cssi/SciSciGPT-SciSciNet huggingface dataset:
The Market for Illegal Goods: The Case of Drugs

This paper considers the costs of reducing consumption of a good by making its production illegal and punishing apprehended illegal producers. We use illegal drugs as a prominent example. We show that the more inelastic either demand for or supply of a good is, the greater the increase in social cost from further reducing its production by greater enforcement efforts. So optimal public expenditures on apprehension and conviction of illegal suppliers depend not only on the difference between the social and private values from consumption but also on these elasticities. When demand and supply are not too elastic, it does not pay to enforce any prohibition unless the social value is negative. We also show that a monetary tax could cause a greater reduction in output and increase in price than optimal enforcement against the same good would if it were illegal, even though some producers may go underground to avoid a monetary tax. When enforcement is costly, excise taxes and quantity restrictions are not equiv...
Should States Have a Legal Right to Reputation? Applying the Rationales of Defamation Law to the International Arena

In the era of globalization and of information technology, the conduct of states is the subject of numerous reports published routinely throughout the world by various sources, primarily the mass media and non-governmental organizations. Those reports shape the reputations of states in the eyes of individuals, publics, organizations, and governments. While most reporting may be presumed accurate, disinformation inevitably finds its way into the international public domain and does injustice to the states concerned. Nevertheless, states normally do not enjoy a legal, actionable right of reputation, nor is the option of endowing them with such a right seriously considered in the political and academic international debates. Against this background, my Article seeks to conceptualize states' interest in their reputation as a legal right.As general principles of law recognized by national legal systems constitute a source of inspiration for international law, the Article draws an analogy from domestic laws of defamation, which are prevalent worldwide, and calls for establishing a parallel normative framework in international law. Based on insights drawn from the areas of political science, international relations, sociology, and communications studies, the Article contends that the principal rationales of defamation law, which typically concern natural persons and private legal entities, are relevant to states as well. As it explains, given the prominence of mass media reporting and of the public opinion in today's international arena, false defamatory statements harm substantial interests of states, especially the weaker ones. This is so particularly when states are accused of violating international law. The harm suffered by states also generates side-effects that are often felt by their individual nationals. Furthermore, defamatory falsehoods are harmful from the perspective of the international community as a whole, especially in light of the crucial and complex role played by information in contemporary life. Thus, such publications reduce states' incentive to comply with international law, and render the global decision-making processes less informed and consequently less efficient. Arguably, they also undermine the individual right of the citizens of the world to be properly informed and to take a meaningful part in global governance.Taking into account the needs of states, practical constraints, and considerations pertaining to the freedom of speech, the Article concludes by portraying basic parameters for designing an international law of libel.
Indexing and active fund management: International evidence

We examine the relation between indexing and active management in the mutual fund industry worldwide. Explicit indexing and closet indexing by active funds are associated with countries’ regulatory and financial market environments. We find that actively managed funds are more active and charge lower fees when they face more competitive pressure from low-cost explicitly indexed funds. A quasi-natural experiment using the exogenous variation in indexed funds generated by the passage of pension laws supports a causal interpretation of the results. Moreover, the average alpha generated by active management is higher in countries with more explicit indexing and lower in countries with more closet indexing. Overall, our evidence suggests that explicit indexing improves competition in the mutual fund industry.
Give me liberty and give me control: Economic freedom, control perceptions and the paradox of choice

Abstract We explore the relationship between individual control perceptions and the degree to which a country's institutions and policies are consistent with the principles of economic freedom. Using data from the World Values Surveys (WVS) and the Economic Freedom of the World (EFW) index, we find that people living in more economically free countries are more likely to perceive greater control over their lives. This effect is not diminishing at higher levels of economic freedom. One possible channel that explains this relationship is the perception of procedural fairness and social mobility. Decomposing the EFW index, we further find that the area of sound money is what drives the results.
Climbing atop the Shoulders of Giants: The Impact of Institutions on Cumulative Research

While cumulative knowledge production is central to growth, little empirical research investigates how institutions shape whether exist ing knowledge can be exploited to create new knowledge. This paper assesses the impact of a specific institution, a biological resource center, whose objective is to certify and disseminate knowledge. We disentangle the marginal impact of this institution on cumulative research from the impact of selection, in which the most important discoveries are endogenously linked to research-enhancing institu tions. Exploiting exogenous shifts ofbiomaterials across institutional settings and employing a difference-in-differences approach, we find that effective institutions amplify the cumulative impact of individual scientific discoveries. (JEL D02, D83,123, 030)
THE SOCIO-ECONOMIC BENEFITS OF MARRIAGE: A REVIEW OF RECENT EVIDENCE FROM THE UNITED STATES

