Corporate Governance in Spain (with an Application of the Power Indices Approach)

This paper describes the governance system of Spanish listed firms in the early 1990's. Although the institutional setting of the Spanish Stock Exchanges differs little from other European national markets, we found important differences in several aspects of corporate governance. In particular, some of the standard mechanisms of control (e.g. boards and institutional shareholders) do not play an active role, whereas ownership is relatively concentrated. Moreover, power indices suggest that controlling blocs of large shareholders are very likely to form. We thus conclude that the ownership of shares is a pivotal mechanism in the governance of Spanish corporations.     

The Principle, Politics, and Finances of Introducing Academic Merit as the Standard of Hiring for "the teaching of law as a career," 1870–1900

Compared to the practice in other professional schools and academic fields at universities, law professors are hired at a young age based primarily upon their academic merit determined through grades, class rank, and school rank. This emphasis upon narrowly defined academic merit—apart from achievement demonstrated through original scholarship or experience in professional practice—first emerged during "the professionalization of the American law professor" between 1870 and 1900 at Harvard Law School (HLS). Though normative today, this outcome was neither necessary nor uncontested. In the late nineteenth century the new standard of hiring faculty according to their academic merit was energetically opposed by those favoring the antecedent standard of professional experience and reputation. Only when financial considerations counterbalanced that traditional standard did hiring decisions tip in favor of the new principle. Not until the early 1900s, when the second generation of academic meritocrats dominated the HLS faculty, did the new hiring standard become unequivocally established as policy in the school and, by extension, in legal education.     

Women on Top

THE contender swaggeringdown the lane drops his swag-ger to crouch in the reflectionoffered by a restaurant win-dow. He's either a stylist or he's tryingto look like Julian Casablancas. Hairfixed into the fastidiously-messy mopperfected by the Strokes frontman, heresumes his swagger, into the 13 Club,where about 200 people are swayingand shouting through a set by Caffee-In, a Sino-Japanese outfit specializing injump-along funk. Melody: They Have Itin Buckets. The guitarist is Chinese, th…     

Antitrust in China: The Problem of Incentive Compatibility

This paper reviews China's recent efforts to enact a competitionpolicy (antitrust) law. We focus on three issues: (1) What isthe substance of the proposed law, and how does it differ fromexisting antitrust law in other countries, (2) How will thelaw be implemented or enforced, and how will those who mustimplement this law interpret their mandate, and (3) What willbe the likely effects of this law given China's unique historyand cultural heritage. We emphasize China's economic, legaland regulatory contexts in which an antitrust law may be enforced.Our central focus is the problem of establishing a substantiveand procedural legal framework that is incentive-compatiblewith economic efficiency and growth. The draft law could beimproved, both to increase its clarity and to make its enforcementmore consistent with the goal of achieving improvements in economicefficiency. Nevertheless, there is much merit in the draft,especially its strong focus on reducing anticompetitive practicesof state-owned enterprises (SOEs) and other government bodies.However, our major difficulty with the new law is that, in theabsence of a tradition of reliance on the rule of law, Chineseand foreign enterprises will find it very difficult to relyon the antitrust statute or the actions of the courts in Chinaas a basis for predicting the antitrust liability that mightresult from various business practices. Therefore, the principalvector by which antitrust law (or indeed any law) affects economicbehavior is absent from the Chinese scene. Unless the bureaucracythat enforces the new antitrust law actively pursues a policyof consistent enforcement based on written guidelines, staredecisis, or other sources of predictability, the substance ofthe statute itself will have little significance. That outcomewould represent a significant loss for the economic welfareof the Chinese people.     

Assessing Market Power: The Trade-off Between Market Concentration and Multi-Market Participation

This analysis reveals that traditional market power measuresare biased under the conditions of multi-market participationand demand interdependence. Specifically, when complementary(substitutable) demands dominate, traditional market power measuresare biased upward (downward). A similar bias carries over tothe evaluation of mergers. To wit, mergers that simultaneouslyincrease market concentration and multi-market participationcan result in lower prices even in the absence of merger economies.It follows that merger guidelines that place undue emphasison market concentration can lead policymakers to block (approve)mergers that enhance (diminish) consumer welfare.