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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:


Platforms in the Spotlight at the FTC Hearings

By Joshua Wright, John Yun

ABSTRACT:

Over a series of three days, from October 15 to 17, 2018, the Global Antitrust Institute (GAI) hosted the third session of the FTC Hearings on Competition and Consumer Protection in the 21st Century at the Antonin Scalia Law School, George Mason University. After introductory remarks by Scalia Law School Dean Henry Butler and Federal Trade Commissioner Rohit Chopra, the panels broadly focused upon three topics: (1) multisided platforms, (2) nascent/potential competition, and (3) labor policy. The overarching focus of the hearings was clearly multisided platforms, which accounted for seven of the twelve panels. In the wake of the Supreme Court’s ruling in Ohio v. American Express, platforms are rightly the subject of significant attention and discussion ranging from the economic tools and methods to evaluate platforms to the correct legal framework for capturing and shaping that analysis. The economic research on platforms began in earnest fifteen years ago with pioneering work from Evans (2003) and Rochet and Tirole (2003). Much of the important economic learning over the past fifteen years—economic concepts such as cross-group effects, the interrelationship of demand, and the difference between transaction and non-transaction platforms—are becoming part of the antitrust lexicon. Much of the discussion at the hearings mirrored the conversation taking place among academic economists and lawyers, as well as practitioners and courts, focusing upon how to integrate that economic learning into antitrust institutions and doctrine. 

While the dueling set of amicus briefs for the American Express case indicates there are certainly areas of disagreement, we highlight what we believe emerged throughout the hearings as areas of general consensus in how to assess platforms in an antitrust context.

The Federal Trade Commission Hearings on Competition and Consumer Protection in the 21st Century, Privacy, Big Data, and Competition, 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 in response to the United States Federal Trade Commission (“FTC”) hearing on Concentration and Competitiveness in the U.S. Economy as part of the Hearings on Competition and Consumer Protection in the 21st Century. We submit this comment based upon our extensive experience and expertise in antitrust law and economics. As an organization committed to promoting sound economic analysis as the foundation of antitrust enforcement and competition policy, the Global Antitrust Institute commends the FTC for holding these hearings and for inviting discussion concerning a range of important topics. Businesses today have greater access to data than ever before. Firms now have access to data at high volume, high velocity, and high variety—a phenomenon known as “big data.” The increasing prevalence of big data creates new questions for antitrust enforcers. This comment will discuss how big data should be considered in the context of antitrust analyses.

Common Ownership: Solutions in Search of a Problem

By Keith Klovers, Douglas Ginsburg

ABSTRACT:

Some scholars have argued that common ownership, which refers to an investor's simultaneous ownership of small stockholdings in several competing companies, is anticompetitive and prohibited by the U.S. antitrust laws. Proponents of this view target in particular large investment managers that administer actively managed and passive index mutual funds owned by individual investors, and some even call for the divestiture of trillions of dollars of equities. We believe the argument for antitrust enforcement against common ownership is misguided. First, proponents conflate management by investment managers and economic ownership by individual account holders and therefore incorrectly attribute allegedly anticompetitive conduct to the investment managers. Second, proponents substantially overstate the validity and strength of the existing empirical work purporting to show common ownership causes anticompetitive harm. Third, proponents overstate their legal case, both by relying upon inapplicable cases involving cross ownership – rather than common ownership – and by stretching the holdings of those cases. Shorn of puffery, proponents rely upon little more than the "plain meaning" of the statutes and the hotly contested empirical results. Fourth, at bottom proponents concerns are with either conscious parallelism, which is not unlawful, or anticompetitive conduct that, if proven, could be addressed using established antitrust doctrines applicable to hub-and-spoke conspiracies and to the anticompetitive exchange of information. All the participants in the debate over common ownership are indebted to Frederic Jenny who, with his usual perspicacity, put common ownership on the agenda of the OECD Competition Committee’s December 2017 Meeting, thereby assuring a robust debate in the community of competition scholars.

The Federal Trade Commission’s Hearings on Competition and Consumer Protection in the 21st Century, Reverse-Payment Settlements, 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 in relation to the Federal Trade Commission’s (“FTC”) Hearings on Competition and Consumer Protection in the 21st Century. Specifically, we address the United States Supreme Court’s holding in FTC v. Actavis, Inc. that reverse-payment settlements should be analyzed under the rule of reason. The Court also held that since a full rule of reason analysis is costly and difficult, the size of the settlement may be used a proxy. The idea is that, if a settlement is greater than the potential litigation costs, then this is an indicator of a weak patent, or an attempt by the patent holder to exclude competition—in sum, it indicates that consumer welfare has decreased. We submit this comment based upon our extensive experience and expertise in antitrust law and economics.

