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Cover page -- Halftitle page -- Title page -- Copyright page -- Title page -- Copyright page -- Dedication -- CONTENTS -- ILLUSTRATIONS -- PREFACE -- A. Conditions in the U.S. Vehicle Market: 1980-1993 -- Import Penetration -- Fuel Economy Regulations -- Pricing Patterns -- Competitive Dynamics -- Cost and Productivity Differences -- B. Policy Options for the 1990s -- ACKNOWLEDGMENTS -- Short-Sighted Solutions -- CHAPTER I INTRODUCTION -- A. An Alternative Policy Approach: The Stakeholder Model -- B. Domestic Employment and Oligopoly Behavior in the U.S. Auto Industry -- CHAPTER II BACKGROUND AND LITERATURE REVIEW -- A. The Structure of the U.S. Motor Vehicle Industry -- 1. Oligopoly Power in the U.S. Motor Vehicle Industry -- B. Shifting Patterns of Vehicle Demand and Rising Imports -- 1. Recent Import Trends -- 2. The Japanese Cost Advantage -- C. The Effects of Trade on Employment -- l. Estimates of the Effects of Trade on Employment -- 2. The Effects of Trade Protection: 1980-84 -- 3. The Effects of the VRAs on Quality, Output and Employment Patterns -- CHAPTER III THE MODEL -- A. The Baker and Bresnahan Model4 -- B. A Residual Demand Model for the U.S. Auto industry -- 1. A Reduced Form Model -- 2. Import Markets -- 3. Factor Costs -- CHAPTER IV DATA GENERATION AND HISTORICAL ANALYSIS -- A. Macroeconomic Variables -- 1. Implicit Price Deflators -- 2. Gross National Product -- 3. Gasoline Prices -- 4. Interest Rates -- 5. Time Trend and Structural Dummy Variables -- B. Auto Output and Price Levels -- 1. Own Quantity Sold, by Firm and Size Class -- 2. Own Average Price, by Firm and Size Class -- 3. Import Quantity and Price -- 4. Average Price of All Other Domestic Cars, for Each Firm and Size Class -- C. Factor Costs -- 1. Industry-Wide Cost of Unionized Labor -- 2. Capacity Utilization -- 3. Exchange Rates -- 4. Firm-Specific Labor Costs

On August 13, 2001 the National Conference of Commissioners on Uniform State Laws voted 89 to 53 to reject the 2001 Amendments to Article 2 of the Uniform Commercial Code that had just been approved in May by the American Law Institute. While negotiations continue, this public split between the two bodies that have together shepherded the UCC project for over fifty years represents the likely end of the fourteen year effort to revise the law of sales as embodied in Article 2. In this Essay, I examine the political economy of the Article 2 project from its origins to the present. I begin by analyzing the drafting and enactment process of the original Article 2 and evaluate the success of the new sales law it introduced, a success attributable in no small measure to the replacement of archaic vestiges of property law with efficient contract default rules. I then I consider the effects of the compromises Karl Llewellyn made to secure the enactment of the Code. Of particular significance is how the vague terms that invoke the commercial context (originally intended by Llewellyn as a means of incorporating ex ante default rules) have been used to challenge the objective meaning of disputed contracts. For many commercial contractors, exit may have been a cheaper option than lobbying for clearer and more predictable default rules. But the parties to mass-market sales transactions remain subject to Article 2, and their representatives have sought to influence the revision process. Thus, the focus has shifted from Llewellyn's original goal of prescribing optimal default rules for commercial contracts to the current debate over proscribing freedom of contract in mass-market transactions. The resulting divergence between the interests of producers and those of consumer buyers, computer information licensees and their representatives has produced deadlock. I conclude that the flaws in the Article 2 project were present from its inception. Given the limits of legal regulation, it is unlikely that any set of "uniform" rules that are promulgated for adoption in every state can both efficiently complete the gaps in commercial contracts as well as optimally police consumer transactions. In sum, the uniform laws process works when there is distributional symmetry (when today's buyer might be tomorrow's seller). On the other hand, the process deadlocks when it seeks to produce uniform rules for transaction-types in which the distributional effects are asymmetric and prices do not adjust efficiently to compensate for the victory of one group in the legislative process.

