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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:


In Defense of Presidential Signing Statements

By Nelson Lund

ABSTRACT:

This short essay defends the use of presidential signing statements against a misguided attack by an ABA report, which was signed by a number of prominent academics and leaders of the bar. Posing as a champion of the rule of law and the will of Congress, the ABA hysterically objected to George W. Bush’s statements about his constitutional authority without evidence that his views led his administration to refuse compliance with any statutes. President Obama has continued to issue signing statements, often indistinguishable from those issued by President Bush. More significantly, he has frequently engaged in actual defiance of the will of Congress. The ABA, however, has not denounced Obama a threat to the rule of law and the separation of powers, which confirms that its denunciation of signing statements was really just a politically motivated canard.

Why Political Ignorance Undermines the Wisdom of the Many

By Ilya Somin

ABSTRACT:

Hélène Landemore’s Democratic Reason effectively demonstrates how cognitive diversity may potentially improve the quality of democratic decisions. But in setting out the preconditions that democracy must meet in order for voters to make collectively well-informed decisions, Landemore undermines the case for voter competence more than she strengthens it. The conditions she specifies are highly unlikely to be achieved by any real-world democracy. Widespread voter ignorance and the enormous size and complexity of modern government are severe obstacles to any effort to implement Landemore’s vision. Better-informed decision making is more likely to be achieved by allowing a wider range of issues to be decided by “voting with your feet” instead of at the ballot box.

The Ongoing Debate Over Political Ignorance: Reply to My Critics

By Ilya Somin

ABSTRACT:

The participants in this Critical Review symposium raise many insightful criticisms and reservations about my book Democracy and Political Ignorance: Why Smaller Government Is Smarter. But none substantially undermine its main thesis: that rational political ignorance and rational irrationality are major problems for democracy that are best addressed by limiting and decentralizing government power. Part I of this reply addresses criticisms of my analysis of the problem of political ignorance and its causes. Part II assesses challenges to my proposed solution.

Journal of the Oxford Centre for the Study of Law & Public Policy Introduction: Volume I, Issue 1

By Harry Hutchison

ABSTRACT:

Recent history bears poignant witness to a growing humanitarian disaster that envelops much of the Middle East, the Latin West, and the world as ISIS enlarges its grip on parts of Iraq and Syria and intensifies its allegiance to human savagery. At the same time, the West appears to have concluded its negotiation of an Iran Nuclear deal, an event that corresponds with unmistakable evidence of an escalation of Russian support for its long-time ally, Syrian President Bashar al-Assad. Taking full advantage of these circumstances, President al-Assad, who is also allied with Iran, has reportedly inflamed the refugee crisis in order to bolster his grip on power. Whilst bodies of refugees wash up on Greece’s shores and evidence emerges indicating that ISIS fighters continue to use the Turkish border as a transit point to the war-torn Middle East, the Turkish government—in an apparent effort to hedge its bets between Europe and NATO, on one hand, and its Middle Eastern friends, on the other—hesitates to decide whether to fully invest the nation’s political and ideological capital in the ongoing conflict with ISIS. Turkey and Turkish policies are once again at the centre of any attempt to understand the above-referenced events. Impelled by these events, the Oxford Centre for the Study of Law & Public Policy has launched an effort to comprehend Turkey and the geopolitical dimensions of its policies as a prelude to a wider focus on the Near East. Volume I of the Journal of the Oxford Centre for the Study of Law & Public Policy advances this endeavour.

Civil Rights and the Right to Work

By David Bernstein

ABSTRACT:

This is a book review of Sophia Lee, The Workplace Constitution: From the New Deal to the New Right. The book is a lively, well-written exploration of two movements, the civil rights movement and the right to work movement, that tried to constitutionalize the rights of workers in response to the New Deal's provision of monopoly power to labor unions. Lee also discusses some surprising commonalities and even synergies between the two movements.

