Showing papers on "Damages published in 2005"

The law of torts

Abstract: A single-volume introduction to contemporary tort and injury law. This expert summary covers direct and intentional interference with person or property and explores their defenses. Reviews liabilities, damages, and the apportionment of responsibility among parties, and examines the criticism and choices in tort law. Economic and dignitary injury is considered as well.

Optimal Cartel Pricing in the Presence of an Antitrust Authority

Abstract: The dynamic behavior of a price-fixing cartel is explored when it is concerned about creating suspicions that a cartel has formed. Consistent with preceding static theories, the cartel's steady-state price is decreasing in the damage multiple and the probability of detection. However, contrary to those theories, it is independent of the level of fixed fines. It is also shown that the cartel prices higher when a more competitive benchmark price is used in calculating damages.

Intellectual Property: Valuation, Exploitation, and Infringement Damages

Abstract: Note to the Reader: Chapters or sections not in the main bound volume are indicated by "(New)" after the title. Material new to or modified in this supplement is indicated by an asterisk () in the left margin in the contents and throughout the supplement.Preface.PART I VALUATION.1A Intellectual Property Landscape (New).1A.1 80% of Corporate Value Is Intellectual Property and Intangible Assets.1A.2 Over Seven Million Patents.1A.3 Corporations Own the Most Patents.1A.4 All Industries Are Patenting Inventions.1A.5 Trademarks.1A.6 Trademarks Are Supported with Huge Ad Spending.1A.7 Copyrights.1A.8 Trade Secrets.1A.9 Business of Licensing.12A Risk-Adjusted Cash Flows (New).12A.1 Required Rates of Return.12A.2 Capital Asset Pricing Model.12A.3 Build-Up Method.12A.4 Venture Capital Rates of Return.12A.5 Probability of Success.12A.6 Conclusion.Because of the rapidly changing nature of information in this field, this product may be updated with annual supplements or with future editions. Please call 1-877-762-2974 or e-mail us at subscriber@wiley.com to receive any current update at no additional charge. We will still send on approval any future supplements or new editions when they become available. If you purchased this product directly from John Wiley & Sons, Inc., we have already recorded your subscription for this update service.12B Dealing with Risk and Uncertainty in Intellectual Property Valuation of Exploitation (New).12B.1 Risk versus Uncertainty.12B.2 Decision Analysis and Decision Trees.12B.3 Decision Tree Components and Conventions.12B.4 Monte Carlo Techniques.12B.5 Markov Chains.12B.6 Obtaining Information from Indirect Observation: Shadow Pricing.12B.7 Bayesian Analysis.12B.8 Option Pricing Models.12B.9 Limitations on Rationality in Decision-Making: The Effects of Perception and Biases on Decision-Making.12B.10 Conclusion.14A Rights of Privacy, Publicity, and Celebrity Persona (New).14A.1 Introduction.14A.2 Legal Underpinnings.14A.3 Trademark Rights.14A.4 Copyright.14A.5 Legal Uncertainties and Solutions.14A.6 A Photography Issue.14A.7 Conclusion.Index.

Hurricane Katrina: Preliminary Estimates of Commercial and Public Sector Damages

Abstract: Hurricane Katrina's impact on the economy and infrastructure of Louisiana, Mississippi and Alabama represents an immediate concern to commercial enterprises, area residents, and policymakers at all levels. Understanding the severity of the damages and the magnitude of the recovery efforts are important for both private and public decision makers deploying resources in the affected area. This paper provides initial estimates of damages in a number of infrastructure categories and residential and commercial structures, content and equipment. The estimation is based upon earlier analysis (Burton and Hicks, 2003) which provided an economic model of damages based upon the upper Mississippi floods of 1993. Specifically we estimate that Hurricane Katrina has generated commercial structure damages of $21 Billion, commercial equipment damages of $36 Billion, residential structure and content damages of almost $75 Billion, electric utility damages of $231 Million, highway damages of $3 Billion, sewer system damages of $1.2 Billion and commercial revenue losses of $4.6 Billion. We are unable to estimate water system, and some key infrastructure damages at this point, and have not included the economic consequences of the loss of life or damage to the regions environmental amenities.

