Truth on the Market

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Archive for May, 2007

More Kookiness in Chicago

Posted by Thom Lambert on May 28, 2007

I’ve previously tiraded about paternalism in my beloved Chicago. I won’t beat that dead horse, but I just can’t ignore the latest liberty restriction imposed by our esteemed aldermaniacs. The members of the aldermen’s Buildings Committee recently voted to extend the city’s smoking ban to performers in theatrical productions.

What a freakin’ embarrassment.

The aldermen remind me of the administrators of my Baptist high school, who routinely censored student theatrical productions. Lest we offend our more sensitive brethren (i.e., those who might give money to the school), we were required to refer to the elderberry wine in Arsenic and Old Lace as sassafras tea. The big dance in Meet Me in St. Louis became a banquet. I’m not kidding. Good Baptists don’t drink or dance.

Not surprisingly, the censored productions lost a bit of their zip and we performers looked like idiots. But there was an even more negative result. A large proportion of my classmates, long forced to adhere to a ridiculously stringent code of conduct, eventually turned into wild heathens. The continual top-down control wore on them until they could take it no more and they rebelled, throwing out the baby of Christian belief itself with the bathwater of one particular brand of Baptist fundamentalism. It’s tragic, but it’s an inevitable result of overly stringent conduct restrictions.

This is one of the reasons I oppose smoking bans: they make smoking more attractive to the most impressionable folks out there, rebellion-prone youngsters. I also oppose them because they remedy no genuine technological externality. People who choose to go to an establishment that permits smoking have decided to accept the risks, inconveniences, and benefits (yes, for some folks there are some) of a smoking-permitted zone. The owner of the property at issue has every incentive to maximize the attractiveness of her venue by selecting the optimal smoking policy.

When it comes to censoring smoking in theatrical productions, these arguments are even stronger. A ban on portrayals of smoking was the end of the slippery slope in the film Thank You for Smoking, in which an anti-Tobacco senator tried to order Hollywood to doctor old movie star portraits so that the actors’ cigarettes were replaced with innocuous items like candy canes and chopsticks. The notion that the government would try to censor art (and history) as part of its anti-smoking crusade seemed ridiculous enough to evoke a few laughs. Now it’s for real, and it’s bound to create more smoking rebels.

With respect to externalities, any theatre patron who is offended by onstage smoking — either because of the “risk” presented (by the way, there’s not one) or the message conveyed — can ask in advance whether the production involves smoking and can spend his entertainment dollars elsewhere if he’s so inclined. People routinely decline to see plays that involve offensive elements. (Should the Board of Aldermen protect the easily offended from The Vagina Monologues?)

Theatre critic Terry Teachout had it right in this weekend’s WSJ:

To perform “[A] Streetcar [Named Desire]” without cigarettes, or “Twelve Angry Men” without a smoke-filled jury room, is to insult the intelligence of audiences who come to see these well-known plays expecting to see them performed as written. … Such a ban isn’t unconstitutional — but it’s stupid, which is even worse. It makes Chicago look like a backwoods burg full of philistine pols with nothing better to do than mind other people’s business. … [S]ince when did Carl Sandburg’s City of the Big Shoulders turn into Nannytown, U.S.A.? As for those Chicagoans who don’t care to have their nostrils brutalized by the smell of a lone cigarette burning halfway across a crowded theater, they have an inalienable right of their own — the right to head for the nearest exit. I urge them to exercise it and leave the actors to go about their stage business undisturbed.

Well said.

Posted in environment, musings, politics, regulation | 2 Comments »

Rizzo v. Thaler on "Libertarian Paternalism" at Econoblog

Posted by Josh Wright on May 25, 2007

See here.

My favorite line of the exchange comes from Rizzo in response to Thaler’s inclusion of private choices by firms to adopt automatic savings plans as examples of “libertarian paternalism”:

“Is New Paternalism primarily about advising private individuals and firms? If so, why use a political term — libertarian — to identify it?  It is simply a management-consulting philosophy.”

Really nothing new in the exchange — but still entertaining.

Posted in economics, law and economics, markets, regulation | Comments Off

Twombly: Good, Bad, or Who Cares?

Posted by Josh Wright on May 24, 2007

My apologies for the blogging hiatus. I’ve spent the last ten days grading, traveling, grading, being sick, and hanging out with family in sunny San Diego. But now the grading is done, I’m feeling better, and I’ve had an opportunity to do a little blog-speed catch up. I guess the biggest antitrust news is Twombly, so I’ll start there.

David Fischer has all the Twombly reactions covered over at Antitrust Review. The reactions range from applause (see, e.g. Richard Epstein’s take in the WSJ, indifference (Einer Elhauge guest-blogging at VC describes the decision as “quite insignificant” to the dismay of some commentors), to critical (see, e.g. Randy Picker’s take here).

