Monthly Archives: July 2012

The Negative Externalities of Claiming Property

Peter S. Menell & Michael J. Meurer, Notice Failure and Notice Externalities, (Boston Univ. School of Law, Public Law Research Paper No. 11-58, 2011), available at SSRN.

In Notice Failure and Notice Externalities, Peter S. Menell and Michael J. Meurer coin a new term—a “notice externality.”  In the process, they do nothing less than turn the conventional story about property rights and externalities on its head and reconceptualize many of the inefficiencies of contemporary intellectual property regimes.

The externality part of the term should be familiar by now, given the extent to which economic thinking has permeated intellectual property discourse.  An externality arises whenever one party’s conduct has consequences for other parties that are not considered—read “internalized”—by the decision maker.  In some of the classic examples, the externalities are negative: the conduct of sending pollution out a smokestack generates negative externalities for neighbors.  In other classic examples, the externalities are positive: the conduct of inventing new technologies generates benefits for all those whose lives are improved by using the technology. Continue reading "The Negative Externalities of Claiming Property"

Going Public before the IPO

Darian M. Ibrahim, The New Exit in Venture Capital, 65 Vand. L. Rev. 1 (2012).

For some employees and investors, Facebook did not make the decision to pursue an initial public offering (IPO) fast enough. So when a former employee of Facebook needed to sell some shares in the company, he approached SecondMarket, which describes itself as “the leading marketplace for alternative investments.” In 2009 Facebook shares began trading on SecondMarket and SharesPost, another leading market for shares in companies that are moving toward an IPO. These new markets – called private secondary markets – are the hottest new development in securities trading.

Although we have much to learn about private secondary markets, the first article out of the gates is well worth reading. In The New Exit in Venture Capital, Darian Ibrahim relies on interviews, trade publications, blog posts, and newspaper stories to study these emerging markets. He focuses most of his attention on the so-called “direct market,” which involves the trading of stock in startup companies, as opposed to the trading of interests in investment funds. Ibrahim aims to contribute to the still vibrant literature on venture capital investing, but his description of direct private secondary markets should have a much broader audience. Continue reading "Going Public before the IPO"

Trust as Contract? Organization? Property!

M. W. Lau, The Economic Structure of Trusts (Oxford University Press, 2011).

This fascinating book stems from the author’s Ph.D. dissertation at the University of London, supervised by Professor (now the Honorable Mr. Justice) David Hayton and Professors James Penner and Paul Matthews.

The book is a response to academic writing from the United States emphasizing the contractarian or organizational basis of trust law.1 As Dr. Lau explains, his book sets out to achieve two purposes: “The first is to introduce and defend a property-based economic account of trusts. … The second is to influence legal scholarship on and developments of trusts” (P. 17). Continue reading "Trust as Contract? Organization? Property!"

New Jotwell Section: Family Law

Today we inaugurate a new Jotwell section on Family Law, edited by Janet Halley, the Royall Professor of Law at Harvard Law School, and Melissa Murray, Professor, U.C. Berkeley School of Law. Together they have recruited a stellar team of Contributing Editors.

The first posting in the Family Law section is A Hug From the State: Recognizing Stillbirths by Melissa Murray.

We intend to continue to add other new sections in the coming months — Torts and Health Law are next, with more to come. Please note our Call For Papers, and get in touch if you have suggestions for a new section, or if you have a review you would like to contribute to Jotwell.

A Hug From the State: Recognizing Stillbirths

In the not too distant past, it was taboo for women (and men) to speak openly about miscarriages, infertility, or anything having to do with the delicate business of giving birth.  More recently, however, the social anxiety around these topics has receded.  Many of us now speak openly about the pain of a miscarriage or an unsuccessful round of IVF.  Indeed, some find it cathartic to broadcast their grief to a wider audience, blogging about their experiences or discussing it with friends (broadly defined) on social media.  But it is one thing to enlist friends and social media in the grieving process.  It is quite another thing to involve the state.  Or is it?

That is the question that Carol Sanger takes on in “The Birth of Death”: Stillborn Birth Certificates and the Problem for Law.  In this penetrating and thought-provoking Essay, Sanger takes on the taboo subject of stillbirth—the act of delivering a dead child—and the emergent movement that seeks to enlist law to help the parents of stillborn children deal with their grief and loss.  Specifically, Sanger considers “Missing Angel” legislation—laws that authorize the state to issue parents a birth certificate for a stillborn child.  The whole thing sounds at once macabre and incongruent—issuing a birth certificate for a child that was born dead?  But, as Sanger observes, it makes perfect sense to grieving parents, for whom the standard issue fetal death certificate fails to capture the magnitude and profundity of their loss. Continue reading "A Hug From the State: Recognizing Stillbirths"

Corporate Tax Reform in Theory and in Politics

To find out what is going on with corporate tax reform, read Martin Sullivan. Read his columns, and read his book, Corporate Tax Reform: Taxing Profits in the 21st Century . Read him because he squarely tackles the interaction of theory and politics in the area of tax policy.

Academic theories of legislative process make more sense in context. Daniel Shaviro’s analysis of the 1980’s individual base-broadening, rate-lowering reform package is a case in point.  In the area of corporate tax reform, scholars have worked with the understanding, developed for example by William Eskridge, Philip Frickey and Elizabeth Garrett, that the U.S. legislative process favors the status quo.  Against this backdrop, Jennifer Arlen and Deborah Weiss argue that agency costs further hamper reform because managers favor policies like accelerated depreciation that provide targeted incentives for new corporate investment, even though shareholders prefer policies that also enrich existing investment.  Michael Doran builds on the Arlen and Weiss analysis with a public choice account of heterogeneity of interests among different corporations.  The result, he argues, is an incentive for corporations that disproportionately benefit from a certain tax break, for example the research and development credit, to lobby energetically to keep that tax break rather than supporting more general reform proposals like base-broadening and rate-lowering. Continue reading "Corporate Tax Reform in Theory and in Politics"