David D. Haddock

Research Notes: Measuring Parity Tying Into the Idealized Standard Deviation

We present a metric to calculate the idealized standard deviation (ISD) in the event that ties are possible and receive points in team-sport league standings. Our aim is to raise some issues regarding the customary application of that concept in leagues that do not employ a binomial system for determining rankings, to suggest that the reciprocal of the ISD may be a more intuitive construct if the intent is to represent parity, to provide scholars with a set of ISDs, and to suggest some interesting topics that arise from a quick perusal of the time series.

Similar Economic Histories, Different Industrial Structures: Transatlantic Contrasts in the Evolution of Professional Sports Leagues

Industries that have different structures in Europe than in America can teach useful lessons about industrial evolution. Despite similar initial histories, European professional sports leagues adopted team promotion and relegation, which facilitates much easier entry than is possible in North America, where leagues themselves create new franchises to sell to investors. By contrasting the histories of the English Football League and the National Baseball League, we show that their structures arose from differences in geographic compactness, the entertainment level of games, and territorial monopolies. As the evolution becomes more understandable, the persistence of the intercontinental difference becomes more problematic.

An Ordinary Economic Rationale for Extraordinary Legal Sanctions

Legal scholars have typically viewed the set of extraordinary legal sanctions (that is, remedies that systematically overor undercompensate plaintiffs) as logically independent and often inefficient. In this Article, the authors offer a single, generally applicable model that predicts and explains the role extraordinary sanctions play in an efficient legal system. Starting with punitive damages, the authors show that extraordinary sanctions are necessary in those situations in which the expected imposition of liability rules, which seek to make the plaintiff whole, would encourage a defendant wrongly to take a plaintiffs property rather that negotiate for it. The authors distinguish their model from two others, the court-error model and the illicit-benefits model. They then extend their model to account for many other controversial and seemingly unrelated extraordinary legal remedies: injunctions, stipulated damages, collateral source recoveries, wrongful death awards, and criminal sanctions.

Controlling Insider Trading in Europe and America: The Economics of the Politics

The purchase or sale of corporate stock by employees or other closely associated individuals, when done on the basis of information that is not publicly available, is called insider trading. Insider trading is illegal in the United States, and the Securities and Exchange Commission (SEC) vigorously enforces the laws with both civil and criminal penalties. By contrast, insider trading is legal in most European countries. A few other European countries have mild rules constraining insider trading, but those rules have not been enforced actively.

Irrelevant externality angst

Public goods are perplexing because insuperable transaction costs are encountered when optimization requires comprehensive negotiation among large populations of beneficiaries. Though scrutiny is certainly warranted, private internalization of public goods externalities is common. Even when many parties can freely utilize the good, if most experience a real but marginally irrelevant external effect, private interactions among the few who experience relevant impacts can suitably balance marginal costs and benefits across entire populations. It is impossible to ascertain the desirability or form of government intervention if empirical tasks are neglected on the basis of inconclusive theoretical conjectures. Journal of Economic Literature Classification: D23, D62, D78, H41, K32, P16, Q28

Research Notes: Measuring Parity

We present a metric to calculate the idealized standard deviation (ISD) in the event that ties are possible and receive points in team-sport league standings. Our aim is to raise some issues regarding the customary application of that concept in leagues that do not employ a binomial system for determining rankings, to suggest that the reciprocal of the ISD may be a more intuitive construct if the intent is to represent parity, to provide scholars with a set of ISDs, and to suggest some interesting topics that arise from a quick perusal of the time series.

Irrelevant Internalities, Irrelevant Externalities, and Irrelevant Anxieties

Due to the high transaction cost that would be necessary for large numbers of people to negotiate with each other, even those who are sanguine about private markets become reserved when externalities affect large populations. The distinction between private and societal interest is well understood for pecuniary externalities, but neglect of Buchanan and Stubblebines article Externality has left the same distinction widely unrecognized for non-pecuniary ones. If only a few parties on either side experience a relevant externality within Buchanan and Stubblebines relevant/irrelevant distinction, private interactions can appropriately internalize costs and benefits across the entire population. Regardless of the perceptiveness of legal and cultural institutions in placing entitlements, and regardless of the level of transaction cost among the universe of the affected, a surprising number of externalities will readily fix themselves. The desirability of corrective intervention is much too easily conceded.

The Economic Function of Futures Trading

To evaluate properly the function of the delivery process, and therefore how changes in delivery specification influence the larger economy, it is necessary to understand the economic role of futures markets. We discuss that role in this chapter, paying special attention to the factors that differentiate futures markets from other forward markets.

The Economic Effect of Potential Grain Futures Contract Redesign

The preceding chapter noted that an expansion of the deliverable set can reduce the profitability—and hence the likelihood—of a long manipulation. An increase in the number of deliverable locations would also increase available delivery capacity, which would reduce the likelihood of pricing anomalies due to the exhaustion of regular space or quality problems. Those are beneficial objectives, but such an expansion will have other effects as well. An increase in the number of deliverable grades or delivery locations will, for example, change the basis risks faced by the hedgers of various grades in various locations. As noted in Chapter 2, the costs and benefits of any such change depend upon the geographic distribution of hedgers.

The Role of the Futures Delivery Process

The delivery terms of futures contracts specify the types and grades of deliverable goods, and denote the places and times of delivery that must be met to avoid default on an outstanding contract. It is exceedingly difficult to ascertain proper specifications for a futures contract. But if the contractual terms are improperly specified, too few buyers or too few sellers of the contract will appear in the market at any given price, and the contract will fail.