This review considers the book in the broader context of labor history. Unlike much labor history, it is mercifully free of jargon and of ideological cant. The very fact that Lee treats the civil rights movement and the right-to-work movement as parallel and at times symbiotic "workplace constitution" movements itself demonstrates a welcome broadmindedness about what is significant in labor and constitutional history.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the State Administration for Industry and Commerce Anti-Monopoly Guidelines on the Abuse of Intellectual Property Rights

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

ABSTRACT:

This comment is submitted to China's State Administration for Industry and Commerce (SAIC) by the Global Antitrust Institute (GAI) at George Mason University School of Law in response to the SAIC's consultation on its Anti-Monopoly Guidelines on Abuse of Intellectual Property Rights. The GAI Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy, including how to analyze conduct involving standard-essential patents.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the National Development and Reform Commission’s Draft Anti-Monopoly Guideline on Intellectual Property Abuse

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

ABSTRACT:

This comment is submitted to China's National Development and Reform Commission (NDRC) by the Global Antitrust Institute (GAI) at George Mason University School of Law in response to the NDRC's Draft Anti-Monopoly Guideline on Intellectual Property Abuse. This is the third comment submitted by the GAI to the NDRC on its Draft AML-IP Guidelines.  All three of China’s AML agencies are drafting separate guidelines to submit to the State Council of the PRC for consideration. The final guidelines will reportedly apply to all three AML agencies.   

Overall, we suggested that the NDRC adopt a more compliance-based approach that sets forth basic principles that would allow parties to self-advise. The current Draft Guideline instead sets forth a list of factors that the NDRC will consider when analyzing specific conduct. The Draft Guidelines do not explain the significance of each of the factors or how they will be weighed in the Anti-Monopoly Law (AML) agencies’ overall decision-making process. This approach allows the AML agencies broad discretion in enforcement decision-making without providing the guidance stakeholders need to protect incentives to innovate and transfer technology that could be subject to AML jurisdiction. Lastly, we recommend that the NDRC include throughout the Guidelines examples similar to those found in the U.S. antitrust agencies’ 1995 Antitrust Guidelines for the Licensing of Intellectual Property to illustrate how the AML agencies will apply the basic principles. We also provide specific line-edit proposed edits on four provisions: general analysis, charging “unfairly high” royalties, discriminatory treatment, and injunctive relief.

Stop Chug-a-lug-a-lugin 5 Miles an Hour on Your International Harvester: How Modern Economics Brings the FTC’s Unfairness Analysis Up to Speed with Digital Platforms

By Joshua Wright, John Yun

ABSTRACT:

In this Essay, the authors argue that in cases involving digital platforms, the Federal Trade Commission—when alleging unfair acts or practices in violation of section 5 of the Federal Trade Commission Act—must adopt the insights from platform economics and apply them within the legal framework of section 5(n), as informed by the Commission’s Policy Statement on Unfairness. After outlining the development and rise of digital platforms and discussing of the importance of digital platforms to consumers and the marketplace, this Essay sets forth a brief overview of the basic economics of multisided platform markets and points out the key differences between these markets and traditional markets as well as their corresponding implications for consumer welfare. The Essay then describes the evolution of the Commission’s unfairness authority in consumer protection cases—including the statutory requirement that the agency conduct cost-benefit analysis—and examines how the Commission has performed such cost-benefit analyses in recent cases. The Essay critiques the Commission’s decision in the recent Apple case as an example of the potential pitfalls for consumer protection in multisided markets when the Commission conducts a cost-benefit analysis without arming itself with the basic economic insights from platform economics. Untethered from the appropriate economic framework, the Commission’s logic allows it to condemn product design decisions whenever it can imagine an alternative design it believes survives a cost-benefit test. As the number of consumer protection cases involving digital platforms inevitably rise, the authors recommend that the Commission instead apply insights from platform economics within the well-established legal framework of section 5(n) and the FTC Policy Statement on Unfairness.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the Korea Fair Trade Commission’s Amendment to Its Review Guidelines on Unfair Exercise of Intellectual Property Rights

