Band 16, Heft 2

Written as part of a keynote address for the 20th Annual Asian Law and Economics Conference, these remarks reflect on the way lawyers, judges, and law professors without economic training view and use law and economic models. After revisiting notably successes of classic results from the tort model – results that have penetrated the legal profession – it turns to the translation of more recent models of lawyer argumentation and precedent. Throughout, the point is to demonstrate how model insights can be used to help argue cases and distinguish precedent.

Even if a CBDC issued by an advanced economy adds little to that economy’s domestic financial and payment system, it can be of great value to non-domestic users, especially to the oppressed people living in autocracies. Designing a CBDC for these oppressed people requires new thinking. In particular, AML loopholes need to be created deliberately. They need to be small enough so that criminals cannot exploit, yet big enough for the oppressed people to use the system anonymously. This article explains how this can be done.

In this paper, we attempt to analyze whether North Korea’s mixed economic system, with a planned sector and an illegal market sector, is sustainable in the long run. Using an evolutionary game theoretic approach, our model describes distinct ways in which North Korea’s planned economy could eventually be displaced by a decentralized market economy. As more people trade using unofficial market transactions, the probability that they will be apprehended and punished or fined declines, thereby increasing the expected payoff from market transactions. An extension of this model demonstrates how the government could introduce legal but more restricted markets as a strategy to prevent further decentralization. Our model suggests, however, that there is perhaps surprisingly broad scope for government-owned stores to become replaced by private markets. Evolutionary game theory provides one way to understand which kinds of shocks could lead to such a transition in which economic agents gradually adopt trading institutions that fit better with their changing environment.

India’s insolvency framework mandates preserving viable firms as going concerns, but a critical gap remains – the lack of a standardised approach to assessing a firm’s viability during bankruptcy proceedings, resulting in inefficient allocation of interim finance to insolvent firms. This study sheds light on this issue by examining the performance of 21 firms during insolvency. We find that the absence of a clear viability assessment has led to suboptimal outcomes: viable firms being underfinanced and unviable firms being overfinanced. This has led to value deterioration, as many viable firms were ultimately pushed into liquidation due to insufficient interim financing. As a remedy, the authors propose a periodic viability assessment framework, for collecting and publishing information about the insolvent firm during insolvency proceedings. This would improve transparency and predictability for viable firms seeking interim finance, empowering lenders and investors to make better-informed decisions. By supporting viable distressed firms, this framework could foster a thriving market for distressed debt in India, rescuing valuable companies from the bankruptcy abyss.

In the analysis of digital markets and competition, it is imperative to consider the regulatory landscape. Specifically, with the shift from ex post to ex ante regulation in competition law, establishing a competitive environment reflective of regulatory costs becomes imperative. This study investigates the market’s assessment of ex ante regulation through stock price event analysis. The findings reveal that the market perceives a 10–20 % negative impact on businesses from ex ante regulation for each event upon finalization of the regulatory framework or identification of regulated entities. Unlike ex-post regulation, which targets specific businesses and yields varied impacts in competition law violations, ex ante regulation’s broader influence is remarkable. ex ante regulation incurs significant business costs, with the market assessing its impact as surpassing that of ex-post regulation when viewed holistically. Acknowledging these regulatory costs underscores the imperative for stringent oversight to guarantee the attainment of regulatory aims and objectives.