The Federal Trade Commission’s Hearings on Competition and Consumer Protection in the 21st Century, Innovation and Intellectual Property Policy, 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 in relation to the Federal Trade Commission’s (“FTC”) Hearings on Competition and Consumer Protection in the 21st Century. We submit this Comment based upon our extensive experience and expertise in antitrust law and economics. As an organization committed to promoting sound economic analysis as the foundation of antitrust enforcement and competition policy, the Global Antitrust Institute commends the FTC for holding these hearings and for inviting discussion concerning a range of important topics. In this Comment, we will discuss contemporary issues involving innovation, Standard Essential Patents (“SEPs”), and Fair, Reasonable, and Non-Discriminatory (“FRAND”) pricing commitments. As we move forward in an era marked by constant innovation revolving around Intellectual Property (“IP”) rights, it is imperative that the FTC recognize that these IP rights should be treated under the same analytical framework as other property rights and upheld regardless whether the setting is private licensing or FRAND commitments. Our modern law and jurisprudence are well-developed in the area of IP rights, and the reliance on IP rights in the standard-development process should not be accompanied by a move away from this well-developed body of law. In writing this Comment, we want to emphasize the importance of strong IP rights, the lack of evidence supporting the concern over holdup issues, and the need for the FTC to recalibrate priorities in the relationship between IP and antitrust.

Deregulatory Benefit-Cost Analysis and Regulatory Stability

By Caroline Cecot

ABSTRACT:

Benefit-cost analysis (“BCA”) has faced significant opposition during most of its tenure as an influential agency decisionmaking tool. As advancements have been made in BCA practice and, especially, in monetization of relevant effects, BCA has been gaining acceptance as an essential part of reasoned agency decisionmaking. This Article highlights an underappreciated effect of extensive use of BCA to support agency rulemaking: BCA’s role in promoting reasonable regulatory stability. In particular, a regulation based on a high-quality BCA is more difficult to modify for at least two reasons. The first reason relates to the nature of BCA. BCA, by focusing on the incremental costs and benefits of a proposed change, can make it difficult to justify changing course, especially when stakeholders have already relied on the prior regulation. The second reason relates to judicial review. Courts take a “hard look” at agency reasoning, including its BCA, and require reasonable explanations when an agency changes course. Any updated BCA supporting the new regulation will naturally be compared against the prior BCA, and the agency will need to explain any changes in BCA inputs, assumptions, and methodology. Together, these forces will constrain the range of changes that agencies could support. The Article then discusses the implications and the desirability of BCA’s stabilizing effect on regulatory policy. By constraining agency decisionmaking and policy updating, BCA should promote stability around efficient and predictable policies at and encourage targeted retrospective review. But admittedly this BCA-based stabilizing influence gives rise to several objections. The Article responds to, among others, concerns about agency bias, democratic accountability, and, most importantly, the use of alternative methods of modifying policies. Overall, the Article concludes that BCA and judicial review of BCA plays a desirable role in stabilizing regulatory policy across presidential administrations.

Is This Any Way to Make Civil Rights Law? Judicial Extension of “Marital Status” Nondiscrimination to Protect Cohabitants

By Helen Alvaré

ABSTRACT:

In recent years, civil rights legislation has been the subject of significant attention. In part, this is due to the emergence of novel and contested interpretations of longstanding statutes offering protection against discrimination based upon sex and marital status. Courts and agencies are infusing new meanings into old laws in response to questions provoked by new behaviors. One new question concerns whether to interpret “marital status” nondiscrimination as protecting an unmarried couple’s cohabiting. Four state courts and one federal court have answered “yes.” But these cases work against uniting Americans behind civil rights laws - laws that ought to be a point of national pride. Because of their mistakes in the areas of statutory interpretation and separation of powers, they appear starkly ideological. They also do a poor job reflecting upon the proper balance with religious freedom. Americans may wish to protect cohabiting as a “marital status.” If so, this should be accomplished by a legislative process that can investigate the myriad social welfare questions cohabitation provokes: - especially regarding possible effects on marriage and children’s stability. Cohabitation-protective cases cannot and do not accomplish this. Instead, they play word games and manipulate statutory canons. They tell religious citizens what they are “really” thinking no matter what the citizen believes in her own mind. They also insist, against settled law, that the state, and not the religious citizen, knows the nature of the burden on the free exercise of religion created by a particular civil right. And throughout, such cases fashion social policy, while ignoring the vast amount of data and public opinion necessary to make informed policy. In short, they do civil rights no favor.

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.