ALBERT

Notes: The paper argues that society should vary the sanction applied to a criminal defendant with the weight of the evidence against him or her. This is optimal when it is costly for society to apply sanctions, since it can yield the same degree of deterrence while requiring fewer resources to be spent on sanctioning. Furthermore, when the unfairness of convicting an innocent defendant increases with the size of the sanction, this provides a further rationale for graduating sanctions with the probability of guilt. Some objections are briefly discussed, mainly that it is inherently unfair to apply different sanctions on people, who have committed the same offense, and that the legal system will lose legitimacy if it allows sanctions to vary in the way suggested.

Notes: This article illustrates how contracts are completed ex post in practice and, in so doing, indirectly suggests what the real function of contracts may be. Our evidence comes from the contracts between automobile manufacturers and their dealers in 23 dealership networks in Spain. Franchising dominates automobile distribution because of the need to decentralize pricing and control of service decisions. It motivates local managers to undertake these activities at minimum cost for the manufacturer. However, it creates incentive conflicts, both between manufacturers and dealers and among dealers themselves, concerning the level of sales and service provided. It also holds potential for expropriation of specific investments. Contracts deal with these conflicts by restricting dealers' decision rights and granting manufacturers extensive completion, monitoring and enforcement powers. The main mechanism that may prevent abuse of these powers is the manufacturers' reputational capital.

Notes: The paper deals with a bilateral accident situation in which victims have heterogeneous costs of care. With perfect information, efficient care by the injurer raises with the victim's cost. When the injurer cannot observe at all the victim's type, and this fact can be verified by Courts, first-best cannot be implemented with the use of a negligence rule based on the first-best levels of care. Second-best leads the injurer to intermediate care, and the two types of victims to choose the best response to it. We explore in particular detail the more interesting case of imperfect observation of the victim's type, characterizing the optimal solution and examining the different legal alternatives when Courts cannot verify the injurers' statements. Counterintuitively, we show that there is no difference at all between the use by Courts of a rule of complete trust and a rule of complete distrust towards the injurers' statements. We then relate the findings of the model to existing rules and doctrines in Common Law and Civil Law legal systems.

Notes: This paper develops a framework to study the effects of the durability of legal allocation decisions, such as trial outcomes, regulatory enactments and property entitlements. For a party favored by the legal allocation, a more durable decision is also more costly to secure, ex-ante. Thus, it is not the greater durability of the allocation that determines whether the "winner" is better-off, but other factors that are affected by the durability attribute, such as the cost of securing a favorable outcome and the ability of contesting parties to affect this cost. The paper develops conditions under which greater durability is irrelevant, or even undesirable to the winner. The analysis is applied to shed light on durability doctrines relating to trial outcomes (e.g., res judicata and double jeopardy), rules and regulations (e.g., transition relief when rules change), entitlements (e.g., adverse possession and statutes of limitations), and marriages.

Notes: This article studies the optimal scope of negligence, considering which of the parties' precautionary measures should be included in the determination of negligence and which instead should be omitted. The analysis shows that the optimal scope of negligence balances the gains derived from improved accident prevention with the administrative costs of the system. This approach also provides insights concerning not only the notions of care and activity level and their respective boundaries, but also the choice between strict liability and negligence.

Notes: This paper examines a particular type of contracts that is, sadly, increasingly frequent: the agreements produced by divorcing couples. They are unhappy contracts, agreements produced as a necessary part of exit from what is now suboptimal marriage. They are virtually required by many states and are, in theory at least, closely monitored by courts since, when children are involved, they will be incorporated into court orders. What parties to unhappy contracts do is attempt to minimize losses, rather than maximize gain. How are contracts structured that will do this, and how does a difference in the size or power of the bargaining entities change the final settlement or contracting result? Because they are for more than one year, they also must be analyzed as relational contracts. This empirical study not only considers how the contractual terms come to be, but also what effect they have over a five year period, with an eye to seeing which contracts produce (or are at least consistent with) further litigation and which correspond with adjustment over time. The role of lawyers in the entire process is also a focus of the inquiry. Special attention is also paid to the role of fault, with surprising results in a no-fault system. All the divorce stipulations for parents of minor children that were filed in Johnson County, Iowa, during 1998 provide the beginning data, which is supplemented by other court records in each case.

Notes: In the "Three Tenors" case the FTC found an agreement to be an antitrust violation despite the fact that there was no way it could be anticompetitive. The Commission failed to heed the lessons of Coase's classic paper on the nature of the firm, making a sharp distinction between activities within a firm (legal) and across firm boundaries (not legal). Analytically, there should be no distinction. The decision to integrate activities by contract rather than ownership is a matter of relative transactions costs. Since the boundaries of the firm are, ultimately, an economic decision reflecting the costs and benefits of the alternative arrangements, there is no economic justification for making the legality of any act contingent upon whether it was on the proper side of that boundary. Nor is there any particular virtue in using antitrust rules to alter the relative costs so as to shift that boundary to favor bringing activities within the firm. The paper proposes a "quick look" approach. The first thing to look for is some indication of market power. If antitrust harm is not credible, as in this case, because there was no market power, stop looking.

Notes: This Article attempts to explain the views about business of Brandeis and Holmes. The Article analyses why their economic thinking differed as it did; to what extent it comports with a modern understanding of economics; and how Holmes and Brandeis could have been such close allies when their economic theories differed as fundamentally as they did. Finally, the Article addresses the consequences and current significance of, if any, the theories of Brandeis and Holmes, with particular though not exclusive reference on the one hand to antitrust law and on the other hand to the current crisis of corporate governance.

Notes: A feature of many penal codes is that punishments are more severe for repeat offenders, yet economic models have had a hard time providing a theoretical justification for this practice. This paper offers an explanation based on the wage penalty suffered by individuals convicted of crime. While this penalty probably deters some first-timers from committing crimes, it actually hampers deterrence of repeat offenders because of their diminished employment opportunities. We show that in this setting, an escalating penalty scheme is optimal and time consistent.

Notes: In ignoring the facts of the Three Tenors case and the transactions costs of legal rulemaking, Professor Goldberg would unnecessarily complicate antitrust law to the detriment of consumers. Contrary to his assertions, the FTC's opinion does not favor ownership over contract. The parties could have chosen to coordinate Three Tenors products and promote a "brand," but they did not. Indeed, their contract explicitly provided otherwise. For a small class of cases - in which the parties restrain basic forms of competition such as price or advertising without a legitimate claim of consumer benefit - antitrust law avoids the costs of finding market power. In any event, the facts of the Three Tenors case provide a natural experiment revealing that the agreement the Commission proscribed in fact harmed consumers.

Notes: Firms can "rent" the securities laws in other countries by listing or selling securities there while remaining subject to local law. Firms thereby can reduce their cost of capital despite political and other impediments to strong securities laws in their home countries. The cross-listing market has implications for both cross-listing jurisdictions and the home jurisdictions of cross-listing firms. From the standpoint of home countries, firms' flight to other markets may result in political pressure to adopt laws similar to those in the cross-listing countries. However, this pressure is unlikely to cause convergence of international corporate laws. To the extent divergence persists, cross-listing firms' costs of complying with the internal governance law of cross-listing jurisdictions may exceed the benefits of cross-listing. In order to avoid reducing cross-listings, cross-listing jurisdictions have an incentive to exempt foreign firms from their internal governance law or to avoid regulating internal governance. This has important implications for expanding US federal regulation of internal governance: Just as the federal government is Delaware's competition, so the international market for cross-listings is Washington's competition.

Notes: All politicians, regardless of the nominal form of government within which they operate, face the trade-off between current period gains and tenure extension. That is, rulers can exploit their power for personal gain, but they risk being removed from their positions of power, either through a popular vote or a coup or revolution. If they temper their exploitation to remain in power, they sacrifice some of their current personal gain. Essentially all politicians are limited autocrats, where the limitations imposed on them differ according to the institutional structure under which they rule. This paper presents a formal model of this trade off in the Mancur Olson stationary bandit framework, where tenure length is explicitly endogenized in the politician's maximization problem.

Notes: Many legal rules can be interpreted as creating options. Option pricing is thus important for understanding the ex ante effects of these rules. And, recognizing that individuals, whose behavior the law aims to influence, are imperfectly rational, a behavioral option pricing model is a potentially helpful tool for legal policy. This paper develops such a model and applies it to a series of legal problems in tort law, contract law, corporate law and criminal law.