Environmental Regulation with Technology Adoption, Learning and Strategic Behavior

Abstract: We analyze a model of environmental regulation with learning about environmental damages and endogenous choice of emissions abatement technology by a polluting firm. We compare environmental policy under discretion, in which policy is updated upon learning new information, versus under rules, in which policy is not updated. When investment in abatement technology is made prior to the resolution of uncertainty, neither discretion nor rules with either taxes or standards achieve an efficient solution except in special cases. When there is little uncertainty, rules are superior to discretion because discretionary policy gives the firm an incentive to distort investment in order to influence future regulation. However, when uncertainty is large, discretion is superior to rules because it allows regulation to incorporate new information. Taxes are superior to standards under discretion regardless of the relative slopes of marginal costs and marginal damages for the case of quadratic abatement costs and damages.

Private authority and transnational governance: the contours of the international system of investor protection

Abstract: Conventionally, investors could not sue states directly under international law and arbitration tribunals did not have general jurisdiction over international investment disputes. This has changed, especially since the early 1990s, with the emergence of an international system of investor protection that combines investor-state arbitration and broad standards of investor protection. The system elevates the legal status of investors (but not other individuals) in international law by allowing them to make international claims for damages against host states. Although the system depends on state authority for its establishment and ongoing effectiveness, the system adopts private authority as a method of transnational governance by permitting private investors to make claims and by giving private arbitrators the power to resolve those claims. This provides significant advantages to multinational enterprises at the expense of governmental flexibility in both capital-importing and capital-exporting states, as revealed by the recent explosion of investor claims. This article examines the legal architecture of the system in order to demonstrate how it expands private authority in the context of transnational governance.

Economic Valuation of on Site Material Damages of High Water on Economic Activities based in the City of Venice: Results from a Dose-Response-Expert-Based Valuation Approach

Abstract: The paper focuses on the economic assessment of damages caused by high water in the city of Venice. In particular, we focus our attention on a valuation exercise that addresses the estimation of monetary, short period, on-site damages due to high water events on the different business activities located in Venice. On-site damages include both mitigation costs, which refer to all types of financial expenditure undergone to avert physical and material damages caused by flooding, and remediation costs, i.e. costs to be sustained for maintenance and substitution of affected building elements. Hence, the present study can be considered as a pioneering attempt to analytically quantify, from an economic point of view, on-site damages from high water. An integrated dose-response modelling and an expert-based valuation approach have been selected as the most suitable economic valuation methodology to shed light on the on-site damages. The main focus of the work is to assess dose-response relationships, which are able to describe the physical effects of high water on the different on-site damage categories, including inner and front doors maintenance, cleaning of pavements and maintenance of the walls. Bearing in mind such an economic valuation framework, we proceed with the estimation of on-site damages not only for the present high water situation (business as usual) but also extend the valuation exercise to three additional high water scenarios: (1) a climate change scenario; (2) a high water protection scenario; and, (3) a combined climate change and protection scenario. Estimation results show that the welfare loss due to on-site, short-term damages supported by the business activities ranges from 3.41 to 4.73 million Euro per year, respectively for the business as usual and climate change scenarios. Finally, we can conclude that the introduction of a public policy protection mechanism that defends the city of Venice from any flooding above 110 cm above the Punta della Salute Tidal Datum, such as the MOSE, will reduce the on-site damages supported by the business activities up to 2.87 million Euro per year.

Financial Compensation in the WTO Improving the Remedies of WTO Dispute Settlement

Abstract: The current system of remedies in the WTO provides Members with a choice between trade compensation or retaliation. There is a problem in that trade compensation is only possible with the consent of the non-complying country and thus often remains theoretical, while retaliation has the disadvantage of requiring the complaining Member to 'shoot itself in the foot' by restricting imports and thus hurting its own industrial users, importers and consumers. Such retaliatory restrictions also hurt innocent bystanders abroad: private parties who are not involved in a dispute lose their export markets. As importantly, the current system does not provide for effective reparation of damages suffered by the WTO Member and private parties concerned. These problems are even more urgent for developing countries. Many of them cannot effectively retaliate: their economies are too small to make an impression on the infringing country, and the negative effects of such countermeasures would be felt disproportionately by their own economies and businesses. Introducing financial compensation could be a solution. Financial compensation does not restrict trade, helps to compensate injured Members and industries, avoids hurting innocent bystanders, and can contribute to more effective compliance. In addition to analysing the problems with current remedies and the pros and cons of financial compensation, this article outlines what financial compensation in the WTO could look like. Copyright 2005, Oxford University Press.

