MICHAEL W. TOFFEL, Harvard Business School (HBS) - Technology & Operations Management Unit
Email: mtoffel@hbs.edu
JODI L. SHORT, Georgetown University Law Center
Email: jls272@law.georgetown.edu

Administrative agencies are increasingly establishing voluntary self-reporting programs both as an investigative tool and to encourage regulated firms to police themselves. Effective self-policing is critical to contemporary regulatory designs that rely heavily on regulated entities to monitor and assure their own regulatory compliance. We investigate whether self-reporting, or the voluntary disclosure of legal violations, can reliably signal effective self-policing efforts that might warrant a reduction in regulatory scrutiny. We find voluntary disclosure to be associated with improvements in regulatory compliance and environmental performance, indicating that self-reporting is associated with effective self-policing. In addition, we find evidence that regulators subsequently reduced scrutiny of voluntary disclosers, which suggests that self-reporting can help regulators economize government enforcement resources and develop cooperative relationships with firms that are committed to self-policing.

RICHARD K. GORDON, Case Western Reserve University School of Law
Email: richard.gordon@case.edu

Current trends in international legal scholarship have shifted from a paradigm of state actors working within recognized sources of international law to one that includes networks of domestic regulators that develop and implement best practices or standards on a global basis. The new paradigm can be seen in operation in the efforts by onshore jurisdictions (most of which are financial centers themselves) to restrict the activities of offshore financial centers. Onshore jurisdictions enlisted these regulatory networks, as well as key international organizations, such as the Organisation for Economic Co-operation and Development and the International Monetary Fund, to advance new standards for income taxation, prudential regulation, and money laundering in offshore centers. By 2005, offshore centers’ compliance with financial, regulatory, and money laundering standards was largely complete, while there was less success with income tax standards. The current financial crisis, however, has spurred renewed efforts, particularly with respect to the latter. An analysis of this experience suggests that the new paradigm should view regulatory networks in the context of a complex system of states and international organizations that possess the qualities of such regulatory networks. A system of global governance that includes both regulatory networks and these international organizations advances fairness and objectivity and, in particular, may protect weak states from the coercive power of the stronger.

VIKTORIA BAKLANOVA, University of Westminster - School of Law
Email: baklanova@usa.net

In July 2008 the United States Securities and Exchange Commission (SEC) published three releases relating to the use in its rules and forms of credit ratings issued by Nationally Recognized Statistical Rating Organizations (NRSRO). The proposed amendments were designed to address concerns that the references to such ratings in SEC documents may have contributed to an undue reliance on NRSRO ratings by market participants. Publishing the proposals, the SEC sought market feedback regarding the effect the removal of such references may produce on investors, issuers and regulated entities.

This article examines the use of ratings by various market constituents, including the regulators themselves and analyzes the details of the SEC proposals. This is done against a backdrop of the origin and history of the credit rating business. Further, the article reviews the feedback provided in response to the SEC proposals and identifies the areas of conflicting views. With credit ratings serving the purpose of regulatory compliance, the use of rating by various market participants deviated from what ratings were originally designed for. One of the major findings of this research is that the market participants are not ready to accept responsibilities for an independent credit risk assessment and, for the most part, opposed the SEC proposals. We infer that investors, fiduciaries and regulated entities are looking to regulators to offer a common measure of risk, accurate and free of conflict of interests.

CHRIS JAY HOOFNAGLE, University of California, Berkeley - School of Law, Berkeley Center for Law & Technology
Email: choofnagle@law.berkeley.edu

Google has come to symbolize the tensions between the benefits of innovative, information-dependent new services and the desire of individuals to control the contexts in which personal information is used. This essay reviews hundreds of newspaper articles where Google speaks about privacy in an effort to characterize the company’s handling of these tensions, to provide context explaining the meaning of the company’s privacy rhetoric, and to advance the privacy dialogue among policy makers, journalists, and consumers.

The dialogue surrounding these tensions is unfocused because many policy makers, journalists, and consumers concentrate the debate on whether the company violates its “you can make money without doing evil� corporate motto. This first observation flows to a second: Google’s conception of “evil� is tied to the revolution the company brought about in advertising practices, practices that many think are mainstream now. Google is thus missing opportunities to remind the public that its advertising policies have several strong pro-consumer aspects, many of which are lost when “evil talk� is employed. Third, vague privacy rhetoric signals a weak commitment to technical or legal safeguards. Journalists are well suited to remedy this by exercising greater inquiry and skepticism in contexts where Google’s privacy representations are non-substantive. Finally, Google heavily relies upon appeals to competition, arguing that those who adopt the company’s services engage in meaningful tradeoffs. Quietly shifting practices, lock in, and lengthy data retention periods, however, mean that these tradeoffs must be continually reevaluated. Google should give voice to its competition and tradeoff rhetoric by creating data portability and deletion rights for consumers.

