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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:


The Federal Trade Commission’s Hearings on Competition and Consumer Protection in the 21st Century, Platforms, Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University

By Tad Lipsky, Joshua Wright, Douglas Ginsburg, John Yun

ABSTRACT:

This comment is submitted by the Global Antitrust Institute (GAI) at Scalia Law School at George Mason University to the U.S. Federal Trade Commission regarding platforms, as part of the Hearings on Competition and Consumer Protection in the 21st Century. The GAI Competition Advocacy Program provides a wide range of recommendations to facilitate adoption of economically sound competition policy.

Square and Round Customers: Defining Geographic Markets with Willingness to Travel Circles

By Shawn Ulrick, Seth Sacher, Paul Zimmerman, John Yun

ABSTRACT:

Issues of spatial competition play a key role in many antitrust matters in terms of both defining relevant markets and evaluating competitive effects.  One area where this is particularly important is in retail competition.  While detailed data for conducting empirical analyses is available in many retail industries, it is often the case that practitioners must define markets, at least preliminarily, under limited information.  In this paper, we develop techniques for aiding in defining markets involving spatial competition under limited information.

Justifications, Excuses, and Affirmative Defenses

By Murat Mungan

ABSTRACT:

A defendant who admits to having committed an offense may nevertheless be acquitted if he can provide a legally cognizable justification or excuse for his actions by raising an affirmative defense. This article explains how affirmative defenses generate social benefits in the form of avoided unnecessary punishment. It then asks what kind of evidentiary standards must be used in order to balance these benefits against potential social costs arising from frivolous defense claims. It thereby provides an economic rationale for the uniformity across US jurisdictions in allocating the burden on the prosecution to prove the commission of the offense, as well as the variation across states in the standards of proof they use in determining the validity of affirmative defenses. The analysis also explains why mere assertions of undeterrability should not be considered as affirmative defenses.

The Enduring Vitality of Comity in a Globalized World

By Douglas Ginsburg, John Taladay

ABSTRACT:

Consideration of comity in antitrust cases is more important than ever. The global proliferation of competition law enforcement agencies has produced profound effects. Most are highly beneficial for consumers at a local level, but these many agencies create significant difficulties because they apply different legal standards, procedures, and approaches to identifying and redressing perceived antitrust violations. One inescapable consequence is a much greater risk of conflict. This conflict can take various forms. In the extreme case, it can mean that different jurisdictions impose conflicting remedies for the same conduct irrespective of the effect in another jurisdiction, making it impossible for a party to comply with both remedies. But there are more subtle tensions, equally problematic, that can result in the regulation of a party’s conduct by one or more agencies that affect market conduct far beyond the enforcing agency’s own borders. These risks are particularly high when an agency applies the “effects” doctrine, which often results in remedies that necessarily have an effect beyond that jurisdiction’s own borders. Agencies seeking to enforce their antitrust laws should recognize these risks and guard against interfering with the legitimate interests of other governments regulating conduct within their own borders and determining how their own domestic markets should function. This Article examines some of the sources of tension in the competition ecosystem and the means the agencies now use to address those conflicts. The Article identifies a gap that still exists between the need for and mechanisms of coordination and proposes an expanded use of traditional comity to ensure that international competition law enforcement produces benefits for consumers while minimizing unnecessary and inappropriate interference with the legitimate interests of foreign jurisdictions.

Distortion of Justice: How the Inability to Pay Bail Affects Case Outcomes

By Megan Stevenson

ABSTRACT:

This paper uses a natural experiment to analyze whether incarceration during the pretrial period affects case outcomes. In Philadelphia, defendants randomly receive bail magistrates who differ widely in their propensity to set bail at affordable levels. Using magistrate leniency as an instrument, I find that pretrial detention leads to a 13% increase in the likelihood of being convicted, an effect largely explained by an increase in guilty pleas among defendants who otherwise would have been acquitted or had their charges dropped. I find also that pretrial detention leads to a 42% increase in the length of the incarceration sentence and a 41% increase in the amount of non-bail court fees owed. This latter finding contributes to a growing literature on fines-and-fees in criminal justice, and suggests that the use of money bail contributes to a ‘poverty-trap’: those who are unable to pay bail wind up accruing more court debt.

Legal Sufficiency of Statistical Evidence

By Jonah Gelbach, Bruce Kobayashi

ABSTRACT:

When are litigants' statistical estimates legally sufficient, given that courts use the preponderance of the evidence standard? We answer this question using Bayesian hypothesis testing and principles of federal procedural law, focusing on the common case of statistical estimation evidence from a normally distributed estimator. Our core result is that mathematical statistics and black-letter law combine to create a simple standard: statistical estimation evidence is legally sufficient when it fits the litigation position of the party relying on it. This means statistical estimation evidence is legally sufficient when the p-value is less than 0.5; equivalently, the preponderance standard is frequentist hypothesis testing with a significance level of just below 0.5. Finally, we show that conventional significance levels such as 0.05 require elevated standards of proof tantamount to clear-and-convincing or beyond-a-reasonable-doubt.