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

ABSTRACT:

This comment is submitted to Korea’s Fair Trade Commission (“KFTC”) by the Global Antitrust Institute (GAI) at George Mason University School of Law in response to the KFTC's December 16, 2015 amendments to its Review Guidelines on Unfair Exercise of Intellectual Property Rights. The GAI Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy, including how to analyze conduct involving standard-essential patents.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the European Commission’s Public Consultation on the Regulatory Environment for Platforms

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

ABSTRACT:

This comment is submitted in response to the European Commission’s (EC’s) public consultation on the Regulatory Environment for Platforms, Online Intermediaries, Data, Cloud Computing, and the Collaborative Economy.

The comment addresses: (1) concerns that the EC’s survey methodology and design is not conducive to generating reliable and policy-relevant data; (2) the economic analysis of platforms and multi-sided markets; (3) the dangers to competition and consumers of new ex ante regulation designed to regulate platforms, as opposed to relying upon existing European competition and consumer protection laws to address any potential anticompetitive effects or consumer harm arising from conduct by platform owners; and (4) the economic analysis of privacy and data security and its implications for new regulation.

The Supreme Court Should Grant Certiorari in FTC v. McWane

By Joshua Wright

ABSTRACT:

Exclusive dealing is the last vestige of the pre-economic era of antitrust. And it shows. The Supreme Court’s decision in GTE Sylvania nearly 40 years ago was the turning point for the evolution of modern antitrust law in the United States because it made clear “that the analysis of economic effects provided the proper basis for evaluating conduct under the antitrust laws.” In the area of vertical restraints in particular, the critical lesson that has emerged from the economic revolution in antitrust law has been that such conduct must not be condemned without economic evidence of harm to competition. The Supreme Court should grant certiorari in FTC v. McWane because, unfortunately, it is a vivid demonstration of the fact that exclusive dealing law remains untouched by the intellectual revolution in antitrust doctrine since the Supreme Court’s decision in GTE Sylvania. The Federal Trade Commission’s analysis in FTC v. McWane, and thus the Eleventh Circuit opinion, are not only in significant tension with the modern antitrust approach to vertical restraints, they reject it altogether. McWane presents a unique and timely opportunity for the Supreme Court to bring exclusive dealing law in line with modern antitrust law and economic analysis, to recalibrate the doctrine to focus on harm to competition, and to provide guidance to lower courts with respect to the application of rule of reason analysis in cases involving exclusive dealing arrangements.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the Questionnaire for the Revision of China’s Anti-Monopoly Law

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

ABSTRACT:

This comment is submitted by the Global Antitrust Institute (GAI) at George Mason University School of Law in response to the Questionnaire on Revisions to China's Anti-Monopoly Law (AML). The GAI Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy. Topics covered in this response include competition objectives, vertical restraints, the definition of a dominant market position, the prohibition on purchasing products at “unfairly high” or buying products at “unfairly low” prices, refusing to deal, collective dominance, concentration of undertakings, abuse of administrative power, fines, disgorgement, and the application of the AML to matters involving intellectual property rights.

The Limits of Antitrust and Patent Holdup: A Reply to Cary et al.

By Bruce Kobayashi, Joshua Wright

ABSTRACT:

In their recent article in this Journal, Cary et al. critique our prior article, Federalism, Substantive Preemption, and Limits on Antitrust: An Application to Patent Holdup. In that article, we assess the marginal costs and benefits of applying antitrust tools to the so-called patent holdup problem, contend that the costs of applying antitrust rules tools outweigh the benefits, and argue that our analysis is consistent with recent Supreme Court antitrust jurisprudence. Cary et al. focus on the question of how to apply antitrust analysis to the problem of patent holdup in the standard-setting context. However, we believe that the antecedent question of whether it makes economic sense to use antitrust rather than alternatives, such as contract and patent law, to police patent holdup is an important consideration that has received too little attention.

