1. The Sin of the Hidden Tradeoff

2. The Sin of No Proof

3. The Sin of Vagueness

4. The Sin of Irrelevance

5. The Sin of Lessor of Two Evils

6. The Sin of Fibbing

Republicans - favor less regulation, believe in an unfettered free market

Democrats - favor greater regulation to protect consumers

Prevent monopolies or failtures

ex. railroads, phones, banks (present)

Social Regulations

(Definition)

- focus on a concern for public welfare, through production/working conditions, and by-products such as pollution

- goal is a better quality of life for all

-implies government knows best at times...

Social Regulations

(Types)

1. Socially desirable Goods and Services

2. Protecting Individuals Rights and Privacy

3. Consumer Safety

4. Regulation to Benefit Special Groups

5. Externalities

1. Creation of new markets

2. Advantage of size

3. Leveling the playing field

4. Control of Entry

5. Subsidies

- a duty, or tax levied on goods when they arrive in a country that did not produce the good

-used to:

1. protect local industries and jobs from less costly foreign competition

2. anti-dumping measures

3. Compensation for local governments subdizing the production costs, this is known as 'contervailing tariffs'

Economic costs of Regulation

(Direct costs)

1. Additional government employees = higher taxes

2. Inspections costs businesses time and $

3. Compliance

Economic costs of Regulation

(Indirect costs)

1. Time to fill out paperwork

2. Increased stress on employees to comply

3. Opportunity costs of business ($ spent on compliance cannot be spent for R&D)

1. Abolishing regulations in specific industries

2. Imposing cost benefit analysis

3. Reducing the $ available to enforcement agencies

4. Putting industry insiders in charge of regulating industry

- used for major rules and predicted annual impact of more than $100 million

-Contain three things

1. A statement of the need for the rule
2. An examination of alternative approaches
3. An evaluation of the benefits and costs of the rule, and alternatives

- provisions built into regulations that will expire at a given point in time

- beneficial because rules can be easily eliminated and if useful, be reauthorized

1. The rules of the game of capitalism, designed to preserve the competitive process

2. The engine of free enterprise is competition.  When it works, the market functions well

3. Markets may fail due to competitors subvert to competition

4. Trusts work to stifile competition, hence anti-trust laws were developed

1. Justice department can file a civil case

2. Federal Trade Commission has the right to enforce, on behalf of the government

3. State attorney generals

4. Private parties

Sherman Act

(Section I)

Contract, combination, or conspiracy must be involved

- two actors must be acting in conscious conert

- restraint on trade must be unreasonable

Only unreasonable restraints of trade violate Sec. 1

use Rule of Reason

1. The pro and anti competitive effects of the restraint

2. competitive structure of the industry

3. firms mrkt share/power

4. history/duration of restraint

5. other relevant factors

Per Se Rules

- so obvious that courts won't even apply Rule of Reason

1. Pros and anticompetitive effects of the restraint

2. The competitive structure of the industry

3. The firm's market share or power

4. The history and duration of the restraint

5. Any other relevant factors

Tying Arrangement

(Definition)

Tying Arrangement

(Three part test)

1. Two separate products must be involved
2. The seller must have sufficient market power in the tying product to force the sale of the tied product
3. There must be an impact on commerce

1. The possession of monopoly power in the relevant market

2. The willful acquisition or maintenance of that power

1. Can lead to monopoly power by driving competitors out, and barring new entrants to the field

2. The danger is that eventually a company will achieve a monopoly, and then raise prices for all consumers

- looks for potential problems in the future and tries to stop them now

-

-specifies the rights and responsibilities of stockholders, directors, and officers

-provides detailed provisions on annual meetings, the method of choosing a director, and the authority of directors to issue stock

1. The right to receive dividends, if declared

2. The right to vote on: members of the board, major mergers and acquisitions, charter and byelaw changes, proposals by stockholders

3. To receive annual reports

4. To bring shareolder suits against the company and officers

5. To sell their shares of stock to others

-when shareholders believe that the board has done something that adversely affects the company

