A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics National Bureau of Economic Research (NBER) (Ed.) Periodical Part NBER Reporter Online, Volume 2008 NBER Reporter Online Provided in Cooperation with: National Bureau of Economic Research (NBER), Cambridge, Mass. Suggested Citation: National Bureau of Economic Research (NBER) (Ed.) (2008) : NBER Reporter Online, Volume 2008, NBER Reporter Online, National Bureau of Economic Research (NBER), Cambridge, MA This Version is available at: http://hdl.handle.net/10419/61991 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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In regard to the operation of the legal pro- cess, the Program examines topics such as labor markets for lawyers, litiga- tion dynamics, judicial and agency behavior, and the determinants of leg- islative action. In addition, the Program studies the effects and causes of legal rules across a range of legal subjects beyond property, criminal, con- tract, and tort law, including corporate law, employment law, health care law, social welfare law, family law, bankruptcy law, patent and copyright law, and antitrust law. The Program meets twice per year, once at a mid-year program meet- ing and again at the NBER’s Summer Institute. The Program’s recent spe- cial activities include a project in the area of corporate governance, under the direction of Research Associate Lucian Bebchuk; selected papers from that project are scheduled to appear in a forthcoming issue of the Review of Financial Studies. In this article, I first describe recent research in the foundational legal subjects and then turn to work on the operation of the legal process. I con- clude with an overview of work on the effects and causes of legal rules in corporate law, employment law, health care law, social welfare law, family law, bankruptcy law, patent and copyright law, and antitrust law. In 2007, we converted from issuing quar- * terly, seasonal issues to a system of numbered Jolls directs the NBER’s Law and Economics Program and is a profes- issues. This is the second issue of 2008 under sor at Yale Law School. In this article, the numbers in parentheses refer to the new numbering system: 2008 Number 2. NBER Working Papers. Steven Shavell, the previous director of the Law and Economics Program, provided extremely helpful feedback on this Program Report. NBER Reporter • 2008 Number 2 Property Law, Criminal Law, NBER Reporter Contract Law, and Tort Law A fundamental aspect of any legal system is the structure of property rights. Recent work by Oliver Hart (3540) is the latest in an impor- tant line of papers by Hart, Sanford Grossman, and John Moore that examine the effects of a The National Bureau of Economic Research is a private, nonprofit research organization founded in 920 and devoted to objective quantitative analy- particular conception of property rights empha- sis of the American economy. Its officers and board of directors are: sizing “residual control.” In this view, the owner of an asset retains those rights to the asset that President and Chief Executive Officer — James M. Poterba are not specifically assigned by any existing con- Controller — Kelly Horak tractual commitment. While previous papers in BOARD OF DIRECTORS the series have examined the effects of the resid- ual control rights conception of property rights Chairman — Elizabeth E. Bailey Vice Chairman — John S. Clarkeson in the face of parties’ non-contractible up-front Treasurer — Robert Mednick investments, the recent paper by Hart studies the effects of property rights of this form in a DIRECTORS AT LARGE model with uncertainty of values and costs of Peter Aldrich George C. Eads Laurence H. Meyer Elizabeth E. Bailey Jessica P. Einhorn Michael H. Moskow a good to be traded. Hart’s model suggests that Richard Berner Martin Feldstein Alicia H. Munnell ex-ante contracting over asset ownership can John Herron Biggs Jacob A. Frenkel Rudolph A. Oswald reduce later incentives to engage in hold-up. A John S. Clarkeson Judith M. Gueron Robert T. Parry system that did not provide for property rights Don R. Conlan Robert S. Hamada Richard N. Rosett in the Grossman-Hart-Moore sense (reserving Kathleen B. Cooper Karen N. Horn Marina v. N. Whitman Charles H. Dallara John Lipsky Martin B. Zimmerman residual rights to the state rather than to the property owner) would be inferior within this DIRECTORS BY UNIVERSITY APPOINTMENT framework. George Akerlof, California, Berkeley Marjorie B. McElroy, Duke Also central to the structure of property Jagdish W. Bhagwati, Columbia Joel Mokyr, Northwestern Glen G. Cain, Wisconsin Andrew Postlewaite, Pennsylvania rights is the question of when government may Ray C. Fair, Yale Uwe E. Reinhardt, Princeton obtain ownership of assets from unwilling pri- Franklin Fisher, MIT Nathan Rosenberg, Stanford vate parties. In a recent paper (3564), Steven Mark Grinblatt, California, Los Craig Swan, Minnesota Shavell models the desirability of allowing gov- Angeles David B. Yoffie, Harvard ernment takings of private land by its eminent Saul H. Hymans, Arnold Zellner, Michigan Chicago domain power when the government’s infor- DIRECTORS BY APPOINTMENT OF OTHER ORGANIZATIONS mation about owners’ valuations is imperfect. Jean Paul Chavas, American Agricultural Economics Association Shavell shows that eminent domain becomes Gail D. Fosler, The Conference Board appealing if the number of property owners is Martin Gruber, American Finance Association Timothy W. Guinnane, Economic History Association large, in order to overcome a problem of “hon- Arthur B. Kennickell, American Statistical Association est” holdout. This conclusion holds regardless Thea Lee, American Federation of Labor and of whether the land that the government seeks Congress of Industrial Organizations is a parcel at a fixed location or instead is located William W. Lewis, Committee for Economic Development anywhere in a region. Robert Mednick, American Institute of Certified Public Accountants Angelo Melino, Canadian Economics Association A legal system determines what, if any, con- Harvey Rosenblum, National Association for Business Economics duct should be subject to criminal sanctions John J. Siegfried, American Economic Association and establishes the shape of those sanctions. An extensive recent law and economics litera- The Reporter is issued for informational purposes and has not been reviewed by the Board of Directors of the NBER. It is not copyrighted ture studies the effects of various forms of crimi- and can be freely reproduced with appropriate attribution of source. Please nalization. John Donohue and Justin Wolfers provide the NBER’s Public Information Department with copies of any- (11982) examine the potential deterrent effects thing reproduced. of the ultimate criminal sanction — the death Requests for subscriptions, changes of address, and cancellations should penalty, which is reserved predominantly for be sent to Reporter, National Bureau of Economic Research, Inc., 050 homicides. While there is some variation in Massachusetts Avenue, Cambridge, MA 0238-5398. Please include the the use of capital punishment, both across time current mailing label. and across states with different legal regimes, 2 NBER Reporter • 2008 Number 2 Donohue and Wolfers conclude that this to deter. Civil liability creates obligations for understanding and improving diverse variation is small when compared with of one private party to another rather forms of regulation of risky products. the large swings in the homicide rate; than liability of an individual to the state, even when the use of the death penalty as in criminal law. Much recent work in The Operation of the increases, the absolute number of execu- tort law has been in the area of prod- Legal Process tions remains quite small. Thus, exist- ucts liability — the liability of firms