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 Catalog to locate a working paper.

Recent Working Papers:


Freedom Through Foot Voting

1-2021 | Ilya Somin

ABSTRACT:

Freedom of movement is one of the great issues of our time. Expanding opportunities for both international and internal migration can greatly expand freedom and opportunity for hundreds of millions of people. The same goes for expanding freedom of choice in the private sector. “Voting with your feet” in any of these three ways is also, in crucial ways, superior to ballot box voting as a mechanism of political choice.

In this article I summarize the key advantages of foot voting over ballot box voting, describe how they apply to the three major types of foot voting, and outline answers to several types of standard objections to expanded migration rights. I address these issues in much greater detail in my book Free to Move: Foot Voting, Migration, and Political Freedom, on which this article draws.

The Easterbrook Theorem: An Application to Digital Markets

1-2021 | Joshua Wright, Murat Mungan

ABSTRACT:

The rise of large firms in the digital economy, including Amazon, Apple, Facebook, and Google, has rekindled the debate about monopolization law. There are proposals to make finding liability easier against alleged digital monopolists by relaxing substantive standards; to flip burdens of proof; and to overturn broad swaths of existing Supreme Court precedent, and even to condemn a law review article. Frank Easterbrook’s seminal 1984 article, The Limits of Antitrust, theorizes that Type I error costs are greater than Type II error costs in the antitrust context, a proposition that has been woven deeply into antitrust law by the Supreme Court. We consider the implications of this assumption on the standard of proof. We find that, taking variants of the Easterbrook assumption as given, the optimal standard of proof is stronger than the preponderance of the evidence standard. Our conclusion is robust to how one specifies the preponderance of the evidence standard and stands in stark contrast to contemporary proposals to reduce or eliminate the burden of proof facing antitrust plaintiffs in digital markets.

What Is an Independent Agency to Do? The Trump Administration’s Executive Order on Preventing Online Censorship and the Federal Trade Commission

1-2021 | Joshua Wright, Alexander Krzepicki

ABSTRACT:

President Trump’s Executive Order on Preventing Online Censorship is the latest in a series of proposals aimed at independent agencies, chiefly the Federal Communications Commission (FCC) and Federal Trade Commission (FTC), that seek to police how tech companies operate their social media platforms. These measures suffer from fatal defects. They run against the weight of First Amendment law and, our focus, beyond the limits of FTC Section 5 authority. We briefly summarize the scope of that authority before analyzing the Executive Order against the backdrop of the First Amendment and Section 5; concluding it would be illegal and imprudent to enforce. We conclude with suggestions for how the FTC should handle the position it finds itself in—facing an Executive Order to consider and study unlawful enforcement actions that not only undermine its independence, but also shift its attention away from its primary mission of consumer protection toward policing free speech.

Rethinking Foreclosure Analysis in Antitrust Law: From Standard Stations to Google

1-2021 | Joshua Wright, Alexander Krzepicki

ABSTRACT:

Foreclosure is a prominent concept in the antitrust laws and across economics. In the world of exclusionary conduct—foreclosure is the concept. But, despite its prominence in antitrust law and economics—including taking center stage in the Department of Justice’s complaint against Google—it is still a relatively unsettled area of the law. Foreclosure does not enjoy a commonly understood definition. There is no agreed upon method for measuring it. And there is no well-settled threshold at which antitrust concerns are triggered. In short, foreclosure analysis is a mess. As the last major law-defining case on exclusive dealing, Tampa Electric, nears its sixtieth birthday, the black letter law of naive foreclosure has an increasingly unbearable disconnect with modern economic antitrust methods. Courts are left with relatively little guidance as to how to understand the competitive effects of a world with and without the contracts being challenged—and the naïve approach is precisely of zero help on that question. Courts have adapted on their own to bridge the gap between the foreclosure analysis in the early cases—built from discredited foreclosure theory—and modern economics by adopting process-based foreclosure inquiries. This is the future of foreclosure, and the sooner we get there, the better.

