See also the News feed of working papers as they are released.
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:
Accounts of property tend to define it as a right to exclude and treat use-privileges as incidental by-products of that right. This paper sketches a different approach, one that treats recognition of use-privileges to things as prior and then asks what sorts of rights might be justified in their support. I attempt to defend this approach against the analytical and doctrinal arguments made by Simon Douglas & Ben McFarlane in their paper Defining Property Rights. As the concept of “use” depends upon that of “thing,” I also attempt to shore up the reliance on “things” as central to the concept of property. In this vein, I argue for a concept of “thing” that encompasses any discrete and intelligible nexus of human activity with respect to which human purposes may come into conflict, arguing that this renders intellectual property rights straightforwardly intelligible as usufructary interests in things. I also offer a response to Christopher Essert’s argument in Property in Licenses and the Law of Things to the effect that property should jettison any reliance on things and simply view property rights as aimed at excluding others from classes of activity. Here my contention is that the identification of some discrete “thing” as an object of property provides a necessary focal point for the concepts of use and interest that are both functionally and normatively essential to property as a human institution.
By Nelson Lund
Like everything else in the Bill of Rights, the Second Amendment originally restrained only the new federal government. This left the states free to regulate weapons as they saw fit, just as they were free to regulate such matters as speech and religion. The Supreme Court did not invalidate a federal statute under the Second Amendment until 2008, and it was only in 2010 that a regulation adopted pursuant to state law was struck down. These two decisions — District of Columbia v. Heller and McDonald v. City of Chicago — prompted a stream of litigation that may eventually put significant constraints on legislative efforts to regulate the possession and use of weapons. As this is written in July 2017, however, it seems more likely that the Court’s decisions will prove to have very limited practical effects. It is worth recalling the Rehnquist Court’s Commerce Clause decision in United States v. Lopez, which set off celebrations and lamentations about a federalism revolution that has yet to come about. Similarly, the Roberts Court has so far shown only that the Second Amendment does not leave governments with absolutely limitless regulatory power.
This contribution to American Federalism and Public Policy (edited by Christopher P. Banks) begins with a brief sketch of the legal and historical background that set the stage for Heller and McDonald. After a description of those cases, the chapter surveys the application of the decisions by the lower courts. The chapter concludes with an analysis of the Supreme Court’s response to the case law developed by the lower courts.
The Effect of Optimal Penalties for Organizations Convicted of Price Fixing in the Presence of Criminal Sanctions for Individuals
By Michelle Burtis, Bruce Kobayashi
This chapter examines the nature of optimal price fixing penalties on organizations in the presence of criminal sanctions for individuals employed by convicted firms. In other work, we examined the nature of optimal penalties for firms convicted for price fixing when the only sanction is the one placed on the firm. This chapter expands the economic analysis to examine how optimal organizational sanctions function when individuals employed by the firm are subject to criminal penalties, including incarceration. Our analysis demonstrates how sanctions on individuals can serve to complement firm level expenditures on monitoring and compliance, resulting in better deterrence and lower compliance costs.
By Steven Eagle
This Essay surveys contemporary issues in American land use regulation. Its central claim is that, despite good intentions, regulations often have either been ineffective or exacerbated existing problems. The problems underlying regulation include contested understandings of private property rights, continual economic and social change, and a political process prone to ad hoc deal making. Together, they result in regulation that is conceptually incoherent and continually provisional.
The Essay briefly reviews how land use philosophy has changed from early nuisance prevention, through Progressive Era comprehensive planning, to modern views of regulation as transactional. It examines our regulatory takings framework for delineating between private property rights and legitimate government regulation. The Essay reviews such contentious issues as affordable housing. Finally, it asserts that, in the absence of a generally agreed upon understanding of land use goals, comprehensive grand bargains among factions and public-private partnerships would facilitate entrenchment and favoritism. The ensuing uncertainty and lack of housing opportunities in cities where workers would be most productive harms individual advancement and the national economy.
