romanistic GI proponents’ current impasse over TRIPS GI protection reforms. Although likely not intended by either the EU or India, the GI provisions in the EU-India BTIA, due to the size and significance of the agreement, could act as a starting point to resolve the current deadlock between Anglo-American and Romanistic supporters in the TRIPS GI protection expansion debate if the EU and India’s GI provisions are flexible, effective, and show possible solutions to both Anglo-American and Romanistic country concerns.

Despite the potential opportunities the EU-India BTIA provides for international TRIPS Plus GI protection advancements, this article will show that the EU and India’s GI proposals fail to provide effective international TRIPS Plus GI protections because they restrict the amount of GIs qualifying for protection under the EU-India BTIA, limit protections afforded to such GIs, and hinder means of enforcement.

To understand these deficiencies in the EU-India BTIA GI proposals, Part I of this paper will examine current international GI protections under TRIPS, TRIPS’ protection deficiencies, and recent failed efforts to reform TRIPS’ deficiencies through multilateral initiatives. Evaluating these topics will enable an understanding of why TRIPS Plus GI proponents, such as the EU and India, seek to pursue international GI protections beyond TRIPS.

Part II of this article examines the EU and India’s own GI protections in their domestic legislation. This will include an analysis of both countries’ GI legislation, as well as the rationales for their implementation, in order to establish the important TRIPS Plus features of their domestic GI protections that will be used in evaluating the EU and India’s GI proposals in Part III.

Lastly, Part III will evaluate both countries’ proposals for GI protections in the EU-India BTIA. The draft proposals will be examined in relation to the countries’ domestic GI legislative frameworks as well as the consequences of the proposals’ implementation. This will be done both from a bilateral basis and within the perspective of multilateral TRIPS reforms, to determine their effectiveness in protecting both countries’ TRIPS Plus GI protections as well as providing an effective blueprint for enhanced international GI protections. This analysis will be focused on the three major aspects of the proposals: the scope of GIs qualifying for protection, afforded legal protections, and rights of enforcement.

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000

A Blueprint for International TRIPS Plus Geographical Indication Protections? An Analysis of Geographical Indication Protection Proposals in the European Union – India Bilateral Trade and Investment Agreement

admin — Tue, 15 May 2012 16:27:39 +0000