Notes: Professors Goldberg vigorously attacks the merits of the "Three Tenors" decision while emphasizing the issue of whether the challenged restraint resides within the boundaries of the firm. Professor Muris responds that the Commission's analysis is correct as a matter of law and fact, and that Professor Goldberg's call for a market power screen for all horizontal restraints ignores the legal costs of rulemaking. I take a third view of the debate. While conceding that per se rule is properly applied to "naked restraints," I show that the Commission's analysis relies on an inappropriately narrow view of the ancillary restraints doctrine in order to justify application of the per se rule. In particular, the Commission's emphasis on the timing of the restraint as well as its hostility towards PolyGram's free rider defense are not supported as a matter of law. In any event, the facts of the Three Tenors do not support the Commission's conclusion that the moratorium agreement was not ancillary to the joint venture.

Notes: World governance today is characterized by international organizations lacking democratic legitimacy and control by the citizens they claim to represent. They are also criticized for being inefficient. This leads to violent protests and to NGOs having great influence. To address these problems, we propose international governance based on the democratic idea of citizen participation: All citizens of the member countries of international organizations have the potential right to participate in the decision-making of international organizations via initiatives, referendums and recalls. In order to reduce transaction costs, a representative group of citizens is randomly selected who can actually exercise their participation rights.

Notes: Many of the world's banks have operations, if not branches or agencies, in the United States. When these banks fail, their U.S. operations and assets are subject to a confused, and confusing, patchwork of insolvency laws, both federal and state. This essay examines that legal patchwork, asking whether it is desirable, much less efficient, for a nation to have an inconsistent foreign-bank insolvency regime. The essay does not attempt to provide final answers but, instead, focuses on identifying the threshold conceptual issues that must be resolved before attempting to provide answers.

Notes: This paper presents a model of penalties that reconciles the conflicting accounts of optimal punishment by Becker, who argued penalties should internalize social costs, and Posner, who suggested penalties should completely deter offenses. The model delivers specific recommendations as to when penalties should be set to internalize social costs and when they should be set to completely deter offensive conduct. One basic recommendation is that whenever the cost of transacting with respect to some entitlement is less than the cost of enforcing the right to that entitlement, penalties should be set to completely deter. I use the model to generate a positive account of the function and scope of criminal law doctrines, such as intent, necessity, and rules governing the distinction between torts and crimes. The model is also consistent with the history of criminal penalties set out by Adam Smith.

Notes: Antitrust authorities often consider parallel pricing and market share stability to be clues of illegal collusion. To analyze whether this inference is correct, I develop a model of price competition with differentiated products in which demand and costs vary over time. In many cases parallel pricing does not distinguish between a competitive and a collusive outcome. However, in some cases perfect parallel pricing is compatible only with a competitive equilibrium, and therefore provides some evidence that firms did not collude. I also show that the competitive equilibrium is characterized by a higher market share stability than a collusive equilibrium.

Notes: Monetary sanctions are less effective when agents cannot afford to pay them in full. We present a simple model of a society with two types of risk averse agents, differing in terms of productivity in the legal labor market. We consider transfers from the most productive to the least productive agents, and discuss the conditions under which redistribution can reduce crime.

Notes: Buying market share occurs when firms price below the profit-maximizing price in order to gain market share, even though recoupment of lost profit is impossible. Although perceived by rivals as predatory pricing, buying-market-share pricing does not generally damage competition even when it forces efficient rivals to exit, and current predatory pricing policy yields desirable antitrust enforcement outcomes. However, buying market share can harm competition when share-based entry barriers exist and product differentiation is sufficiently weak. With weak product differentiation and share-based entry barriers, even prices set above average costs can have anticompetitive consequences.

Notes: This paper extends the law enforcement model to include court congestion. Society suffers harm from court congestion since delay affects the credibility and the reliability of the criminal justice system. The core result of the paper is that the probability of apprehension and the probability of conviction should be considered separately by the enforcement authority. Because the level of congestion is affected by the probability of apprehension only, the use of fines and conviction should be exhausted before resorting to the costlier (in terms of court congestion costs) instrument of apprehension.

Notes: We demonstrate that contingent attorney fees can play a strategic role in a model of nuisance suits. Specifically, the use of contingency fees makes the plaintiff's threat to go to trial credible. In contrast to previous economic analyses, we show that contingency fees do encourage nuisance suits.

Notes: Merger analysis is a field in which economic theory is systematically applied, day-in, day-out. Economics structures the definition of the relevant market, and then economics drives the evaluation of the likely competitive effect of the merger. Exactly which models are used by Federal Trade Commission staff would be of great interest to the stake-holder community, as would any details on how the models are applied. This paper provides those details with an in-depth study of the FTC merger review process focused on single market horizontal mergers evaluated between 1993 and 2003. Five different market models are identified with a homogeneous goods analysis (two choices) useful in about one-third of the cases and a differentiated goods analysis (three choices) relevant for the others. Unilateral effects analysis was used in slightly more than half of the cases and coordinated interaction theories in just less than half. Evidence contained in hot documents, validated customer concerns and event analyses appears to play an important role in confirming the implications of Guidelines-based theoretical models of a merger's competitive effect.

Notes: This paper discusses specific cases in financial regulation, competition law and legal rules in procurement, in light of the economic concept of the efficiency of mixed bundling as derived in our theoretical models. We assess the appropriateness of the existing rules, and also discuss whether there is a need to reform specific legal or regulatory rules in light of the efficiency discussion. We examine the U.S. legal and regulatory framework in government procurement, the offsets case, and finally we look into financial regulation in the case of bundled brokerage and soft commission arrangements on both sides of the Atlantic. The novelty of our models is that we analyze transactions mixed bundling in the cases of monopoly, monopsony and exchange. Additionally, for the cases of monopsony and exchange we consider goods of varying degrees of quality certainty. The common result is the local optimality of the bundling of transactions in terms of expected profits for the price-setting firm, and an overall increase in the level of trade in the goods bundled. In the real-life cases examined, we found that in most instances the authorities have decided that if the practice of pure bundling is present, to replace it with mixed bundling, rather than ban bundling altogether. This practice is correct, as according to our models mixed bundling is efficiency-enhancing (both in profits and in trade volumes). On the other hand, the policy implications derived from our models based on the presence of quality uncertainty suggest that allowing the bundling of dissimilar tasks is beneficial rather than damaging to trade, especially if the goods bundled are of diverse degrees of quality certainty. This is at odds with the current legal and regulation approach to bundling practices.

Notes: The judicial review of legislation can be configured in any of a number of ways. In particular this task may be concentrated in a constitutional court, or diffused among ordinary judges. Recent studies have shown that the design of judicial institutions can have important legal, social, and economic consequences for a given polity. Scholars have dwelled on the reasons that lead political actors to the choice of one model of judicial review over another, but there has been little empirical study on this choice. Here, several hypotheses as to the circumstances that lead to the establishment of constitutional courts are tested on the basis of a data set of 128 democratic constitutions. I find that the degree of political uncertainty facing politicians is an important predictor of whether or not a constitutional court will be established.

Notes: The Trojan Horse enforcement mechanism turns law-breakers into law-enforcers by entrusting them with the right to file a private suit and to collect a fine from their accomplices. Unlike leniency or state witness programs, the Trojan Horse mechanism is not dependent on an effective public enforcement agency operating in the background. It positions conspirators in a prisoner dilemma at the very first stage of their conspiracy, long before public enforcers are on their tails, thus enabling the state to decriminalize certain conspiracies. As shown in this paper, the Trojan Horse mechanism has a (comparative) advantage in asymmetric settings, such as in the employment of illegal immigrants. Whereas fines and other criminal sanctions hardly deter empty-pocket lawbreakers such as illegal immigrants, the carrot this mechanism waves might lure illegal immigrants into suing their employers and leaving the country with a prize in their pockets. Thus, it provides a more humane enforcement mechanism than the prevailing ones, and creates a strong deterrent effect on employers who consider hiring illegal immigrants.

Notes: Professor Wright mischaracterizes both the legal basis and the factual context of the FTC's Three Tenors opinion, recently affirmed by Judge Ginsburg's opinion for a unanimous panel of United States Court of Appeals for the District of Columbia Circuit. Neither opinion's legal analysis relies on the timing of the moratorium agreement. Under either opinion, the agreement to eliminate advertising and price competition would have been proscribed even had it occurred when the joint venture was formed. Moreover, the factual underpinnings of the case differ from Professor Wright's assertions. In particular, the facts demonstrate that the joint venture did not attempt to promote the combination of various three tenors products. The only coordination with the first two albums was a restriction on their discounting and advertising. There was none of the production, distribution, and promotion among the three albums normally associated with an integrated effort.