By Nelson Lund
Severe restrictions on so-called assault weapons and large-capacity magazines have long been an important agenda item for organized proponents of gun control. For just as long, gun rights activists have accused their opponents of a kind of bait and switch. The main targets of these restrictions have been rifles that look like M16s, AK-47s, and other military rifles, but operate differently. Since 1934, civilians have been required to undergo a costly and burdensome federal licensing process in order to possess fully automatic weapons, commonly referred to as machineguns. Such weapons, which include military rifles, are now rare and expensive because the federal government froze the civilian supply in 1986. The rifles at which more recent laws are aimed, such as the AR-15 and AR-10, have a superficial resemblance to military weapons but use a semi-automatic operating system like those found in many ordinary hunting guns, as well as in a very large proportion of modern handguns. These semi-automatics are now called “modern sporting rifles” by their defenders, who hope to discourage the public from being fooled into mistaking them for machineguns.
The debate about this issue assumed national prominence in 1994, when Congress enacted a statute that restricted the sale of semi-automatic rifles with a military appearance and all magazines that can hold more than ten rounds of ammunition. Although the statute contained a grandfather clause exempting weapons already in civilian hands, it provoked a firestorm of criticism, and the Democratic Party promptly lost control of both Houses of Congress for the first time in four decades. When the law expired by operation of a sunset provision ten years later, President Bush advocated its renewal. The Republican Congress ignored him, and the Democrats failed to revive the measure after they regained control of Congress and the presidency in 2009. Evidently regarding such legislation as politically toxic, neither party has enacted a major gun control law at the national level for almost a quarter of a century.
Several states, however, have enacted laws that are modeled on the 1994 federal statute. Maryland’s version was recently upheld by the Fourth Circuit, sitting en banc, in Kolbe v. Hogan. This decision offers a useful lens through which to view the landmark decision in District of Columbia v. Heller, which recognized a constitutional right to keep a handgun at home for self defense. In Kolbe, the majority concluded that the Second Amendment has no bearing on the Maryland statute. The dissent went almost to the opposite extreme by arguing that the statute should be subjected to strict scrutiny. Both the majority and the dissent went to great lengths to argue that their opposing conclusions were dictated by Justice Scalia’s Heller opinion, and both of them are demonstrably wrong about that.
Taken as a whole, the Heller opinion is exquisitely equivocal about issues like the ones raised in Kolbe. The large doctrinal space left open by Heller is inevitably being filled according to the policy views of judges on the lower courts. Those views are no doubt influenced to some extent by judges’ opinions about the desirability of the gun control regulations they review. In a distinct and more important sense, the approach of the judges is determined by their views about the value of the Second Amendment and the right it secures. Heller contains a lot of rhetoric supporting those, like the Kolbe dissenters, who place a high value on Second Amendment rights. But that rhetoric is undermined by a series of pro-regulation dicta in the opinion.
The Supreme Court has declined to back its rhetoric up with any decisions actually rejecting the dismissive approach adopted by the Kolbe majority and many other courts. Justice Thomas, joined by Justice Scalia and now by Justice Gorsuch, has strongly objected to the Court’s passive acceptance of such decisions, but there is no sign yet that the Court is prepared to recognize any Second Amendment rights beyond the narrow holding in Heller.
By Claude Fluet, Murat Mungan
Fault-based liability regimes require an inquiry into the nature of the defendant's conduct, whereas this type of inquiry is absent in strict liability regimes. Therefore, verdicts reached through fault-based liability regimes can convey superior information compared to verdicts reached through strict liability regimes. Further reflection reveals that this advantage is enjoyed by fault-based liability regimes only if the evidence related to the nature of defendants' actions is sufficiently informative. Otherwise, admitting such evidence can add noise to the information conveyed through verdicts. Therefore, liability regimes have a function of tuning signals conveyed on to third parties, which, in turn, causes deterrence effects by affecting the informal sanctions imposed on defendants who are found liable. We construct a model wherein this function is formalized, and we identify the optimal liability regime and burden of proof as a function of various factors (e.g. the commonality of the harmful act, and the informativeness of the evidence).
