Vincy Fon

The economics of lawmaking

Acknowledgements Introduction PART I ? Lawmaking through Legislation: Codified Law Chapter 1. Lawmaking through Legislation: An Introduction Chapter 2. Optimal Specificity of Laws: Rules versus Standards Chapter 3. Optimal Timing of Legal Intervention: Lawmaking under Uncertainty Chapter 4. Optimal Territorial Scope of Laws: Subsidiarity and Legal Harmonization PART II ? Lawmaking through Adjudication: Judge-Made Law Chapter 5. Lawmaking through Adjudication: An Introduction Chapter 6. Litigation and the Evolution of Legal Remedies Chapter 7. Judicial Path-Dependence and Legal Change Chapter 8. Theories of Legal Precedent: Stare Decisis and Jurisprudence Constante PART III ? Lawmaking through Practice: Customary Law Chapter 9. Lawmaking through Practice: An Introduction Chapter 10. Fostering the Emergence of Customary Law Chapter 11. Customary Law and Articulation Theories Chapter 12. Stability and Change in Customary Law PART IV ? Lawmaking through Agreement: Treaty Law Chapter 13. Lawmaking through Agreement: An Introduction Chapter 14. Formation and Accession to Treaties Chapter 15. Ratification and Reservations: The Effects of Reciprocity Chapter 16. The Hidden Bias of Treaty Law Conclusions

State Liability for Wrongful Conviction: Incentive Effects on Crime Levels

Wrongful convictions may increase the level of crime over the ideal case of their absence. The problem of wrongful conviction is most serious in areas where crime is endemic and for certain groups of citizens who are stereotyped. State liability mitigates this problem; compensating the wrongfully convicted induces some individuals not to commit crimes, thereby leading to a lower crime level. However, state liability may distort the behavior of judges if the welfare of judges is inversely related to compensation for wrongful conviction. We address policy implications that minimize such distortions.

Stability and Change in International Customary Law

While customary law is capable of creating universally binding rules, the rules that govern its formation allow states to gain an exemption from emerging norms of customary law by remaining persistent objectors. This form of objection requires the objecting state to take express action to oppose an emerging practice by making its objections widely known before the practice solidifies into a binding rule of custom. Likewise, after the custom is formed states have an opportunity to express an objection or depart from it. In this latter case, the departing state does not obtain an exemption from the binding custom unless other states acquiesce to its departure. We model the effects of persistent objector and subsequent objector doctrines in the formation and change of customary law when heterogeneous states are involved.

Free-Riding versus Paying under Uncertainty

An uncertainty model with a choice of free-riding is presented. The model does not provide theoretical justification to support a conclusion that rational individuals will always choose to free-ride. In the case of a contributor, a smaller likelihood of the undesirable event and a less effective benefit production function both lead to a smaller contribution by an individual. However, an individual who becomes more risk-averse, depending on the probability of the undesirable event and the effectiveness of the benefit production function, might choose to make either a larger or smaller contribution.

Optimal Remedies for Bilateral Contracts

In several contract situations, parties exchange promises of future performance, creating reciprocal obligations. In this paper, we extend the standard models of contract remedies to consider the incentives created by contracts where both parties provide only executory consideration and where the parties’ obligations are yet to be performed. We show that the legal remedies that govern these contracts provide valuable enforcement mechanisms that are not available when parties enter into a contract in which they exchange a promise for an actual performance. We show that when the values of the parties’ performances are interdependent, contracts with executory consideration create effort incentives that are superior to the incentives of contracts with executed consideration. In contracts with independent values, contracts with executory consideration also offer a valuable instrument to correct enforcement imperfections. Such imperfections include imperfect compensation and litigation costs.

Treaty Formation and Reservations

This chapter discusses factors conducive to international agreements such as treaties, compares alternative types of international agreements and indicates why treaties may represent the preferred instrument. It describes the different modalities by which international treaties can be formed under the Vienna Convention on the Law of Treaties, and considers the impact of an international reservations regime on different states. Section 2 discusses factors that provide the foundation for international cooperative behavior, such as coordination and externalities. Section 3 investigates differences between treaties and customary international law, and contemplates the strength of treaties over customary international law. Section 4 undertakes a similar comparison of treaties and non-legal international agreements. Section 5 discusses modalities of formation of treaties, analyzes a state’s incentive problem in deciding whether to be a founding negotiating state or an acceding state, and underscores the relationship between the acceding protocol of the treaty and the treaty content. Turning next to the issue of reservations to a treaty, Section 6 analyzes an applicant state’s ability to express reservations while becoming a party of the treaty, and the effects of reservations and of objections to reservations, under the framework of the Vienna Convention on the Law of Treaties. It also considers how successfully the Vienna Convention fulfills competing needs for reservations. Section 7 compares benefits and costs of reserving and non-reserving states to help understand whether the Vienna Convention is neutral toward both types of states. Section 8 summarizes the previous sections.

Entrepreneurial Activities: A Microeconomic Analysis

People have different preferences for performing entrepreneurial activities. These differences can be influenced by actions of the state. Special attention is paid to examine the individual behavior in choosing employed work or entrepreneurial activities. Individual supply of entrepreneurial work is aggregated. Equilibrium entrepreneurial activity is given by the balance of aggregate supply and aggregate demand. States can promote more aggregate supply of entrepreneurial activity through engaging institutional devices, or they can make institutional changes to increase aggregate demand for entrepreneurial activity through domestic and global markets. The effects of appropriate institutional settings on entrepreneurial activities over time are highlighted.

Electoral College Alternatives and U.S. Presidential Elections

The President of the United States is chosen directly by the Electoral College, although indirectly the citizens select the President. Different states currently employ two systems of electoral-vote allocation under the Electoral College framework: the widely adopted winner-take-all system and the system adopted by Maine and Nebraska. The properties of these two systems are analyzed against the backdrop of majority rule and the notion that every vote counts. Two variants of the existing systems are then introduced, using intuitive proportional rules to allocate electoral votes under the Electoral College. These proposed systems are compared to the existing winner-take-all system and to the Maine-Nebraska system. Further, the outcomes of three historical Presidential Elections are considered under different electoral allocation systems. This study highlights basic properties of the Electoral College and possible variants of the current system so that better judgments can be made in future debates.

The Hidden Bias of the Vienna Convention on the Law of Treaties

The process of treaty formation and reservations to multilateral treaties, enshrined in Articles 19-21 of the Vienna Convention on the Law of Treaties, establishes the principle that reservations are reciprocal. The treaty will be in force between a reserving state and a non-reserving state as amended by the reservation. Therefore if a state wants to exempt itself from a treaty obligation, it must let other nations escape that same burden. This paper presents an economic model of treaty formation and considers the effect of reciprocity on treaty ratifications among heterogeneous states. The economic model further reveals a hidden bias of the Vienna Convention. In spite of the apparent neutrality of the reciprocity principle governing the effect of reservations, the Vienna Convention creates a systematic disadvantage for states that have a comparative advantage in cooperation.

Integral Proportional System: Aligning Electoral Votes More Closely with State Popular Votes

US Presidential elections make use of a majority vote in the Electoral College. The Constitution did not specify how states determine electoral votes; 48 states let the statewide popular plurality vote winner garner all electoral votes for that state. Our proposed Integral Proportional System splits the state’s electors, keeping the spirit of the Constitution and maintaining the structure of the Electoral College. This system better reflects voter preferences in a state by assigning a number of electoral votes similar in proportion to the statewide popular vote. Important properties of the system are analyzed; features and strengths are clarified using recent election data.