The law influences the behavior of its citizens in various ways. Well understood are the direct effects of legal rules. By imposing sanctions or granting subsidies, the law either expands or contracts the horizon of opportunities within which individuals can satisfy their preferences. In this way, society can give incentives for desirable behavior. In recent years, the social norms literature has shown that law can also have indirect effects on incentives. By empowering neighbors and other citizens to use public ridicule as an enforcement technique, these laws can influence behavior by imposing informal sanctions, such as shaming. Similarly, these laws can have self-sanctioning effects to the extent that citizens internalize the legal rule and are deterred by the prospect of guilt. These latter effects require that legal rules be mediated through social phenomena – social norms and human emotions – that are highly complex and only imperfectly understood. In the case of a shaming sanction, the law must rely on existing normative structures to influence in predictable ways the "expression" or social meaning of the disfavored (or favored) action. In the case of self-sanctions, the law must rely on the even more complex phenomenon of internalization of normative behavior. Legal scholars and economists continue to explore the internal mechanisms of social norms and of human emotions and to suggest predictive tools that may be capable of accounting for the influences of legal rules on social norms and individual values. In this essay, I ask the evaluative question: How far have we come? Clearly, as a descriptive matter, we have come a long way. But when it comes to using this more textured understanding of human experience to improve our ability to predict the effects of legal rules, the verdict is far less clear. The danger in such an environment is that the analyst will be guided more by the strength of her a priori beliefs in the relative efficacy of government intervention than in the analytical tools that are deployed. In short, the dilemma remains no different from when it was first identified by Arthur Leff a generation ago. Law and economics, Leff said, "is a desert," and law and society (read: sociology and psychology) "is a swamp." For twenty-five years legal scholars have searched for the holy grail, the fertile middle ground between economics and the other behavioral sciences. The search may be noble and important, but the end of the journey is not yet in sight. The Essay proceeds as follows. In Part I, I set out a contextual case study as an archetypal environment for analyzing the interactions of law and norms. Part II evaluates both the direct and indirect effects of law within this contextual framework using the techniques of rational choice theory. In Part III, I relax the assumption that preferences are exogenous in order to examine, in the same context, the explanatory power of the emerging expressive and internalization theories of law. I conclude, in Part IV, that a preference-shaping analysis provides a richer explanation for commonly observed interactions among legal rules, norms and values, but at a considerable price. The introduction of non-falsifiable hypotheses produces an analysis that is rich in content but also speculative and context-dependent.

A deal to admit China to the World Trade Organization must include enforceable labor rights and commercial benefits.

In the ongoing debate concerning the efficiency and social value of Article 9 of the Uniform Commercial Code, two points are beyond dispute. First, asset-based financing has undergone an enormous transformation since the enactment of Article 9. The most vivid illustration of this is the dramatic increase in the number and size of firms that rely on secured credit as their principal means of financing both ongoing operations and growth opportunities. Previously, with a few exceptions (such as factoring and trust receipts), secured financing principally had served second-class markets as the "poor man's" means of obtaining credit. Now, it has become the linchpin of private financing, prompting even large firms to employ leveraged buyouts as a means of fleeing public equity markets for the safe harbors of Article 9. When viewed in these terms, Article 9 can only be seen as a blazing success. No less debatable is that financial institutions, and those sympathetic to their needs, played a significant role in the drafting and ratification of Article 9. Grant Gilmore has described how conservatives in the legal establishment decided in the 1960s to throw their support behind the same U.C.C. they had considered overly radical ten years before. Earlier, when the U.C.C. project had just gotten underway after World War II, Homer Kripke, then associated with C.I.T. Financial Corporation, served as a key advisor to Gilmore and the other drafters of what eventually became Article 9. In addition, Kripke served as the principal drafter for what became the 1972 revision of Article 9. And, in the campaign to pass the U.C.C. in the 1960s, William Schnader, a strong proponent of the Code, was hesitant to incorporate amendments suggested by academics, but, as Robert Braucher humorously noted, "was quite sympathetic with people who were suggesting amendments, where [they] were people who had power to keep the Code from getting enactment." All this is not to impugn the motives of the managers of financial institutions, or the business lawyers who represent their interests, or to accuse either group of a conspiracy to infiltrate the lawmaking process and shape the Code to their advantage. Indeed, while recognizing the significant role played by financial institutions and their representatives in the Article 9 drafting process, Gilmore recalled that they acted honestly and in good faith. And it is quite clear that Homer Kripke indeed believes that "the legal structure of secured credit developed to make possible mass production and the distribution of goods" and "that these developments have increased human welfare." Nonetheless, the enthusiasm that secured lenders showed for Article 9 begs the question of why they found it so attractive.