By Jennifer Mascott
In June 2017 the D.C. Circuit issued a judgment that essentially reaffirms the constitutionality of current appointments procedures for administrative law judges (ALJs) in the Securities and Exchange Commission (SEC). After conducting an en banc hearing in the case, the en banc court split evenly over whether the ALJs are “Officers of the United States” subject to the constitutional requirement of appointment by the president, a department head, or a court of law. The evenly divided vote resulted in the affirmance of the D.C. Circuit’s earlier panel decision finding that the ALJs are not “officers”—continuing the court’s split with the Tenth Circuit, which has concluded the ALJs are “officers.” The continued split and the en banc posture of the case mean this issue may receive consideration by the Supreme Court.
This essay responds to a widely cited article by Professor Kent Barnett that suggested ALJs should be appointed by neither the President or an agency head, even if the courts eventually conclude they are “officers.” In particular, Professor Barnett contends that executive branch appointment of agency adjudicators creates such a significant threat to ALJ impartiality that due process considerations may require a court of law such as the D.C. Circuit—rather than the executive branch—to appoint ALJs. This essay refutes those concerns. Tying together legal scholarship on due process and the Appointments Clause, this essay contends: The Article II clause that vests executive power in the President, as well as the text and drafting history of the Appointments Clause, together mandate that agency adjudicators must be appointed by executive branch actors—not by courts of law. As long as these adjudicators handle issues properly resolved through executive adjudication as a historical matter, there are no constitutional partiality concerns with the executive branch appointment—or even removal—of agency adjudicators. Rather, the transparency protections of the Appointments Clause provide the appropriate constitutional mechanism for accountability in executive adjudication.
In 2015, the FCC reclassified the framework for regulation of the Internet from Title I of the Telecommunications Act to Title II. This reclassification treats the Internet as a common carrier and bans any vertical agreements between Internet service providers and content providers. Economic analysis shows the 2015 Order harmed consumers and depressed investment. In April 2017, the FCC initiated a proceeding to end the Title II regulatory approach. Such a shift will also replace the categorical ban on vertical arrangements to a regulatory regime grounded by antitrust law and its “rule of reason.” Critics argue the antitrust approach cannot reach each of the harms envisioned by proponents of net neutrality or is otherwise insufficient. We explain that the criticism that antitrust cannot reach harm to innovation caused by anticompetitive conduct is wrong as a matter of both antitrust as a matter of theory and practice. We conclude that antitrust is superior to proposed alternatives that would condemn vertical arrangements in broadband markets either on a categorical basis or the plaintiff bearing the prima facie burden of showing proof of harm to competition.
By Koren Wong-Ervin
Standard-development organizations (SDOs) “vary widely in size, formality, organization and scope,” and therefore individual SDOs may need to adopt different approaches to meet the specific needs of their members. Critically, to balance the needs of both contributors and implementers, SDO policies must be developed through transparent and consensus-based processes. Issuance of best practices by a government agency may unduly influence private SDOs and their members to adopt policies that might not otherwise gain consensus support within a particular SDO and that may not best meet the needs of that SDO, its members, and the public. Accordingly, the U.S. antitrust agencies have taken the position that they do “not advocate that [SDOs] adopt any specific disclosure or licensing policy, and the [a]gencies do not suggest that any specific disclosure or licensing policy is required.”
By Terrence Chorvat, W. Gavin Ekins
In this experiment, we test whether the Domar-Musgrave model accurately predicts investor behavior in its paradigmatic setting. Our results indicate that investors only scale up their investments in risky assets to the extent predicted by the model when tax rates are relatively low. Moreover, we found a portion of the subjects decreased investments in risky assets as a reaction to the imposition of symmetric capital taxes. For these subjects, we found that the return on the risky asset in the immediate prior period was a more important determinant of risk-taking.