Notes: We offer a model that sheds light on the debate over whether corporate ownership concentration converges to the Berle-Means image. Our model takes into account the importance of both legal rules and firm-specific arrangements. Our analytical result is that share ownership concentration either persists or falls depending on the relative importance of these protective arrangements. In particular, our model predicts: (a) diffuse corporate ownership in nations that impose legal limits on blockholders' clout to expropriate minority shareholder rights, and (b) concentrated corporate ownership in nations that rely on asset specificity as a form of investor protection. Our empirical work suggests partial convergence toward Berle-Means diffuse share ownership. It is thereby reasonable to infer the existence of path dependent forces on ownership concentration. But this result does not preclude the possibility of functional convergence or convergence to the diffuse form of share ownership via cross-listings on the major U.S. stock exchanges that impose stringent disclosure and listing requirements. In essence, these results suggest a case for the co-existence of the preexisting path-dependency and functional-convergence stories.

Notes: Patent law today is a complex institution in most developed economies, and the appropriate structure for patent law is hotly debated around the world. A crucial feature shared among the diverse patent systems of the industrialized world, even before the recent trend toward harmonization, is that modern patent regimes are "constitutionalized," meaning the self-restriction of executive and legislative discretion over the patent power. Given the lucrative nature of patent monopolies and the long history of granting patents as a form of patronage, the choice to confine patents within a legal framework that minimizes the potential for rent-seeking requires explanation. Why choose to constitutionalize patents? This paper answers this question by examining three salient constitutionalizing events through the lens of public choice theory-a theoretical framework all but absent in patent and innovation scholarship. Using interest-group analysis, we trace the constitutionalization of patent law from the Venetian patent statute of 1474, through the English 1624 Statute of Monopolies, to the Intellectual Property Clause of the United States Constitution. We argue that creating constitutional patent law institutions offered the opportunity to both increase the durability of the bargain between the state and the inventor and, in some cases, to limit the grant of patents to those most likely to increase the general welfare.

Notes: We present a simple model wherein a patents regime is inferior to a trade secrets system, meaning that when private returns from innovation under the two regimes are the same, society will be better off if the innovator chooses not to patent. In our model, trade secret licensing is envisaged and the inferiority of patents depends on the lack of an independent invention defense in patent law, while such a defense currently exists in secrecy and copyright law. Thus, although secrecy is superior to patents, it is not superior to other types of formal intellectual property rights where independent invention is allowed (such as copyrighted software).

Notes: This study empirically investigates whether racial and ethnic differences in police searches of stopped drivers reflect efficient enforcement or biased policing. Null hypotheses consistent with efficient enforcement are derived from alternative assumptions regarding police objectives: 1) police seek to maximize public safety, and 2) police seek to maximize the hit rate. We use both an outcomes-based non-parametric analysis and a standard benchmarking parametric approach (regression analysis). Both approaches yield the same results: law enforcement officers display both personal and police cultural bias in their propensity to search African American and Latino drivers. African American and Latino status tends to lower the guilt signal required for police suspicion. Further, white officers police differently than their African American and Latino colleagues. White officers are 73 percent of the sworn police force, conduct 88 percent of the searches, and have a hit rate of 20 percent. Latino officers are 11 percent of the sworn labor force, conduct 8 percent of the searches, and have a hit rate of 24 percent. African American officers are 15 percent of the sworn labor force, conduct 4 percent of the searches, and have a hit rate of 26 percent. The preferential treatment of white drivers by police is attenuated with increases in the fraction of racial and ethnic minority residents in the county where the stop occurred.

Notes: In recent years, new articles presenting rigorous analyses of bargaining incentives have overturned some of the fundamental claims made by Calabresi and Melamed in their seminal article on property rules and liability rules published in 1972. In particular, the proposition that property rules are socially preferable to liability rules when transaction costs are low appears to be either no longer valid or severely weakened under the new analyses. This paper reexamines the property rule versus liability rule question in light of the contributions of the recent bargaining theory literature. In contrast to this literature, I find that the fundamental propositions of Calabresi-Melamed remain valid, and I extend the framework to provide a more detailed positive economic theory of common law rules. The key contribution of this paper is pointing out the importance of subjective valuations in the analysis of property and liability rules. This allows for a synthesis of Calabresi-Melamed and the bargaining theory literature within an expanded framework.

Notes: In this paper we assert that, if an offender can dispose of some or all of his wealth after violating the law, raising the fine up to his wealth level will induce him to dispose of his wealth, thereby increasing social cost without deterring more offenses. This suggests that the socially optimal fine should be set below the offender's maximum wealth level.

Notes: This paper investigates the evolution of competition policy decisions in the US and, particularly, in the EU, concerning mandatory access to an essential facility held by a dominant firm. Based on some recent and controversial EU antitrust decisions, we outline a comprehensive test for identifying an essential facility and consequently imposing a mandatory access obligation on dominant firms.

Notes: The popularity of the International Court of Justice (ICJ) is the subject of much controversy. This paper examines usage of the ICJ by all United Nations (UN) member states as compared with its usage by those states with the top-ten economies of the world. Five hypotheses explaining the decrease in ICJ usage by the top-ten economies are presented as follows: (1) a home-bias of judges, (2) the diversification of international tribunals, (3) changes in the composition of the cases filed, (4) the (re-)allocation of power, and (5) an increased heterogeneity of external institutions among UN member states. We find empirical evidence that an increase in UN membership has led to increased heterogeneity, which in turn has led to a decline in usage of the ICJ by the top-ten economies.

Notes: This article derives key variables in the analysis of standards of proof in criminal law from basic conditional probabilities. The variables derived are the probability of correct and wrongful conviction, the expected sanction, and society's incarceration costs, while the basic conditional probabilities are the probability of observing (any given) evidence against individual i given that individual j committed the crime (for any j including j equal to i. The variables are derived from the conditional probabilities as a function of the standard of the proof using simple Bayesian updating.

Notes: The corporate lawyer-client privilege is increasingly controversial. Courts assert that the privilege promotes corporate compliance with the law as long as it is restricted to communications in furtherance of legal advice. This article assumes the privilege increases the probability that a corporation will escape liability. Courts can apply various tests to determine whether the agent who communicated with the corporate attorney can be defined as a representative of the corporation. The most restrictive test, the "control group" test, has been rejected by most American jurisdictions, but it has recently re-emerged in the United Kingdom. The author proposes that this test motivates corporations to restructure their optimal internal decision-making processes in order to "squeeze" into the privilege. When plaintiffs are uninformed about the internal organization of a corporate defendant, even corporations that cannot squeeze into the test have an incentive to mimic the behavior of privileged corporations, and consequently pursue socially harmful actions. These findings are supported by case law from control group jurisdictions.

Notes: Economic models of negligence ordinarily involve a single standard of care that all injurers must meet in order to avoid liability. When injurers differ in their costs of care, however, this leads to distortions in their care choices. This paper derives the characteristics of a generalized negligence rule that induces injurers to self-select their optimal care levels. The principal features of the rule are (1) the due standard of care is maximal, and (2) liability increases gradually as injurers depart further from this standard. The results are broadly consistent with the gradation in liability under certain causation rules and under comparative negligence.

Notes: In some areas of the United States, racial and ethnic minorities have been effectively excluded from the democratic process by a variety of means, including electoral laws. In some instances, the Courts have sought to remedy this problem by imposing alternative voting methods, such as cumulative voting. I examine several voting methods with regard to their sensitivity to rent-seeking. Methods which are less sensitive to rent-seeking are preferred because they involve less social waste, and are less likely to be co-opted by special interest groups. I find that proportional representation methods, rather than semi-proportional ones, such as cumulative voting, are relatively insensitive to rent-seeking efforts, and thus preferable. I also suggest that an even less sensitive method, the proportional lottery, may be appropriate for use within deliberative bodies, where proportional representation is inapplicable and minority vote dilution otherwise remains an intractable problem.

Notes: In this paper we analyze the necessity of an appeals process in private-civil litigation from the point of view of potential litigants. Our main concern is the question of whether the existence of an appeals system is to the benefit of potential litigants or if they would be better off in a system in which appeals are not possible. Our main observation is that it is unnecessary to enable appeals in all civil litigation. Indeed, a judicial system with a built-in appeals process is in many cases less desirable for the parties involved.

