Volume 2, Issue 2

This article summarizes some propositions regarding economic dynamics and implications of two-sided altruism, on the basis of the human-capital-based OLG model of Ehrlich and Lui (1991), with application of a modified, fertility-endogenized definition of linearly separable two-sided altruism by Abel (1987) and Altig and Davis (1993). Some properties in both transition processes and steady states, the effects of unfunded social security on an equilibrium path, and the implications in the context of so called the Samaritan’s dilemma and the Recardian equivalence are also analyzed. Finally some policy implications are summarized. Our calibration results and analyses show that (1) the combination of altruism toward parents and children is crucial for determining a threshold level of initial human capital and education technology in a transition process (stagnant to growth or growth to stagnant) with an irreversible hysteresis aspect, (2) a regular recursive induction approach might still cause inefficiency in terms of an ex-post Pareto optimality criterion as of two periods later, even if strategic effects for after children (two generations later) are appropriately taken account of, and (3) unfunded social security, which involves actuarially fair insurance as well as certainty premium transfer, might not affect either saving or critical values for regime change so drastically.

This article provides an overview of the current status of the Law and Economics education in Korea. In Korea, a course in Law and Economics was first offered in mid-1980s at Seoul National University, and since then, academic and teaching interests have been growing steadily. Based on the results of an informal survey on course offerings, we describe what is being taught and discuss challenges that the field is facing in Korea. Major pedagogic challenges include (i) insufficient supply of instructors and researchers who have background knowledge of both law and economics; (ii) lack of textbooks written in the Korean language dealing with Korean legal issues; and (iii) lack of Korean court cases and other materials suited for classroom discussions. Recent introduction of the new postgraduate professional legal education system is the biggest factor that will have a significant impact on the prospect of Law and Economics education in Korea. While interests among students have increased considerably, the problem of the limited supply of researchers in the field remains unsolved. The field should still provide convincing evidence to the traditional legal academia that Law and Economics is relevant and indeed useful in analyzing today’s difficult legal issues that Korea has to deal with.

After the September 11th attacks, passengers avoided air travel. Hence, companies competing with air carriers may have benefited from the terrorist attacks. Using the market model with a dummy variable and generalized autoregressive conditional heteroskedasticity (GARCH) for an event study, we examine the impact of the attacks on Japanese airline and high-speed railway industries. We show that terrorist attacks negatively impacted the stock prices of the airline industry but increased those of the high-speed railway industry. Thus, because of the competition between air carriers and railway companies, terrorist attacks benefited the high-speed railway industry. We conclude that the Japanese transportation market can be defined as a market containing both air carriers and railway companies.

It has been often argued in industrial relations and law and economics literature that enlarging the contract zone, by increasing the costs of disagreement, helps to reduce the bargaining impasse improving the bargaining result. For example, when the costs of disagreement rise, such as the costs of a trial, this will make a pre-trial settlement more attractive for disputing parties in a civil lawsuit. But the paper shows that this is not necessarily true, that the increase in the costs of disagreement may have a perverse effect of increasing the probability that the bargaining ends in disagreements.

This article is based on the hypothesis that there exists far less conflict between competition/antitrust policy and intellectual property rights (IPRs) than there is made out to be. Historically, judges have imagined far greater conflicts between antitrust policy and intellectual property rights than have actually existed, or else relied on generalizations rather than close analysis. For example, they have often assumed that the presence of an intellectual property right has led to anticompetitive effects where there was no basis for finding any injury to competition at all. The fact that true conflicts between antitrust and intellectual property rights are relatively rare has been highlighted. Thus, an analysis has been done in the ways in which these two important areas of government regulation are and are not in tension, and we discuss the history of the relationship between these laws and whether they are in conflict or complementing each other. Further, we submit that antitrust can serve the goals of innovation and dynamic efficiency directly in circumstances in which competition, not monopoly, serves as a spur to innovation. The goal of the IP and antitrust laws should be to seek a robust balance between competition and monopoly in the service of dynamic efficiency.