Volume 10, Issue 3 -

This exchange between Judge Posner and Professor Becker – two founding fathers of our discipline – was composed almost 3 years ago, but the perspective and wisdom of this exchange remains most relevant to this day. Since then, Professor Becker has died; Judge Posner has added a brief remembrance of Becker at the end of this exchange.

Crimes such as bribery require the cooperation of two or more criminals for mutual gain. Instead of deterring these crimes, the state should disrupt them by creating distrust among criminals so they cannot cooperate. In a cooperative crime with two criminals, the state should offer amnesty and a bounty to the criminal who first secures punishment of the other criminal. When the bounty exceeds the bribe, a bribed official gains less from keeping the bribe than from confessing and receiving the bounty. Consequently the person who pays the bribe cannot trust the person who takes it. The game’s unique equilibrium is non-cooperative and bribes disappear. We explore legal implications and practical challenges to this disruption mechanism.

We consider the problem faced by standard-setting organizations of specifying Fair, Reasonable and Non-Discriminatory (FRAND) agreements. Along with Layne-Farrar et al. (2007. “Pricing Patents for Licensing in Standard-Setting Organizations: Making Sense of FRAND Commitments.” 74 Antitrust Law Journal 671–706), we model the problem as a cooperative game with transferable utility, allowing for patents that have substitutes. Assuming that a value has been assigned to these “weak” patents, we obtain a formula for the Shapley value that gives an insight into what FRAND agreements could look like.

We explore the causality relationship between litigation rates and the number of lawyers, drawing on an original panel dataset for the 169 Italian first-instance courts of justice between 2000 and 2007. In this time period, both the number of lawyers and the civil litigation rate sharply increased, and a mandatory minimum fee was in place for lawyers’ services. We first document that the number of lawyers is positively correlated with different measures of the litigation rate. Then, using an instrumental variables strategy, we find that a 10% increase in lawyers over population is associated with an increase between 1.6 and 6% in civil litigation rates. Our empirical analysis supports the supplier-induced demand (SID) hypothesis for Italian lawyers: following a sharp increase in the number of lawyers, and in the impossibility of competing on price because of the minimum fee regulation, some lawyers may have opportunistically used their informational advantage to induce their clients to bring lawsuits into court more often than would have been optimal if they were acting in the exclusive interest of their clients.