Notes: In a comprehensive study extending prior research, Prince and Rubin (2002) use the event study methodology, and find negative market reaction to a sample of 15 initial filings of product liability litigation and 29 other litigation events against U.S. automakers between 1973 and 1995. They conclude that the event study methodology is a useful way to measure the costs of litigation. In contrast, after examination of a new sample of 144 initial filing events and 465 other litigation events for six major automobile firms from 1985 to 2000, and after re-examining Prince and Rubin's data, we find that the market reaction to all but the most extreme and infrequent events is generally not significant. We suggest that the event study methodology may not generally be useful to study the social costs of litigation, but may be useful for unexpected abnormal litigation events where the potential liabilities (including reputation and other losses triggered by litigation) may far exceed the legal liability reserves set up by firms. We find mixed results for the market impact of litigation against a competitor. When a product liability lawsuit is first filed against a U.S. firm, the market values of the Japanese firms significantly decline. When a Japanese firm is sued for product liability, the U.S. firms register a significant increase in market value. However, these spillover results have to be interpreted with caution because of small sample sizes and possible confounding events.

Notes: This paper provides a coherent framework for classifying cases with multiple tortfeasors in relation to the efficient allocation of liability across the tortfeasors. We construct a simple model in which various tortfeasors contribute to a loss, and consider efficient liability rules under various assumptions.

Notes: We attempt to revise the inspection game used by George Tsebelis to model phenomena in criminal justice. The refinement has been conducted by disaggregating the game payoffs and then using findings from empirical studies to reconstruct the game. In contrast to Tsebelis' propositions, we find that the severity of punishment may affect the offending behavior of individuals. The result also holds for the case in which the authority initiates crime prevention programs, by providing incentives to those who do not have a criminal history. The impact of increasing the severity of punishment on reducing individuals' offending behavior is less certain than that of instigating crime prevention programs. This result holds so long as the authority does not alter the levels of enforcement.

Notes: Miller v. Schoene approved the uncompensated destruction of cedar trees that were alternate hosts to a fungus that damaged apples but not cedars. Supreme Court Justice Harlan F. Stone's opinion noted that deciding for either cedar or apple growers would amount to action by the state. Scholars have claimed that Miller marked the demise of the public/private distinction in constitutional law. This article presents historical evidence to the contrary. A widely-accepted standard--higher commercial value--commonly decided whose interests should prevail in such controversies. The analysis also shows that moral hazard explains why cedar owners were denied just compensation, which orchardists had originally been willing to tax themselves to pay. Cedar owners whose land actually gained in value when their trees were cut down nonetheless availed themselves of damages.

Notes: This paper shows that unilateral-harm contexts with role-type uncertainty can create incentives similar to bilateral-harm contexts. For this purpose, we show that the result of Dharmapala and Hoffmann (2005), namely that standard liability rules do not lead to efficient care choices by injurer and victim if precaution costs are interdependent and harm is unilateral whereas they can in the case of bilateral harm, depends on role-type certainty.

Notes: In some recent works, negligence-based liability has been severely criticized. It has been argued that negligence-based liability does not form a convincing basis for liability assignment. Causation-based liability has been proposed as an alternative basis of liability determination. Parisi and Fon (2004) have studied the efficiency properties of the causal apportionment of liability. The authors have shown that when care levels as well as activity levels of the parties affect the causation of an accident, causation based liability does not provide efficient incentives for the parties. In this paper, we assume the activity levels to be constant. Under this assumption, we have demonstrated the existence of liability rules that are efficient and at the same time `consistent' with the requirement of causation liability. In addition, it is shown that under these rules the equilibrium outcome is unique. The analysis has been undertaken in a very general framework.

Notes: Harsh sanctions are conventionally assumed to primarily benefit vulnerable targets. Contrary to this perception, this article shows that augmented sanctions often serve the less vulnerable targets. While decreasing crime, harsher sanctions also induce the police to shift enforcement efforts from more to less vulnerable victims. When this shift is substantial, augmented sanctions exacerbate--rather than reduce--the risk to vulnerable victims. Based on this insight, this article suggests several normative implications concerning the efficacy of enhanced sanctions, the importance of victims' funds, and the connection between police operations and apprehension rates.

Notes: This article develops a model in which firms may commit to disclose varying amounts of two types of information, accuracy information and agency information, and in which a regulator may also mandate disclosures. The resulting analysis provides a way to better understand the relationship between disclosure regulation and social welfare, including issues such as: how disclosure regulation can generate social welfare gains (contra Dye, 1990; Admati & Pfleiderer, 2000), why imposing disclosure requirements on only certain firms and certain information may be efficient, and why stricter mandatory disclosure requirements may be an efficient regulatory response to more robust public securities markets (contra La Porta, Lopez de Silanes, & Shleifer, 2006).

Notes: What explains the popularity of law and economics (L&E) in some academic communities and the scarcity of such scholarship in others? Many explanations have been given for the centrality of economic analysis in American legal thought and its marginality in Europe. This article examines what drives scholars to select L&E as a topic for research. It does so by implementing the methodology of many papers in the field - by assuming that regulation and incentives matter. Legal scholars face very different academic incentives in different parts of the world. In some countries, the academic standards for appointment, promotion and tenure encourage legal scholars to concentrate on L&E. In others, they strongly discourage such research. Thus, we should expect wide variation in the participation rate of legal scholars in the L&E discourse across countries. On the other hand, economists are evaluated with similar yardsticks everywhere, and thus their participation rate is likely to vary much less. The hypothesis of this paper is that academic incentives are a major factor in the level of participation in L&E scholarship. This "incentives hypothesis" is presented and then examined empirically with data gathered from the list of authors in L&E journals and the list of participants in L&E conferences. The data generally support the hypothesis. In legal academia, the incentives to focus research on L&E topics are the strongest in Israel, weaker in North America, and weakest in Europe. In fact, the data reveal that lawyers' authorship of L&E papers weighted by population is about ten times higher in Israel than in North America; while in Europe it is almost five times lower than in North America. By comparison, the weighted participation level of economists - who face relatively similar academic environments across countries - in L&E research is not significantly different across countries.

Notes: The text of a Laudatio delivered on September 16, 2006 by Professor Francesco Parisi on the occasion of the awarding of an honorary membership in the European Association of Law and Economics (EALE) to Professor Pietro Trimarchi. This was the first such honorary membership awarded by this association.

Notes: This paper develops a stylized model of international treaty formation and analyzes the different modalities with which states can become part of an international treaty according to the procedures set forth by the Vienna Convention on the Law of Treaties. We consider the rules governing accession to international treaties, distinguishing between three situations: (i) Treaties for which acceptance of a new member requires unanimous approval of the signatory states with an amendment of the original treaty agreement (closed treaties); (ii) Treaties where acceptance of a new member is made possible through approval by a majority of the existing member states (semi-open treaties); and (iii) Treaties where the original member states have agreed to leave the treaty open for accession by other states (open treaties).

Notes: Courts may determine that an offer is irrevocable due to the offeree's reasonable reliance on it. For instance, the landmark case of Drennan v. Star Paving Co. (1958) held a subcontractor's price offer to be irrevocable once it had been relied upon by the general contractor in computing his overall bid. However, a rule of implied irrevocability raises two main difficulties. First, it seems unfair to force the offeror to commit, but not the offeree. Second, from an ex ante perspective, the implied irrevocability rule seems to deter parties from submitting low-priced, unqualified offers. These concerns have led several scholars to argue for modification of the rule. This paper rationalizes the implied irrevocability rule by demonstrating that the above concerns are unfounded. We demonstrate that whereas some restrictions on the offeree's freedom to conduct bid shopping ex post (i.e., after the uncertainties are resolved) are essential in order to allow him to receive viable price offers ex ante, these restrictions need not be absolute nor legally enforced. Partial restrictions, in the form of a self-enforced Binding Range, may well suffice. The plausible existence of a self-enforced Binding Range ensures that offerors have incentives to submit irrevocable bids because they can expect to earn a profit by submitting the best offer. This paper characterizes the optimal size of the Binding Range, and explores what legal provisions should be applied when the self-enforced Binding Range is sub-optimal.

Notes: Introduction to the Twenty-Second Annual Conference of the European Association of Law and Economics, Ljubljana, Slovenia

Notes: In most countries, wireless communications rely on administrative allocation of radio spectrum. The inefficiencies associated with this centralized approach have led economists, starting with Coase in 1959, to suggest "propertyzing" radio spectrum. Critics of this approach assert that property rights impose prohibitive transaction costs and inhibit development of wireless services. Reforms enacted in Guatemala (in 1996) and El Salvador (in 1997) have largely implemented policies suggested by Coase, yielding a natural experiment. Evidence generated in the mobile telephone market suggests that these regimes are associated with relatively efficient policy outcomes, including abundant spectrum availability and a high degree of competitiveness, and with correspondingly low retail prices and high rates of output (minutes of use). Further, such markets appear to avoid high transaction costs in the public or private sectors. We conclude that these liberal reforms tend to produce results consistent with Coase's policy conjecture.