While I agree with the commentators that have noted that Twombly’s primary legacy will be procedural — the death of the “no set of facts” language in ConleyTwombly’s antitrust-specific relevance will be a function of how courts scrutinize conspiracy allegations at the motion to dismiss stage in applying the “plausibility” standard. The “plausibility” standard may amount to the “plus factor” standard. Maybe something less. Maybe more (but I doubt it). Bottom line: I’m satisfied with the “plausibility” standard, and register myself with the pro-Twombly camp, but it will be interesting to watch how Section 1 claims play out at the dismissal stage over the next few years. For that matter, it might be interesting to see how the “plausibility” standard is applied in non-conspiracy settings as well.

But how does Twombly fit into the recent and revived SCOTUS antitrust jurisprudence? I’ve been thinking a bit about this question and how Twombly maps into themes emerging (or possibly to emerge!) from the jurisprudence (or jurisprudence-to-be) embodied by Weyerhauser, Leegin, Credit Suisse, and maybe even going back to the 2005-06 term to include Independent Ink, Dagher, and Volvo Trucks. As far as extrapolating larger trends from the recent decisions, it is obviously a bit early since many of these cases are still pending and the Court may grant cert on a reverse payment case, but I’ve got a few ideas. Ok, one idea. And its still half-baked (a sensible Leegin decision that relies on empirical evidence regarding the anticompetitive theories of RPM could help the baking process…).  But I’m going to be writing up some thoughts on the latest SCOTUS term this summer for an upcoming issue of Competition Policy International, and will be previewing them here in the weeks to come (likely after having the benefit of the Leegin decision).

Posted in antitrust, blogging, economics, law and economics, markets, musings, regulation | 2 Comments »

Notebooks/Laptops for the Professional Academic

Posted by Elizabeth Nowicki on May 21, 2007

I would be curious to know what laptops folks out there are using (with success).  I am shopping for a lightweight (lightweight!) laptop to tote around to conferences and such, and I have absolutely no clue where to start.  I do not use fancy stuff – just Word, Excel, Powerpoint.  And I refuse to use a Mac.  I fear change.  Old dog, new tricks, etc. etc.

Thoughts?

Posted in Uncategorized | 6 Comments »

The only thing good about the movie, The Corporation

Posted by Geoffrey Manne on May 17, 2007

Frankly, I thought the movie, The Corporation, was unabashedly abysmal.  It was a childish caricature, exhibiting no understanding by the filmmakers (or most of the interviewees) of the law, economics, or nature of corporations–to say nothing of capitalism.  The movie is unsophisticated, anti-capitalist tripe.  See Seth Weinberger’s review of the movie from the journal Political Communication for the longer version of this analysis. 

That said, the filmmakers have just provided me–and now you–with one of the most remarkable three minutes of video footage I’ve ever seen:  The Milton Friedman Choir. 

Milton Friedman on corporations says,
Corporations have no social duty
Except to those who own their stock.

Hat tip:  Henry Manne.

Posted in corporate social responsibility, musings | 3 Comments »

Slopping Wordsmithing by the WSJ or Bad Corporate Governance?

Posted by Elizabeth Nowicki on May 17, 2007

As we know, News Corp. has made a bid for Dow Jone, offering $60/sh for the outstanding Dow Jones stock.  The Bancroft family, however, who controls at least a majority of the Dow Jones voting stock, has indicated clearly that it will not vote in favor of this offer, such that the offer, as it currently stands, has no chance of coming to fruition.  News Corp. can up the offer, change the offer, make the offer again, but, without the majority vote from Bancroft (or some percentage of the 52% of votes controlled by the Bancroft block), the News Corp. offer is dead in the water.

The WSJ reports that:
The [Dow Jones] board’s position is that to assess the offer at this point would be futile if the controlling shareholder would vote it down anyway. That is a safe haven — legal experts agree that the board has no obligation to act — but legal precedent indicates that the board could make a recommendation at any time.

Not quite right.  The board absolutely has the obligation to look at the offer.  The judiciary is very deferential only to boards as a presumptive matter.  If a complaining minority shareholder can show that the board did not act in good faith, was not grossly negligent in becoming informed, or acted irrationally, the board may find itself under close scrutiny.  Not assessing an offer at all does not seem to be an act in good faith.

I understand the point that the controlling shareholders have indicated that they would vote down the offer.  That, however, does not change the board’s obligation to do its job.  Mind you, I am not saying a company has to put itself up for play whenever a bid comes in, particularly if the majority of the s/h make clear they are not going to support the bid. Moreover, I am not saying that the DJ board needs to pull in a raft of investment bankers to do fairness opinions on the offer being made.  However, the board members cannot just e-mail each other and say “we’re not for sale, right?”  Even if the board cannot stop the majority s/h from acting or cannot force the majority s/h to support a bid, a board acting “in good faith” is going to at least keep an internal assessment of the offer ongoing, such that if the offer reaches a point where it is just too good too ignore, the board can speak up.  The question at that point then becomes how far the board has to go in agitating in favor of the bid….
Stay tuned.