Pollution Trading in Water Quality Limited Areas: Use of Benefits Assessment and Cost-Effective Trading Ratios

Abstract: This paper proposes a water quality trading design that addresses common implementation problems. Trading ratios, which are calculated from damages integrated over each source’s spatial zone of influence, drive the system to a socially costeffective outcome. The design is applied to combined sewer overflow management in the Upper OhioRiver Basin, where trading ratios can vary significantly among trading partners. The analysis shows that significant compliance cost savings are possible without incurring a penalty in terms of social damages or overall water quality despite a higher level of discharge relative to the command and control option.

Investor-State Arbitration

Abstract: I Introduction II History and Limitations of the Traditional System for Resolving Investment Disputes III The Modern System of Investor-State Arbitration IV Commonly Used Procedural Rules V Procedural Law Applicable in Investor-State Arbitration VI National Court Interference: Anti-Arbitration Injunctions VII The Course of an Investment Arbitration VIII Consolidation under Relevant Arbitration Rules or Treaties IX Governing Law in Investment Disputes X Consent to Arbitral Jurisdiction XI The Concept of Investment XII The Nationality of the Investor XIII Exhaustion of Local Remedies XIV Election of Forum: National Courts and Contract Arbitrations XV Discrimination XVI Expropriation XVII "Fair and Equitable Treatment" and "Full Protection and Security" XVIII Umbrella Clauses XIX Damages, Compensation, and Non-Pecuniary Remedies XX Annulment and Set Aside XXI Enforcement of Awards XXII The Future of International Investment Arbitration Select Bibliography Index Table of Cases Index of Treaties, Conventions, and International Agreements

Have state caps on malpractice awards increased the supply of physicians

Abstract: Twenty-seven states have laws that cap payments for noneconomic damages in malpractice cases. In this study we examined whether these laws have increased the supply of physicians, using c...

Private v. Public Antitrust Enforcement: A Strategic Analysis

Abstract: We compare private and public enforcement of the antitrust laws in a simple strategic model of antitrust violation and lawsuit. The model highlights the tradeoff that private firms are initially more likely than the government to be informed about antitrust violations, but are also more likely to use the antitrust laws strategically, to the disadvantage of consumers. Assuming coupled private damages, if the court is sufficiently accurate, adding private enforcement to public enforcement always increases social welfare, while if the court is less accurate, it increases welfare only if the government is sufficiently inefficient in litigation. Pure private enforcement is never strictly optimal. Public enforcement can achieve the social optimum with a fee for public lawsuit that induces efficient information revelation. Private enforcement can also achieve the social optimum with private damages that are efficiently multiplied and decoupled.

Unintended Consequences of Medical Malpractice Damages Caps

Abstract: Previous empirical studies have examined various aspects of medical malpractice damages caps, focusing primarily upon their overall effect in reducing insurance premium rates and plaintiffs' recoveries, and (to a lesser degree) upon other effects such as physicians' geographic choice of where to practice and the "anchoring" effect of caps that might inadvertently increase award amounts. This Article is the first to explore an unintended crossover effect that may be dampening the intended effects of caps. It posits that, where noneconomic damages are limited by caps, plaintiffs' attorneys will more vigorously pursue, and juries will award, larger economic damages, which are often unbounded. Implicit in such a crossover effect is the malleability of various components of medical malpractice damages, which often are considered categorically distinct, particularly in the tort reform context. This Article challenges this conventional wisdom. My original empirical analysis, using a comprehensive dataset of jury verdicts from 1992, 1996, and 2001, in counties located in twenty-two states, collected by the National Center for State Courts, concludes that the imposition of caps on noneconomic damages has no statistically significant effect on overall compensatory damages in medical malpractice jury verdicts or trial court judgments. This result is consistent with the crossover theory. Given the promulgation of noneconomic damages caps, the crossover effect may also partially explain the recently documented trend of rising economic (as opposed to noneconomic) damages in medical malpractice cases.