Notes: The making of the information/knowledge society has driven a flourishing body of literature on the law and economics of copyright. This paper introduces the articles collected in the following symposium, produced by a number of scholars participating in the lively worldwide community devoted to the study of the economic role of copyright law in light of current technological change. The aim of these writings as a whole is to broaden the analytical perspective and stimulate further research, thanks to a wide selection of topics related to behavioral analysis, competition policy, insurance, cultural economics and other fields.

Notes: This paper considers how the economics of intellectual property can benefit from what has been published in the area of the economics of insurance. The objective is to show that the two areas of study are sufficiently related for the insights of the latter to be relevant to the former. Since the economics of insurance is a very mature subject, while the economics of IP is much younger, it seems that there could be many valuable lessons from insurance that can be imported into IP, at least at a first degree of approximation.

Notes: The music and movie industries have recently added individual consumers as the target of the file sharing lawsuits. It is often questioned why the industries use substantial resources to fight in the courtrooms instead of making better and more affordable products. In this article, we first analyze the reasons of the industry behavior suggesting that the court strategy may be in fact more effective, at least in the short term, than it should be based on pure economic calculations. However, the empirical evidence seems to imply that lawsuits fail to send a strong signal to individuals about the society's supposedly negative attitude towards file sharing. General deterrence from the threat of being sued does not help in the end either because people are risk seeking in the face of making a decision between a certain and probable loss. In conclusion, we argue that the court strategy cannot be used to establish any social norm with a long lasting effect on individual behavior as long as the peer pressure works towards the opposite direction.

Notes: Copyright law provides an excellent case study with which to evaluate Harold Demsetz's theory of property rights. Regardless of how one feels about the relationship between property and intellectual property, it is hard to escape the fact that intellectual property rights have expanded and grown more property-like and more privatized in recent decades. In this article, I critique the undeniable Demsetzian trend in copyright law and challenge some of the fundamental premises upon which rest the normative arguments for continued privatization and propertization of intellectual resources. First, I focus on the perceived benefits of internalizing externalities, arguing that externalities do not necessarily distort incentives or, more generally, the market allocation of resources. For many externalities, there is no efficiency benefit to internalization (whether accomplished by Pigouvian taxes/subsidies or property rights). In the end, the benefits of internalization must be carefully assessed rather than assumed. The view that increasing the degree of internalization through private property rights inevitably leads to increased incentives to invest in creation or distribution is not well-established in either theory or practice. Second, I focus on the frequently-invoked solution of efficient licensing and the "logic" that property rights should be extended "into every corner in which people derive enjoyment and value...[so that] signals of consumer preference [may] trigger and direct [producers'] investments" (Goldstein, 1994). I argue that a fundamental flaw in this logic undermines the efficient licensing hypothesis. Social demand for individuals' access to and use of copyright protected works often exceeds private demand. Purchasers'/licensees' willingness to pay reflects only their private demand and does not take into account value that others might realize as a result of their use. As I explain, many uses of copyrighted works generate value for third-parties. Finally, drawing from the first two points, I argue that, from a Coasean perspective, both externalities and property rights have symmetrical and reciprocal potentials to distort the market allocation of resources. A priori and devoid of context, one cannot say that the potential distortions caused by a property right, externality, or incremental change in a property right have a net positive or negative effect on social welfare.

Notes: This paper investigates the interplay between copyright law and antitrust law in two distinct respects. We first argue that the origin of copyright seems to be rooted not only in the need to foster the production and the spread of knowledge but also in the necessity of limiting market power on the side of distributors. We then show the potential impact on market competition of the evolution of copyright as a property rule. While property rules reduce transaction costs in the standard case of bilateral monopoly over the exchange of information goods, they might increase transaction costs. When coupled with market power, a property rule enables the right holder to control uses and prices so as to implement entry deterrence strategies against potential competitors. Conversely, we argue that reversing property rules in favor of competitors or switching to liability rules for copyright may restore competitive outcomes. This conclusion brings new insights on the application of the essential facility doctrine to copyrighted works.

Notes: Over the last century, performers gradually acquired statutory protection of their economic and moral rights. These rights are not copyright in the legal sense but neighboring rights and until recently, they were mainly remuneration rights that are collectively administered. With the WPPT (WIPO Performers and Phonograms Treaty), performers now have individual exclusive rights for digital performances; this leads to the question: what has motivated this change - is it a change in the perception of the value of performer or a change brought about by the changing technology of copying or, indeed, a change that reflects different economic costs and benefits? The paper discusses the role of copyright law as an incentive to performers and asks if the economic role of the performer is so different from that of the author. The conclusion is that a complex interaction of the legal regulations, economic conditions and institutional arrangements for administering these new rights will determine the outcome.

Notes: This paper uses a strategic entry-deterrence framework to study the relationship between copying cost, and a monopolist's profit and product quality. The potential entrant is a fake-producer producing and selling identical copies of the monopolist's product. The monopolist's subgame perfect equilibrium quality and profit is either unaffected or positively affected by changes in the copying cost. Tariffs on copying devices may be an effective copyright right protection instrument. Though an increase in tariff increases the product quality and monopolist's profit, its welfare effects are ambiguous.

Notes: Copyright protection can be divided into ?ve levels: subject matter, level of abstraction, exceptions, term limit, and restricted acts. Although copyright exceptions, in particular the fair use doctrine, and term limit have been subject to signi?cant economic analyses, studies on protection and the limits of protection of subject matter, and level of abstraction in copyright are still fairly scarce. Furthermore, the dominant model for optimal copyright protection is problematic for it requires a standard-based copyright doctrine to achieve what was postulated. Since copyright doctrines in respect of protection based on the level of abstraction are more rule-based in nature, an alternative explanation is in order. In a recent article titled "Copyright as a Rule of Evidence", Douglas Lichtman (2003) hinted such an approach where evidence plays a role in explaining this set of doctrines. In this paper, we use an abstraction and a probabilistic model to explain copyright doctrines. Copyright doctrines such as the idea-expression dichotomy, the originality requirement, de minimis rule, substantiality requirement, merger doctrine, and the scènes á faire doctrine, have the effect of creating a protection divide. Doctrines such as the causal connection requirement, independent creation defence, and the objective similarity requirement, further create an inference divide. We show that the protection and inference divides are relevant in protecting the literal and non-literal dimensions in a copyrighted work. Furthermore, we ?nd that between the protection divide and the inference divide, there is a region of non-strict liability protection. All these three regions, and the related copyright doctrines, are explained by an evidence theory of minimising the risk of court error in deciding infringement cases.

Notes: Sequential innovation with actual patent infringement and uncertainty in litigation is analyzed. Comparative statics shows that within a wide range of model parameters, a basic researcher holding a patent is able to extract all of the profit facilitated by the basic innovation. The patent holder achieves this by offering a licensing contract which the subsequent innovator accepts in the shadow of paying infringement damages. It is further demonstrated that, under rather general circumstances, broader patent breadth may diminish the patent holder's incentive to innovate: that is to extract all of the profit from the subsequent innovator commercializing the innovation.

Notes: Many legal scholars believe that equity should be considered in designing legal rules. Kaplow and Shavell (1994) seriously challenged this approach. They proved that the tax transfer system is superior to legal rules in redistributing wealth. This paper reexamines their 'double distortion' claim, presenting two main arguments. The first shows that the 'double distortion' claim is not necessarily valid under welfarism. In particular, under an ex post approach to welfarism, which generally implies that society pays attention to the ex post (actual) rather than expected redistribution, the proof of the tax superiority breaks down. Secondly, and more importantly, it is proven that, in principle, tort rules can easily be designed to circumvent 'double distortion' effects. Thus, the tort system is not inherently more inefficient than the tax-transfer system in accomplishing redistribution. The paper generally concludes that although there are often no good reasons for redistribution within the legal system, theoretically and a priori it is not an inferior redistribution mechanism.

Notes: Control of multirate systems is a challenging problem due to several reasons such as increased complexity in the design with tighter performance specifications. In this work, an algorithm for multirate constrained predictive control (MCPC) is presented. The multirate predictive control system includes a multirate state estimator, which provides inter-sample estimates of state variables of the process from infrequent and slow measurements. Constraints are addressed rigorously in this framework. The proposed design method is verified via simulation as well as experimentation. The results of the multirate predictive control for temperature control of a stirred tank system are shown and compared with those of a proportional integral (PI) control system.