Posted in corporate governance, corporate law, mergers & acquisitions | 1 Comment »

FTC Grocery Antitrust Conference

Posted by Josh Wright on May 16, 2007

The FTC’s Bureau of Economics has scheduled a conference that looks very interesting and concerns a subject near and dear to my heart: antitrust in the supermarket!  Sadly, I will not be able to attend as I am going to take a little bit of a paper grading/ battery re-charge vacation for the next few weeks before starting my full-time tour of duty at the Commission.  BE has put together an excellent program:

This one-day conference will look at antitrust analysis of the grocery industry including both historical analysis and analysis of current methods. The roundtable will include both paper presentations and panel sessions. The paper presentations will include recent academic work related to competition in the grocery store industry. The panels will include discussions from various people including academics, antitrust professionals and industry professionals.

Topics will include historical review of the Commission’s actions in this industry, current economic analysis of grocery and retail competition, and recent work on new methods for analyzing grocery and retail competition.

Participants include David Bell (UPenn Wharton), Arie Beresteanu (Duke), Tim Brennan (UMBC), Dennis Carlton (DOJ), Adam Copeland (BEA), Benoit Durand (UK Competition Authority), Paul Ellickson (Duke), Jim Fishkin (Dechert), Tom Holmes (Minnesota), Dennis Lu (Canadian Competition Authority), Dan O’Brien (DOJ), David Scheffman (LECG), Jon Seaton (Loughborogh University), Catherine Tucker (MIT Sloan), Raphael Thomadsen (UCLA), and economists from the FTC.

TOTM readers and … well … maybe just me … might have noticed that the conference agenda does not appear to include anything on a few of my favorite topics:

  1. Klein & Wright, The Economics of Slotting Contracts (forthcoming JLE in August).
  2. Wright, Slotting Contracts and Consumer Welfare (forthcoming Antitrust LJ).
  3. Wright, Antitrust Analysis of Category Management: Conwood Co. v. United States Tobacco (working paper, 2007).

Posted in announcements, antitrust, economics, federal trade commission, law and economics, legal scholarship, scholarship | 1 Comment »

Reflections on the GMU/Microsoft Conference

Posted by Geoffrey Manne on May 14, 2007

As you may know, this past Friday we (Geoff and Josh) organized the inaugural GMU/Microsoft Conference on the Law and Economics of Innovation. Overall, we were extremely pleased with our first entry in this conference series, The Regulation of Innovation and Economic Growth. We had about 130 register for the conference, including many high level FTC and DOJ officials, academics, and industry representatives. In the end we had about 95 attendees. We also hosted a dinner for about 45 Washington VIPs (several FTC folks, a federal judge, prominent attorneys, representatives from USTR and Commerce, etc.) the evening before at Citronelle. A good time and good conversation were had by all.

The conference started off on the right foot with an opening address from Bob Cooter (Berkeley Law) which pointed to institutional and legal solutions to the “double trust problem” in innovation as a primary factor in unleashing entrepreneurial forces in countries facing high levels of poverty and stagnant growth. The basic point was that various institutions—including importantly IP laws—serve to facilitate the essential melding of ideas and capital necessary to promote innovation and to encourage economic growth. The talk was derived from a book Cooter is currently writing (with Hans-Bernd Schaefer), two draft chapters of which are available here.

The three subsequent panels discussed the innovative process & bundling in technology markets, IP Reform, and Antitrust Regulation of Innovation. The papers are available here. We both took notes on the presentations and share some reflections on the papers and discussions below the fold.

Read the rest of this entry »

Posted in antitrust, economics, intellectual property, law and economics, legal scholarship, patent, regulation, scholarship, technology, truth on the market | 1 Comment »

2nd Annual Conference on Empirical Legal Studies

Posted by Josh Wright on May 12, 2007

From the Conference on Empirical Legal Studies Website:

The Second Annual Conference on Empirical Legal Studies will be held at New York University School of Law in New York, New York on Friday November 9 and Saturday November 10, 2007. The conference will feature original empirical and experimental legal scholarship by leading scholars worldwide, from a diverse range of fields.

The conference is jointly organized by Cornell Law School, NYU School of Law and the University of Texas School of Law. The organizers of this year’s conference are Jennifer Arlen (NYU), Bernard Black (Texas), Theodore Eisenberg (Cornell), Michael Heise (Cornell), and Geoffrey Miller (NYU).

This conference is the first event organized by the newly-created Society for Empirical Legal Studies (SELS).

For details on submitting papers, please click on “Submitting Papers” in the box to the left of this page.

The deadline for submissions is July 1, 2007.

Posted in announcements, legal scholarship, scholarship | Comments Off

Webcast of first SEC roundtable on proxy process now available online

Posted by Bill Sjostrom on May 10, 2007

See here for the webcast and here for the agenda. Fellow bloggers Bainbridge and Ribstein participated as well as several other corporate law heavyweights.

Posted in securities regulation | Comments Off

 
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