Domestic Politics and Settlement in Investor-State Arbitration

1-2021 | Weijia Rao

ABSTRACT:

Settlement of high-stake investor-state disputes may expose respondent state governments to public criticism for allegedly capitulating to foreign investors and large corporations, which gives rise to domestic audience costs in the form of lower support for respondent state governments. The anticipated domestic audience costs may in turn constrain state settlement behavior. Using the time left until the next election in the respondent state as a proxy for the size of anticipated domestic audience costs, I find evidence that case settlement probability decreases as elections approach in respondent states. This pattern appears to hold for both democracies and nondemocracies that hold elections. The findings suggest that pressure from domestic constituents causes respondent state governments to change their settlement behavior by not settling cases they otherwise would have settled or delaying settlement timing. These findings reveal potential inefficiencies arising from domestic political influences on state settlement behavior.

Section 13(b) of the FTC Act at the Supreme Court: The Middle Ground

12-2020 | Howard Beales, Benjamin Mundel, Timothy Muris

ABSTRACT:

In 1981, while in the FTC's Bureau of Consumer Protection, two of the authors were instrumental in initiating the FTC's fraud program, relying on Section 13(b)'s authority to obtain a permanent injunction to seek equitable relief, including asset freezes and consumer redress. The fraud program has become a mainstay of the Commission's consumer protection program, and the agency now coordinates local, state, national, and international agencies to fight the many faces of fraud. When the Obama Administration claimed that 13(b) could be used beyond fraud cases, an authority that all previous Commissions believed they lacked, we warned that this overreach could threaten the heretofore uncontroversial fraud program. A case currently before the Supreme Court challenges the FTC's ability to obtain monetary relief under 13(b) in any circumstances, which we call the Never position. The Commission takes the opposite extreme, arguing that monetary relief is available in any case it chooses, which we term the Always position. We argue that both positions are wrong. Among other problems, the Never position would terminate the fraud program, ending 40 years of successful use of an important, practical solution to one of the major problems that consumers face, with no clear evidence that the Commission has exceeded its authority. The Always position ignores both the text of Section 13(b), which limits permanent injunctions to "proper cases," and the statutory structure, which itself limits the FTC's ability to obtain monetary relief. Congress originally considered Section 13(b) as part of a comprehensive set of changes to enhance the Commission's authority, which also included what became Section 19 two years later. That section limits the FTC's ability to obtain monetary relief to conduct that a reasonable person would know was dishonest or fraudulent.

We argue instead for a middle ground. Because Section 19 requires separate administrative proceedings before the Commission can seek monetary relief, the money would be gone without the ability to obtain extraordinary relief, especially an ex parte asset freeze. It therefore cannot be used to attack fraud successfully. The middle ground would allow 13(b) to be used against fraudsters. Another advantage of the middle ground is that it respects the original vision of the FTC that there are some law violations for which monetary relief is inappropriate, a view codified in both 1914 and again in Section 19 in 1975. For example, complex issues of advertising substantiation, as well as issues about the adequacy of disclosures to consumers, about which reasonable experts often disagree, should normally be resolved through the administrative process. To subject all violations of the FTC Act routinely to potential monetary relief risks chilling the provision of truthful and useful information, as well as other conduct beneficial to consumers.

Accuracy and Preferences for Legal Error

12-2020 | Murat Mungan, Marie Obidzinski, Yves Oytana

ABSTRACT:

We study the interactions between accuracy and standards used in the determination of legal liability. First, we show that accuracy and type-1 errors (wrongful findings of liability) must reduce each other's effectiveness in mitigating optimal type-2 errors (wrongful failures to assign liability) for previous results in the literature to hold. When this condition holds, for major crimes the median voter's tolerance for type-1 errors is reduced as the legal system's accuracy increases. However, this relationship need not hold for minor offenses. Our analysis also reveals that legal processes that emerge under electoral pressures convict more often than is optimal but less often than necessary to maximize deterrence. Moreover, when the median voter's preferences are implemented, an increase in accuracy can counter-intuitively reduce welfare.

