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Bound print copies of George Mason School of Law’s working paper series on law and economics are available in the Law Library. The bound set often includes initial drafts of papers. Search Mason’s Classic Catalog to locate a working paper.

Recent Working Papers:


Staying Agency Rules: Constitutional Structure and Rule of Law in the Administrative State

By Ronald Cass

ABSTRACT:

Today, administrative rules are far more numerous than the laws enacted by Congress, cover far more pages in the relevant legal codes, account for far more regulatory commands, and have profound effects on American economy and society. Although administrative rules can provide substantial public benefit, legal constraints on the scope of administrative authority and on the processes by which it is employed provide critical protections. Courts, when asked, can review the legality of these rules; courts also can stay rules’ effectiveness pending review, both preserving the status quo and reducing costs entailed by rules of questionable legality. Holding rules in abeyance until they can be reviewed frequently is the best—and at times the only—vehicle for guaranteeing a meaningful review. Given the vast reach of federal administrative regulation, the concentrated impact regulations often have on specific individuals and entities, and the frequent experience that staying rules’ effect is critical to limiting administrative adventurism and avoiding irreparable harm, canons of deference to both administrative and judicial discretion should be revisited. Greater attention to the harm from failure to stay questionable rules can protect rule-of-law values, preserve liberties that were central to our constitutional design, and provide space for serious evaluation of the rules’ consistency with law.

The Information-Forcing Dilemma in Damages Law

By Tun-Jen Chiang

ABSTRACT:

Courts assessing compensatory damages awards often lack adequate information to determine the value of a victim’s loss. A central reason for this problem, which the literature has thus far overlooked, is that courts face a dilemma when applying their standard information-forcing tool to the context of damages. Specifically, the standard method by which courts obtain information is through a burden of proof. In the context of assessing damages, this means a rule requiring plaintiffs to prove the value of a loss with precision. But courts will often face a situation where it is clear that the plaintiff has suffered a loss, but where the plaintiff cannot prove the exact amount of the loss. A court that strictly enforces the burden of proof would award zero damages in such a case, producing a harsh result. But a court that avoids this result by instead awarding its best guess at the correct amount — effectively forgiving the inadequacy of plaintiff’s proof — then undermines future incentives for plaintiffs to produce rigorous evidence.
The result of this dilemma is that courts oscillate between strict and forgiving approaches, causing much confusion. Explaining the dilemma helps alleviate the confusion and points to a solution. In principle, courts should require a party to produce damages evidence if, and only if, the party is the lower cost provider of that evidence, and the benefit of having the evidence outweighs the cost of collecting it. The messy legal standards for calculating damages in various fields can be understood as clumsy attempts by courts to arrive at this unifying principle. Interpreting the vague and messy doctrine in light of this “cheaper cost-effective producer” principle thus helps make damages law more coherent.

Gateway Crimes

By Murat Mungan

ABSTRACT:

Many who argue against the legalization of marijuana suggest that while its consumption may not be very harmful, marijuana indirectly causes significant social harm by acting as a “gateway drug,” a drug whose consumption facilitates the use of other, more harmful, drugs. This article presents a theory of “gateway crimes”, which, perhaps counterintuitively, implies that there are social gains to decriminalizing offenses that cause minor harms, including marijuana-related offenses. A typical gateway crime is an act which is punished lightly, but, because it is designated as a crime, being convicted for committing it leads one to be severely stigmatized. People who are stigmatized have less to lose by committing more serious crimes, and, therefore, the criminalization of these acts increases recidivism. Thus, punishing “gateway crimes” may generate greater costs than benefits, and this possibility must be kept in mind when discussing potential criminal justice reforms. This “gateway effect” does not require that, but, is strongest when, people underestimate, or ignore, either the likelihood or magnitude of the consequences associated with being convicted for a minor crime. Therefore, - if potential offenders in fact underestimate expected conviction costs - this theory not only implies previously unidentified benefits associated with decriminalizing acts that cause questionable or minor harms, but also benefits associated with making the costs associated with convictions more transparent.

Advancing Judicial Review of Wetlands and Property Rights Determinations: U.S. Army Corps of Engineers v. Hawkes

By Steven Eagle

ABSTRACT:

This Article analyzes recent U.S. Supreme Court decisions that enhance procedural protections for landowners alleging that stringent federal regulatory determinations threaten their Takings Clause rights. It uses as a focus the Court’s 2016 decision in U.S. Army Corps of Engineers v. Hawkes, involving the justiciability of “approved jurisdictional determinations” under the Clean Water Act. The Article reviews the practical difficulties resulting from the Corps of Engineers and Environmental Protection Agency’s sweeping definition of “Waters of the United States,” their demands involving wetlands, and landowners’ ability to meaningfully contest those demands in U.S. district court. The Article suggests how property owners might use the Court’s recent property rights and environmental holdings, and dicta, as guides to more effectively protect their property interests in the face of broad assertions of regulatory authority premised on very general statutory provisions.

