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Abstract:
The operating agreements of many business ventures include clauses to facilitate the exit of joint owners. In so-called Texas Shootouts, one owner names a single buy-sell price and the other owner is compelled to either buy or sell shares at that named price. Despite their prevalence in real-world contracts, Texas Shootouts are rarely triggered. In our theoretical framework, sole ownership is more efficient than joint ownership. Negotiations are frustrated, however, by the presence of asymmetric information. In equilibrium, owners eschew buy-sell offers in favor of simple offers to buy or to sell shares and bargaining failures arise. Experimental data support these findings.

Exit Mechanisms for Joint Ownership Ventures, Texas Shootout Clauses, Buy-Sell Mechanisms, Shotgun Provisions, Russian Roulette Agreements, Put-Call Options, Cake-Cutting Rule, Bargaining with Common Values, Experiments, Ultimatum Exchange Environments with Endogenous Offer Types

Abstract:
Many partnership contracts (and other joint-venture agreements) include so-called "Texas Shootout Clauses" to govern future breakups. In a Texas Shootout, one partner names a single buy-sell price and the other partner has the option to buy or sell at that price. While the prior literature has considered the allocative efficiency of the Texas Shootout, this paper focuses on the incentives of private parties to make these offers to begin with. We consider a model where sole ownership is more efficient than joint ownership. Although both partners are equally capable, one has private information about the common value of the asset. When given the choice, they avoid making buy-sell offers because these offers give away bargaining surplus (the partners are "gun shy"). Instead, they often (but not always) prefer to make simple offers to buy or simple offers to sell and bargaining failures arise. Texas Shootout contracts that assign trigger rights - where one party can force the other to name a price - increase efficiency and are jointly desirable.

Partnerships, breakup, buy-sell provisions, Texas shootout, common values, bargaining failure

Abstract:
This work presents a theory of residential segregation through enforcement of racial restrictive covenants and social conventions. The empirical analysis of the article indicates that covenants had a significant impact on housing prices, an impact that continued to resonate decades after state enforcement of these covenants was ruled unconstitutional. As such, it is argued that formal and informal (or unofficial) uses of racial restrictive covenants played a key role in establishing and perpetuating long-standing racial residential segregation patterns in the North.

Abstract:
Arguments for and against property rules (roughly equitable remedies) and liability rules (legal remedies) have been largely based on efficiency considerations. Courts can clearly determine efficient remedies when they are sufficiently informed about the valuations of parties. However, courts are rarely so well informed and thus they guess (often incorrectly) which remedy will lead to an efficient outcome. This research presents conditions where uninformed courts can reach efficient outcomes using simple direct mechanisms, mechanisms that are essentially hybrids of equitable and legal remedies. The principal result here is that a court does not have to guess when it can effectively harness the private information possessed by other parties. This result holds even though the court does not actually acquire the private information, though it does require that one of the litigating parties observe some of the other party's information.

Abstract:
We compare the process to obtain air pollution emission permits for automobile assembly plants in the U.S. and Germany. The project consists of four case studies in which comparisons are made with respect to the costs of obtaining air pollution permits for assembly plant "paint shops"--the part of the factory where new cars and trucks are painted. The plants are owned by the same company, use nearly identical paint application technologies and paints, and use virtually the same air pollution control technologies. Moreover, both countries are federalist in structure, with the national government setting general standards, and the states issuing and enforcing individual permits. These similarities allow us to compare the permitting processes in U.S. and Germany, and to isolate the salient political and legal differences and economic consequences.

In both the United States and Germany, state air pollution agencies implement federal standards that effectively require the assembly plants to install similar pollution abatement technologies to control emissions resulting from increases in production or changes in paint composition. Nevertheless, the two countries' regulatory processes are rather different. Air pollution control laws, regulations, and plant-level permits in the U.S. are somewhat more stringent, detailed, and prescriptive than in Germany. Moreover, U.S. law provides substantially greater opportunity for public participation in agency permitting decisions, and at one U.S. plant, public participation significantly affected the regulatory outcome. For these and other reasons, the permitting processes at the U.S. plants were much slower and more conflictual than at the German plants, resulting in much longer delays in making production changes and installing new pollution controls.

Abstract:
The operating agreements of many business ventures include clauses to facilitate the exit of joint owners. In so-called Texas Shootouts, one owner names a single buy-sell price and the other owner is compelled to either buy or sell shares at that named price. Despite their prevalence in real-world contracts, Texas Shootouts are rarely triggered. In our theoretical framework, sole ownership is more efficient than joint ownership. Negotiations are frustrated, however, by the presence of asymmetric information. In equilibrium, owners eschew buy-sell offers in favor of simple offers to buy or to sell shares and bargaining failures arise. Experimental data support these findings.

Exit Mechanisms for Joint Ownership Ventures, Texas Shootout Clauses, Buy-Sell Mechanisms, Shotgun Provisions, Russian Roulette Agreements, Put-Call Options, Cake-Cutting Rule, Bargaining with Common Values, Experiments, Ultimatum Exchange Environments with Endogenous Offer Types

Abstract:
A number of recent studies have explored the consequences of interracial peer effects on the academic and social performance of minority students. This article contributes to that discussion, focusing, however, on perceptions rather than behaviors. The analysis suggests that exposure to white peers is associated with declining perceptions of racial justice among black and Latino high school students. While cautioning against causal interpretations of this finding, the article suggests that the integrationist aims of Brown v. Board of Education will not be satisfied without more thoughtful and vigorous desegregation efforts.

Abstract:
Legal and economic scholars have predicted that increases in liability encourage firms to contract out risky activities in order to take advantage of so-called judgment-proof strategies. These strategies allow entities to limit their liability through through contractual arrangements with nearly insolvent (i.e., judgment-proof) firms. However, the use of judgment-proof firms triggers two countervailing effects: it provides opportunities to externalize liability; but, the insolvency of these firms introduces distortion in care levels that can generate more liability costs. These costs may outweigh the benefits of externalizing liability, making contracting out suboptimal. A simple model of organization (make-or-buy) decision-making with judgment-proof firms is developed and applied to the oil industry. The empirical research suggests that either increases in liability or the possibility of vicarious liability (or both) undermined contracting out in the wake of the Exxon Valdez oil spill.

liability, regulation