Volume 17, Issue 3

Slavery has been a long-lasting and often endemic problem across time and space, and has commonly coexisted with a free-labor market. To understand (and possibly eradicate) slavery, one needs to unpack its relationship with free labor. Under what conditions would a principal choose to buy a slave rather than to hire a free worker? First, slaves cannot leave at will, which reduces turnover costs; second, slaves can be subjected to physical punishments, which reduces enforcement costs. In complex tasks, relation-specific investments are responsible for high turnover costs, which makes principals prefer slaves over workers. At the other end of the spectrum, in simple tasks, the threat of physical punishment is a relatively cheap way to produce incentives as compared to rewards, because effort is easy to monitor, which again makes slaves the cheaper alternative. The resulting equilibrium price in the market for slaves affects demand in the labor market and induces principals to hire workers for tasks of intermediate complexity. The available historical evidence is consistent with this pattern. Our analysis sheds light on cross-society differences in the use of slaves, on diachronic trends, and on the effects of current anti-slavery policies.

Motivated by some recent examples, this paper employs a model of public law enforcement to explain why it may not be in society’s interest to send criminals to prison. We establish two main findings. First, independent of the lawbreaker’s societal position, imprisonment is suboptimal when the harm from the illegal activity is sufficiently small. Second, for a given level of harm, imprisonment is suboptimal when the lawbreaker is sufficiently important. This latter result thus provides a rationale for why some parties are taken to be ‘too big to jail’.

This article models the duty of care as a response to moral hazard where the principal seeks to induce effort that is costly to the agent and unobservable by the principal. The duty of loyalty, by contrast, is modeled as a response to adverse selection where the principal seeks truthful disclosure of private information held by the agent. This model of corporate loyalty differs importantly with standard adverse selection models, however, in that the principal cannot use available contracting variables as a screening mechanism to ensure honest disclosure and must rely upon the use of an external third-party audit technology, such as the court system. This article extends the model to the issue of corporate compliance and argues that the optimal judicial approach would define the duty to monitor as a subset of due care – and not loyalty – but hold that the usual legal protections provided for due care violations no longer apply.

Late medieval Englishmen provided for their wellbeing in the hereafter by purchasing intercession for their souls. They traded valuable landed endowments for the promise of posthumous Masses and prayers whose daily observance contractual counterparties agreed to underwrite for decades, centuries, even eternally. Intercessory foundations so contracted were called chantries. Chantry contracts constituted trades with the dead in the sense that the promisees were deceased when the promisors were supposed to perform. I study the special problems that chantry contract promisees faced in enforcing their rights from the grave and analyze the devices they used for that purpose. Chantry founders wary of their fates in the afterlife showed equal concern for the challenges their contracts would encounter in this life long after they were gone. Founders met those challenges by leveraging the economics of incentives to develop a strategy of chantry contract self-enforcement: profit the living, present and future, for monitoring the contractual performance of promisors and promisors’ agents, and for punishing them should they breach. Chantry founders’ strategy was successful, enabling trade with the dead.

Two firms offer product series from which multiple complementary pairs are formed. The firms engage in a price- or quantity-choosing game in the market. It is found that the integration of the two firms may not necessarily lower the equilibrium prices because it precludes “indirect competition” in the market. Therefore, the integration, which may appear as a vertical integration, could be an antitrust concern even in the absence of exclusionary purpose.

Content industries have several profit sources that positively interact with one another, and piracy affects them not only negatively but also positively. For copyright holders, choosing to allow piracy depends upon its total external effects. This paper proves that in such case the profit function is convex with respect to the level of enforcement. This paper shows a convex profit function with respect to the level of enforcement. The convexity leads to a corner solution of optimal enforcement for copyright holders. Which corner solution is selected depends on the relative size of the sub-market, and no enforcement is profitable if the submarket size is relatively large. This result compensates for a shortcoming of discussions that assume only two options regarding the level of enforcement, zero or perfect enforcement.