Response to the Proposed Changes to the Claim Construction Standard for Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal Board

By John Allison, Wissam Aoun, Matthew Barblan, Andrew Chin, Christopher Cotropia, Dennis Crouch, Loletta Darden, Gregory Dolin, Stuart Graham, Yaniv Heled, Mark Janis, Jay Kesan, Mark Lemley, Yvette Liebesman, Jonathan Masur, Robert Merges, Adam Mossoff, Kristen Osenga, Arti Rai, Ted M. Sichelman, Saurabh Vishnubhakat

ABSTRACT:

We the undersigned professors of law and economics offer this comment on the USPTO’s notice of proposed rulemaking to change how the Patent Trial and Appeal Board will construe patent claims in its administrative trial proceedings. As a group, our research explores a wide range of issues in innovation, intellectual property, administrative process, and institutional design. What brings us together is our interest in the proper functioning of the U.S. patent system and Patent Office operations.

We appreciate the USPTO’s attention to the need for uniformity and predictability in the patent system, especially the agency’s ongoing efforts to improve the PTAB trial proceedings. For the reasons that follow, we support the proposed change away from the PTAB’s current broadest reasonable interpretation (BRI) standard to the approach set forth in Phillips v. AWH Corp.

Will the FTC’s Success Continue?

By Timothy Muris

ABSTRACT:

The FTC has enjoyed great success for decades, and I address four topics here in this paper presented at the opening session of the FTC’s “Hearing on Competition and Consumer Protection in the 21st Century.” First, what durable success means for an agency like the FTC. Then, the vision I shared with my friend and predecessor as FTC Chairman, Robert Pitofsky, reflected in the second ABA Kirkpatrick Commission, that has helped lead to the agency’s success. Next, I consider recent challenges to that vision, in both competition and consumer protection, from two “p’s,” paternalism in consumer protection and populism in antitrust. Both of these “isms” once dominated FTC work, particularly in the 1970s, with disastrous consequences for consumers and the FTC. Finally, I debunk the shibboleth that an economic cult based in the University of Chicago somehow dominates FTC thinking, particularly in antitrust.

Gundy v. United States: Reflections on the Court and the State of the Nondelegation Doctrine

By Jennifer Mascott

ABSTRACT:

This short "reflections" essay is an invited piece that addresses the Supreme Court's upcoming consideration of the "nondelegation doctrine" this coming Term in Gundy v. United States. The Court has not found any statutory provision to be unconstitutional on nondelegation grounds since 1935. Will that change this Term when the Court evaluates the Attorney General's authority to retroactively apply federal sex offender registration requirements to individuals convicted prior to enactment of those statutory rules? Will the new makeup of the Court after Justice Kennedy's retirement impact the likely outcome of this nondelegation challenge?

The Behavioral Economics of Behavioral Law & Economics

By Todd Zywicki

ABSTRACT:

Behavioral Law & Economics (BLE) has loudly proclaimed its victory over traditional law & economics methodologies. Nowhere has this proclamation been so loud or self-certain as with respect to claims about consumer financial decision-making. Drawing on a set of casual observations styled as empirical proof, BLE scholars have called for a variety of regulatory interventions that are claimed to be necessary to protect consumers. But examining two detailed case studies here, one involving credit card usage by consumers and the other involving claims about consumer behavior in response to cash discounts and credit card surcharges, it is shown that these claims are simply incredible, in the sense that it is literally difficult to believe that unbiased scholars would find those studies to be even slightly persuasive. Possible explanations for this disconnect between the weakness of the underlying science and the widespread social acceptance of the theories by BLE scholars are discussed.

Law and Economics: The Contributions of the Austrian School of Economics

By Peter Boettke, Todd Zywicki

ABSTRACT:

The Austrian contribution to the development of law and economics is the study of endogenous rule formation, or the spontaneous evolution of social institutions, which can be traced to the founder of the Austrian School, Carl Menger. While Menger’s emphasis on spontaneous institutional analysis was born out of the Methodenstreit, a methodological battle engaged against the German Historical School, this paper argues that the Austrian contribution to law and economics emerged directly from the socialist calculation debate against market socialism. This debate, we will argue, played an essential role in the re-discovery of the institutional framework in economics during the post-WWII era, particularly in the development of law and economics. In the aftermath of the socialist calculation debate, Menger’s earlier emphasis on institutional analysis was reemphasized by F.A. Hayek, who in turn influenced the early pioneers of law and economics, particularly Aaron Director, Ronald Coase, and Bruno Leoni.