Notes: Fluid catalytic cracking (FCC) is the refinery process for the conversion of high molecular-weight hydrocarbons to produce higher valuable products such as gasoline. The optimization of FCC process is challenging due to the complex interactions between a large number of dependent and independent parameters. One of the most uncertain aspects of a fluid catalytic cracking (FCC) unit is the description of fluid-solid mixing at the riser entrance. Most of the existing models assume an instant mixing of solids and gaseous reactants. However, a finite mixing length at the bottom of the riser may have a pronounced effect on the FCC operation, particularly, when very short residence times are allowed in the current commercial FCC risers. A good solid-fluid mixing is essential to ensure a complete feed vaporization which is important for several reasons including assuring a thorough catalyst to oil contact and minimizing coke deposition. In this study, the Eulerian-Eulerian multiphase flow and the 3-lump kinetic models were used to simulate the hydrodynamics and cracking reactions occurring in the FCC riser reactors. The model demonstrated the capability of commercial CFD code FLUENT 6.2 to describe the flow field in the riser reactor. The model also takes into account the temperature, the heat of reactions and gasoline distribution along the riser height.

Notes: A detailed mathematical dynamic model of reactive batch distillation column is formulated for ethyl acetate synthesis and presented in terms of differential and algebraic equations (DAEs). These DAEs are solved using fourth order Runge-Kutta method in MATLAB® to obtain the detailed column dynamics. The simulation results provide the dynamics of reboiler and distillate compositions, reboiler temperature, ethyl acetate purity in the accumulated distillate and conversion of the reactants. These results are analyzed to derive the optimum operating policy, i.e., reflux ratio and batch time.

Notes: The problem of the on-line estimation of the reaction heat in a continuous stirred tank reactor from temperature measurements is addressed in this paper. The proposed uncertainty observer is based on differential algebraic techniques, such that the algebraic observability condition of the uncertainty from noisy temperature measurements is easily verified and the observer structure is very simple, which lead to feasible implementation. The observer proposed is robust against noisy measurements and sustained disturbances. The good performance of the observer is shown by means of numerical simulations and is compared with a nonlinear Luenberger-type observer.

Notes: The objective of this study is to simulate the green petroleum coke calcining processes using the simulation program HYSYS and using actual industrial data. Because counter-current mass flow is not allowed in the HYSYS program, the kiln was described by using fictive streams and unit operations. By the simulation, it is possible to predict the operating conditions that control the contents of undesirable impurities in the calcined petroleum coke, namely, sulfur, volatile matter and moisture contents. It also gives the desirable calcined petroleum coke properties such as density. Apart from the metal contents, the simulation allows the coke calciner to utilize any type of green coke regardless of the undesirable impurities. This is done without resorting to the costly blend from different types of green cokes. Simulation is also effective in controlling and optimizing calcination processes' variables. From the simulation it was found that it is possible to process any type of green coke for varying sulfur, volatile matter and water content by adjusting the amount of tertiary air and/or fuel. Two simulation cases were studied for low and high volatile matter contents of 8.5 and 14.7 wt% in the feed. Mass flow rates of fuel and tertiary air were both increased in the first case, while no fuel was required in the second case. The benefit from this is to reduce the operating costs.

Notes: Dynamic simulation and optimization of a hydrogenation reactor system were developed and investigated in the present work. The process mainly consists of three adiabatic fixed bed hydrogenation reactors in series in addition to one heater before the first reactor and three coolers after each reactor for interstage cooling. The feed flow rate to the unit, the feed temperature or the carbon monoxide content of the feed may change and cause variations of the outlet temperature of reactors. Therefore, it is essential to control the inlet temperature of each reactor. There is a temperature controller before each reactor and also one after the third reactor. The tuning parameters of the controllers were optimized in three different cases, taking into account the process constraints. In each case, a special disturbance was forced to the process. Because of catalyst deactivation, the inlet temperature of reactors must be increased during the running period in order to have the desired conversion. Therefore, the optimal inlet temperature profile was determined based on SOR, MOR and EOR data. Optimization of the process was done by the use of a hybrid GA-SQP method. The new hybrid method was developed to overcome the difficulties of both methods. The genetic algorithm (GA) which is a stochastic method, is relatively slow, but is not sensitive to the initial point. In contrast, sequential quadratic programming (SQP) method is a deterministic method which is fast, but very sensitive to the initial point and gets trapped in local optima. In the newly developed hybrid method, the SQP method speeds the solving procedure, while the GA enables the algorithm to escape from local optima. An industrial acetylene hydrogenation system was used to provide the necessary data to adjust kinetics and to validate the approach.

Notes: A new simulation method for investigating mixed aqueous electrolyte systems at thermodynamic equilibrium is presented. Based on the commercial simulation package IPSEpro, a graphical procedure for assembling equilibrium systems followed by simultaneous solution of the underlying equation system was developed. At graphical setup, species and reactions objects are connected by the information of activity and stoichiometry in a network-like manner. Consequently, the resulting equations of mass action, the electro-neutrality and balance conditions are solved incorporating the Pitzer activity coefficient model and equilibrium constants from thermodynamic standard data. The method developed allows fast and flexible application of the complex thermodynamic principles to engineering tasks. The modeling approach and all basic models for graphical input and simultaneous solution of coupled equilibrium conditions are explained. For demonstration of the simulation method, example simulations for the systems of H2SO4-H2O, CaSO4-H2SO4-H2O and NaCl-CaSO4-CO2-H2O are described and evaluated successfully.

Notes: The outputs of statistical process control (SPC) tools developed for fault detection are comparatively examined while applied to actual data collected in an industrial plant. The influence of added information gathered from the plant operation under different strategies is analyzed. Particularly, standard principal component analysis (PCA), kernel PCA and the Hotelling's T2 charts are inspected for a reported problem. The effect of training the tools either with an extended historic databank obtained under standard operation, or including also non-conventional conditions, is studied. The ability of the tools to provide a specific alarm and identify the responsible variable is examined by analyzing the contributions per variable to the SPE and the T2 statistics. In addition, the capacity of the tested tools to adapt to a new operation strategy is compared.

Notes: This paper presents a Fault Detection and Isolation (FDI) method for stochastic nonlinear dynamic systems. Our contribution consists of showing another method of tackling the problem of the physical origin diagnosis of faults by combining the technique based on the innovations and the technique using the multiple Kalman filters for a nonlinear dynamic system strongly non-stationary. The usefulness of this combination is the implementation of all the faults dynamics if the decision threshold on the standardized innovation exceeds a fixed value. In the other case, one filter is enough to estimate the process state. An algorithm is described and applied to a perfectly stirred chemical reactor functioning in a semi-batch mode. In this paper, the chemical reaction used is an oxido reduction one, the oxidation of sodium thiosulfate by hydrogen peroxide.

Notes: In this paper a technique borrowed from modern control theory, called sliding mode observers, is used as the vehicle for nonlinear parameter estimation. The observer is a dynamic system derived from the original state equations that guides, in real time, parameter values from initial estimates to optimal ones. This is done by driving errors between the estimated and "data" states to zero. Observers are developed and demonstrated for the Monod model for biokinetics, which has been used widely in bioprocess design for both aerobic and anaerobic bio-processes under both toxic and non-toxic conditions. The Monod model has four parameters; often, two of the parameters (y, yield and b, decay coefficient) are assumed or calculated from other sources such as from thermodynamic considerations. The other two parameters (k, maximum specific uptake rate of the substrate and ks, the half saturation constant for growth) are determined from experimental data. The determination of these parameters is often performed using nonlinear regression or related methods and it has been demonstrated that these are particularly difficult parameter estimation problems. Examples are presented where only k is unknown and when both k and ks are to be determined. One case where the data are corrupted with noise is considered. The primary objective of the paper is to introduce the methodology of sliding mode observers for nonlinear parameter estimation to the chemical and process engineering communities.

Notes: The multizone circulating reactor (MZCR) technology is a newly announced reactor design for solid-catalyzed gas-phase polymerization. The process is characterized by two hydrodynamically distinct but interconnecting polymerization zones, thus forming a continuous loop of polymer flow between the said zones. In the present study, a dynamic model for the MZCR reactor is developed to illustrate the basic dynamic behavior of the new reactor design; the model is used to study the copolymerization of ethylene with butene. Several parameter sensitivity analyses are performed to show the computer-simulated time responses for reactor temperature, number-average molecular weight, weight-average molecular weight, catalyst feed rate and the monomer concentration along the reactor length.