Damages Caps, Insurability, and the Performance of Medical Malpractice Insurance

Abstract: This article uses the complete property-casualty insurance files of the National Association of Insurance Commissioners from 1984 to 1991 to assess the effect of medical malpractice reforms pertaining to damages levels and the degree to which these damages are insurable. Limits on noneconomic damages were most influential in affecting insurance market outcomes. Several punitive damages variables specifically affected the medical malpractice insurance market, including limits on punitive damage levels, prohibitions of the insurability of punitive damages, and prohibition of punitive damages awards. Estimates for insurance losses, premiums, and loss ratios indicate effects of reform in the expected directions, where the greatest constraining effects were for losses. The quantile regression analysis of losses indicates that punitive damages reforms and limits were most consequential for firms at the high end of the loss spectrum. Tort reforms also enhanced insurer profitability during this time period.

Hurricane Fatalities and Hurricane Damages: Are Safer Hurricanes More Damaging?

Abstract: 1. IntroductionHurricanes have long threatened the coastal areas of the United States. The nation has invested millions of dollars to understand and forecast hurricanes. Research efforts led by the National Hurricane Center (Simpson 1998) have succeeded in making land-falling hurricanes less deadly. In the 1990s, the modernization of the National Weather Service, featuring the installation of the Advanced Weather Interactive Processing System to process data from radar, satellites, and surface observations at high speeds and a nationwide network of Doppler weather radars, contributed to improved forecasts of weather hazards (Friday 1994). Annual hurricane fatalities have fallen from 0.5 per million residents nationally during the 1950s to 0.05 per million residents during the 1980s and 1990s. Kunkel, Pielke, and Changnon (1999) attribute the decline to improved hurricane forecasts.1Although hurricanes have become less deadly over time, hurricane damages have increased, particularly in recent years. By 1995, hurricane damage in the 1990s had already exceeded total damage in the 1970s and 1980s combined. This escalation has led to interest among policy makers and researchers regarding the causes of increasing hurricane damages. Some observers attribute rising damages to an increase in the number and severity of hurricanes; for instance, a 1995 congressional report asserts that hurricanes "have become increasingly frequent and severe over the last four decades as climatic conditions have changed in the tropics" (cited in Pielke and Landsea 1998, p. 623). This explanation, however, is simply false. Katz (2002) for instance finds no statistically significant increase in the number of land-falling hurricanes over time.2 And the period from 1991 to 1994 had the fewest tropical storms of any four-year period in the last 50 years.Increasing societal vulnerability, that is, more people and wealth along hurricane-prone coasts, seems to explain increasing hurricane damages. illustrates the increase in coastal county populations during the 20th century. The figure graphs the population growth rates by decade for 130 Atlantic and Gulf coast counties and for the United States overall. As illustrated, the coastal counties grew faster than the nation in each decade. A wealthier population will also have more property vulnerable to destruction by a hurricane. Pielke and Landsea (1998), Changnon and Hewings (2001), and Katz (2002) find no time trend for hurricane damages after normalizing for changes in population and wealth in addition to inflation.An understanding of increasing hurricane losses requires an explanation for the increase in coastal county populations, and several have been advanced. One is the rising standard of living in the United States: wealthier people will spend more on luxuries, such as living near the ocean. Another possibility involves low-probability event bias. Considerable evidence suggests that people do not behave according to expected utility theory with respect to low-probability, high-consequence events like hurricanes. Instead of considering the expected cost of these events, which is considerable, people act as if such events "couldn't happen to me" and treat the low probability as a zero probability (Kunreuther et al. 1978; Camerer and Kunreuther 1989). Finally, a number of government policies, including subsidized insurance, disaster assistance, and structural restoration measures (e.g., rebuilding roads and restoring beaches after storms) contribute to overbuilding on hurricane-prone coasts (Platt 1999).3We consider an alternative explanation, one which, to our knowledge, has not been widely discussed, namely the very reduction in hurricane lethality. Through improved hurricane warnings, better evacuation, and engineering advances, the probability of fatalities has been reduced, thereby decreasing the expected cost of living along hurricane-exposed coasts. …

