Food safety, reputation and trade

I develop a simple dynamic model of reputation-based transactions between a buyer in one country and a supplier in another. I use the model to study the impact of a more stringent regulation on the buyer optimal purchase volume within an existing buyer-seller partnership. A more stringent standard affects the volume of trade in two intuitive ways: directly, a stricter standard affects the supply of quality goods and indirectly through reputation. I refer to the former effect as the regulation effect, and to the latter as the reputation effect. I show that, whereas most of the empirical literature has so far assumed that more stringent standards would be likely to reduce trade, the net effect is in fact non-monotone, even without taking into account endogenous technological upgrading in the supplier country. It varies with the belief the buyer holds about his seller at the time the change in regulation takes place. For both very low and very high seller's reputation, the reputation effect is negligible vis-à-vis the regulation effect. For intermediate levels of the supplier's reputation, reputation has the power to significantly mitigate the direct negative effect of a more stringent sanitary standard on trade. This result has significant implications for developing countries, for which access to developed countries markets is by and large, said to be disproportionately constrained by stricter standards.Product quality ; food safety ; reputation ; agricultural trade

Reputation Systems Bias in the Platform Workplace

Online reputation systems enable the providers and consumers of a product or service to rate one another and allow others to rely upon those reputation scores in deciding whether to engage with a particular provider or consumer. Reputation systems are an intrinsic feature of the platform workplace, in which a platform operator, such as Uber or TaskRabbit, intermediates between the provider of a service and the consumer of that service. Operators typically rely upon consumer ratings of providers in rewarding and penalizing providers. Thus, these reputation systems allow an operator to achieve enormous scale while maintaining quality control and user trust without employing supervisors to manage the vast number of providers who engage consumers on the operator’s platform. At the same time, an increasing number of commentators have expressed concerns that the invidious biases of raters impact these reputation systems. This Article considers how best to mitigate reputation systems bias in the platform workplace. After reviewing and rejecting both a hands-off approach and the anti-exceptionalism approach to regulation of the platform economy, this Article argues in favor of applying what the author labels a “structural–purposive” analysis to regulation of reputation systems discrimination in the platform workplace. A structural-purposive analysis seeks to ensure that regulation is informed by the goals and structure of the existing workplace regulation scheme but also is consistent with the inherent characteristics of the platform economy. Thus, this approach facilitates the screening out of proposed regulation that would be inimical to the inherent characteristics of the platform economy and aids in the framing of regulatory proposals that would leverage those characteristics. This Article then demonstrates the merits of a structural–purposive approach in the context of a regulatory framework addressing reputation systems discrimination in the platform workplace. Applying this approach, the Article derives several principles that should guide regulatory efforts to ameliorate the prevalence and effects of reputation systems bias in the platform workplace and outlines a proposed regulatory framework grounded in those principles

Reputation Systems Bias in the Platform Workplace

Online reputation systems enable the providers and consumers of a product or service to rate one another and allow others to rely upon those reputation scores in deciding whether to engage with a particular provider or consumer. Reputation systems are an intrinsic feature of the platform workplace, in which a platform operator, such as Uber or TaskRabbit, intermediates between the provider of a service and the consumer of that service. Operators typically rely upon consumer ratings of providers in rewarding and penalizing providers. Thus, these reputation systems allow an operator to achieve enormous scale while maintaining quality control and user trust without employing supervisors to manage the vast number of providers who engage consumers on the operator’s platform. At the same time, an increasing number of commentators have expressed concerns that the invidious biases of raters impact these reputation systems. This Article considers how best to mitigate reputation systems bias in the platform workplace. After reviewing and rejecting both a hands-off approach and the anti-exceptionalism approach to regulation of the platform economy, this Article argues in favor of applying what the author labels a “structural–purposive” analysis to regulation of reputation systems discrimination in the platform workplace. A structural-purposive analysis seeks to ensure that regulation is informed by the goals and structure of the existing workplace regulation scheme but also is consistent with the inherent characteristics of the platform economy. Thus, this approach facilitates the screening out of proposed regulation that would be inimical to the inherent characteristics of the platform economy and aids in the framing of regulatory proposals that would leverage those characteristics. This Article then demonstrates the merits of a structural–purposive approach in the context of a regulatory framework addressing reputation systems discrimination in the platform workplace. Applying this approach, the Article derives several principles that should guide regulatory efforts to ameliorate the prevalence and effects of reputation systems bias in the platform workplace and outlines a proposed regulatory framework grounded in those principles

The Irrational Auditor and Irrational Liability

This Article argues that less liability for auditors in certain areas might encourage more accurate and useful financial statements, or at least equally accurate statements at a lower cost. Audit quality is promoted by three incentives: reputation, regulation, and litigation. When we take reputation and regulation into account, exposing auditors to potentially massive liability may undermine the effectiveness of reputation and regulation, thereby diminishing integrity of audited financial statements. The relation of litigation to the other incentives that promote audit quality has become more important in light of the sea change that occurred in the regulation of the auditing profession with the adoption of the Sarbanes-Oxley Act. Given these fundamental changes in the regulatory backdrop, I argue that the marginal benefit of litigation has been substantially diminished and in many cases that it is likely to be ineffective in promoting greater audit quality. I propose a knowledge standard for auditor liability in securities fraud cases

Securities and Financial Regulation in the Second Circuit

The Second Circuit has long been the country’s preeminent court in the field of securities and financial regulation. The reputation of the Second Circuit in the realm of securities has been so great that other courts, including the Supreme Court, often mention by name the particular judges that decided a given Second Circuit precedent to justify their reliance on that decision. Many courts have long looked to its jurisprudence for guidance in deciding novel or complex securities law issues. This article tracks the Second Circuit’s significant role in developing civil enforcement mechanisms for federal securities laws and making criminal prosecution for corporate malfeasance a real weapon

Securities and Financial Regulation in the Second Circuit

The Second Circuit has long been the country’s preeminent court in the field of securities and financial regulation. The reputation of the Second Circuit in the realm of securities has been so great that other courts, including the Supreme Court, often mention by name the particular judges that decided a given Second Circuit precedent to justify their reliance on that decision. Many courts have long looked to its jurisprudence for guidance in deciding novel or complex securities law issues. This article tracks the Second Circuit’s significant role in developing civil enforcement mechanisms for federal securities laws and making criminal prosecution for corporate malfeasance a real weapon