Some Reactions to “Reactionary Antitrust”

11-2020 | Seth Sacher, John Yun

ABSTRACT:

In a recent article, Professor John Newman describes and offers a defense of neo-antitrust, and critiques the position taken by those defending modern antitrust. Professor Newman distinguishes between what he sees as merely “conservative” responses—those opposed to the neo-antitrust policy positions, but not opposed to debating the issues they raise—and certain ideas that are “lightly derogatory” and exhibit “logical fallacies.” He proposes the provocative moniker “reactionary antitrust” to designate ideas that fall under this latter rubric.

In this article, we respond to Professor Newman’s critiques of the arguments made by critics of neo-antitrust. Broadly, his claim is that the critics are committing a number of logical fallacies; setting up and knocking down straw men; mistakenly calling their own position in the antitrust debate “apolitical”; and ignoring certain key arguments.

 

Before the Federal Ministry of Economic Affairs and Energy “GWB Digitalization Act” Comment of the Global Antitrust Institute, Antonin Scalia Law School, George Mason University

11-2020 | Tad Lipsky, Douglas Ginsburg, John Yun, Bruce Kobayashi, Joshua Wright

ABSTRACT:

This comment is submitted by the Global Antitrust Institute (GAI) at Scalia Law School, George Mason University to the Federal Ministry of Economic Affairs and Energy (Bundesministeriums für Wirtschaft und Energie, hereinafter “BMWi”) for consideration in relation to its proposed amendment to German competition law, the GWB Digitalization Act. The GAI Competition Advocacy Program provides recommendations to facilitate adoption of economically sound competition rules and policies. This comment identifies a number of elements contained in the proposed legislation that have the potential to introduce departures from sound economic analysis into German competition-law enforcement. These include novel provisions affecting the definition of “dominance” and “abuse of dominance,” as well as provisions promoting the use of so-called mandatory access remedies in cases involving digital platforms.

Reputational versus Beckerian Sanctions

11-2020 | Claude Fluet, Murat Mungan

ABSTRACT:

Punishment causes reputational losses in addition to more tangible losses. Lowering the probability of punishment reduces these reputational losses by diluting the informational value of verdicts. These considerations better align the positive as well as normative implications of law enforcement models with intuition and empirics: Crime is more responsive to the certainty rather than the severity of punishment even absent risk-seeking offenders (positive), which causes extreme Beckerian punishments to be inefficient when sanctions are socially costly to impose (normative). Moreover, in some cases optimal enforcement is `anti-Beckerian': Punishment is symbolic and detection costs are incurred solely to provide reputational incentives.

The State’s Monopoly of Force and the Right to Bear Arms

10-2020 | Robert Leider

ABSTRACT:

In debates over the Second Amendment, the conventional view is that the government ought to possess a monopoly of legitimate force, subject to the right of individuals to act in emergency self-defense. Many treat the non-defensive circumstances in which our system decentralizes force as holdovers from days of nonprofessional police and soldiers. When it comes to the Second Amendment, many believe that the only legitimate reason individuals may bear arms today is for individual self-defense against isolated criminal violence (e.g., an occupied home invasion).

This symposium article attacks the monopoly of force account, justifying the continued relevance of American law’s decentralization of legitimate force. This article argues that decentralization of force remains important for three reasons. First, despite the rise of professional police, American law enforcement still enforces law below desirable levels. Underenforcement of core crimes is particularly a problem in disadvantaged and rural communities and during times of civil unrest. Decentralization of force helps mitigate the underenforcement problem. And decentralization may be a better solution than simply providing more police because many areas where law is underenforced also (paradoxically) suffer from the effects of overcriminalization. Increased police presence could make the overcriminalization problem worse without solving the underenforcement problem. Second, American law has a mismatch between public duties and private rights. While providing effective law enforcement is a public duty, it is not a private right. Individuals, thus, have no effective claim that the government adequately enforce the law or protect them against unlawful violence. And any attempt to create such a private right would create profound separation of powers concerns. Consequently, self-help and private law enforcement are the best remedies when governments undersupply needed levels of police protection. Third, even if the “government” has a monopoly of force, it does not follow that government officers are the only ones in whom the government’s monopoly may be vested. The “government” is an incorporeal entity whose power must be exercised by human agents. Agents do not perfectly carry out the tasks of their principals; some government officers commit malfeasance and nonfeasance. The decentralization of force provides a remedy for such abuses of office.