Coping with Disaster: The Impact of Hurricanes on International Financial Flows, 1970-2001

Abstract: How well do countries cope with the aftermath of natural disasters? In particular, how well do international financial flows buffer economic losses from disasters? This paper focuses on hurricanes (one of the most common and destructive types of disasters), and examines the impact of hurricane damages on resource flows to affected countries. Due to the potential endogeneity of disaster damage, I exploit instrumental variables constructed from meteorological data on hurricanes. Instrumental variables estimates indicate that disaster damages lead to increases in national-level net inflows of migrants' remittances, foreign lending, and foreign direct investment. These types of flows respond rapidly, within the first year after damages. Official development assistance (ODA) also responds positively to hurricane damage, but with a lag of roughly two years. On average, total inflows from these sources within the following four years amount to roughly four-fifths of estimated damages. The null hypothesis of full insurance of hurricane disaster damages cannot be rejected. By contrast, ordinary least squares estimates find essentially no response of international flows to disaster damages, highlighting the importance of an instrumental variables approach in this context.

Economic theories of settlement bargaining

Abstract: ▪ Abstract We briefly review two basic models of settlement bargaining based on concepts from information economics and game theory. We then discuss how these models have been generalized to address issues that arise when there are more than two litigants with related cases. Linkages between cases can arise because of exogenous factors such as correlated culpability or damages, or they can be generated by discretionary choices on the part of the litigants themselves or by legal doctrine and rules of procedure.

What is corporate social responsibility? : The case of Canada

Abstract: The question of responsibility is not new to labour law. The earliest developments in labour law and social law sprang from a “legal revolution” to borrow the words of Georges Scelle, considering the concept of responsibility that prevailed in common law. Civil responsibility which was originally based on fault could now be based on the risk inherent to a socially useful activity so as to ensure that the responsibility for damages that might result from it be equitably shared. This development took place under the generalization of the industrial production mode, first within the frame work of laws respecting compensation for industrial accidents.

Cost Impacts, Scheduling Impacts, and the Claims Process during Construction

Abstract: Construction mismanagement results in multiple problems that can cascade throughout the work force chain, affecting the schedule and leading to damages to multiple parties. Although the problem may start with a single subcontractor, it can result in all contractors feeling some impact to their work. In this paper, a case study is presented of a project with seven different mismanagement scenarios. A description of each scenario is provided as well as a quantification of the damages that result from the problem. A construction claims section is also included that addresses many of the issues that could result from a claim for each of the seven scenarios. A discussion is presented outlining possible preventative steps to minimize the damages from the problems presented.

Judgment proofness under four different precaution technologies

Abstract: This study shows that the effects of judgment proofness on precaution depend on whether the injurer can reduce the probability of the accident, the magnitude of the harm, or both. Different legal solutions to the problem are examined: punitive damages, average compensation, undercompensation, accurate compensation, and negligence. We find that when the injurer can only reduce the probability of the accident, negligence with average compensation is the best solution, but negligence with perfectly compensatory damages is the desirable solution if the injurer can only or also affect the magnitude of the harm.

Managerial Opportunism during Corporate Litigation

Abstract: Using a large sample of litigation events involving publicly listed defendants, we document a surprising fact. The resolution of litigation through a court's decision dominates settlement of litigation from the shareholders' point of view, even when the firm loses. We develop a model using agency costs within the firm to explain why the market views settlement as a negative outcome on average and find empirical evidence supporting the implications of the model. Specifically, firms with weak corporate governance settle litigation more quickly, and the market reacts more negatively to settlements involving firms with higher agency costs. POLITICALLY, THERE ARE FEW ISSUES that are more contentiously debated than tort reform in the United States. The argument is usually framed from the perspective of various opposing stakeholders in the process; proponents of reform contend that the system is too often used frivolously to extort wealth from business, while opponents of reform point out that it is the best means of protecting other stakeholders (customers, employees, neighboring communities, etc.) from damages inflicted by the operations of business. Certainly, there is ample evidence to prove that both statements are true at the margins. But often left out of the policy debates is the forgotten stakeholder in corporate litigation: the shareholders who must ultimately bear the cost of the litigation.

