Law and Economics

The flexibility to renegotiate can facilitate long-term contracting and thereby beneficial reliance investments and risk allocation. The prospect of modification can induce contracting parties who expect their bargaining power to improve to enter into contracts earlier and realize the advantages of longer-term relationships. Otherwise, those parties might decline to contract or delay until those opportunities realize, thereby foregoing the benefits of long-term risk allocation or reliance investments. The parties decide not only whether, but also when, to make legally binding commitments to each other. Courts should be more lenient in enforcing contract modifications that, prompted by a shift in bargaining power, may have only a redistributive effect. Parties can design under-compensatory damages that would provide a credible threat of breach ex post to facilitate ex post modification. Requiring good faith in modification (along with damages) can constrain possible holdup and protect reliance investments and risk allocation.

The negative moral emotions of guilt and shame impose real social costs but also create opportunities for policymakers to engender compliance with legal rules in a cost-effective manner. This Essay presents a unified model of guilt and shame that demonstrates how legal policymakers can harness negative moral emotions to increase social welfare. The prospect of guilt and shame can deter individuals from violating moral norms and legal rules, thereby substituting for the expense of state enforcement. But when legal rules and law enforcement fail to induce total compliance, guilt and shame experienced by noncompliers can increase the law’s social costs. The Essay identifies specific circumstances in which rescinding a legal rule will improve social welfare because eliminating the rule reduces the moral costs of noncompliance with the law’s command. It also identifies other instances in which moral costs strengthen the case for enacting legal rules and investing additional resources in enforcement because deterrence reduces the negative emotions experienced by noncompliers.

Search costs matter and are reflected in many areas of law. For example, most disclosure requirements economize on search costs. A homeowner who must disclose the presence of termites saves a potential buyer, and perhaps many such buyers, from spending money to search, or inspect, the property. Similarly, requirements to reveal expected miles per gallon, or risks posed by a drug, economize on search costs. But these examples point to simple strategies and costs that can be minimized or entirely avoided with some legal intervention. Law can do better and take account of more subtle things once sophisticated search strategies are understood. This Essay introduces such search strategies and their implications for law.

When one thinks of government, what comes to mind are familiar general-purpose entities like states, counties, cities, and townships. But more than half of the 90,000 governments in the United States are strikingly different: They are “special-purpose” governments that do one thing, such as supply water, fight fire, or pick up the trash. These entities remain understudied, and they present at least two puzzles. First, special-purpose governments are difficult to distinguish from entities that are typically regarded as business organizations—such as consumer cooperatives—and thus underscore the nebulous border between “public” and “private” enterprise. Where does that border lie? Second, special-purpose governments typically provide only one service, in sharp contrast to general-purpose governments. There is little in between the two poles—such as two-, three-, or four-purpose governments. Why? This Article answers those questions—and, in so doing, offers a new framework for thinking about special-purpose government.

For years, academic experts have championed the widespread adoption of the “Fama-French” factors in legal settings. Factor models are commonly used to perform valuations, performance evaluation and event studies across a wide variety of contexts, many of which rely on data provided by Professor Kenneth French. Yet these data are beset by a problem that the experts themselves did not understand: In a companion article, we document widespread retroactive changes to French’s factor data. These changes are the result of discretionary changes to the construction of the factors and materially affect a broad range of estimates. In this Article, we show how these retroactive changes can have enormous impacts in precisely the settings in which experts have pressed for their use. We provide examples of valuations, performance analysis, and event studies in which the retroactive changes have a large—and even dispositive—effect on an expert’s conclusions.

Everyone owes each other a duty of ordinary care—but what is “ordinary”? How does one act reasonably to meet this burden? This Comment analyzes the current reasonable person standard for disabled plaintiffs and the corresponding duty of “ordinary care” provided by defendants through a critical disability studies lens. The current system of tort law burdens disabled plaintiffs with accommodating themselves, rather than requiring defendants to include accessible care in meeting their duty of ordinary care. To make the distribution of accommodative labor more equitable, this Comment proposes three stackable changes: (1) courts should reinterpret defendants’ duty of ordinary care to include care of individuals with disabilities by eliminating the doctrine that tortfeasors owe accommodations to people with disabilities only if they are on notice of their disabilities; (2) courts could further shift the balance of accommodative labor by factoring the mental and physical cost of accommodating oneself into the reasonable care inquiry when the plaintiff is disabled; and (3) courts could eliminate comparative negligence for plaintiffs with disabilities to address the problematic “reasonable person with a disability” standard. This Comment also explores theoretical, doctrinal, and normative justifications while creating space for a more robust dialogue on how the law treats disability as “extra”—but not ordinary.

This Comment analyzes the entrance of institutional investors into the single-family rental market after the Great Recession of 2008. The collapse of the housing market during the Great Recession fundamentally changed the ownership structure of U.S. single-family homes. This post-recession reality has introduced a housing puzzle: the pricing trends of single-family rentals in the decade after the Great Recession suggest that institutional investors have captured monopolistic power over the single-family rental market despite owning a relatively small market share. Thus, this Comment evaluates the housing puzzle through the lens of antitrust law.

While a potential antitrust case appears to suffer from the critical weaknesses of low entry barriers and market shares, analyzing the institutional entrance into the single-family rental market under antitrust merger doctrine reveals that the case is stronger than it may initially seem. After evaluating the antitrust case, this Comment considers how the housing market can instruct antitrust doctrine’s further evolution, since commentators across academia, the media, and politics all criticize institutional entrance. By highlighting how unique market facts in housing obfuscate market power, this Comment suggests expanding the merger analysis to include not just levels and changes in concentration, but also orders of magnitude.

I argue for an economic approach to equal protection analysis that is grounded in the motivations of government actors but that addresses some of the longstanding concerns with intent-based tests. The examples of criminal deterrence and equal protection analysis are illustrative of an agenda for law and economics analysis that more incorporates other-regarding motives more generally.

This Article explores what it might mean in practice for agencies to incorporate distributive considerations into cost-benefit analysis. It uses, as a case study, a 2014 rule promulgated by the National Highway Traffic Safety Administration (NHTSA) requiring new motor vehicles to have rearview cameras that reduce the risk of backover crashes.

Llacua is one of many shepherds who move to the United States for a few months each year with an H-2A visa to work on a ranch. The H-2A program allows U.S. employers to petition to hire foreign temporary agricultural workers, provided that the employers satisfy specific regulatory requirements.