In this essay I summarise recent evidence demonstrating that marriage is an institution of great social significance, one that offers economic and health benefits to married adults and similar benefits to their children. Many of these benefits can plausibly be ascribed to the changes in behaviour that ensue when men and women commit to one another in marriage.
There’s an App for That: Mobile Applications for Urban Planning

The number of worldwide mobile device users is increasing rapidly, as are the number of applications to serve these devices. Urban planners have the opportunity to use an array of mobile applications to increase productivity, share information, and engage with the public. This article explores a number of mobile applications that can add value to the work that urban planners undertake. It also considers the types of applications that could be developed to assist planners in their efforts to understand cities and engage with the public.
Modeling Dynamic Helium Release as a Tracer of Rock Deformation

We use helium released during mechanical deformation of shales as a signal to explore the effects of deformation and failure on material transport properties. A dynamic dual-permeability model with evolving pore and fracture networks is used to simulate gases released from shale during deformation and failure. Changes in material properties required to reproduce experimentally observed gas signals are explored. We model two different experiments of 4He flow rate measured from shale undergoing mechanical deformation, a core parallel to bedding and a core perpendicular to bedding. We find that the helium signal is sensitive to fracture development and evolution as well as changes in the matrix transport properties. We constrain the timing and effective fracture aperture, as well as the increase in matrix porosity and permeability. Increases in matrix permeability are required to explain gas flow prior to macroscopic failure, and the short-term gas flow post failure. Increased matrix porosity, is required to match the long-term, post-failure gas flow. Our model provides the first quantitative interpretation of helium release as a result of mechanical deformation. The sensitivity of this model to changes in the fracture network, as well as to matrix properties during deformation, indicates that helium release can be used as a quantitative tool to evaluate the state of stress and strain in earth materials.
Should Agencies Enforce

Introduction 2069 I. The Structural Choice of Agency Enforcement 2073 II. Enforcement as a Specialization 2077 A. Prosecutorial Discretion: Who? 2078 B. Prosecutorial Discretion: How Much? 2083 C. Rewards, Whistleblowers, and Cooperators ......... 2087 III. Specialized Enforcement: Structural Weaknesses & Strengths 2092 A. The Cyclical Nature of Specialized Enforcement . 2093 B. Specialized Enforcement and the Silo Effect ........ 2098 C. Specialized Enforcement and Agency Alternatives 2106 D. Specialized Enforcement and Norms of Behavior 2113 IV. The Consequences of the Enforcement Tradeoff 2116 A. Consequences for Congress: Structuring Agencies 2117 B. Consequences for Courts: Comparative Deference 2122 C. Consequences for Agencies: Collaborative Enforcement 2128 Conclusion 2130
Multifactor Portfolio Efficiency and Multifactor Asset Pricing

The concept of multifactor portfolio efficiency plays a role in Merton's intertemporal CAPM (the ICAPM), like that of mean-variance efficiency in the Sharpe-Lintner CAPM. In the CAPM, the relation between the expected return on a security and its risk is just the condition on security weights that holds in any mean-variance-efficient portfolio, applied to the market portfolio M. The risk-return relation of the ICAPM is likewise just the application to M of the condition on security weights that produces ICAPM multifactor-efficient portfolios. The main testable implication of the CAPM is that equilibrium security prices require that M is mean-variance-efficient. The main testable implication of the ICAPM is that securities must be priced so that M is multifactor-efficient. As in the CAPM, building the ICAPM on multifactor efficiency exposes its simplicity and allows easy economic insights.
Does Doing Good Always Lead to Doing Better? Consumer Reactions to Corporate Social Responsibility

Abstract In the face of marketplace polls that attest to the increasing influence of corporate social responsibility (CSR) on consumers’ purchase behavior, this article examines when, how, and for whom specific CSR initiatives work. The findings implicate both company-specific factors, such as the CSR issues a company chooses to focus on and the quality of its products, and individual-specific factors, such as consumers’ personal support for the CSR issues and their general beliefs about CSR, as key moderators of consumers’ responses to CSR. The results also highlight the mediating role of consumers’ perceptions of congruence between their own characters and that of the company in their reactions to its CSR initiatives. More specifically, the authors find that CSR initiatives can, under certain conditions, decrease consumers’ intentions to buy a company’s products.
Operations on Metric Thickenings

