Equal loss under separatorization and egalitarian values

We characterize the equal division value, the equal surplus division value, and the class of their affine combinations for TU-games involving equal loss under separatorization. This axiom requires that, if a player becomes a dummifying player (Casajus and Huettner, 2014), then any two other players are equally affected

Ubi Remedium, Ibi Ius at the WTO

The WTO law of remedies for violation appears incoherent. States that fail to comply with their obligations are subject to WTO-authorized retaliation. First, this retaliation takes the inefficient form of blocked trade by the complaining state. This remedy is unlikely to be useful to developing countries. Second, the amount of trade blocked by the violation is often used as the measure of authorized retaliation. This measure is not necessarily incentive compatible, as it is not necessarily linked to welfare. Thus, its use may result in inefficient breach, or inefficient compliance, with WTO law. Third, only states that engage in dispute resolution proceedings are authorized to retaliate, artificially reducing the possible incentives to comply. Fourth, authorization to retaliate is granted only prospectively, and there are generally no formal remedies for damages accruing before adjudication and the passage of permitted time for compliance. This also artificially reduces incentives to comply. This paper analyzes the rationale for, and structure of, welfare-based remedies that could form the basis for cash compensation in WTO law

Corporate Restructuring Through Spin-Off Reorganization Plan: A Korean Case Study

Since the corporate spin-off was adopted in Korean business corporation law in 1998, many Korean exchange-listed and KOSDAQ- registered firms have applied this system. Especially, the Korean bankruptcy court realized that the spin-off is a very useful tool for reorganizing firms and rescuing them from financial distress. The actual benefits of corporate spin-offs include the (i) enhancement of management efficiency, (ii) improvement of the sound structure of corporate governance, and (iii) alleviation of information asymmetry by dividing a well-diversified business in the market, among others. This article analyzes two reorganizing firms’ division cases, which successfully completed a turnaround from insolvency by applying spin-offs. Corporate spin-off, as a legal process, is controversial. The most critical disputes involve creditor and shareholder interest protection and the subject of division. This article examines many practical issues with a focus on spin-off procedures. This article covers the following topics: (i) the significance, need, and legal nature of a spin-off; (ii) the various ways of creating a company spin-off such as simple division, merger by split, merger through a newly incorporated division, merger by split, and in rem division; (iii) the divided firm’s scope, asset, and debts; (iv) spin-off procedure for reorganizing a company; and (v) the effects of a spin-off and status of reorganizing a company. Since 1999, many Korean firms have begun to implement spin-offs for their own purposes, but there has been limited academic research on them. Therefore, Germany and France have been used as other jurisdictional sources for explanation. This article conducts an in-depth analysis of the spin-off process at two reorganizing Korean companies and it will provide understanding as to why corporate spin-offs have been used since the Korean economy’s collapse in 1998

Solomonic Bargaining: Dividing a Legal Entitlement to Facilitate Coasean Trade

It is a common argument in law and economics that divided ownership can create or exacerbate strategic behavior. For instance, when several persons own the land designated for a proposed stadium, individual sellers may hold out for a disproportionate share of the gains from trade. Alternatively, when building a public library would benefit multiple residents, individual buyers may free ride on the willingness of others to pay for its construction. Such transaction costs of collective action fall under a variety of analytic rubrics, including the tragedy of the commons and the theory of public goods. Nonetheless, each example of market failure shares a common attribute: The division of a single legal entitlement, or of rivalrous entitlements, among joint sellers or joint buyers may prevent socially efficient transactions, particularly when the parties possess private information about their preferences. This Article explores a different way of dividing an entitlement. Rather than analyzing divisions among buyers or among sellers, we consider the effects of splitting an entitlement between the two groups. Our core insight is Solomonic in character: Dividing a legal entitlement between rivalrous users can facilitate efficient trade. More specifically, we show that when two parties have private information about how much they value an entitlement, endowing each party with a partial claim to the entitlement can reduce the incentive to behave strategically during bargaining, thereby enhancing economic efficiency. Private information is a particularly pernicious form of transaction cost, especially in legal contexts where, for procedural or other reasons, parties must negotiate within thin markets. In such contexts, self-interested bargainers have a strong incentive to misrepresent their private valuations so as to capture a larger share of the bargaining pie. These incentives often lead to predictable opportunistic strategies: Sellers tend to overstate the value they place on the bargained-for item, while buyers tend to understate their desire to purchase it. As a result of such strategic behavior, the parties may fail to detect and exploit a mutually beneficial trade, and even when they can it is usually after considerable and costly delay. In this Article, we argue that divided entitlements can facilitate trade by inducing claim holders to reveal more information than they would under an undivided entitlement regime. Owners of divided, or Solomonic, entitlements must bargain more forthrightly than owners of undivided entitlements, because the entitlement division obscures the titular boundary between buyer\u22 and seller. More precisely, endowing each bargainer with a share of the underlying entitlement creates the possibility of two different types of Coasean trade: A bargainer might buy the other party\u27s claim, or, alternatively, she might sell her own. During negotiation, each party is likely to be uncertain about whether she will ultimately emerge as a seller or a buyer. This strategic identity crisis can strongly mitigate each party\u27s incentive to misrepresent her respective valuation; each party must balance countervailing interests in shading up her valuation, as one would qua seller, and shading down her valuation, as one would qua buyer. This form of rational ambivalence, we argue, can lead the bargainers to represent their valuations more truthfully