Conflation, Intractability and Affordable Housing

By Steven Eagle

ABSTRACT:

This Article examines the varying and often-conflicting views of “affordable housing” of different social and economic groups. It asserts that attempts to deal with affordable housing issues must take into account the shelter, cultural, and economic needs of those populations, and also the effects of housing decisions on economic prosperity. The article focuses on affordable housing goals such as making available an ample supply of housing in different price ranges; attracting and retaining residents who contribute to the growth and economic prosperity of cities; ensuring that neighborhood housing remains available for existing residents, while preserving their cultural values; and providing adequate housing in high-cost cities for low- and moderate-income persons and the overlapping concern for “fair housing” for families of all races and backgrounds.  Thereafter, the Article examines the benefits and detriments of various means of providing more affordable housing, including fair-share mandates, rent control, and inclusionary zoning (including whether that leads to impermissible government takings of private property). It then briefly considers the merits and demerits of federal subsidy programs.  The Article briefly considers conceptual and practical problems in implementing the Su-preme Court’s 2015 Inclusive Communities disparate impact holding, and HUD’s 2015 regulations on “Affirmatively Furthering Fair Housing.” Finally, it discusses how the concept of “affordable housing” conflates the separate issues of high housing prices and poverty, and how housing prices might be reduced through removal of regulatory barriers to new construction.  Throughout, the Article stresses that advancing affordable housing goals have both explicit and implicit costs, and that goals often are conflicting. To those ends, it employs economic and sociological as well as legal perspectives.

Conditional Privacy Rights

By Murat Mungan

ABSTRACT:

People have subjective valuations of privacy. Thus, absent further considerations, efficiency requires that a person be afforded privacy if, and only if, his subjective valuation of privacy exceeds the social value of the information that would be disclosed through a violation of that person's privacy. Absolute regimes that either always allow privacy, or never allow privacy, cannot achieve this result. This article shows that a conditional privacy regime can lead to efficient separation among people based on their subjective valuations of privacy. Moreover, this regime need not inefficiently distort information collection incentives or incentives to refrain from various acts that may generate collectible information.

Salience and the Severity Versus the Certainty of Punishment

By Murat Mungan

ABSTRACT:

The certainty aversion presumption (CAP) in the economics of law enforcement literature asserts that criminals are more responsive to increases in the certainty rather than the severity of punishment. In simple economic models, this presumption implies that criminals must be risk-seeking. Some scholars claim that this and similar anomalous implications are caused by the exclusion of various behavioral considerations in theoretical analyses. This article investigates whether a model in which criminals over-weigh probabilities attached to more salient outcomes (as in Bordalo et al. (2012) and (2013)) performs better than the simple expected utility theory model in explaining CAP-consistent-behavior. The analysis reveals that the answer is negative unless the probability of punishment is unreasonably high. This finding suggests that we should exercise caution in incorporating salience -- a la Bordalo et al. -- in simple law enforcement models.

The Certainty versus the Severity of Punishment, Repeat Offenders, and Stigmatization

By Murat Mungan

ABSTRACT:

There is a widely held presumption that the certainty of punishment (p) is a greater deterrent than the severity of punishment (s). This presumption is at odds with evidence from recent experimental work suggesting the contrary, and the implication of simple law enforcement models that risk-averse individuals must be deterred more by an increase in s than a comparable increase in p. This article demonstrates that this discrepancy may be the result of subtle differences in the effects being investigated. In particular, when repeat offenders are punished more severely than first time offenders, a change in p can have a greater effect than an increase in s on the aggregate offense level, even when each individual offender is more responsive to s than p. This is because an increase in p corresponds to moving some offenders from the first time offender category to the repeat offender category, which reduces the crime rate by causing a discrete increase in the sanctions that these individuals face. This effect is reversed when a first conviction results in stigma that more than off-sets the difference between the formal sanction for repeat offenders and first time offenders, because, then, the total sanction for repeat offenders is lower than the total sanction for first time offenders. In these cases, stigmatization can cause criminogenic effects. However, these negative effects are generally off-set by a second effect that emerges when stigmatization is present: an increase in p results in greater expected formal as well as informal sanctions, whereas an increase in s only affects the expected formal sanction. Finally, all results are derived by assuming that individuals are risk-neutral, implying that individuals need not be risk-seeking for deterrence to be more responsive to p than s, which is a point claimed in Becker (1968). 