Many simplicial complexes arising in practice have an associated metric space structure on the vertex set but not on the complex, e.g. the Vietoris-Rips complex in applied topology. We formalize a remedy by introducing a category of simplicial metric thickenings whose objects have a natural realization as metric spaces. The properties of this category allow us to prove that, for a large class of thickenings including Vietoris-Rips and Cech thickenings, the product of metric thickenings is homotopy equivalent to the metric thickenings of product spaces, and similarly for wedge sums.
Rewiring the DNA of Securities Fraud Litigation: Amgen's Missed Opportunity

INTRODUCTION American judges and policymakers are of two minds when it comes to securities fraud litigation. On the one hand, private class action lawsuits to enforce the anti-fraud provisions of the federal securities laws are viewed as a necessary supplement to limited governmental resources in an era of ever-increasing complexity in the financial industry.1 On the other hand, securities litigation is viewed as parasitic,2 ineffective at compensating those who have actually suffered harm,3 and as a cumbersome and expensive tax on publicly traded companies levied by powerful (but not always publicly minded) plaintiff’s’ securities firms.4 Which of these views is right? The unsurprising answer is likely both, to a degree. The clear consequences of our schizophrenic view of securities litigation can be found both in legislation and case law. On
The Bayh–Dole Act and university research and development

Abstract This paper examines the relationship between university research and development (R&D) activities and the Bayh–Dole Act. This act made it much easier for universities to obtain patents from research funded by the federal government and may have provided universities with an incentive to alter their R&D activities. The Act may provide an incentive to reduce basic research (which does not generate licensing fees) and increase applied research (which does generate patents and licensing fees). In addition, industry might be more willing to fund university R&D projects since the results would now be easier to patent. This paper differs from the existing literature which uses patent data (a measure of research output) by using research and development data (a measure of inventive input) to examine the effect of the Act.
A Simple Model of Quality Heterogeneity and International Trade

Abstract This paper develops a trade model with firm-specific quality heterogeneity in markets where firms face the threat of imitation and engage in limit-pricing strategies. Firms producing high-quality (high-price) products export, whereas firms producing lower-quality (lower-price) products serve the domestic market. Trade liberalization raises the average domestic markup and increases the number of products consumed in each country. However, the impact of trade liberalization on the average export markup depends on the nature of liberalization. Although the presence of markups renders the laissez-faire equilibrium suboptimal, trade liberalization increases national and global welfare.
FAVORITISM UNDER SOCIAL PRESSURE

This paper is concerned with the effect of nonmonetary incentives on behavior, in particular with the study of social pressure as a determinant of corruption. We offer empirical evidence that shows how professional soccer referees favor home teams in order to satisfy the crowds in the stadium. Referees have discretion over the addition of extra time at the end of a soccer game to compensate for lost time due to unusual stoppages. We find that referees systematically favor home teams by shortening close games where the home team is ahead, and lengthening close games where the home team is behind. They show no such bias for games that are not close. We further find that when the rewards for winning games increase, referees change their bias accordingly. Lastly, we identify that the mechanism through which bias operates is to satisfy the crowd, by documenting how the size and composition of the crowd affect referee favoritism.
Currency crisis and contagion: evidence from exchange rates and sectoral stock indices of the Philippines and Thailand

Abstract This paper analyzes empirically the recent Asian financial crisis by using high-frequency data of exchange rates and stock indices of the Philippines and Thailand. With time-series techniques, this study confirms that benchmark stock indices often fail to provide valuable insights into currency crises, but there is evidence that developments in some sectoral indices—including those of banking and financial sectors—seem to have caused upward pressure on exchange rates. Our evidence therefore confirms the importance of financial markets as a transmission channel during the currency crisis period.
The Information Content of Tax Expense: A Discount Rate Explanation

I investigate the information content of income tax expense using variance decomposition to separate stock returns into cash flow and discount rate news components. While prior literature has focused on linking tax expense with expected future cash flows, I argue that tax expense should also be informative about discount rates because of its ability to summarize fundamental economic performance. Consistent with my arguments, I find that tax expense surprises are correlated with both revisions in future cash flows and revisions in discount rates; however, the economic magnitude of tax expense's impact on returns is primarily through the discount rate channel. I also perform cross-sectional tests, which reveal that the discount rate implications of tax expense are due not only to its ability to capture fundamental economic performance but also to its ability to convey information about a firm's earnings management and tax avoidance activities. This article is protected by copyright. All rights reserved.
"Who's the Man?": Masculinities Studies, Terry Stops, and Police Training