We claim that when an alternative legal structure competently regulates the relevant activity, the marginal benefits of applying antitrust enforcement to this activity may be outweighed by the costs of doing so (including error and litigation costs). From a consumer welfare perspective, when applying antitrust enforcement will result in over-deterrence and decrease welfare, antitrust should be rejected in favor of those alternatives. We believe that a marginal analysis of the value of antitrust in the patent holdup context demonstrates that: (1) the costs of false positives are high because it is difficult to reliably identify anticompetitive conduct, (2) the benefits are small because competent alternative regulatory regimes exist in contract and patent law, and (3) shedding antitrust liability in favor of these alternative structures would move legal penalties for patent holdup closer to the de-trebled magnitude that optimal deterrence theory recommends.

We also claim that the Supreme Court’s recent antitrust jurisprudence embraces the type of marginal analysis we offer, including endorsing considerations of the costs associated with both judicial error and the direct costs of administration and litigation as inputs into analyses aimed at identifying the optimal scope and content of antitrust law. Moreover, notwithstanding Cary et al.’s claims to the contrary, the Supreme Court has expressly endorsed an analysis of the comparative advantages and costs of antitrust law relative to other regulatory structures. Thus, our analysis is consistent with the Supreme Court’s interpretation of the Sherman Act.

The Dodd-Frank Act Five Years Later: Are We Freer?

By Todd Zywicki

ABSTRACT:

This congressional testimony summarizes the effects on consumers and the economy of Dodd-Frank, the Durbin Amendment the Consumer Financial Protection Bureau, and other government regulations (such as the CARD Act of 2009) enacted in the wake of the recent financial crisis. The testimony notes that the combined effect of these laws and regulations has resulted in higher bank fees, a dramatic reduction in access to free checking, an increase in the number of unbanked consumers, a dramatic reduction in access to credit cards for low-income consumers, and continued low access to mortgages, especially among lower-income and higher-risk borrowers. In addition, because of the crushing and disproportionate burden of Dodd-Frank’s regulations on smaller banks, the law has promoted consolidation of the banking industry and forced many smaller banks to exit certain product markets, especially mortgages. This combined effect has reduced choice and competition for consumers. Finally, the lack of democratic accountability over the CFPB has resulted in an agency defined by bureaucratic overreach, resulting in an invasive and reckless data-mining project and assertion over many industries and products that stand outside of the agency’s authorized jurisdiction.

Yakus and the Administrative State

By James Conde, Michael Greve

ABSTRACT:

In Yakus v. United States (1944), the U.S. Supreme Court sustained the conviction of a Boston meat dealer accused of violations of the Emergency Price Control Act and of price regulations issued by the federal Office of Price Administration (OPA)—without affording the accused an opportunity to challenge the validity of the rules under which he was convicted. The case is now mostly forgotten; in Supreme Court opinions and scholarly treatises, it appears (if at all) as a wartime embarrassment or a marginal case about the exhaustion of administrative procedures. At the time, though, Yakus was viewed by combatants on all sides as a case that would define the contours of constitutional government and of the emerging administrative state. Prominent textbooks of the post-War era afford prominent status to Yakus as a foundational case for Administrative Law.

This article tells the story of Yakus v. United States. Close examination of the litigation and its context, we argue, shows that Yakus was not an awkward wartime case that is easily cabined in technical exhaustion doctrines: it is in fact foundational to the modern administrative state. The Yakus lessons that we have forgotten are the ones that we want to forget.

Uber and the Rule of Law: Should Spontaneous Liberalization Be Applauded or Criticized?