In this chapter, we discuss some ways in which neuroeconomic research can inform legal scholarship. Given the limitations on space of this chapter, we cannot discuss anything like all of the neuroeconomic research that has been done in the last few years, even all of that which is of relevance to legal scholarship. Therefore, this chapter is a highly selective review of the research that we believe is useful to legal scholars. The focus of the chapter is on neuroeconomic research related to financial decisions and its relevance to legal scholarship.
Dissecting Professor Wu and Yelp's Local Search Study: An Antitrust Law Analysis of The ‘Experimental Evidence'
In a 2015 article co-authored with three Yelp employees, Professor Wu purports to examine evidence from one experiment allegedly relevant to the question whether Google’s display of local search results in a defined space on the search results page violates the antitrust laws. The authors rely entirely upon this single experiment to support two central claims: that Google’s local results harm consumers and that this innovation violates the antitrust laws. A closer look at the authors’ experiment, however, makes clear it is does not substantiate either of these claims. I describe the methodological flaws in the authors’ approach in some detail, including their mistaken claim that the single experiment amounts to an “RCT,” or “randomized controlled trial.” I also identify the mistaken premise underlying their provocative legal claim – that is, that a firm can face antitrust liability for innovation that improves consumer welfare on the grounds that one can imagine an innovation that would have generated greater welfare improvements. Antitrust law has repeatedly considered and rejected this notion. Professor Wu and his co-authors draw even more provocative conclusions from this experiment, but ignore the fact that in the 5 years following Yelp’s initial complaints regarding local search, Yelp’s annual revenues grew from $83 to $713 million. In response to the common refrain of antitrust complainants that they could have performed even better but for the allegedly unlawful conduct, I explain the relevance of a rival’s economic success in the context of Section 2 claims involving exclusionary conduct. Professor Wu and his Yelp co-authors’ theory thus ultimately fails as a matter of economics, law, and data.
By Eric Claeys
In scholarship on intellectual property (‘IP’), philosophical justifications for IP rights seem to suffer from one of two flaws. To some, philosophical justifications are too indeterminate to offer concrete guidance about rights in practice. To others, philosophical justifications seem extreme; they mandate certain conclusions without letting decision makers consider the relevant context or consequences of different IP rights. Both impressions neglect an important dimension of moral reasoning about rights — practical reason. In perfectionist theories of law, ‘practical reason’ describes the principles by which general justifications for moral rights are implemented in specific decisions in law and ethics. This Article introduces practical reason to IP scholarship, and shows how it facilitates reasoning about the context of different IP rights. The Article shows how principles of practical reason might apply to patent’s novelty requirement, copyright’s originality requirement, copyright’s idea-expression distinction, and the duration requirements for various forms of intellectual property.
Methodologies for Calculating FRAND Damages: An Economic and Comparative Analysis of the Case Law from China, the European Union, India, and the United States
By Anne Layne-Farrar, Koren Wong-Ervin
In the last several years, courts around the world, including in China, the European Union, India, and the United States, have ruled on appropriate methodologies for calculating either a reasonable royalty rate or reasonable royalty damages on standard-essential patents (SEPs) upon which a patent holder has made an assurance to license on fair, reasonable and non-discriminatory (FRAND) terms. Included in these decisions are determinations about patent holdup, licensee holdout, the seeking of injunctive relief, royalty stacking, the incremental value rule, reliance on comparable licenses, the appropriate revenue base for royalty calculations, and the use of worldwide portfolio licensing. This article provides an economic and comparative analysis of the case law to date, including the landmark 2013 FRAND-royalty determination issued by the Shenzhen Intermediate People’s Court (and affirmed by the Guangdong Province High People’s Court) in Huawei v. InterDigital; numerous U.S. district court decisions; recent seminal decisions from the United States Court of Appeals for the Federal Circuit in Ericsson v. D-Link and CISCO v. CSIRO; the six recent decisions involving Ericsson issued by the Delhi High Court; the European Court of Justice decision in Huawei v. ZTE; and numerous post-Huawei v. ZTE decisions by European Union member states. While this article focuses on court decisions, discussions of the various agency decisions from around the world are also included throughout.