We men have some strange rituals. One occurs on the basketball court. A player will make a move around a defender and score a basket. Then he'll shout, "who's the man?" He wants his opponent to say, "You are the man." This episode is a paradigmatic description of how masculinities work. Men often act with the goal of impressing other men. We gain our masculine esteem and relative masculine stature from other men's acknowledgements of our masculinity. Sociologist Michael Kimmel puts it best: "[w]e are under the constant careful scrutiny of other men. Other men watch us, rank us, grant our acceptance into the realm of manhood. Manhood is demonstrated for other men's approval." The need for other men's approval leads us to constantly call out, "who's the man?." Kimmel helps us see that masculinities are expressed through encounters where one man can demand that another man acknowledge him as "the man." The existence of the "who's the man?" game is revealed by studying hegemonic masculinity5 using the literature from the field of masculinities studies. To date, the legal literature on masculinities has focused on employment discrimination and equal protection. This Article applies the masculinities studies literature to the field of criminal procedure and asks the following question: How does masculinity affect policing? This is an important question, given that policemen have nearly unique powers to make others acknowledge them as "the man" while ostensibly merely performing their duties. Keywords: masculinities, critical race theory, criminal procedure, police, policing, fourth amendment Language: en
Benchmarking the Research Productivity of Accounting Doctorates

ABSTRACT : Increasing attention to faculty research productivity suggests a need for reliable benchmarks, which the literature has provided. We add to this literature by providing alternative benchmarks based on records of 5,607 accounting doctoral graduates from 1971–2005. We measure research productivity in four ways: (1) unadjusted number of published articles in the Best 3, Best 13, Best 24, and Best 40 journals, (2) published articles adjusted for journal quality scores, (3) published articles adjusted for coauthorship, and (4) published articles adjusted for both journal quality and coauthorship. We find evidence that average publication productivity of accounting faculty per year has steadily increased over the 35 years under study. We present benchmark measures based on faculty productivity in four sets of journals both from 1971–2005 and for each year of 2001–2005. The former shows that a significant proportion of doctoral graduates have never published in any of the 40 journals studied. The latt...
Nontraditional Students, Accelerated Programs, Grade Expectations, and Instructor Evaluations

This article is intended as both a cautionary tale and an encouraging guide for instructors who are beginning to teach in accelerated programs designed to attract nontraditional students. This article is based, in part, on classroom action research conducted through surveys, observations, exams, and assessments, in an introductory business law course taught in two different universities. Initially, this article seeks to define and examine the particular issues of the nontraditional student using demographic and anecdotal data gathered on nontraditional students at the University of Cincinnati and traditional students at Southeast Missouri State University. Special attention is given to the role of gender and role strain in nontraditional students. Role strain has three dimensions: (1) role conflict from simultaneous, incompatible demands; (2) role overload (insufficient time to meet all demands); and (3) role contagion or preoccupation with one role while performing another. The article also examines the relationship between grade expectations/grade inflation and instructor evaluations.
Control of Corporate Decisions: Shareholders vs. Management *

Activist shareholders have lately been attempting to assert themselves in a struggle with management and regulators over control of corporate decisions. These efforts have met with mixed success. Meanwhile, shareholders have been pressing for changes in the rules governing access to the corporate proxy process, especially in regard to nominating directors. The key issue which these events have brought to light is whether, in fact, shareholders will be better off with enhanced control over corporate decisions. Proponents of increased shareholder participation argue that such participation is needed to counter the agency problems associated with management decisions. In this view, boards of directors do not exercise sufficient control over self-interested managers because management insiders typically hand-pick directors through their control of the proxy process. Opponents offer several arguments such as that shareholders lack the requisite knowledge and expertise to make effective decisions or that shareholders may have incentives to make value-reducing decisions. In this paper, we investigate what determines the optimality of shareholder control, taking account of some of the above arguments, both pro and con. Our main contribution is to use formal modeling to uncover some factors overlooked in these arguments. For example, we show that the claims that shareholders should not have control over important decisions because they lack sufficient information to make an informed decision or because they have a non-value-maximizing agenda are flawed. On the other hand, it has been argued that, since shareholders have the “correct” objective (value maximization) and can always delegate the decision to insiders when they believe insiders will make a better decision, shareholders should control all major decisions. We show that this argument is also flawed.
Diversification in Funds of Hedge Funds: Is It Possible to Overdiversify?