By Damien Geradin

ABSTRACT:

While Uber is able to operate legally in a growing number of countries and cities, regulatory approval has proved to be elusive in other jurisdictions. Yet, in a number of regions or cities Uber decided to launch its services despite the absence of regulatory approval. The fact that Uber has decided to engage in “spontaneous liberalisation” has drawn criticism from various quarters. But should Uber be blamed for failing to comply with certain regulatory requirements or should they be applauded for pushing the boundaries of the law? Whether spontaneous liberalization should be applauded or criticized depends. While there is generally no justification for ignoring rules that are necessary to protect the services’ users and nonusers from the risks that are inherent to the carrying of passengers on public roads, there is an element of public good in testing the boundaries of public restrictions of competition. Whatever happens to Uber’s efforts to challenge rules impeding its ability to deliver certain categories of services in certain markets, the taxi industry has already changed for the better as many taxi companies have developed their own apps, either alone or with others, and efforts have been to improve their quality of service. Uber was a needed electroshock in an industry whose actors had often become complacent and failed to meet user expectations.

Comment of the Global Antitrust Institute, George Mason University School of Law, on the National Development and Reform Commission’s Anti-Monopoly Guide on Abuse of Intellectual Property Rights

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

ABSTRACT:

This comment is submitted to China's National Development and Reform Commission (NDRC) by the Global Antitrust Institute (GAI) at George Mason University School of Law in response to the NDRC's Draft Abuse of Intellectual Property Rights Guideline. The GAI Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy, including how to analyze conduct involving standard-essential patents, as well as refusals to license, the essential facilities doctrine, discriminatory licensing, “unfairly high” pricing, bundling, cross-licensing, grantbacks, charging for expired patents, and the use of no-challenge clauses.

Who’s Really Sentenced to Life Without Parole?: Searching for “Ugly Disproportionalities” in the American Criminal Justice System

By Craig Lerner

ABSTRACT:

Critics argue that the American criminal justice system is rife with “ugly disproportionalities” and “brutal penalties on the undeserving.” One particularly brutal punishment is the sentence of life without the possibility of parole (LWOP). The punishment, conceived decades ago as a substitute for the death penalty, scarcely exists in the rest of the world. Today, while capital punishment wanes in the United States, steadily increasing numbers of defendants are sentenced to LWOP. Furthermore, according to a recent ACLU Report, over 3,000 of the 50,000 inmates serving LWOP were convicted of nonviolent offenses. There is no uglier disproportionality than a defendant, guilty of a minor crime, banished to prison for the remainder of his life.

This Article questions this narrative and therewith the contemporary wisdom as to the brutality of American criminal justice, at least in its imposition of LWOP sentences. The author conducted a detailed study of every inmate sentenced to LWOP in eight states. In a few states, it is impossible to find a single inmate sentenced to LWOP for any crime other than murder or the most serious violent crimes. Even in jurisdictions that impose LWOP for crimes labeled “nonviolent,” the inmates are few in number and often present aggravating factors, such as extensive criminal histories or previous violent crimes. Inevitably, criminals sentenced to LWOP will vary in culpability, and some will appear not to merit this punishment. Drawing attention to their plight can spur executive clemency in individual cases. But accusations that the American legal system is rife with “ugly disproportionalities,” at least insofar as this claim is applied to LWOP sentences in the states, appear to have little merit.

Religious Liberty for Employers as Corporations, Natural Persons or Mythical Beings? A Reply to Gans

By Harry Hutchison

ABSTRACT:

David Gans and Ilya Shapiro’s recent book probes the question of corporate constitutional and statutory rights. Advanced by a series of public debates, the book is entitled: Religious Liberties for Corporations?: Hobby Lobby, The Affordable Care Act and the Constitution. This manuscript delineates the facts, and legal arguments as well as the majority and dissenting opinions in Burwell v. Hobby Lobby. Gans emphasizes the Founders’ conception of corporations and offers predictions regarding the future trajectory of corporate rights beyond the narrow, yet clamorous, domain of religious liberty. Consistent with the weight of scholarly opinion and in sharp contrast to his co-author’s approach, Gans denies that for-profit corporations have free exercise rights. Whatever its merits, the Hobby Lobby opinion has provoked a wave of scholarship and a flurry of rancor. Gans’s contribution is part of this outpouring and confirms that corporate ontology is once against the focal point of academic and judicial commentary.