Deterring Fraud: The Role of General Damage Awards in Automobile Insurance Settlements

Abstract: Awards for pain and suffering and other noneconomic losses account for over half of all damages awarded under third-party auto insurance bodily injury settlements. This article hypothesizes that third-party insurers use general damage awards to reduce the incentive to submit exaggerated claims for specific damages for injuries and lost wages. Consistent with this hypothesis, the article finds evidence using data on over 17,000 closed bodily injury claims that special damage claims that exceed their expected value receive proportionally lower general damage awards than claims that do not. Among the implications of this research is the possibility that insurers will be less zealous in challenging fraudulent special damage claims under a third-party insurance regime than they will be under a first-party insurance regime in which access to general damages is limited.

Intellectual Property: Economic and Legal Dimensions of Rights and Remedies

Abstract: 1. Introduction 2. The law and economics of IPRs 3. A general theory of damages rules 4. Departures from the general theory 5. Liability standards for IPRs 6. Who is an infringer? 7. Who should be entitled to sue for infringement? 8. Calculating monetary damages 9. Concluding remarks.

The European Commission issues a green paper on damages actions for breach of the EC antitrust rules

Abstract: "Green Paper on damages actions for breach of the EC antitrust rules"* A. Introduction The competition rules of Articles 81 and 82 EC can be enforced both by competition authorities (public…

Can the International Environmental Cooperation Be Bought

Abstract: In this paper a two-stage game of international environmental agreement formation with asymmetric countries is solved. The equilibrium of the game allows to determine the number of countries interested in signing the agreement. Two cases are studied. In the first case, it is assumed that the only difference among countries is given by the abatement costs, and in the second case, by the environmental damages. In both cases, two different institutional settings, one without side payments and another with side payments, are considered. The results establish that the asymmetry assumption has no important effects on the scope of cooperation in comparison with the symmetric case if side payments are not used or the only difference among countries is given by the abatement costs. When the only difference are the environmental damages, the result is that the level of cooperation that can be bought through a self-financed side payment system increases with the degree of asymmetry.