Many institutions are attracted to diversified portfolios of hedge funds, referred to as Funds of Hedge Funds (FoHFs). In this article, we examine a new database that separates out for the first time the effects of diversification (the number of underlying hedge funds) from scale (the magnitude of assets under management). We find with others that the variance-reducing effects of diversification diminish once FoHFs hold more than 20 underlying hedge funds. This excess diversification actually increases their left-tail risk exposure once we account for return smoothing. Furthermore, the average FoHF in our sample is more exposed to left-tail risk than are naive $1/N$ randomly chosen portfolios. This increase in tail risk is accompanied by lower returns, which we attribute to the cost of necessary due diligence that increases with the number of hedge funds.
LAID OFF, BUT STILL LOYAL: THE INFLUENCE OF PERCEIVED JUSTICE AND ORGANIZATIONAL SUPPORT

Research on layoff victims reports that interactional justice judgments influence important work‐related attitudes, such as organizational commitment. In this paper, we build on this emerging literature through an examination of the role that both interactional justice and organizational support have in explaining the organizational commitment of 147 layoff victims at a major manufacturing plant. The results of structural equation analyses supported our hypothesis that organizational support mediates the relationship between interactional justice and organizational commitment.
The Arms Trade Treaty Regime in International Institutional Law

By the end of 2014, the Arms Trade Treaty (ATT) will enter into force, creating new treaty organs that will further develop international institutional law as it applies to these quasi-international organizations. The states parties to the ATT did not create a new international organization to support the treaty regime, but instead created treaty organs to do the same task, specifically the Conference of States Parties (CSP) and the Secretariat. While the creation of international organizations was once seen as the best solution, states are increasingly attracted to the creation of treaty organs instead. The emergence of yet more treaty organs into the already crowded field shows that this approach may now be the dominant method for giving effect to bureaucratic regimes, displacing the older preference for formal international organizations. In creating these organs, the states parties to the ATT are drawing on several decades’ worth of experience with these bodies and the initial steps taken already show that the ATT organs will continue and buttress crystallizing international practice on treaty organs. This article will review the text of the ATT pertinent to the treaty organs and place the new regime into a comparative study of similar treaty organs. It will also contribute to the scholarship on treaty organs by functionally applying international institutional law to these entities. This approach is not merely a wish; rather, it represents the current practice regarding these organs, as evidenced through the wide-ranging comparative study of the application of international institutional law.
The relationship between daily events and mood: The mood measure may matter

Measures of daily mood have been used as immediate indicators of the effects of the psychosocial environment, the latter concept often measured by daily events. We examined the prediction of two measures of daily mood, the Positive and Negative Affect Schedule (PANAS) and Nowlis Mood Adjective Checklist (MACL), by daily desirable and undesirable events and by day of the week. Unlike prior studies, the event assessment and type of subjects studied (community residents) were the same in both studies, allowing an attribution of differential associations between the two mood scales and either daily events or day of the week to the different mood measures. The mood measures had similar and expected associations with daily events, although the MACL scale generally had stronger associations with events. Surprisingly, the pattern of day of the week effects for positive, yet not negative, mood were different for the two mood measures. Consistent with the weekend's increase in desirable daily events, MACL positive affectincreased on weekends, relative to weekdays, whereas PANAS positive mooddecreased on weekends. Also, for both positive and negative affect scales, the MACL scales had stronger associations with day of week than the PANAS scales. These results suggest caution in the choice of mood measure to use in studies of daily events and pose questions about the meaning of these mood measures.
CEO decision horizon and firm performance: An empirical investigation

Abstract We investigate the effect of top managers' myopia on firms' market valuation. We devise a measure of expected CEO tenure as a proxy for the length of CEO decision horizon. After accounting for the endogenous nature of CEO horizon, our empirical tests show that shorter CEO horizon is associated with more agency costs, lower firm valuation and higher levels of information risk. The results are consistent with the notion that a short CEO decision horizon is indicative of preference for investments that offer relatively faster paybacks at the expense of long-term value creation.
Targeted savings and labor supply

Substantial evidence suggests that savings behavior may depart from neoclassical optimization. This article examines the implications of raising the savings rate—whether through social security, retirement plans, or otherwise—for labor supply, where labor supply is determined by behavioral utility functions that reflect the non-neoclassical character of savings behavior. Under one formulation, raising the targeted savings rate increases labor supply regardless of the slope of the labor supply curve; under a second, raising the targeted savings rate has the same effect on labor supply as that of raising the labor income tax rate; and under a third, raising the targeted savings rate has no effect on labor supply. Effects on labor supply are particularly consequential because of the significant preexisting distortion due to labor income taxation.
Student Attitudes and Knowledge Change in an Introductory College Economics Course