Equally true, the Hobby Lobby Court’s decision has generated a number of overlapping questions. First, since the Hobby Lobby plaintiff-firms are institutions characterized by the pursuit of profit, limited liability, and a legal separation from their shareholders, do those attributes either together or separately, bar them from asserting free exercise rights? Second, must the pragmatic or normative implications connected to the legal structure of for-profit corporations require them to maximize profits, in principle, or can such entities maximize other values as well, coherent with the deduction that religious exercise may take a corporate form for a wide spectrum of actions and purposes that include full involvement in the marketplace? Third, although Justice Douglas has cautioned us that “[g]eneralizations about standing to sue are largely worthless as such,” can the plaintiff-firms  satisfy the “case and controversy” requirement  because they suffered a concrete injury to their own interest within the domain of Article III or based on a derivative or third-party theory of prudential standing consonant with the view that they are more like partnerships, membership organizations or associations of individuals, rather than large publicly-held corporations? Finally, are the opponents of corporate free exercise correct in their presumption that free exercise claims are purely personal and individual as opposed to being the representative outworking of a voluntary collective group, so that profit pursuing corporations must be seen as non-religious entities lacking the anthropomorphic capacity necessary to practice religion?

These questions and their correlative answers are visualized through a nexus-of-contracts-entrepreneurial-choice investigation that originates in the law and economics of organizations, a scaffold, which encompasses closely-held firms, LLCs and other for-profit vehicles. Pertinent answers are then refracted through the prism of Professor Buccola’s organizational neutrality framework. The resulting analysis provides a basis to contest the weight of scholarly opinion. When viewed on a pragmatic or normative level, it is doubtful that the choice of the corporate form, a move that gives rise to both for-profit firms and nonprofit entities, should be relevant, in establishing a defendable boundary that cabins an institution’s ability to pursue free exercise exemptions.

Conditional Discounts and the Law of Exclusive Dealing

By Derek Moore, Joshua Wright

ABSTRACT:

The appropriate antitrust analysis of conditional discounts remains a subject of considerable debate. The debate surrounding how the law ought to treat conditional “discounts” stems largely from the fact that certain discounting practices resemble both conduct that the antitrust laws have analyzed under the “predation” rubric and conduct that the antitrust laws have analyzed under the “exclusion” rubric. The critical question, then, is whether the law should analyze conditional discounts as price predation, exclusive dealing, or some hybrid combination of the two. This Article argues that exclusive dealing provides a superior framework for analyzing conditional discounts. The basis for this claim is relatively simple. There are two economic paradigms to analyze anticompetitive conduct that is not the product of collusion among competitors: predation and exclusion. Most, if not all, modern cases involving conditional discounts are based upon theories of economic harm grounded in the RRC-exclusion framework. Because the relevant economics for understanding these claims involves the economics of exclusion, the legal framework best suited to analyze conditional discounts is the one most closely aligned to the economics of exclusion. As this Article will demonstrate, price-cost tests applied to predatory pricing are not a good match for the economics of exclusion. A price below cost is neither necessary nor sufficient for exclusion. Further, importing a price-cost test to analyze claims sounding in exclusion rather than predation inserts intellectual distance between antitrust economics and the correct legal standard—rather than more closely aligning industrial-organization economics and antitrust law, as has been the overwhelming and beneficial trend over the past fifty years. The false allure of the increased administrability of price-cost tests has led many scholars to argue that loyalty discounting is the exceptional case in which the antitrust laws are improved by imposing a legal framework that does not comport closely with the economic forces describing most conditional-discount-based antitrust claims. They are wrong, both because price-cost tests in the conditional-discount context require subjective, costly, and uncertain determinations of contestability and because prices below cost are not a necessary condition of the relevant anticompetitive mechanism allegedly at work in exclusion cases. Accordingly, courts should reject price-cost tests in conditional-discount cases alleging exclusion in favor of the rule of reason framework applied in exclusive-dealing cases.