By Ronald Cass
Due process as a notion of basic fairness has deep roots and broad intuitive appeal. It is a guarantee, stretching back at least to Magna Carta, that government’s most feared impositions on those within its reach — using coercive powers to take away our lives, our liberty, or our property — can only be accomplished through processes that have qualities of regularity and impartiality under rules adopted through mechanisms that historically carried the hallmarks of legitimacy, generality, and neutrality. The same instincts that underlie due process guarantees also inform the structural protections that are the central features of our Constitution. The goal under either label is to protect liberty by regulating the way government goes about setting and applying legal rules.
The intuitive appeal of the notion of “due process,” however, at times has obscured the limited reach of the core concept, which is restricted in both what it applies to and what it requires. Transformation of due process from that core to a looser constraint that can be shaped to fit particular notions of good governance has produced serious failures, both encouraging episodes of judicial adventurism that invade space reserved to electoral-representative processes (the story of “substantive due process”) and weakening protections against inappropriate exercises of official discretion.
Reliance on softer notions of due process may be especially problematic in respect to questions of administrative process, which often lie outside the ambit of appropriate due process constraints. Even where due process does apply, other legal rules strongly influence the degree to which administrative processes work and frequently provide better avenues for constraining them. Addressing directly the problematic nature of many delegations of authority to administrators and of inappropriate judicial deference to administrative determinations by and large will be preferable to due process challenges to administrative action. Due process can be a complement to reinvigorated delegation constraints and reformed deference rules or a partial substitute — used to compensate for failure to properly reform those doctrines — but it is at best a “second best” option.
By Craig Lerner
The Biblical story of the Tower of Babel illuminates contemporary efforts to secure ourselves from global catastrophic threats. Our advancing knowledge has allowed us to specify with greater clarity the Floods that we face (asteroids, supervolcanoes, gamma ray bursts, etc.); and our galloping powers of technology have spawned a new class of human-generated dangers (climate change, nuclear war, artificial intelligence, nanotechnology, etc.). Should any of these existential dangers come to pass, human beings and even all life could be imperiled. The claim that Man, and perhaps the Earth itself, hangs in the balance is said to imply the necessity of a global response. All well-meaning men and women should abandon a provincial attachment to the nation-states they contingently call home. What is needed is more global cooperation, or global governance, so that we can join together in the construction of a tower to the heavens, safe harbor from whatever terrors nature or God visit upon us.
This article questions the conventional narrative. The Biblical account of the Tower of Babel is richly metaphorical in its suggestion that the division of mankind into separate spheres has salutary consequences. The fantasy of a common humanity, joined selflessly in a common enterprise, assumes away the tenacious passions and interests that divide us. The facile claim, based on little more than linguistic parallelism — global catastrophic threats require global governance solutions — breaks down as one reflects, at a more granular level, upon the diversity of those threats. Apart from questions of feasibility, global governance solutions overstate the benefits and understate the costs of collaboration. There are often substantial advantages to maintaining separate and even competing spheres of control. Nation-states, with more rigorous lines of political accountability than amorphous governance structures, are best able to respond to any existential threats. Finally, nation-states and territorially localized sovereigns are less likely to threaten humanity’s future than a global sovereign, empowered by modern technology and emboldened by a crusading faith to save Mankind.