Dollars and Death

Abstract: Administrative regulations and tort law both impose controls on activities that cause mortality risks, but they do so in puzzlingly different ways. Under a relatively new and still-controversial procedure, administrative regulations rely on a fixed value of a statistical life representing the hedonic loss from death. Under much older law, tort law in most states excludes hedonic loss from the calculation of damages, and instead focuses on loss of income, which regulatory policy ignores. Regulatory policy also disregards losses to dependents; tort law usually allows dependents to recover for loss of support. Regulatory policy generally treats the loss of the life of a child as equivalent to the loss of the life of an adult; tort law usually treats the loss of the life of a child as less valuable. Regulatory policy implicitly values foreigners as equal to Americans; tort law does not. We argue that both areas of law make serious mistakes in valuing life and that each should learn from the other. Regulatory policy properly focuses on hedonic loss from death, and tort law should adopt this approach. But regulatory policy should imitate tort law’s individualized approach to valuing the loss from death, including its inclusion of losses to dependents. If these changes were made, tort awards would be more uniform and predictable, and regulations would be less uniform and more stringent. In addition, average tort damages for wrongful death would be at least twice as high as they are today. With respect to dollar judgments for mortality risks, a pervasive issue is how to combine accuracy with administrability and predictability; both bodies of law could do far better on this score. How should the legal system assign dollar values to human lives? Consider a highly publicized example. On September 22, 2001, Congress enacted legislation to compensate the survivors of the attacks of eleven days earlier. Under the final regulations, survivors were permitted to claim amounts for both economic and non-economic losses. The economic losses were to be measured by calculating each victim’s expected lost wages from 5, 2004 * Kirkland and Ellis Professor of Law, University of Chicago Law School. ** Karl N. Llewellyn Distinguished Service Professor of Jurisprudence, University of Chicago, Law School and Department of Political Science. Thanks to Matthew Adler, Ward Farnsworth, Robert Hahn, Saul Levmore, Richard Posner, Adrian Vermeule, and W. Kip Viscusi for comments, and to Nikkie Eitmann, Josh Kluewer, Wayne Hsiung, Gavin Martinson, and Andres Sawicki for research assistance. Posner thanks the Russell Baker Scholars Fund for financial support. 1 Air Transportation Safety and System Stabilization Act, § 405(c)1-2, 49 U.S.C § 40401 (2001). 2 See http://www.usdoj.gov/victimcompensation/. For discussion, see Symposium, 53 DePaul L Rev 205 (2003). September 11, 2001 through the anticipated date of retirement, subject to several timate of household consumption or victim. Noneconomic losses were set at $250,000 per victim plus 100,000 per surviving spouse and ild. In all, 2,878 families, about 97 percent of those eligible, received compensation rom the fund, with amo a high of $7.1 million; e average award totaled about $2.1 million per family. Hence there was significant varia presu comm awar varia simu of ru are s bring ust generally accom 7 and to ndertake that analysis, agencies must turn human lives into monetary equivalents. For ple, the Environm a set of fact-specific awards adjustments, including a reduction by an es expenditure by the $ for each surviving ch f unts ranging from a low of $250,000 to th bility among awards. But the variability came amidst a serious effort to produce mptive floors and caps, with a “baseline” for single decedents of $300,000 and a itment to allow awards exceeding $3,000,000 only in unusual circumstances. These ds have been attacked on multiple grounds, including excessive and insufficient bility. The September 11 awards reflect a strong influence from tort law, which they ltaneously modify. But in American law, tort doctrines provide only one of two sets les for monetizing death. The other comes from administrative regulations, and there triking contrasts between the two bodies of law. One of our main goals here is to the two in contact with one another. Countless regulations now attempt to reduce statistical risks. Cost-benefit analysis pany these regulations, at least if their costs are high, m u exam ental Protection Agency values each life at a uniform number, most recently $6 million. Through tort law, courts provide 3 28 C.F.R. § 104.44 (2004). 4 See David W. Chen, After Weighing Value of Lives, 9/11 Fund Completes Its Task, The New York Times, June 16, 2004, at A1. 5 66 Fed Reg 66,274-75. 6 See Alina Tugend, Lives in the Balance, The National Journal Government Executive, September 2003, at 50; David W. Chen, Man Behind Sept. 11 Fund Describes Effort as a Success, With Reservations, The ee 68 Fed. Reg. 41434, 41488 (July 11, 2003); in its ggested a ). New York Times, January 1, 2004, at B3. 7 See Stephen Breyer et al., Administrative Law and Regulatory Policy 120-35 (5 ed. 2002). 8 A general overview can be found in Office of Management and Budget, Regulatory Analysis, Circular A4 (September 17, 2003), available at http://www.whitehouse.gov/omb/inforeg/regpol.html#rr 9 See 66 Fed. Reg. at 7012. In its July 2003 regulation governing food labeling of trans fatty acids, the Food and Drug Administration used a VSL of $6.5 million, s March 13, 2003 proposed rule on dietary ingredients and dietary supplements, the same agency su VSL of $5 million, see 68 Fed. Reg. 12158, 12229 (using this value to calculate the “value of a statistical life day”

Optimal Deterrence and Private International Cartels

Abstract: The focus of this paper is on penalties imposed on modern private international cartels. I begin by showing that deterrence of recidivism of overt collusion is the overarching objective of the world's leading antitrust regimes, and I sketch the theory of optimal deterrence in the context conduct by hard-core cartels. Beginning in the late 1980s, fine-setting standards became more precise and progressively harsher. U.S. Sentencing Guidelines for cartels came based on a corporate defendant's affected commerce and certain objective culpability factors. Alternatively, large fines could be assessed by a double-damages criterion. Combined with parallel treble damages from private suits that often accompany fines, the substantial increase in total penalties has led some legal writers to criticize U.S. cartel sanctions as having reached supra deterrent levels. Fines imposed on cartels by the European Union and other jurisdictions have also risen in the past decade, thus adding to concerns about supra deterrence in the case of global cartels. On the other hand, there are at least eight legal-economic arguments that support the proposition that contemporary monetary sanctions on global cartels are inadequate to deter recidivism. Previous attempts to analyze optimal cartel sanctions have generally remained at a theoretical level. In the few cases where optimal fines have been discussed empirically, the studies have relied on assumed point estimates of key parameters, the fines considered have been those of only one jurisdiction, private settlements have been ignored, only current monetary values employed, and the scenarios have been generic cartel situations. To attempt to resolve this debate, formulas are presented and parameterized with data that takes into account the specific characteristics of modern private international cartels. This paper considers five important cases: cartels that operate within North America (fined only, civil settlements only, and both), within the EU, and across two or more continents ("global" cartels). Empirical data needed to operationalize the formulas are drawn from a comprehensive sample of 283 international cartels discovered since January 1990. Moreover, actual affected sales, penalties, and damages are adjusted to account for the time value of money. Optimal penalties are derived as a function of damages caused by the cartels. Probability distributions of the relevant variables result in a range of optimal penalties for the five cartel scenarios. Optimal corporate monetary sanctions are compared to both the median and the harshest actual international cartel fines and settlements. This exercise supports the view that with rare exceptions actual corporate cartel penalties up to 2005 have been sub optimally deterrent.

