Damages, Deterrence, and Antitrust—A Comment on Cooter

Melamed offers a comment on Robert D. Cooter\u27s article on punitive damages. Melamed relates the concept of antitrust to Cooter\u27s valuable insights

Cooter and Rappoport on the Normative

In a recent examination of the origins of ordinal utility theory in neoclassical economics, Robert D. Cooter and Peter Rappoport argue that the ordinalist revolution of the 1930s, after which most economists abandoned interpersonal utility comparisons as normative and unscientific, constituted neither unambiguous progress in economic science nor the abandonment of normative theorizing, as many economists and historians of economic thought have generally believed (Cooter and Rappoport, 1984). Rather, the widespread acceptance of ordinalism, with its focus on Pareto optimality, simply represented the emergence of a new neoclassical research agenda that, on the one hand, defined economics differently than had the material welfare theorists of the cardinal utility school and, on the other, adopted a positivist methodology in contrast to the less restrictive empiricism of the cardinalists

The Intrinsic Value of Obeying a Law: Economic Analysis of the Internal Viewpoint

Economic theory distinguishes sharply between what a person wants and what he can have. “Preferences” describe what a person wants, and “constraints” describe the limits of what he can have. The collision of preferences and constraints yields the choices that economists study. The meaning of both terms is broad and flexible. Preferences and constraints help to distinguish between the internal and external viewpoints that H. L. A. Hart made famous. The internal viewpoint concerns preferences to perform legal obligations. A person who prefers to obey a law is willing to give up something to perform his legal obligation. The preference is intrinsic, not an instrument for securing something else of value. Conversely, a person who is indifferent to a legal obligation takes a purely instrumental approach towards obedience—he obeys only when doing so secures something else of value. What explains the distribution of preferences among people to obey a law? I will sketch part of the answer that emerges from economic and psychological studies. Finding an answer is important because when laws are reasonably just and many citizens intrinsically prefer to obey them, government is easier, and life is better than when most citizens are indifferent towards obeying the law

Punitive Damages, Social Norms, and Economic Analysis

Cooter offers an economic analysis of punitive damages, keeping in mind the role of social norms. Liability for compensatory damages provides efficient incentives for self-monitoring

Anti-Sharing

Anti-Sharing may solve the sharing problem of teams: the team members promise a fixed payment to the Anti-Sharer. He collects the actual output and pays out its value to them. We prove that the internal Anti-Sharer is unproductive in equilibrium. -- Anti-Sharing kann das Teilungsproblem der Teamproduktion lösen: Die Teammitglieder versprechen dem Antisharer zunächst einen fixen Betrag. Der Anti-Sharer bekommt den tatsächlichen Teamoutput und zahlt dessen Wert an jedes Teammitglied aus (vermindert um die fixe Zahlung). Wir zeigen, daß der Anti-Sharer im Gleichgewicht unproduktiv ist.team production,sharing problem,bonding,theory of the firm

Anti-Sharing.

The paper proposes a mechanism that may implement first-best effort in simultaneous teams. Within the framework of this mechanism, each team members is obliged to make a fixed, non-contingent payment, and chooses his individual effort. After the output is produced, each team member receives a gross payment that equals the actual team output. We demonstrate that a Nash equilibrium exists in which each team member chooses first-best effort. We call this mechanism ?Anti-Sharing? since it solves the sharing problem that causes the inefficiency in teams. The Anti-Sharing mechanism requires one player to specialize on the role of an ?Anti-Sharer?. With an external Anti-Sharer who works on a non-profit base, the mechanism can implement first-best effort. If, however, the Anti-Sharer comes from within the team and desires a positive payoff, then the mechanism may implement not more than second-best effort. The latter version of the model could be interpreted as a new theory of firms and partnerships in the sense of the theory of Alchian and Demsetz (1972). --Efficient Effort in Teams,Second-Best Solution,Partnerships

Clearings and Thickets

Intellectual property law, which includes patents and copyright law, establishes the ownership of innovations by people. It conveys a bundle of rights to creators as determined by rules. Applied to intellectual property law, the normative question of growth economics is, “Which ownership rules maximize innovation?” In order to increase the pace of innovation, ownership rules should increase venture profits. So the question of this essay is, “Which ownership rules maximize venture profits?".Institutions; property rights; intellectual property rights; law and economics

Anti-Sharing.

Anti-Sharing may solve the sharing problem of teams: the team members promise a fixed payment to the Anti-Sharer. He collects the actual output and pays out its value to them. We prove that the internal Anti- Sharer is unproductive in equilibrium.