Students’ attitudes towards economics as well as their knowledge of economics before and after taking a college introductory economics class is examined using standardized multiple choice economics knowledge and attitude questions. Prior knowledge of economics, having a bank account, and other biographical information are used to hold constant many factors influencing pre/post performance in an economics class. Students who gained in economics knowledge appear to have a more negative attitude towards the subject compared to students who exhibited no knowledge gained. Prior experience in or outside of high school appear to have little impact on knowledge gain or attitude though the beginning of the semester knowledge of economics is important. Results are mixed but show a clear need to improve attitudinal change of students and the pedagogical knowledge of prospective teachers.
Deregulation, misallocation, and size: Evidence from India

AbstractThis paper examines the impact of the deregulation of compulsory industrial licensing in India on firm-size dynamics and reallocation of resources within industries. Following deregulation, resource misallocation declines and the left-hand tail of the firm-size distribution thickens significantly, which suggests increased entry by small firms. However, the dominance and growth of large incumbent firms remains unchallenged. Quantile regressions reveal that the distributional effects of deregulation on firm size are significantly nonlinear. The reallocation of market shares toward a small number of large firms and a large number of small firms is characterized as the shrinking middle in Indian manufacturing. Small and medium-sized firms may continue to face constraints in their attempts to grow.
Appearing and disappearing dividends: The link to catering incentives ∗

We document a close link between fluctuations in the propensity to pay dividends and catering incentives. First, we use the methodology of Fama and French (2001) to identify a total of four distinct trends in the propensity to pay dividends between 1963 and 2000. Second, we show that each of these trends lines up with a corresponding fluctuation in catering incentives: The propensity to pay increases when a proxy for the stock market dividend premium is positive and decreases when it is negative. The lone disconnect is attributable to Nixon-era controls.
Legal Barriers to Innovation: The Growing Economic Cost of Professional Control over Corporate Legal Markets

U.S. legal markets are among the most heavily regulated in the economy, with regulation over almost all aspects of legal production exercised in a fragmented and unclear regime by individual state bar associations and state courts, largely driven by decisions of the American Bar Association. These restrictions, presented as ethical regulation by an independent and self-governing body committed to the public interest, control the scope of regulation (what counts as a legal product), who can produce legal products, what law schools must teach, which markets firms that produce legal products can serve, how firms that provide legal products must be organized and financed and many of the terms that must be in a legal services contract. While the implications of professional control over legal markets for price have long been a concern, I argue in this paper that the more costly result of professional regulation, specifically of corporate legal markets, is the impediment to innovation in legal products and services. The obstacles to innovation arise from the top-down standardization of legal products, the homogeneity of the legal ideas pool, restrictions imposed on the achievement of economies of scale and scope and restrictions on methods of financing legal innovation. Substantial deregulation of legal markets in the U.S., which has already been implemented in the U.K. and is likely to spread throughout Europe through the application of antitrust principles to legal provision, is essential to grow the necessary legal infrastructure to support transition to new economic models and globalized competition. HADFIELD LEGAL BARRIERS TO INNOVATION MARCH 2008.DOC 3/10/2008 6:08 PM 101 LEGAL BARRIERS TO INNOVATION: THE GROWING ECONOMIC COST OF PROFESSIONAL CONTROL OVER CORPORATE LEGAL MARKETS Gillian K. Hadfield* INTRODUCTION 101 I. THE REGULATORY STRUCTURE OF LEGAL MARKETS 108 A. The Self-Governing Profession in the U.S.: Not We the Titmice of England 108 B. Distinct Professions: The Political and Economic Functions of Law ......... 113 II. A HEAVILY REGULATED MARKET: WHAT THE BAR AND JUDICIARY CONTROL 118 A. What Counts as a Legal Product 119 B. Who Can Produce Legal Products 121 C. What Law Schools Must Teach 125 D. Which Markets Firms that Produce Legal Products Can Serve 126 E. How Firms that Provide Legal Products Must Be Organized and Financed 127 F. What Terms Must Be In A Legal Services Contract 128 III. OBSTACLES TO INNOVATION IN CORPORATE LEGAL MARKETS 130 A. Top-Down Standardization of the Product 131 B. Homogeneity of the Idea Pool 133 C. Restrictions on Scale and Scope Economies 136 D. Restriction On Methods Of Financing Legal Innovation 139 CONCLUSION: THE ECONOMIC COST OF PROFESSIONAL REGULATION OF CORPORATE LEGAL SERVICES 141
Measurement scale in maximum entropy models of species abundance