Do Institutions Matter? The Impact of the Lead Plaintiff Provision of the Private Securities Litigation Reform Act

Abstract: When Congress enacted the Private Securities Litigation Reform Act in 1995, the Act's "lead plaintiff" provision was the centerpiece of its efforts to increase investor control over securities fraud class actions The lead plaintiff provision alters the balance of power between investors and class counsel by creating a presumption that the investor with the largest financial stake in the case will serve as lead plaintiff The lead plaintiff then chooses class counsel and, at least in theory, negotiates the terms of counsel's compensation Congress' stated purpose in enacting the lead plaintiff provision was to encourage institutional investors - pension funds, mutual funds, hedge funds, etc - to come forward to serve as lead plaintiff The theory was that an institutional investor with a substantial damages claim would have the incentive to bargain hard with class counsel on behalf of the class, reducing the percentage of the recovery awarded to class counsel Congress also expected institutions to play an oversight role, monitoring to make sure that class counsel was vigorously pursuing claims on behalf of the class and not settling claims on the cheapOur study offers evidence on the extent to which the lead plaintiff provision furthers these goals We have collected two samples of securities class actions - one from 1991 to 1995 (pre-PSLRA), and one from 1996-2000 (post-PSLRA) We compare the class representatives from the two periods to determine if institutional investors are stepping forward in significantly greater numbers We also sort the institutional investors - distinguishing public from private - to see what types of investors have stepped forward to serve as lead plaintiff Consistent with other research, we find a significant difference only in the number of public institutions serving as lead plaintiffOur sample also allows us to analyze the impact of the lead plaintiff provision Does the presence of an institutional investor increase the likelihood of a high value settlement? Despite the visible participation of institutions in several high-profile cases, we find no systematic evidence that private institutional lead plaintiffs are associated with larger class recoveries Public pension funds, on the other hand, are correlated with higher class recoveries as a fraction of the potential damage award in the post-PSLRA period Our results are, however, consistent with the possibility that public pensions "cherry pick" the actions in which they seek to become lead plaintiff, selecting only the cases with the largest potential damages and the strongest evidence of fraud Further analysis is necessary to evaluate this possibility We also evaluate the effect of lead plaintiffs on the selection of attorneys and attorneys' fees We find that, for the time period of our study, institutional investors tended to avoid the Milberg Weiss plaintiffs' attorney firm On the more fundamental issue of whether the presence of an institutional investor as a lead plaintiff reduces the fees paid to the lawyers, after controlling for the size of the case, we find no systematic evidence that institutional involvement correlates with lower fee awards

Anatomy of the Rise and Fall of a Price-Fixing Conspiracy: Auctions at Sotheby's and Christie's

Abstract: The Sotheby’s–Christie’s price-fixing scandal that ended in the public trial of Alfred Taubman provides a unique window on a number of key economic and antitrust policy issues. The trial provided detailed evidence as to how the pricefixing worked, and the economic conditions under which it was started and began to fall apart. The role of the amnesty program was important to the case, and does not appear to have had a role in the cartel’s enforcement of pricefixing or the cartel’s demise. The outcome of the case also provides evidence on the auction process used to choose the lead counsel for the civil settlement. Finally, though buyers received the bulk of the damages, a straightforward application of the economic theory of auctions shows that it is unlikely that successful buyers as a group were injured.