Ultimately, the article concludes that the individual right to bear arms still has relevance for public defense and security. This fact should warrant consideration when determining the scope of the right, including that the arms protected by the Second Amendment should continue to include those arms whose primary value is public security rather than individual self-defense.

European Commission’s Notice on the Definition of Relevant Market for the Purposes of Community Competition Law, Comment of the Global Antitrust Institute

10-2020 | Camila Ringeling, Tad Lipsky, Douglas Ginsburg, Bruce Kobayashi, Joshua Wright

ABSTRACT:

This comment is submitted by the Global Antitrust Institute (GAI) to the European Commission (Commission) for consideration in relation to its consultation on its Notice on the definition of relevant market for the purposes of community competition law.

The Right to Armed Self-Defense in the Light of Law Enforcement Abdication

10-2020 | David Bernstein

ABSTRACT:

This article defends the position that the right of armed self-defense remains important today, in particular in light of the civil unrest of the Summer of 2020. The article proceeds in three parts. The first part will summarize arguments from various prominent commentators that the right to self-defense with firearms is anachronistic in the contemporary United States. These critics argue that Americans can and should rely solely on their local professional police force to protect them.

The second part of the article will focus on how this argument has been undermined by recent events. This part documents in great detail the failures of law enforcement in reaction to looting, rioting, and other forms of illegal behavior that threatened the well-being of the public. First, many police departments received implicit or explicit orders from their political supervisors to “stand down.” Second, in many instances, the police themselves were unwilling or unable to combat lawless behavior. If police consistently fail to enforce law and order, the argument against the individual right to bear arms for self-defense purposes significantly weakens.

Finally, the last part of the article will discuss examples of individuals and groups of citizens using firearms in self-defense during the recent unrest in the absence of effective law enforcement. Some of these episodes are open to criticism, whether on the grounds that one believes that it’s never worth using or even threatening to use deadly force to defend property, or because the line between justified self-defense and unjustified vigilantism is not always a clear one. Nevertheless, if law enforcement is unwilling or unable to preserve basic law and order, it’s both inevitable that citizens will try to fill the breach, and desirable that law-abiding individuals should be given the means to do so.

Self Defense, an Unalienable Right in a Time of Peril: Protected and Preserved by the Second Amendment

10-2020 | Joyce Malcolm

ABSTRACT:

For Americans frightened for their own and their family’s safety, the Covid-19 pandemic; lockdown in March 2020; release of convicted offenders; protests against the police morphing into weeks of violence and calls to defund them; and a presidential candidate promising to seize their guns has led to record-setting applications for firearms. This essay explores the constitutional background of the right to armed self-defense then tests the arguments against it: 1) it’s unnecessary, the police will protect you and 2) guns in your hands pose a danger to public safety. But can the police protect us and do they have a legal duty to do so? To answer the questions the success of restraining orders for vulnerable individuals and violent crime statistics during an era of increased public carry are examined. The essay concludes with the experience of England, where the very right to self-defense has been effectually removed.

The Future of the Second Amendment in a Time of Lawless Violence

9-2020 | Nelson Lund

ABSTRACT:

Joseph Blocher and Reva Siegel have focused attention on an underappreciated dimension of the debate about the constitutional right to keep and bear arms. They reject a narrow concept of “public safety” that evaluates regulations “without full consideration of what is encompassed in that concept—freedom from intimidation, for example, not just physical pain.” At this level of generality, I agree. But I do not agree that an appropriately broad conception should widen the discretion of legislatures to impose restrictions on firearms.