Notes: Expandable Polystyrene (EPS), a material of the insulation productions and packages, is commonly produced in a batch process. The control of the batch process is based on predefined process recipes and process parameters such as mixing properties. The EPS production has to be able to satisfy the aims and quality requirements of the markets, which causes additional demands on the process control. In this paper we demonstrate the optimization and modeling application for the EPS-batch process. The application consists of a production optimization tool and a simulation tool for the process parameters based on the Multi-Layer Perceptron network (MLP) with retrain properties. The software can be used at the operational level as well as at the process management level. The features are programmed into standalone software built up in the Matlab environment and it is tailored for the needs of the EPS production company StyroChem Ltd. The results show that the application can offer an efficient tool to economize production and storage costs.

Notes: To investigate the factors affecting splashing in Peirce-Smith copper converters of Sarcheshmeh copper complex, South-East Iran, a laboratory scale model with dimensions one eighth of the actual converter was designed and assembled. The model was filled with water. Air was impinged onto the water. The sequence of events was subsequently recorded using high speed cameras. Factors affecting splashing such as blowing angle, volumetric flow rate of air, and the distance of the blowers from water surface were studied.Using a value of 2.65×10-11 for Morton dimensionless number, it was found that splashing may be reduced by 75% if the air speed in the tuyeres is reduced from 155 m/s to 30 m/s while the nozzle distance from the melt free surface is between 2 to 0.5 meters.

Notes: Material reuse/recycle has gained much attention in recent years for both economic and environmental reasons. Process integration techniques for water network synthesis have evolved rapidly in the past decade. With in-plant water reuse/recycle, fresh water and wastewater flowrates are reduced simultaneously. In this work, linear programming and mixed integer linear programming models that include piping cost and process constraints are developed to retrofit an existing water network in a paper mill that was not originally designed with process integration techniques. Five scenarios are presented, each representing different aspects of decision-making in real process integration projects. The fifth scenario makes use of fuzzy optimisation to achieve a compromise solution that considers the inherent conflict between maximising water recovery and minimising capital cost for retrofit.

Notes: The NASA low-temperature oxidation catalyst (Pt/SnO2), originally developed for space-based carbon dioxide laser applications has been recently adapted to address formaldehyde destruction in industrial smoke stack emission streams. A mathematical model is developed that can be used to correlate the observable chemistry occurring on the surfaces of a monolith with the volumetric flow rate of the gas and cross sectional area of catalyst surfaces as well as quantifying process design variables such as pressure or temperature of an exhaust gas stream.

Notes: A more realistic numerical technique hereafter known as Hegde's Ultimate Numerical Technique (HUNT) is developed and demonstrated on a one dimensional and a two dimensional steady state diffusion problem of heat transfer. The available numerical methods developed are based on finite difference technique neglecting the contribution of higher order terms in Taylor series expansion of the function leading to an approximation and the error in the solution. In the present effort of the HUNT, the optimization of the partial derivatives leads to the elimination of the error and justifies the stability and the convergence of the solution. The HUNT procedure based on the interface theory developed by the author, is capable of providing the ultimate optimum solution to all the partial derivatives considered as decision vectors. Even though the HUNT is demonstrated on one dimensional and two dimensional steady state diffusion equations, it does not require rigorous efforts to apply it to three dimensional problems of fluid flow and heat transfer. As pilot exercises the HUNT is demonstrated on a one dimensional circular fin and a two dimensional plate to obtain the temperature distribution. The result is compared with the analytical method and the finite volume method for which the results are available in the literature. To the knowledge of the authors, HUNT is both different and a unique example of its kind.

Notes: Fluidised-bed Catalytic Cracking (FCC) units, are one of the most complex and interactive processes in the refining industry, hence they are difficult to operate and to control; on the other hand they are one of the main producers of gasoline, which is an incentive to improve operation policies. This work deals with the design of regulative control law for stabilisation of reactor and regenerator temperatures considering that kinetics terms are poorly known, which is the industrial case. This control law uses on-line estimates of the heat of reaction, obtained from Kalman-like filtering of measured temperatures. The controllers designed are similar to standard input-output linearising controllers and can be tuned by standard techniques. Performance of the estimation technique under closed-loop operation is analysed by numerical simulations, considering noisy measurements and time delay in the regenerator control input.

Notes: Generic technology is presented for the optimal screening of reaction and separation process interactions. The proposed scheme enables the use of particularly rich superstructure formulations that are comprised of two types of generic synthesis units with flexible representation modes. A reaction unit enables a detailed representation of the reaction and a conceptual representation of separation systems is facilitated through separation task units. Possible process design interactions are embedded in the superstructure formulations as combinations of generic units. The design options are explored using stochastic optimisation techniques suitable for this class of problems. The synthesis scheme supports the decision making process in early process design stages and prepares problem definitions for later stages. Conceptual screening functionalities reveal design insights into the performance of complex reaction-separation systems based on the limited modelling information available early in design. This enables the identification and inclusion of the relevant design information into the superstructure formulations employed in the subsequent design stages.

Notes: This article presents a solution to pH control based on model-free learning control (MFLC). The MFLC technique is proposed because the algorithm gives a general solution for acid-base systems, yet is simple enough for implementation in existing control hardware. MFLC is based on reinforcement learning (RL), which is learning by direct interaction with the environment. The MFLC algorithm is model free and satisfying incremental control, input and output constraints. A novel solution of MFLC using multi-step actions (MSA) is presented: actions on multiple time scales consist of several identical primitive actions. This solves the problem of determining a suitable fixed time scale to select control actions so as to trade off accuracy in control against learning complexity. An application of MFLC to a pH process at laboratory scale is presented, showing that the proposed MFLC learns to control adequately the neutralization process, and maintain the process in the goal band. Also, the MFLC controller smoothly manipulates the control signal.

Notes: This article demonstrates, using simulations, the potential of the S-system formalism for the inference of unknown chemical reaction networks from simple experimental data, such as that typically obtained from laboratory scale reaction vessels. Virtually no prior knowledge of the products and reactants is assumed. S-systems are a power law formalism for the canonical approximate representation of dynamic non-linear systems. This formalism has the useful property that the structure of a network is dictated only by the values of the power law parameters. This means that network inference problems (e.g. inference of the topology of a chemical reaction network) can be recast as parameter estimation problems. The use of S-systems for network inference from data has been reported in a number of biological fields, including metabolic pathway analysis and the inference of gene regulatory networks. Here, the methodology is adapted for use as a hybrid modelling tool to facilitate the reverse engineering of chemical reaction networks using time series concentration data from fed-batch reactor experiments. The principle of the approach is demonstrated with noisy simulated data from fed-batch reactor experiments using a hypothetical reaction network comprising 5 chemical species involved in 4 parallel reactions. A co-evolutionary algorithm is employed to evolve the structure and the parameter values of the S-system equations concurrently. The S-system equations are then interpreted in order to construct a network diagram that accurately reflects the underlying chemical reaction network.

Notes: Like many globalized industries, the pulp and paper sector finds itself with an increasingly demanding clientele, who continually expect a better and cheaper product. An important design strategy being employed to address this objective is through an analysis of the vast quantity of process and product data accumulated in plant-wide data historians, in order to improve operations. Mill processes are multivariate, meaning that the interactions between the variables are as important as the variables themselves. Process relationships must therefore be modeled as a group, using an appropriate simulation technique like Multivariate Analysis (MVA), with suitable data pre-processing to account for process upsets and other disturbances. In a previous paper, using an Eastern Canadian newsprint mill as an industrial case study, we showed that it was possible to find statistically significant correlations between wood chip refiner operation, intermediate pulp quality, and final paper quality using data-driven models. This was true even though some important process parameters went unmeasured, process lags changed with time, and the operation of key equipment items changed gradually with use. The present study compares the use of different timescales and combinations of unit operations to determine which ones yield the best MVA simulations. Because plant operating data were used, and experimental design was not practical, it is possible that some of the correlations found could be attributable to coincidence. We therefore added and removed variables and time periods to explore the validity of the models. The best MVA models were obtained by using a shorter (1-hour) data timescale, although use of a weighted-average filter helped to bridge the gap between these faster readings and the slower paper quality trends.

Notes: The manuscript is focused on the optimization of a batch distillation column that is actually formulated in terms of control problem. The final objective is finding the optimal time-dependent reflux profile. In order to fulfill the call for simplicity and functionality from the industries, the reflux profile was approximated by means of a piece-wise function with three time intervals. A first-principles model, derived from the literature, proved to be a good trade-off between computational effort and accuracy. The capacity factor (CAP), defined as the on-specification products produced per time unit, is the performance index that must be maximized. The optimization problem was solved by a specifically modified Simplex method that demonstrated a good behavior in case of discontinuous objective function. Finally, a graphical analysis of the capacity factor was performed to show the irregularities of such a function.