By Craig Lerner
This article analyzes the origins of the “responsible corporate officer” doctrine: the trial of Joseph Dotterweich. That doctrine holds that an officer may be personally liable for the criminal act of a subordinate if the officer was, in some indefinite way, able to prevent the violation. Applying this doctrine, the prosecution of Dotterweich entailed strict liability for a strict liability offense. The underlying offenses — the interstate sale of one misbranded and adulterated drug and one misbranded drug — were said to be strict liability offenses. And then, with respect to Dotterweich as the corporation’s general manager, the government argued that he was strictly liable because he stood in “responsible relation” to the company’s acts. The government never tried to prove that the company, Buffalo Pharmacal, was negligent, nor did it try to prove that Dotterweich was negligent in his supervision of the employees of Buffalo Phamacal. The prosecutor and judge were candid about this theory throughout the trial, although the judge conceded that it seemed bizarre and unfair. The defense lawyer repeatedly sought to inject what became known throughout the trial as “the question of good faith,” but was circumvented at almost every turn. What would thus seem to be the crux of any criminal trial — the personal fault of the defendant — was carefully shorn from the jury’s consideration. The government’s theory was so at odds with intuitive notions of liability and blame that as one probes into the case, and looks at the language used in the government’s appellate briefs, imputations of moral fault inevitably creep in. Yet the government was not entitled to make such accusations, as it had pruned moral considerations from the trial.
The article argues that the “responsible corporate officer” doctrine can never enjoy a secure place in our legal system. First, the doctrine is at a minimum in tension with, and often in direct opposition to, basic principles of the criminal law; and second, the doctrine fails, when followed to its logical conclusions, to accord with basic notions of fair play. The article concludes that the responsible corporate officer doctrine is either unnecessary, in cases in which the evidence establishes personal fault, or unjust, in cases in which it creates liability in the absence of personal fault through the unspecified notion of “responsibility.” The Dotterweich case illustrates what is contemplated by the latter possibility, and why it is problematic in any judicial system that purports, in the words of the Model Penal Code, “to safeguard conduct that is without fault from condemnation as criminal.”
By Murat Mungan
The literature contains ambiguous findings as to whether statistical discrimination, e.g. in the form of racial profiling, causes a reduction in deterrence. These analyses, however, assume that enforcers' incentives are exogenously fixed. This article demonstrates that when the costs and benefits faced by officers in enforcing the law are endogenously determined, statistical discrimination as well as taste-based discrimination lead to an increase in criminal activity. Moreover, the negative effects of statistical discrimination on deterrence are more persistent than similar effects due to taste-based discrimination. This suggests, contrary to the impression created by the existing literature, that statistical discrimination is not only harmful, but, may be even more detrimental than taste-based discrimination. Thus, for purposes of maximizing deterrence, the recent focus in empirical research on identifying taste-based discrimination as opposed to statistical discrimination may be misplaced. A superior approach may be to identify whether any type of racial discrimination takes place in the enforcement of laws, and to provide enforcers with incentives to minimize the impact of their discriminatory behavior.
By Iijoong Kim, Hojun Lee, Ilya Somin
The taking of private property for development projects has caused controversy in many nations, where it has often been used to benefit powerful interests at the expense of the general public. This edited collection is the first to use a common framework to analyze the law and economics of eminent domain around the world. The authors show that seemingly disparate nations face a common set of problems in seeking to regulate the condemnation of private property by the state. They include the tendency to forcibly displace the poor and politically weak for the benefit of those with greater influence, disputes over compensation, and resort to condemnation in cases where it destroys more economic value than it creates. With contributions from leading scholars in the fields of property law and economics, the book offers a comparative perspective and considers a wide range of possible solutions to these problems.
The Introduction summarizes the rest of the book, and describes the common analytical framework used by the contributors.
Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University, on the Proposed Amendments to the Competition Law of the Socialist Republic of Vietnam
This comment is submitted by the Global Antitrust Institute (GAI) at Scalia Law School at George Mason University to the Vietnam Competition Authority on the proposed amendments to the Competition Law of the Socialist Republic of Vietnam. The GAI Competition Advocacy Program provides a wide-range of recommendations to facilitate adoption of economically sound competition policy.