The questions that Blocher and Siegel raise are especially important during this time of politically inspired riots and flaccid government responses to mob violence. The most practically important Second Amendment issue that is ripe for Supreme Court resolution concerns the scope of the constitutional right to bear arms in public. The Constitution’s text and history offer little direct guidance, and the Justices will inevitably have to decide how to resolve the conflict of interests that occur when governments seek to promote public safety by depriving individuals of the means to protect themselves.

In performing this obligation, the Court should give no weight to fears of an armed citizenry, which frequently inspire useless or counterproductive infringement on individual liberty. Nor should regulations enjoy a presumption of constitutionality merely because they may promote a net reduction in deaths and physical injuries. The deepest principles on which our legal and constitutional institutions rest, which are reflected in the Second Amendment, are at odds with this kind of narrow cost-benefit calculation.

The right to keep and bear arms, and to use them when appropriate, is a vital element of the liberal order that our Founders handed down to us. They understood that those who hold political power will always be tempted to reduce the freedom of those they rule, and that many of the ruled will be tempted to trade their liberty for promises of security. Those temptations are apt to be especially alluring when widespread criminal violence threatens both liberty and security. They may be even more alluring when such violence takes the form of sustained and repeated mob violence that reflects a serious breakdown of the social fabric.

The causes of these temptations are sown in the nature of man. Our Constitution, including the Second Amendment, is a device designed to frustrate the domineering tendencies of the politically ambitious. The Second Amendment also plays an important role in fostering the kind of civic virtue that resists the cowardly urge to trade liberty for an illusion of safety. Armed citizens take responsibility for their own security, thereby exhibiting and cultivating the self-reliance and vigorous spirit that is ultimately indispensable for genuine self-government. 

 Our rulers include the judges charged with protecting our Second Amendment rights, and they are subject to the same temptations as other government officials. As they develop the nascent jurisprudence of this recently rediscovered constitutional provision, they have an opportunity to show that they understand how a robust right to keep and bear arms serves both individual freedom and civic virtue. If they fail to do that, they will help the nation take a significant step toward the soft despotism to which Tocqueville feared we would succumb.

Access to Substance Use Disorder Treatment During COVID-19: Implications from Reduced Local Jail Populations

9-2020 | Erkmen Aslim, Murat Mungan

ABSTRACT:

Many states have responded to the spread of COVID-19 by implementing policies which have led to a dramatic reduction in jail populations. We consider benefits associated with providing the population of individuals who would, but for these policies, be incarcerated with substance use disorder (SUD) treatment. We discuss problems that may prevent this population from receiving SUD treatment as well as policies which may mitigate these problems.

Are We Dropping the Crystal Ball? Understanding Nascent & Potential Competition in Antitrust

9-2020 | John Yun

ABSTRACT:

We root for the underdog, and nascent and potential competitors are the antitrust version of underdogs. They introduce a promising product and innovation with the hopes of challenging the incumbent for supremacy in a market. Yet, are those hopes cancelled before they even begin with powerful incumbents acquiring these nascent and potential competitors? Some even refer to these acquisitions as “killer.” However, is this the full story? Assessments of nascent and potential competition are ultimately about “what if.” What if the upstart competitor grows into the next dominant platform or develops the next blockbuster drug? What if the incumbent knows its market position has a weakness that the entrant will exploit so the incumbent must end the competition before it even begins? On the other hand, what if the nascent competitor never fully develops its potential and engages in a series of missteps? What if the nascent competitor’s innovation can be improved upon and reach the market faster and more widely through the well-oiled machinery of the incumbent? These are all possible scenarios. The problem is that the counterfactual world is never actually observable. Thus, speculative “what ifs” cannot guide antitrust policy—whether in an overly permissive or aggressive manner. What are we left with? What should agencies and courts do in face of such uncertainty? This Article offers a number of propositions to address these concerns and questions in regard to competition that has not been fully realized. First, the Article offers a clear legal and analytical delineation between the doctrines of nascent and potential competition—as there has recently been a degree of “semantic satiation” between these two concepts. Second, some have argued that the acquisition of nascent competitors should be adjudicated using legal standards developed under the Sherman Act, Section 2, which covers monopolization, rather than under the traditional Clayton Act, Section 7, which governs mergers and acquisitions. Yet, the counterfactual exercise is fundamentally different between ex ante merger evaluations (Section 7) and ex post monopolization claims (Section 2). Consequently, based on this fact alone, courts should be cautious to adopt Section 2 approaches to Section 7 issues. Third, when evaluating the wider set of proposals to address the nascent and potential competition problem, which the Article comments on, we must ask whether there is a problem in the first place. To that end, the Article examines a number of recent merger retrospectives. Finally, while using the past to predict the future can be a difficult and uncertain exercise even within mature markets, these hinderances can be overstated. Economic tools are available to frame our approach, and agencies and courts should focus particularly on whether the characteristics and nature of the acquired nascent competitor are sufficiently differentiated from the remaining competitors to warrant increased scrutiny.

Laws and Norms with (Un)Observable Actions

8-2020 | Claude Fluet, Murat Mungan

ABSTRACT:

We analyze the interactions between social norms, the prevalence of regulated acts, and policies. These interactions are impacted by people's inability to directly observe actors' behavior. Norms are ineffective incentivizers when acts are committed either very frequently or very infrequently, because noisy signals of behavior are then too weak to alter people's beliefs about others' behavior. This cuts against the dynamics of the `honor-stigma' model (Bénabou and Tirole 2006, 2011) and reverses its implications with even moderately noisy signals. With unobservable acts, the review process through which incentives are provided becomes an additional policy variable whose optima we characterize.

The Case for Second Amendment Sanctuaries: The Duty to Defend the Constitution

8-2020 | Joyce Malcolm

ABSTRACT:

In the wake of proposed new gun regulations the Second Amendment sanctuary movement swept Virginia and other states. The aim, to defend residents against loss of their constitutional right to keep and bear their private firearms, has been dismissed by governors and other authorities as a meaningless gesture. But is it? Federal, state and local officials are sworn to preserve, protect and defend the American Constitution. In addition forty-four states have the right to be armed in their constitutions. What is expected of those who swear that oath? This essay lays out the scope of the sanctuary movement and explores the obligation to protect a constitutional right to be armed.

Private Rules and Standards

8-2020 | Tun-Jen Chiang

ABSTRACT:

There is an enormous literature on the question of whether legal directives should take the form of rules or standards. This literature generally focuses on public laws such as statutes and regulations. Private legal instruments such as patents, contracts, and wills are given little thought. This Article analyzes the choice in the private law context.

Beyond making the obvious-yet-overlooked point that the rules/standards choice applies to private laws, the Article makes two contributions. First, it explores the normative arguments for rules and standards when applied to privately made laws, which are sometimes similar to, and other times different from, the arguments given in the context of public laws. For example, in the public law context, an argument in favor of rules is that they provide notice of expected behavior, while an argument in favor of standards is that they allow tailoring to individual circumstances. Neither argument works when applied to a negotiated private contract: the parties do not need to be notified about what is in their own contract, and the negotiated contract is tailored to the parties’ circumstances.

Second, the Article asks a positive question: will drafters actually choose a rule or standard, given the drafter’s private incentives? This question is rarely asked with respect to public laws, because drafters such as legislators are implicitly assumed to be pursuing the public interest. Private drafters are unlikely to be so public-spirited. The Article provides a model of how clashing incentives between private drafters (who pursue self-interested goals) and courts (who resist those goals) shapes the rules/standards choice. It then explains how this model helps explain drafting choices and interpretative doctrine with respect to contracts, wills, and patents.



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