The consistency of the species abundance distribution across diverse communities has attracted widespread attention. In this paper, I argue that the consistency of pattern arises because diverse ecological mechanisms share a common symmetry with regard to measurement scale. By symmetry, I mean that different ecological processes preserve the same measure of information and lose all other information in the aggregation of various perturbations. I frame these explanations of symmetry, measurement, and aggregation in terms of a recently developed extension to the theory of maximum entropy. I show that the natural measurement scale for the species abundance distribution is log-linear: the information in observations at small population sizes scales logarithmically and, as population size increases, the scaling of information grades from logarithmic to linear. Such log-linear scaling leads naturally to a gamma distribution for species abundance, which matches well with the observed patterns. Much of the variation between samples can be explained by the magnitude at which the measurement scale grades from logarithmic to linear. This measurement approach can be applied to the similar problem of allelic diversity in population genetics and to a wide variety of other patterns in biology.
Productivity and the role of complementary assets in firms’ demand for technology innovations

This article uses data on transactions in the pharmaceutical industry to examine the demand-side of technology outsourcing. By integrating a transaction–cost economics perspective with the analysis of internal R&D capabilities, we find that firms with relatively more cospecialized complementary assets or relatively strong internal R&D productivity have a lower propensity to source a technology from outside the firm. We show, however, that since downstream capabilities and internal R&D are complementary activities in the presence of asset specificity and transaction costs, a decrease in internal R&D productivity reduces the marginal value of the downstream assets within firm boundaries, thus stimulating the demand for external technology.
Prenatal drug use and the production of infant health

We estimate the effect of illicit drug use during pregnancy on two measures of poor infant health: low birth weight and abnormal infant health conditions. We use data from a national longitudinal study of urban parents that includes postpartum interviews with mothers, hospital medical record data on the mothers and their newborns, and information about the neighborhood in which the mother resides. We address the potential endogeneity of prenatal drug use. Depending on how prenatal drug use is measured, we find that it increases low birth weight by 4-6 percentage points and that it increases the likelihood of an abnormal infant health condition by 7-12 percentage points.
Growth and labor supply in the presence of habit formation in consumption

This paper examines a model with habit formation in consumption. The model leads to higher equilibrium values in consumption, output, capital accumulation and labor supply than the neoclassical growth model with elastic labor supply. Comparative static analysis shows that an increase in the importance of consumption in the recent past in habit formation is associated with a decrease in growth and labor supply. On the other hand, an increase of the importance of habit stock relatively to present consumption, is found to stimulate growth and labor supply.
A Re-examination of the Predictability of Economic Activity Using the Yield Spread

This paper revisits the yield spread's usefulness for predicting future real GDP growth. We show that the contribution of the spread can be decomposed into the effect of expected future changes in short rates and the effect of the term premium. We find that both factors are relevant for predicting real GDP growth but the respective contributions differ. We investigate whether the cyclical behavior of interest rate volatility could account for either or both effects. We find that while volatility displays important correlations with both the term structure of interest rates and GDP, it does not appear to account for the yield spread's usefulness for predicting GDP growth.
Reducing Poverty Through Employment

be able to feed himself for the rest of his life. This is an old cliche, and like all cliches it has an element of wisdom. But, it does not go far enough. A fisherman with a simple rod and a canoe will not go hungry, but he will still be poor. For him to rise above poverty, he needs steady employment at reasonable wages in a commercial fishing company. Now his daughter might move up the development ladder and go on to become an engineer.
The Consequences of Broader Media Choice: Evidence from the Expansion of Fox News

In recent decades, the diversity of Americans' news choices has expanded substantially. This paper examines whether access to an ideologically distinctive news source — the Fox News cable channel — influences vote intentions and whether any such effect is concentrated among those likely to agree with Fox's partisan viewpoint. To test these possibilities with individual-level data, we identify local Fox News availability for 22,595 respondents to the 2000 National Annenberg Election Survey. Overall, we find a pro-Republican average treatment effect that is statistically indistinguishable from zero. Yet, when separating respondents by party, we find a sizable effect of Fox access only on the vote intentions of Republicans and pure independents, a result that is bolstered by placebo tests. Contrary to fears about pervasive media influence, access to an ideologically distinctive media source reinforces the loyalties of co-partisans and possibly persuades independents without influencing out-partisans.
Measuring historical volatility.