FRAND in India

By Joshua Wright, Koren Wong-Ervin, Douglas Ginsburg, Bruce Kobayashi

ABSTRACT:

In the last several years, India has raised several novel and controversial concerns regarding standard-essential patents (SEPs). For example, in 2013 and 2014, the Competition Commission of India (CCI) issued investigation orders against Ericsson, alleging that the company violated its commitments to license on fair, reasonable, and nondiscriminatory (FRAND) terms by imposing discriminatory and “excessive” royalty rates and using Non-Disclosure Agreements (NDAs). In its investigation orders, the CCI stated that “forcing” a party to execute [an] NDA” and “imposing excessive and unfair royalty rates” constitutes “prima facie” abuse of dominance and violation of section 4 of the Indian Competition Act, as does “[i]mposing a jurisdiction clause debarring [the licensee] from getting disputes adjudicated in the country where both parties were in business.” Most recently, India’s Department of Industrial Policy and Promotion (DIPP) issued a Discussion Paper on SEPs, which, among other things, expresses concerns about holdup by patent holders while omitting any concerns about holdup and holdout by implementers. 

This article analyzes these developments, providing guidance based upon the approach taken by the United States and the Europe Commission. We offer policy recommendations concerning the availability of injunctive relief; the advisability of a one-size-fits all template for standard-development or standard-setting organizations (SDOs or SSOs); the imposition of royalty caps or competition sanctions for “excessive pricing”: the use of NDAs and the “Non Discriminatory” element of FRAND; balancing desires for transparency with needs for confidentiality in licensing; and the use of international arbitration on a portfolio basis as likely the most efficient and realistic means of resolving FRAND disputes.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the Japan Fair Trade Commission's Consultation on the Administrative Surcharge System

By Joshua Wright, Koren Wong-Ervin, Douglas Ginsburg, Bruce Kobayashi

ABSTRACT:

This comment is submitted in response to the Japan Fair Trade Commission’s request for comments on its Summary of Issues Concerning the Modality of the Administrative Surcharge System. The Global Antitrust Institute's Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the Proposed Revisions to the Guidelines of the Anti-Monopoly Commission of the State Council on Determining Illegal Gains Generated from Monopoly Conduct and on Settin

By Joshua Wright, Koren Wong-Ervin, Douglas Ginsburg, Bruce Kobayashi

ABSTRACT:

This comment is submitted in response to the National Development and Reform Commission of the People’s Republic of China’s public consultation on the Proposed Revisions to the Guidelines of the Anti-Monopoly Commission of the State Council on Determining the Illegal Gains Generated from Monopoly Conduct and on Setting Fines. The Global Antitrust Institute's Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy.

On Corrective Justice and Rights in Property: A Comment on Property Law and Social Morality

By Eric Claeys

ABSTRACT:

This Review Essay was prepared for a 2014 author-meets-readers Symposium at Texas A&M School of Law on Peter Gerhart’s book Property Law and Social Morality.  The book constitutes an exercise in cross-pollination; it draws on philosophical scholarship about corrective justice in tort to describe, justify, and critique property. Property Law and Social Morality is original and interesting because it steers a helpful middle course between lay and libertarian attitudes toward property on one hand and the more communitarian attitudes reflected in progressive property scholarship on the other.  Complications arise in some parts of the book’s argument, however, because tort and property scholars tend to assume different meanings and bounds for corrective justice and distributive justice.  And a corrective justice account of property is bound to be more limited than a corresponding account of tort.  Corrective justice doesn’t cover all of morality, and especially not all the portions a theory of morality needs to structure property rights.  The Essay illustrates with examples from: nuisance cases about access to light; trespass cases involving migrant-residents’ rights to invite lawyers or social service workers to meet them at their residences; the rules regulating use rights and ouster in cotenancies; and American eminent domain practice.