"[T]he laws have mistakes, and you can't go writing up a law for everything that you can imagine." "When you reach an equilibrium in biology you're dead." As we approach the Twenty-First Century, the signs of social disarray are everywhere. Social critics observe the breakdown of core structures – the nuclear family, schools, neighborhoods, and political groups. As these traditional social institutions have disintegrated, the law has expanded to fill the void. There are more laws, more lawyers, and more use of legal mechanisms to accomplish social goals than at any other time in history. The custodians and interpreters of the American legal system have become, whether they like it or not, the center of the universe. Lawyers and legal academics are deeply conflicted about this newfound prominence. The legal profession is searching, even struggling, to define its role in a changing society. Much of this angst comes from a feeling that the legal community hasn't made much progress in resolving what I will term the "Justice Paradox." To understand the paradox, one must focus on the purposes of legal rules. Legal rules that determine liability and/or impose sanctions have both a distributive function and a behavior modification function. That is, the rules redistribute wealth or entitlements between the immediate parties to any particular dispute, and they also influence the behavior of future parties who may find themselves similarly situated. The justice of all legal rules must therefore be evaluated from two distinct perspectives: (1) Does the law accomplish justice between the parties to any particular dispute? We can call this "Present Justice"; and (2) Does the law appropriately regulate the conduct of other parties likely to have similar disputes in the future, making it less likely that similar misfortune will befall others who can learn from the experience of these litigants? We might call this "Future Justice." The paradox arises from two propositions. First, both criteria must be satisfied in order to achieve a just outcome. Second, these two criteria of justice are usually intractably opposed. Simply put, you can't have it both ways. Thus, we aspire to a just society that satisfies the essential conditions of both Present and Future Justice, and yet we live in a world that often forces us to choose between one or the other.

This Article uses the techniques of modern decision analysis and game theory to analyze the decisionmaking strategies of parties to long-term commercial contracts. Most parties to long-term contracts initially allocate the risks of future contingencies and agree – either explicitly or implicitly – to adjust this initial risk-allocation scheme if unanticipated events occur. Once contract risks are initially distributed, however, each party's self-interest may compel them to evade their responsibility rather than adjust cooperatively as originally agreed. Visualizing the interactions between contracting parties as an iterated prisoner's dilemma, the Author attempts to clarify the dynamics of this adjustment process. Professor Scott employs a game theoretic model to demonstrate that two polar behavioral patterns – either conflict or cooperation – would dominate if parties were unable to bargain over adjustment. However, this choice may not occur, he suggests, because even parties that are precluded from negotiating each adjustment option, nevertheless can communicate their intentions to each other. Under these conditions, a cooperative equilibrium will emerge so long as one of the parties commits to a strategy of conditional cooperation before the first adjustment is necessary. Professor Scott notes that in more realistic contractual situations, some breakdowns in patterns of mutual cooperation are inevitable. In actual contract settings, substantial problems of information and enforcement may threaten the parties' efforts to realize a cooperative equilibrium. Nevertheless, he concludes that parties in continuing relationships can invoke various legal and extralegal mechanisms to reduce these information and enforcement deficits and strengthen the existing matrix of social and contractual norms.