The Chrysler and General Motors Bankruptcies

By Todd Zywicki

ABSTRACT:

The bankruptcy proceedings of Chrysler and General Motors were filed at the height of the financial crisis that rocked the global economy in the late-2000s. Although both companies originally received federal financial bailouts to try to avert bankruptcy, within months they were forced to file bankruptcy in an unprecedented bankruptcy-bailout process. The bankruptcy proceedings that subsequently transpired were controversial at the time and remain controversial to this day. This chapter in the Research Handbook in Corporate Bankruptcy Law (Forthcoming 2019) reviews the controversial cases and their uncertain legacy for the future of chapter 11 practice and corporate bankruptcy law.

Austrian Law and Economics and Efficiency in the Common Law

By Todd Zywicki, Edward Stringham

ABSTRACT:

Is the common law efficient? Neoclassical economists debate whether our inherited systems of judge-made law maximize wealth whereas Austrian economists typically adopt much different standards. The article reviews neoclassical and Austrian arguments about efficiency in the common law. After presenting Hayek’s views on the common law as a spontaneous order it concludes that the common law can indeed be viewed as a spontaneous order only when judges provide their services in a free and competitive system.

United States v. AT&T/Time Warner: A Triumph of Economic Analysis

By Joshua Wright, Jan Rybnicek

ABSTRACT:

The DOJ’s lawsuit to block the AT&T/Time Warner transaction marks the first time in 40 years that a court has heard a fully-litigated challenge to a vertical merger. Following a six-week trial, Judge Leon issued a comprehensive 172-page decision holding that the DOJ failed to show that the transaction would be anticompetitive. Although the decision does not break new legal ground, it does represent a welcome reminder of the primacy of economic analysis over hot documents, testimony of rivals, and politics. As populist cries for increased government intervention to combat perceived widespread industry consolidation continue to mount – calls that often are proudly indifferent to the economic impact of the transaction – Judge Leon’s decision is a victory for evidence-based antitrust law. As the government now appeals the decision, we believe the D.C. Circuit should affirm the holding in the case and more broadly Judge Leon’s economic evidence-based approach.

Requiem for a Paradox: The Dubious Rise and Inevitable Fall of Hipster Antitrust

By Joshua Wright, Elyse Dorsey, Jan Rybnicek, Jonathan Klick

ABSTRACT:

For antitrust practitioners, scholars, and economists - those who work with antitrust in agencies, courts, or law firms - the development of the antitrust laws over the past half century has been a remarkable and positive development for the American economy and consumers. Most fundamentally, there is agreement that the goal of protecting consumer welfare is and should be the lodestar of modern antitrust enforcement. This has not always been the case. For much of its history, antitrust has done more harm than good. Prior to the modern “consumer-welfare” era, antitrust laws employed confused doctrines that pursued populist notions and often led to contradictory results that purported to advance a variety of social and political goals at the expense of American consumers. From the perspective of antitrust professionals and academics, there is widespread agreement that the intellectual revolution that led to the consumer welfare standard saved an incoherent doctrine from its own internal inconsistencies and saved consumers from its perverse and paradoxical results. Outside of mainstream antitrust practice and the academy, things look quite different. There appears to be another revolution brewing – the Hipster Antitrust Movement. It calls for the return of populism in antitrust enforcement. It declares the modern antitrust era - and the consumer welfare standard specifically - a failure. Hipster Antitrust lays at antitrust law’s feet a myriad of perceived socio-political problems, including, but not limited to, rising inequality, employee wage concerns, and the concentration of political power. The drumbeat for this revolution is strong and growing, with a broad range of enthusiastic participants and devotees, including public intellectuals and think tankers, as well as prominent members of Congress. At its core, the Hipster Antitrust movement calls for a total rejection of the commitment to economic methodology and evidence-based policy that lies at the heart of modern antitrust enforcement. In this Article, we evaluate the Hipster Antitrust claims. Some of those claims are made on modern antitrust’s own terms: that a return to “big-is-bad” antitrust enforcement based upon firm size or banning vertical mergers would make consumers better off. Others are “outside” the domain of consumer welfare-based antitrust: that lax antitrust has caused an increase in economic inequality. We demonstrate that, when evaluated as evidence-based policy proposals, the Hipster Antitrust agenda fails to substantiate its claims and promises. We discuss the dangers to consumers and society of adopting the populist antitrust approach, including enhancing corporate welfare at the expense of consumers, and encouraging rent-seeking by giving agencies and judges unbridled discretion.

