Volume 15, Issue 3 -

This paper analyzes a litigation contest in which the plaintiff’s lawyer and the defendant choose effort. The plaintiff selects the relative importance of a contract component related to the judgment (similar to contingent fees) and a component related to the lawyer’s efforts (similar to conditional fees) to ensure lawyer participation and guide the lawyer’s decision-making. For our setup, we find that the plaintiff considers the component related to the lawyer’s effort to be the relatively more desirable instrument in the light of its effort-inducing and cost characteristics. However, high levels of the lawyer’s outside utility may limit the role of this component.

A long standing question is whether product market competition disciplines a firm’s incentive to engage in earnings management. This paper argues that this question cannot be investigated adequately without accounting for the quality of firms’ auditors, because auditors affect the probability of discovering earnings management. Since firms choose their auditor, a non-compliant firm can alter its own probability of being detected. Consequently, a firm’s decision to manage earnings is a function of its auditor’s quality, which is itself endogenously chosen by the firm. To study this issue we develop a game-theoretic model that captures the potential inter-relationship between industry competition, the firms’ choice of audit quality, and compliance with accounting regulations (or the degree of earnings manipulation). We show that the link between financial compliance and product market competition is affected by the endogenously chosen audit quality. We estimate this model’s structural parameters and find that greater competition reduces both compliance and the demand for high quality audits.

In this interdisciplinary paper we analyze the anticompetitive effects and the practicability and applicability of passive (non-controlling) minority interests within the existing Merger Regulation system [Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation), OJ L 24/1]. The empirical evidences from existing economic literature and case law show that the existence of an enforcement gap in European Union competition law regarding the anticompetitive effects of non-controlling minority interests has not been confirmed so far. Therefore, there is no space, at least to date , for a per se ruling in the European Union Law for the assessment of passive minority interests, but for a Rule of Reason approach, based on a case by case analysis. The Commission should continue to investigate non-controlling transactions and, in the future, an ex post assessment/quantification of their anticompetitive effects, based on existing (or settled) case law and economic theory, should be at the core of its agenda.

The paper identifies a new rule in the tax discourse – the versatility rule. Calabresi and Melamed’s landmark article contributed to the legal discussion despite paying relatively little attention to taxation. This paper analyzes income tax, Calabresi and Melamed’s rules and Rawls’ theory, and examines whether Calabresi and Melamed’s pioneering work on liability, property and inalienability rules can be integrated into income tax discourse (and other legitimate property expropriations); and claims that these rules assist in understanding the essence of taxation. The question is analyzed from the Rawlsian perspective since his concern with the “least advantaged” and inequality in society poses a serious global challenge. The paper offers a unique analysis by showing that in the tax field all rules protect the same entitlement at the same time against the same entity – the government. This concurrent implementation of Calabresi and Melamed’s rules in taxation can only take place when taxation is understood as both “giving” and “taking”. Although the paper aims at increasing distributive goals, it appears that efficient outcome is its byproduct. Integrating Calabresi and Melamed’s rules into the tax discourse via Rawls’ theory not only elucidates the versatility rule but also blurs the distinction between the protection and transfer rules, and highlights the reciprocity of the duty and right to pay taxes. Since Calabresi and Melamed’s classical work, many scholars have significantly modified the existing rules and developed new ones, such as the Solomonic entitlement and the pliability rule, though no one has thus far proposed a scenario in which all remedies simultaneously apply against the same entity.

State bar associations require bar applicants to pass the Multistate Professional Responsibility Examination over a range of scores and earn a variable number continuing legal education credits in ethics annually. Panel data from 2007–2014 across the fifty states and the District of Columbia are used to assess whether these requirements reduce charges of ethical misconduct against attorneys. Deviations GMM estimation provides evidence that increases in MCLE annual credit-hours in ethics reduce charges. Specifically, a one-hour increase in MCLE reduces the number of charges of ethical misconduct by 10.506 %. The result is robust to different types of models and estimators, but requires making several strong assumptions which are discussed in detail.

This paper presents a simple theoretical model to analyze the relationship between hate groups and hate crimes. This paper focuses on two important roles of hate groups; as providers of membership benefits for group members and as a coordination device for leadership. This paper shows that this interaction implies the possibility of multiple equilibria of the crime rate. This result explains why hate crimes and extreme criminal activities vary across communities and over time, and why a social shock such as 9/11 resulted in a rapid increase of hate crimes. Moreover, if hate groups work as coordination devices, the existence of hate groups may increase hate crimes. This result supports recent empirical results analyzing relationships between hate groups and hate crimes.