STEFANO BALBI, University of Venice - Department of Economics
Email: stefano.balbi@unive.it

Notwithstanding the infinite debate on price versus quantity instruments in the design of a global climate policy, Cap-and-Trade systems are dominating the policymakers' choices worldwide. This is a prime issue for the traditional equilibrium economics, which has argued that the structure of the costs and damages in climate change gives a strong presumption to price-type approaches, building on the seminal work of Weitzman (1974). Therefore, price regulation of Cap-and-Trade systems has been widely proposed as an efficient way to tackle cost uncertainty of abatement, which represents one of the main theoretical problems of using emissions trading. A further issue is the possible carbon price volatility. This paper reviews the theory behind different types of price cap systems and tries to highlight some insights for the existing and upcoming real world climate policies. The outcome is that a price cap alone, without a price floor, would prevent any Cap-and-Trade policy to reach the abatement target. Banking and borrowing are already available flexibility mechanisms through which combating the carbon price volatility. However, in dealing with price spikes, it might be useful to consider the possibility of linking a reserve allowance system with the access to certain types of offset credits.

ROBERT H. LANDE, University of Baltimore - School of Law
Email: rothland@erols.com
JOSHUA P. DAVIS, University of San Francisco - School of Law
Email: davisj@usfca.edu

This article shows that private enforcement of the U. S. antitrust laws-which usually is derided as essentially worthless-serves as a more important deterrent of anticompetitive behavior than the most esteemed antitrust program in the world, criminal enforcement by the Antitrust Division of the U.S. Department of Justice.

The debate over the value of private antitrust enforcement long has been heavy with self-serving assertions by powerful economic interests, but light on factual evidence. To help fill this void we have been conducting research for several years on a variety of empirical topics. This article develops and then explores the implications of a startling finding. Even those who do not deride private enforcement usually believe its only function is to compensate victims of antitrust violations by modest amounts. Significant deterrence is commonly thought to be the effect only of government enforcement, especially criminal enforcement. Our article's conclusion that the amounts of payouts in private cases are actually staggeringly high-so high that they deter anticompetitive conduct more effectively than the criminal fines and prison sentences resulting from Department of Justice cases-is thus the opposite of the consensus within the antitrust community. Indeed, we hope this article causes many in both the United Sates and in Europe to reevaluate their views as to the overall efficacy of private antitrust enforcement.

JEFF SCHWARTZ, California Western School of Law
Email: jschwartz@cwsl.edu

In this Article, I argue that we lack a satisfactory theory about how disclosure, the centerpiece of securities regulation, serves investor interests. To close this gap, I contend that the regulations should be viewed as part of a broader societal framework that protects individuals from stock-market risk. I flesh out this notion in three ways. First, I set out to justify protection from market risk as a valid societal goal. To do so, I appeal to Rawlsian and utilitarian notions of justice. These moral theories contain the principle that a just society helps individuals manage risk. I argue that this principle applies to the risk in the stock market - its volatility. Second, I describe how society currently protects investors from market swings. I contend that securities regulation provides one form of protection. Beyond that, I argue, we rely on a largely market-based paradigm, where individuals are expected to manage volatility on their own by diversifying their portfolios and investing for the long term. In the final part of the Article, I look at the normative implications of this analysis. I ask whether today’s risk-management framework is effective, efficient, and fair. I argue that it comes up short in these regards and consider avenues of reform. I posit that reforms to securities regulations offer little upside, but that we can help investors through the creation of institutions exogenous to the market that facilitate better portfolio diversification and the equitable sharing of market risk across society and generations.

ELIZABETH M. BAILEY, National Economic Research Associates Inc. (NERA)
Email: elizabeth.bailey@nera.com
GREGORY K. LEONARD, National Economic Research Associates Inc. (NERA)
Email: gregory.leonard@nera.com
G. STEVEN OLLEY, affiliation not provided to SSRN
Email: olleys@georgetown.edu
LAWRENCE WU, National Economic Research Associates (NERA)
Email: lawrence.wu@nera.com

The US Department of Justice and Federal Trade Commission receive notification regarding thousands of mergers per year, and must identify, from the entire set of mergers, those that require further investigation. Merger screens are critical to efficient and effective merger enforcement policy, but traditional market share-based screens are often ineffective. An alternative approach is based on the concept of "upward pricing pressure," or UPP, which is a measure of the strength of the merged firm's incentive to increase price above pre-merger levels. In this article, we examine whether UPP would provide a useful screening device that the Agencies could use during the initial waiting period to decide whether a Second Request should be issued. We begin our analysis by providing an alternative derivation of UPP and show that UPP flows from the familiar logic of unilateral effects. We then discuss why reliable estimates of the three key inputs to UPP -- diversion ratios, gross profit margins, and efficiencies -- are unlikely to be available during the initial waiting period, thereby limiting the extent to which UPP can be a useful screen in the first thirty days.