A Transaction Cost Assessment of the SEC's Regulation Best Interest

By D. Bruce Johnsen

ABSTRACT:

The U.S. Securities and Exchange Commission (SEC) is required to provide an economic analysis of proposed regulations and to show that they plausibly meet a cost-benefit test. It recently proposed Regulation Best Interest (RBI) to replace the longstanding suitability rule for securities brokers when providing their retail clients with incidental investment advice. Despite a dearth of empirical support, the proposing release concludes that a best interest standard would better mitigate the conflicts of interest brokers face between providing their clients with impartial advice and maximizing their own compensation. The empirical vacuum is a result of the SEC’s failure to ask the right economic question, which Nobel laureate Ronald Coase raised over half a century ago: why does the rule of liability matter? What transaction costs prevent the parties—who in this setting negotiate face-to-face—from correcting any market failure through private ordering? This essay provides a transaction cost assessment of RBI and concludes that a far more thorough economic analysis is necessary to justify imposing a best interest standard on retail brokers.

Regulatory Fracture Plugging: Managing Risks to Water from Shale Development

By Caroline Cecot

ABSTRACT:

Debates about the desirability of widespread shale development have highlighted outstanding uncertainty about its health, safety, and environmental impacts—most prominently, its water-contamination risks—and the ability of current institutions to deal with these impacts. States, the primary regulators of oil and gas extraction, face pressure from the energy industry, local communities, and, in some cases, the federal government to strike the right balance between energy production and the health and safety of individuals and the environment—an elusive balance given the ongoing risk uncertainty. This dynamic is not especially unique to fracking, or even oil and gas extraction; instead, this dynamic, characterized by tradeoffs between environmental protection and economic development under risk uncertainty, is a common theme of environmental risk regulation. Regulators at every level of government weigh and evaluate potential interventions against this background. This Article contributes to a symposium held at Texas A&M School of Law that explores the advantages and disadvantages of various government interventions in the environmental context in an effort to identify ideal risk-management tools under various circumstances. It argues that the most important considerations for identifying risk-management tools in the environmental context are risks, incentives, and cost-benefit analysis. These cornerstone principles provide a useful framework for environmental policy in general, especially in situations that involve heterogeneous and uncertain risks. By paying attention to risk, incentives, and cost-benefit analysis, government regulators are more likely to promote optimal levels of environmental quality and avoid unintended, or even perverse, consequences. To demonstrate the usefulness of these concepts concretely, this Article applies them to the fracking context, focusing on the most prominent risks from widespread shale development, risks to water from shale gas extraction. It identifies risk-management gaps in tort litigation, insurance markets, and regulation schemes and suggests potential solutions.

The Federal Trade Commission's Hearings on Competition and Consumer Protection in the 21st Century, Vertical Mergers, Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University

By Tad Lipsky, Joshua Wright, Douglas Ginsburg, John Yun

ABSTRACT:

This comment is submitted by the Global Antitrust Institute (GAI) at Scalia Law School at George Mason University to the U.S. Federal Trade Commission regarding its Hearings on Competition and Consumer Protection in the 21st Century. The GAI Competition Advocacy Program discusses vertical mergers and provides a wide range of recommendations to facilitate adoption of economically sound competition policy.

The Federal Trade Commission's Hearings on Competition and Consumer Protection in the 21st Century, the Consumer Welfare Standard in Antitrust Law, Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University

By Tad Lipsky, Joshua Wright, Douglas Ginsburg, John Yun

ABSTRACT:

This comment is submitted by the Global Antitrust Institute (GAI) at Scalia Law School at George Mason University to the U.S. Federal Trade Commission regarding its hearings on Competition and Consumer Protection in the 21st Century, The Consumer Welfare Standard in Antitrust Law. The GAI Competition Advocacy Program provides a wide range of recommendations to facilitate adoption of economically sound competition policy.

The U.S. Federal Trade Commission Hearings on Competition and Consumer Protection in the 21st Century, Hearing on Concentration and Competitiveness in the U.S. Economy, Comment of the Global Antitrust Institute, Antonin Scalia Law School, GMU

By Tad Lipsky, Joshua Wright, Douglas Ginsburg, John Yun

ABSTRACT:

This comment is submitted by the Global Antitrust Institute (GAI) at Scalia Law School at George Mason University to the U.S. Federal Trade Commission regarding its hearing on Concentration and Competitiveness in the U.S. Economy as part of the Hearings on Competition and Consumer Protection in the 21st Century. The GAI Competition Advocacy Program provides a wide range of recommendations to facilitate adoption of economically sound competition policy.