The Right to Arms and the American Philosophy of Freedom

By Nelson Lund

ABSTRACT:

The right to keep and bear arms is a vital element of our liberal order, but its philosophic basis is no longer appreciated by American elites. The left rejects the understanding of politics on which our nation was founded, and conservative intellectuals have been remarkably uncomfortable with the right to arms. George Will and Charles Krauthammer, for example, have advocated repeal of the Second Amendment, and conservative pundits have generally stayed silent in the face of such attacks on the Constitution.  People who do not understand why they should defend the right to arms are not likely to be its most effective defenders, and ignorance about the philosophy underlying our free institutions is among the least excusable failings of public intellectuals. Conservative pundits constantly complain about the erosion of individual liberty by bureaucratic government, about the enervating effects of the nanny state, and about the suffocating atmosphere of euphemisms and repressed resentment imposed by the political correctness police. If they had a better understanding of John Locke, William Blackstone, Cesare Beccaria, Alexis de Tocqueville, and every one of our founding fathers, these opinion leaders would not display an effete abhorrence of what Krauthammer calls “America’s frontier infatuation with guns.” Our nation’s founding philosophy was not infected with some silly romanticism about guns or an outmoded frontier mentality. It was based on the reality of human nature and on reason, neither of which has changed since the eighteenth century.

Agency Finance in the Age of Executive Government

By Michael Greve

ABSTRACT:

The rise of “executive government” has prompted a great deal of public debate and scholarly theorizing.  This article examines one aspect of that very large subject: agency budgets or, more precisely, revenues. To an unprecedented extent, regulatory agencies have come to rely on non-appropriated funds for their ordinary operations. Many have become self-financing; some have become profit centers for wider executive exertions—and for Congress. We trace this development in two areas: agencies’ delegated authority to tax, and agency finance through settlement with private parties in criminal or civil enforcement proceedings. Due to a paucity of reliable data, our presentation is necessarily sketchy and tentative. We nonetheless proceed (with the appropriate caution) in the hope of informing a scholarly debate over “the administrative state” that to our minds has become excessively abstract and formalistic. Agency self-finance bears on many of the central themes of administrative and constitutional law: delegation and the separation of powers; congressional oversight; agency independence; the choice between rulemaking and enforcement or adjudication; and judicial review.  Approaching the administrative state from its most pedestrian front opens a window both into its actual operation and constitutional rule-of-law questions.

Some Clerical Contributions to Ex Parte Quirin

By Ross Davies

ABSTRACT:

This article introduces some documents relating to Ex parte Quirin and then explains where they have been for the last 70-plus years. Quirin is the case in which the U.S. Supreme Court – in a hurried summer session in July 1942 – upheld President Franklin D. Roosevelt’s creation of an unusual military commission to try eight Nazi saboteurs under a special set of rules. The documents are memos written to Chief Justice Harlan Fiske Stone by his senior law clerk, Bennett Boskey, while the Court was hearing and deciding and opining on Quirin.

Antitrust Liability for Licensing Boards After North Carolina Dental: Antitrust Preemption as a Penalty Default?

By James Cooper

ABSTRACT:

Most professions in the United States are regulated by boards composed of industry practitioners, who in their official roles routinely engage in anticompetitive conduct.  Until the Supreme Court’s landmark decision in North Carolina State Board of Dental Examiners v. FTC, many believed that such conduct was beyond the reach of antitrust enforcement as long as it was taken pursuant to state policy to displace competition—a standard met with relative ease.  After North Carolina Dental, states now must additionally take ownership of the anticompetitive actions of these boards to avoid the full force of the antitrust laws.  In this manner, North Carolina Dental has the potential to prompt a large-scale restructuring of the state regulatory apparatus.  This article explores the potential for antitrust preemption to play a role in this restructuring.  I argue that, to the extent that unsupervised boards’ anticompetitive conduct would be justified on non-competition concerns, they are rendered defenseless in any rule of reason inquiry, and hence are subject to a de facto per se standard.  Rather than adjusting the rule of reason inquiry to allow courts to weigh non-competition concerns in these cases, the better alternative would be to preempt the laws altogether.  This approach has several advantages.  First, it would avoid a dissonance between antitrust and due process inquiries into the same conduct.  Second, it would act as a penalty default for states, and like penalty defaults in contracts, such a rule would assign the regulatory decision to the low-cost information provider—the state, rather than the court.  Finally, this approach vindicates federalism to a greater extent than a modified rule of reason.  The only role for a federal court under a preemption approach would be to uphold or strike down the law granting the board authority to engage in the suspect conduct.  This decision, moreover, would be based on an objective analysis of the board’s regulatory structure, rather than a subjective weighing of competition and non-competition concerns.