The authors investigate the use of the mean absolute deviation to forecast future volatility. Despite being so simple to calculate, it provides better forecasts than the more commonly used historical standard deviation. It also provides forecasts that are as good as or better than the GARCH(1,1) model. Because it is so easy to calculate, the authors suggest that the mean absolute deviation be used instead of the more calculationintensive alternatives as in option-pricing models.
Applications Of Mathematical Control Theory To Finance: Modeling Simple Dynamic Cash Balance Problems

In this paper we have dealt with several time dependent cash balance models and have solved them using some form of a control theory maximum principle. The kinds of solutions we obtained were intuitively satisfying from a financial analysis point of view. The main effort for the future will be to extend these very simple models to much more realistic and complicated ones. But to do this will require considerable theoretical research in the area of both deterministic and stochastic control theory. We hope that we have demonstrated the usefulness of these theories in the area of finance and we expect many similar applications to be made in the future.
What Can the Duration of Discovered Cartels Tell Us About the Duration of All Cartels

Estimates of average cartel duration and the annual probability of cartel death are based on data for discovered cartels. It is recognised that these estimates could be biased because the population of discovered cartels may not be a representative sample of the latent population of cartels. This article constructs a birth-death-discovery process to investigate the source and direction of possible biases. Bayesian inference is used to provide bounds on the extent of the bias and deliver an improved set of beliefs on the probability of cartel death.
Skewness Consequences of Seeking Alpha

Mutual funds seek alpha, but residual coskewness is also an important performance attribute. Alpha and residual coskewness relative to the market are negatively correlated in theory, so funds may generate undesirable residual coskewness in the pursuit of alpha. Empirically, the trade-off exists for mutual funds and is driven by both fund composition and actions of managers. Sorting funds by proxies for active management generates positive alpha, but also undesirable coskewness. Investment styles also carry skewness consequences, but only partially explain the trade-off in funds. A minority of funds overcome the trade-off. Thus, seeking alpha generally comes at a skewness cost.
Seasoned equity offerings: Quality of accounting information and expected flotation costs

Abstract Flotation costs represent a significant loss of capital to firms and are positively related to information asymmetry between managers and outside investors. We measure a firm's information asymmetry by its accounting information quality based on two extensions of the Dechow and Dichev [2002. The quality of accruals and earnings: the role of accrual estimation errors. Accounting Review 77, 35–59] earnings accruals model, which is a more direct approach to assessing the information available to outside investors than the more commonly used proxies. Our main hypothesis is that poor accounting information quality raises uncertainty about a firm's financial condition for outside investors, though not necessarily for insiders. This accounting effect lowers demand for a firm's new equity, thereby raising underwriting costs and risk. Using a large sample of seasoned equity offerings (SEOs), we show that poor accounting information quality is associated with higher flotation costs in terms of larger underwriting fees, larger negative SEO announcement effects, and a higher probability of SEO withdrawals. These results are robust to joint determination of offer size and flotation cost components and to adjustments for sample selection bias.
Connecting two markets: An equilibrium framework for shorts, longs, and stock loans.

Abstract We analyze a reduced-form framework for understanding the equity loan market's impact on share prices. We show that hard-to-borrow stocks will have distinct return patterns, responding more to shocks in the supply of shares available, and to changes in the heterogeneity of investor beliefs, than other stocks. We conduct two empirical tests in which we find strong support for these equilibrium predictions. In our first test, we take advantage of a tax-driven exogenous shock to share loan supply and find that when supply is reduced around dividend record dates, prices of hard-to-borrow stocks increase 1.1% while prices of easy-to-borrow stocks are unaffected. In our second test, we find that hard-to-borrow stocks have 4.8% lower three-month returns than other stocks, with negative returns concentrated in stocks with high heterogeneity in investor beliefs. Thus, we extend the Diether, Malloy, and Scherbina (2002) result that stocks with a greater dispersion of investor beliefs have lower returns.
Graph annotations in modeling complex network topologies

The coarsest approximation of the structure of a complex network, such as the Internet, is a simple undirected unweighted graph. This approximation, however, loses too much detail. In reality, objects represented by vertices and edges in such a graph possess some nontrivial internal structure that varies across and differentiates among distinct types of links or nodes. In this work, we abstract such additional information as network annotations. We introduce a network topology modeling framework that treats annotations as an extended correlation profile of a network. Assuming we have this profile measured for a given network, we present an algorithm to rescale it in order to construct networks of varying size that still reproduce the original measured annotation profile.Using this methodology, we accurately capture the network properties essential for realistic simulations of network applications and protocols, or any other simulations involving complex network topologies, including modeling and simulation of network evolution. We apply our approach to the Autonomous System (AS) topology of the Internet annotated with business relationships between ASs. This topology captures the large-scale structure of the Internet. In depth understanding of this structure and tools to model it are cornerstones of research on future Internet architectures and designs. We find that our techniques are able to accurately capture the structure of annotation correlations within this topology, thus reproducing a number of its important properties in synthetically-generated random graphs.