“Land acknowledgements” are all the rage. For those who haven’t been to a graduation or university lecture in Blue America, a “land acknowledgment” is the practice of starting an event with a statement that the land on which the event is taking place once belonged to particular groups of Native Americans. It is easy to dismiss these as ahistorical nonsense, laden with sentimentality. But there is another way to look at these statements that demonstrate American exceptionalism.

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Abstract

It is common to characterize patents as monopolies. This assumption, which underlies the standard dichotomy between intellectual property and antitrust law, is challenged by evidence that large companies in technology markets (outside biopharmaceuticals) tend to advocate for weaker patent protection or, in some cases, no patent protection at all. This revealed preference for weaker patent protection reflects the fact that large integrated firms can often capture returns on innovation through economies of scale and scope and other non-patent-dependent capacities that few other firms can match. Relatedly, a weak-patent environment can confer a competitive advantage on integrated firms against smaller and more innovative firms that rely on patents to capture value on innovation through licensing and other contract-based monetization strategies.

Abstract

American corporations have a long history of carelessness and Caremark has made it difficult for shareholders to recover against them for it. In 2018, for example, the world discovered that Donald Trump had wrongfully collected the personal data of up to 87 million Facebook users. Facebook’s failure to address the unchecked collection and use of users’ data cost the company more than $50 billion in market capitalization alone. Despite clear losses, shareholder litigation has thus far been unsuccessful. The normal governmental response to such corporate failures of oversight is to saddle corporations with more federal oversight, even though this purely reactive behavior has consistently failed to curb corporate misconduct. The consequence for regulated firms is thus an ever-increasing cost of compliance with no marked change in behavior. Meanwhile, shareholders are left with few options for recovery because, in the face of asymmetrical information, there is insufficient evidence to meet onerous pleading requirements found in state and federal laws such as Caremark.

This Article proposes a better solution—the use of federal administrative determinations as presumptive evidence of corporate mismanagement. It describes the existing limitations of both SEC and common law-based protections in the context of shareholder derivative litigation for lapses in oversight, explores the factual commonalties of those plaintiffs that have been successful in this area, and proposes that Delaware can preempt corporate misbehavior, while reducing the need for more federal oversight, by relying on federal administrative fact-finding combined with the Caremark standard to promote shareholder successes in derivative litigation. Corporate law scholarship rarely acknowledges its intersection with administrative law. Thus, scholars have not considered the possibility that shareholders can easily rely on the determinations of federal agencies to establish evidence of a director’s failure of oversight under Caremark.

Abstract

In The Nature of the Firm, Ronald Coase explains how firms represent a suspension of the market mechanism. The allocation of activities depends on the relative costs of organizing activities within the firm versus direct reliance on the market. Despite Coase’s insight, economists often treat firms as black boxes with respect to innovation. Firms take in resources and produce innovations but why firms are successful at innovation is unspecified. As a result, the factors that enable wealth creation within the black boxes of firms, a key factor in economic progress, are little understood. Firms are not the only source of innovation, however. Economically valuable research also emerges from non-profit universities. They represent an alternative (which we term the “red box”) to research that occurs within firms’ black boxes, an alternative with specific advantages and disadvantages in producing innovations. Using a comprehensive set of patent data, we show that university patenting is largely the result of activity by a tiny subset of U.S. universities, contrary to the Bayh-Dole Act’s promise that it would produce a massive technology transfer from universities to the marketplace.

In this Article, we argue that research in non-profit universities is distinct from research in a for-profit firm. As a result, the process of moving inventions from the university to the market usually occurs through licensing innovations to firms that have a comparative advantage in assessing possible market value of inventions and can risk capital to exploit innovations. Because successful commercialization of the product of research requires entrepreneurship, we use the insights into entrepreneurship of economists Joseph Schumpeter and Israel Kirzner to begin to unpack the red box of university commercialization efforts. This Article examines the practices that have emerged after the Bayh-Dole Act’s grant of intellectual property rights to universities for the results of federally funded research and the many constraints imposed by university structure. It also considers how the differences in the incentive structure with black and red boxes create a role of university research.

Abstract

Economists well understand that the work of Friedrich Hayek contains important theoretical insights. It is less often acknowledged that his work contains testable predictions about the nature of market processes. Vernon Smith termed the most important one the ‘Hayek hypothesis’: that gains from trade can be realized in the presence of diffuse, decentralized information, and in the absence of price-taking behavior and centralized market direction. Vernon Smith tested this prediction by surveying data on laboratory experimental markets and found strong support. We extend Smith’s work first by showing how subsequent theoretical advances provide a theoretical foundation for the Hayek Hypothesis. We then test the hypothesis using recent field experimental market data. Using field experiments allows us to test several other predictions from Hayek, such as that market experience increases the realized gains from trade. Generally speaking, we find support for Hayek’s theories.

The Federal Trade Commission (FTC) has long steered the direction of competition law by engaging in case-by-case enforcement of the FTC Act’s prohibition on unfair methods of competition (UMC). Recently, some have argued that the FTC’s exclusive reliance on case-by-case adjudication is too long and arduous a route and have urged the commission to take a shortcut by invoking its purported authority to promulgate UMC rules under Section 6(g) of the Federal Trade Commission Act.

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Twitter has sued Elon Musk, seeking to compel him to buy the company for $54.20 a share. Many observers think the company will prevail, or that Mr. Musk is likely at least to pay the $1 billion breakup fee. They’re wrong. He is likely to walk away largely unscathed, a belief reflected in Twitter’s stock price. This case will be a good lesson on the limits of boilerplate merger agreements and the difference between a corporation and its shareholders.

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European Union lawmakers appear close to finalizing a number of legislative proposals that aim to reform the EU’s financial-regulation framework in response to the rise of cryptocurrencies. Prominent within the package are new anti-money laundering and “countering the financing of terrorism” rules (AML/CFT), including an extension of the so-called “travel rule.” The travel rule, which currently applies to wire transfers managed by global banks, would be extended to require crypto-asset service providers to similarly collect and make available details about the originators and beneficiaries of crypto-asset transfers.

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Slow wage growth and rising inequality over the past few decades have pushed economists more and more toward the study of monopsony power—particularly firms’ monopsony power over workers. Antitrust policy has taken notice. For example, when the Federal Trade Commission (FTC) and U.S. Justice Department (DOJ) initiated the process of updating their merger guidelines, their request for information included questions about how they should respond to monopsony concerns, as distinct from monopoly concerns. ?

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