Solomonic Bargaining: Dividing a Legal Entitlement to Facilitate Coasean Trade

It is a common argument in law and economics that divided ownership can create or exacerbate strategic behavior. For instance, when several persons own the land designated for a proposed stadium, individual sellers may hold out for a disproportionate share of the gains from trade. Alternatively, when building a public library would benefit multiple residents, individual buyers may free ride on the willingness of others to pay for its construction. Such transaction costs of collective action fall under a variety of analytic rubrics, including the tragedy of the commons and the theory of public goods. Nonetheless, each example of market failure shares a common attribute: The division of a single legal entitlement, or of rivalrous entitlements, among joint sellers or joint buyers may prevent socially efficient transactions, particularly when the parties possess private information about their preferences. This Article explores a different way of dividing an entitlement. Rather than analyzing divisions among buyers or among sellers, we consider the effects of splitting an entitlement between the two groups. Our core insight is Solomonic in character: Dividing a legal entitlement between rivalrous users can facilitate efficient trade. More specifically, we show that when two parties have private information about how much they value an entitlement, endowing each party with a partial claim to the entitlement can reduce the incentive to behave strategically during bargaining, thereby enhancing economic efficiency. Private information is a particularly pernicious form of transaction cost, especially in legal contexts where, for procedural or other reasons, parties must negotiate within thin markets. In such contexts, self-interested bargainers have a strong incentive to misrepresent their private valuations so as to capture a larger share of the bargaining pie. These incentives often lead to predictable opportunistic strategies: Sellers tend to overstate the value they place on the bargained-for item, while buyers tend to understate their desire to purchase it. As a result of such strategic behavior, the parties may fail to detect and exploit a mutually beneficial trade, and even when they can it is usually after considerable and costly delay. In this Article, we argue that divided entitlements can facilitate trade by inducing claim holders to reveal more information than they would under an undivided entitlement regime. Owners of divided, or Solomonic, entitlements must bargain more forthrightly than owners of undivided entitlements, because the entitlement division obscures the titular boundary between buyer\u22 and seller. More precisely, endowing each bargainer with a share of the underlying entitlement creates the possibility of two different types of Coasean trade: A bargainer might buy the other party\u27s claim, or, alternatively, she might sell her own. During negotiation, each party is likely to be uncertain about whether she will ultimately emerge as a seller or a buyer. This strategic identity crisis can strongly mitigate each party\u27s incentive to misrepresent her respective valuation; each party must balance countervailing interests in shading up her valuation, as one would qua seller, and shading down her valuation, as one would qua buyer. This form of rational ambivalence, we argue, can lead the bargainers to represent their valuations more truthfully

Collusive Prosecution

In this Article, we argue that increasingly harsh collateral consequences have surfaced an underappreciated and undertheorized dynamic of criminal plea bargaining. Collateral consequences that mostly or entirely benefit third parties (such as other communities or other states) create an interest asymmetry that prosecutors and defendants can exploit in plea negotiations. In particular, if a prosecutor and a defendant can control the offense of conviction (often through what some term a “fictional plea”), they can work together to evade otherwise applicable collateral consequences, such as deportation or sex-offender registration and notification. Both parties arguably benefit: Prosecutors can leverage collateral consequences to extract greater punishments and defendants can avoid consequences they view as particularly burdensome. But these benefits can come at a cost to others who are not at the bargaining table. We contend that “collusive prosecution” of this sort can be pernicious, as may be the case when sex-offender registration and notification laws are in play, but it also has potential to be socially attractive. Accordingly, we sketch a normative framework for evaluating collusive prosecution as a matter of prosecutorial ethics. We draw on the emerging field of public fiduciary theory to characterize prosecutors’ ethical duties to varied—and often conflicting—beneficiaries. We suggest that programmatic uses of collusive prosecution may be fair and reasonable in a common immigration context, but collusive prosecution designed to relocate sex-offense registrants likely fail these conditions. Ultimately, we offer a suite of reforms that may be useful for policing collusive prosecution without banning the practice outright

Collusive Prosecution

In this Article, we argue that increasingly harsh collateral consequences have surfaced an underappreciated and undertheorized dynamic of criminal plea bargaining. Collateral consequences that mostly or entirely benefit third parties (such as other communities or other states) create an interest asymmetry that prosecutors and defendants can exploit in plea negotiations. In particular, if a prosecutor and a defendant can control the offense of conviction (often through what some term a “fictional plea”), they can work together to evade otherwise applicable collateral consequences, such as deportation or sex-offender registration and notification. Both parties arguably benefit: Prosecutors can leverage collateral consequences to extract greater punishments and defendants can avoid consequences they view as particularly burdensome. But these benefits can come at a cost to others who are not at the bargaining table. We contend that “collusive prosecution” of this sort can be pernicious, as may be the case when sex-offender registration and notification laws are in play, but it also has potential to be socially attractive. Accordingly, we sketch a normative framework for evaluating collusive prosecution as a matter of prosecutorial ethics. We draw on the emerging field of public fiduciary theory to characterize prosecutors’ ethical duties to varied—and often conflicting—beneficiaries. We suggest that programmatic uses of collusive prosecution may be fair and reasonable in a common immigration context, but collusive prosecution designed to relocate sex-offense registrants likely fail these conditions. Ultimately, we offer a suite of reforms that may be useful for policing collusive prosecution without banning the practice outright