1. Salary

2. Annual bonuses

3. Long term bonuses

4. Restricted Stock

5. Stock options

Responsibilities

1. appointment, supervision, and removal of corporate officers, and setting their compensation
2. Major financial decisions - setting dividends, issuing new shares
3. Authorize major corporate policy decisions
4. Many states have laws directing the BOD to consider how their decisions affect others

Board members are assigned to committees

- compensation committee

- audit committee

1. The Rubber Stamp
2. The Board is dominated by the CEO
3. The Boad is plagued by Conflicts of Interest
4. Board members owe a fiduciary duty to stockholders

1. Limit the number of 'inside' directors
2. find people who are not affiliated at all
3. avoid people who are consultants or advisors to the company
4. avoid executive's spouse, parent, sibling, or child

At-Will Employment except when:

(3 main things, 3rd has several parts)

1. Breaches the duty of good faith and fair dealings - transfering the employee or making them do something you know that will make them quit
2. Breaches an employment contract
3. Violation of public policy

1. Arrest data - illegal to use this, unless conviction followed

2. Credit history

3. Workers compensation claims

1. Costs to business - costs a lot for medical services and accidents

2. Potential danger to others in business

3. Deters employees from doing drugs

- It is unlawful for employers to discriminate against employees, applicants, and union members on the basis of race, color, national origin, religion, or gender at any stage of employment

- covered by Title VII referred to as 'protected class'

Equal Employment Opportunity Commission

- must file suit with these guys first and if they decline to sue than you can sue yourself

Disparate Treatment

(Intentional Discrimination)

Plantiffs must demonstrate that:

1. They are a member of a protected class

2. Applied for and was qualified for a position

3. The employee was denied the position

4. Employer continued looking and/or hired another person who was not in a protected class

Employer can talk about how they hired a more qualified person or provide another non-discrimatory reason

- pull over a person you think is a drug dealer for another reason to get them

- non-intentional discrimination resulting from seemingly neutral employer policies

- plantiff must demonstrate a causal link between the challenged practice and the statistical imbalance

-

(This for That)

- relates to sexual harrassment

Court will look at the following:

- jobs that require equal skill (experience)

- jobs with equal effort (mental/physical exertion)

- jobs that require equal responsbility(supervision and accountability)

- jobs with similar working conditions (dangers, exposure to elements)

Disabled Person

(useless person)

1. Has a physical or mental impairment that substantially limits one or more of his or her major life activities

2. has a record of such impairment; or

3. is regarded as having such an impairment

National Environmental Policy Act

1969

- command and control

- flexible enforcement

- market incentives

- required disclosure

-voluntary compliance

-idea that the government will se a 'rule' which applies to all industries in the same way

- primary difficulty is that not all industries are the same and plants within a single industry are different

- not economically feasible

- high costs because lack of flexibility

- more popular in Europe

- taxes can be levied on industry

- taxes used to clean up waste produced by industries

- each year, industries releasing any of 650 pollutants must report the amount of those emissions

- initiated in 1987 and has declined by 49%

- companies and industries also do things 'voluntarily' to stave off government regulations

- companies that do good things get good PR

The Environmental Protection Agency

(EPA)

- authorized by congress to make rules that apply to industries

- uses a complex formula of cost benefit analysis

1. Hazard Assessment - establishes a link between a substance, such as a chemical, and human disease
2. A dose-response assessment - a qualitative estimate of how toxic a substance is to humans or animals at increasing levels of exposure
3. Exposure assessment - study of how much a substance humans absorb through inhalation, ingestion, or skin absorption.
4. Risk Characterization is an overall conclusion - about dangers of a substance, takes the form of a detailed, written narrative describing the scientific evidence, as areas of ambiguity

Sherman Act

(Section II)

2 part test

1. possession of monopoly power in the relevant market

2. willful acquisition or maintenance of that power must define Relevant Market to determine market power

- determine geographic as well as product market in which competition is taking place

- relevant market made up of product market and geographic market