Information & Settlement: Empirical Evidence on Daubert Rulings and Case Outcomes

By James Cooper

ABSTRACT:

In 1993, the Supreme Court established a new standard for the admissibility of expert evidence with its decision in Daubert v. Merrell Dow Pharmaceuticals. Although whether Daubert actually has increased the reliability of expert evidence remains an open question, empirical research generally suggests that Daubert has increased the judicial role in expert testimony as the number of challenges has increased.  An unexplored topic to date is how Daubert outcomes impact litigation outcomes.  This paper aims to fill that gap by examining how Daubert outcomes in federal district court affect the likelihood and timing of settlement.  This paper also fits into the larger empirical literature that explores how information flows impact settlement.  The sample of 2,127 Daubert motions made in 1,017 private cases from 91 federal district courts, spanning from 2003-2014, and involving 57 different causes of action provides the most comprehensive overview of Daubert practice in federal courts to date.  The main empirical results suggest that defendant Daubert wins (plaintiff wins) are associated with a reduction (increase) in the likelihood of settlement.  Results from duration analysis suggest that longer pendency time for Daubert motions are associated with lower settlement rates (a 4-7 percent reduction in the rate of settlement for every month that a Daubert motion goes undecided). Decomposition finds that the indirect effect of Daubert pendency (delay due to the reduction in communication between parties while Daubert motions pend before the court) may account for the majority of the measured reduction in the settlement rate.  These results suggest that courts might reduce the cost of litigation if they were to adopt “Lone Pine”-type procedures that structure expert discovery and concomitant Daubert motions early, especially when expert testimony is required to prove certain elements of a claim.  

Gonzales v. Carhart: Bringing Abortion Back into the Family Law Fold

By Helen Alvaré

ABSTRACT:

Alone among abortion opinions, the U.S. Supreme Court’s second partial-birth abortion decision, Gonzales v. Carhart, included fetuses within the categories of human life and family relations. It spoke of a “bond” between a woman and her unborn “child.” Its analysis of constitutional law concerning abortion incorporated presumptions about parent-child relationships ordinarily applied only respecting already-born children: first that the law should prefer maintaining parent-child relationships; and second, that children are naturally vulnerable such that parents have a primary duty of protection, which will be supplemented by the state when a child’s welfare is seriously endangered. This article argues that Gonzales’ harmonizing of abortion law with family law has important and positive consequences not only for children’s health, but also for women and families in the areas of helping women to avoid unwanted pregnancies, and better accommodating women’s employment and other social commitments to women’s childbearing.

Labor, Exclusion, and Flourishing in Property Law

By Eric Claeys

ABSTRACT:

This Article presents a natural rights justification for property rights in a theory called “productive labor theory.” Productive labor theory sets forth a Lockean, labor-based case for property. It links property to human interests in flourishing — specifically in interests in using ownable resources to produce constituent elements of survival or rational improvement. On this foundation, “labor” means intelligent and purposeful activity producing goods contributing to survival or rational improvement.
This Article presents productive labor theory as an alternative to the two families of normative theories that currently loom large in contemporary property scholarship — economic theories of exclusion, and progressive theories. Each of these theory-families unsettles property in an important respect; productive labor theory shores up each of the foundations unsettled by exclusion and progressive theories. Like progressive theories, productive labor theory links property on a satisfying moral foundation, namely human flourishing. Unlike progressive theories, productive labor theory doesn’t denigrate or undermine the role that exclusive control plays in property. Like leading economic theories, productive labor theory justifies strong rights of exclusive control and possession. Yet it avoids standard criticisms about normative foundations of law and economic analysis, and it identifies moral boundaries within which efficiency analyses might be normatively defensible.
The Article illustrates using: the prima facie case for trespass to land; the common law privilege for necessity and the defense for adverse possession; private law remedies for encroaching structures; Allemansrätt and statutory rights to roam; state and local landmark schemes (as exemplified in Penn Central Transportation Co. v. New York City); and regulatory schemes authorizing the use of eminent domain to condemn and reassign private land for commercial redevelopment (as exemplified in Kelo v. City of New London).

The Quality-Assuring Role of Mutual Fund Advisory Fees

By Michael Habib, D. Bruce Johnsen

ABSTRACT:

Active fund managers implicitly promise to research profitable portfolio selection. But active management is an experience good subject to moral hazard. Investors cannot tell high from low quality up front and therefore fear manager shirking. We show how the parties mitigate the moral hazard by paying the manager a premium fee sufficiently high that the manager’s one-time gain from shirking is less than the capitalized value of the premium stream he earns from maintaining his promise to provide high quality. Premium advisory fees act as a quality-assuring bond. Our model has a number of revealing extensions and comparative statics.