Investor Protection and Interest Group Politics

We model how lobbying by interest groups affects the level of investor protection. In our model, insiders in existing public companies, institutional investors (financial intermediaries), and entrepreneurs who plan to take companies public in the future, compete for influence over the politicians setting the level of investor protection. We identify conditions under which this lobbying game has an inefficiently low equilibrium level of investor protection. Factors that operate to reduce investor protection below its efficient level include the ability of corporate insiders to use the corporate assets they control to influence politicians, as well as the inability of institutional investors to capture the full value that efficient investor protection would produce for outside investors. The interest that entrepreneurs (and existing public firms) have in raising equity capital in the future reduces but does not eliminate the distortions arising from insiders' interest in extracting rents from the capital public firms already have. Our analysis generates testable predictions, and can explain existing empirical evidence, regarding the way in which investor protection varies over time and around the world.

Limits of Elemental Contrast by Low Energy Electron Point Source Holography

Motivated by the need for less destructive imaging of nanostructures, we pursue point-source in-line holography (also known as point projection microscopy, or PPM) with very low energy electrons (-100 eV). This technique exploits the recent creation of ultrasharp and robust nanotips, which can field emit electrons from a single atom at their apex, thus creating a path to an extremely coherent source of electrons for holography. Our method has the potential to achieve atom resolved images of nanostructures including biological molecules. We demonstrate a further advantage of PPM emerging from the fact that the very low energy electrons employed experience a large elastic scattering cross section relative to many-keV electrons. Moreover, the variation of scattering factors as a function of atom type allows for enhanced elemental contrast. Low energy electrons arguably offer the further advantage of causing minimum damage to most materials. Model results for small molecules and adatoms on graphene substrates, where very small damage is expected, indicate that a phase contrast is obtainable between elements with significantly different Z-numbers. For example, for typical setup parameters, atoms such as C and P are discernible, while C and N are not.Comment: 15 pages, 5 figure

Consent and Exchange

In some cases, the law permits a party that unilaterally provides a benefit to another party to recover the estimated value of this benefit. Despite calls for expanding the set of cases to which such a restitution rule applies, the law commonly applies a mutual consent rule under which a party providing another with a benefit cannot obtain any recovery without securing the advance consent of the beneficiary to the transaction. We provide an efficiency rationale for the undesirability of broad use of the restitution rule by identifying significant adverse ex ante effects of the rule that are avoided by the consent requirement. Even assuming that courts' errors in estimating buyer benefits would be unbiased, a restitution rule would strengthen sellers' hand by providing them with a put option that they may but do not have to use. As a result, the restitution rule would encourage inefficient market entry by low-quality sellers that would not contribute to any efficient transactions but would be able to extract payments from buyers seeking to avoid an exchange with them. Furthermore, the restitution rule would discourage efficient market entry by some or all potential buyers of a good or service. Beyond the restitution rule, we extend our analysis to show that similar adverse effects can also arise from other "pricing" rules that provide buyers or sellers with call or put options to force an exchange at a judicially-determined price.