Notes: In this paper, the operability of a high-purity distillation column is presented. This process is known to be difficult to control and operate due to the high degree of nonlinearity of the process. The analytical framework used to assess the process operability are the regions of steady-state attainability, recently developed by Rojas et al (2006). This framework is selected because it allows one to assess the viability of applying linear control to a nonlinear process solely based on the process nonlinear steady-state information. In this approach, two operating regions are defined in both input and output spaces, which provide an indication of the inherent difficulty of controlling the nonlinear process using linear output feedback. In order to integrate this operability analysis in process design practice, the analysis is based on a numerical steady-state simulation of the column using ASPEN PLUS®. By using ASPEN Sensitivity Analysis Tool that varies the column inputs across a pre-defined Available Input Space, the steady-state nonlinear map of the column outputs can be generated. Based on these simulation results, the regions of steady-state attainability can be obtained and used to provide insights to the operability properties of this highly non linear system.

Notes: The formulations for dynamic data reconciliation found in the literature assume that the error minimization problem is solved as a non-linear optimization problem constrained by the material and energy balances in the form of time-dependant non-linear differential equations. In this paper we introduce a new approach or an unconstrained formulation of this problem using a dynamic process simulator or model calculator and its potential application to chemical process control.

Notes: The Crude Preheat Train (CPT) is a set of large heat exchangers which recover the waste heat from product streams back to preheat the crude oil. The overall heat transfer coefficient in these heat exchangers may be significantly reduced due to fouling. One of the major impacts of fouling in CPT operation is the reduced heat transfer efficiency. The objective of this paper is to develop a predictive model using statistical methods which can a priori predict the rate of the fouling and the decrease in heat transfer efficiency in a heat exchanger in a crude preheat train. This predictive model will then be integrated into a preventive maintenance diagnostic tool to plan the cleaning of the heat exchanger to remove the fouling and bring back the heat exchanger efficiency to their peak values. The fouling model was developed using historical plant operating data and is based on Neural Network. Results show that the predictive model is able to predict the shell and tube outlet temperatures with excellent accuracy, where the Root Mean Square Error (RMSE) obtained is less than 1%, correlation coefficient R2 of approximately 0.98 and Correct Directional Change (CDC) values of more than 90%. A preliminary case study shows promising indication that the predictive model may be integrated into a preventive maintenance scheduling for the heat exchanger cleaning.

Notes: In the production process of aluminium reduction cells, the anode bubble laden layer has several important influences on the performance of the aluminium reduction cells. Especially for a "drained cathode cell", without the agitating of movement of the melted metal, the bath flow field could be more important. In this paper, the electrolyte two-phase flow fields were studied by using numerically simulation method based on a two-phase turbulence model combining the k - ? model and the Discrete Random Walk model. The results show that: the motion of the bubbles mostly exists within a thin layer under the anode, which results in inducing local electrolyte to flow around the anode in various circulation flows; the flow field in the anode-cathode space can be divided into three regions with different characters; the results also show the Driving action of bubbles is closely related to the current density, inclination of anode and the anode-cathode distance. In general, the increasing in the current density increases the electrolyte velocity and the turbulent kinetic energy. The decrease in ACD significantly enhances the uniformity of the electrolyte flow field in the anode-cathode space. The increase in anode inclination angle increases the velocity of the electrolyte in the anode-cathode space, which would be beneficial to improving the diffusion and dissolution of the alumina and reducing the resistance between the anode and cathode.

Notes: When a paint film is applied to the underside of a horizontal substrate, instabilities will lead to the formation of pendant drops. For sufficiently thick coatings, the drops may even detach from the coating before the coating dries. But even for thin paint films, with sufficiently high evaporation rates and viscosity, drop formation will lead to coating irregularities with thick regions (corresponding to the center of the drop) adjacent to much thinner regions (corresponding to troughs between drops.) In this paper we present a mathematical and numerical model based on the lubrication approximations for the drying of paint films on the underside of horizontal substrates. The paint is modeled as a multicomponent liquid with one non-volatile and one volatile component, termed the ``resin'' and ``solvent'' respectively. Our model includes the effects of surface tension and gravitational forces, and we show that surface tension gradient effects due to solvent evaporation must be considered to correctly model the post-application flow of certain paints. Simulations are given for an array of parameters, and they show that surface tension gradients can dramatically affect the post-application behavior of a model paint film, generally causing the suppression and reversal in drop growth, consequently leading to a more even final coating layer.

Notes: The hot pressing operation is one of the most important operations in medium density fibreboard (MDF) manufacture. Complicated dynamic interactions occur during pressing, including heat transfer, moisture movement, development of gas pressure, internal stress development and relaxation, wood consolidation, resin curing, bonding between particles and eventual development of a non-uniform density distribution through the panel thickness. Consequently the mat experiences continuously changing internal conditions (temperature and moisture content) as the pressing operation proceeds. The vertical density profile (VDP) has a major influence on the MDF strength and physical properties. This influence of the VDP on the board properties is generally recognised, but the formation of the density profile and their specific effects on the board performance have proved difficult to quantify. A mathematical model based on theoretical analysis and experimental information is being developed. In the model, the mat is divided into a number of thin parallel layers. The deformation of each layer is a function of stress, temperature and moisture content of the layer. The model incorporates the variation of the mat mechanical and rheological properties with moisture content and temperature. The changes in temperature and moisture content are provided by a separate heat and mass transfer model. The present model can predict stress, strain, layer deformation and density across the thickness during pressing. The performance of the model was validated by experiments conducted in a pilot-scale press. Twelve MDF boards were made with different pressing parameters, and the VDP were measured and compared with the simulation results from the model. The model could predict the density profile with an acceptable accuracy for the main variables that control the manufacturing of MDF boards.

Notes: The papers in this issue of Chemical Product and Process Modelling are substantially those that arose from special sessions on ``process simulation and control" (organised by Brent R. Young) and ``mathematical modeling" (organised by Mark I. Nelson) at the 34th Australasian Chemical Engineering Conference (held between 17-20th September 2006, in Auckland, New Zealand). The papers in this special issue are available at: http://www.bepress.com/cppm/vol2/iss2. The papers featured in this issue have been revised and extended from CHEMECA and re-reviewed before publication here.All the papers in this issue use mathematics. However, this special issue only features a small number of the presentations at CHEMECA that use mathematics. Mathematics finds many practical applications within chemical engineering and consequently presentations involving mathematics were featured in many special sessions throughout CHEMECA. Some of these presentations will appear in special issues elsewhere. In particular, the papers from every session that were nominated for the John Brodie award are appearing in a special issue of the Asian-Pacific Journal of Chemical Engineering.

Notes: The deposition rates for a water spray on a plate have been studied in a rectangular box configuration to determine the effects of turbulence and droplet size in a relatively simple geometrical configuration, with the aim being to assess the ability of a CFD simulation to predict the actual wall deposition fluxes and the trends in these fluxes in such a geometry. The main air velocities that were used in this study were 1 m/s and 2 m/s inside the box. The results from the Computational Fluid Dynamics (CFD) simulations underpredicted the percentage deposition on the plate significantly (by about 75% and lower) compared with the experiments. The droplet size effects on the deposition rates were studied by varying the atomizer air pressure (air flow rate). The inlet turbulence level was changed by placing a mesh at the box inlet. The results of experiments and simulations showed similar trends when decreasing the droplet size. Increasing the turbulence intensity at the box inlet seems to result in underpredicting the actual amounts of deposition, since the movements of the fine droplets are not well predicted by RANS approaches, because the RANS approaches do not predict the gas-phase turbulence levels near the walls well. The other reasons for the underprediction in the simulations could be coalescence of droplets in the spray, dispersion of droplets due to turbulence and radial variations in droplet velocities and sizes in the spray.

Notes: A general expression which is useful for predicting the radial distributions or for analyzing and interpreting experimental data is derived for a liquid-solid circulating fluidized bed. The effect of both the radial liquid velocity and solids holdup distributions are taken into account in the analysis. Both effects are analyzed and are related to the operating variables of superficial liquid velocity, jl, superficial solids velocity, js, and cross-sectional average solids holdup. The results predicted by the analysis are compared with the experimental data obtained for various two-phase flow regimes, when different solids and bed dimensions are applied. The model predictions show good agreements with the experimental data and reasonable trends when different solids and bed dimensions are applied. Stronger non-uniformities in flow structures are found in larger size particles systems, with larger solids density and/or larger diameter columns. Radial solids holdup distribution is related with the cross-sectional average solids holdup. Good agreement with data and reasonable trends are observed.

Notes: Flexible manufacturing and processing, which are becoming crucial for companies that wish to remain competitive in today's changing market environment, require the detailed modeling of process operations, as well as the incorporation of utility consumption modeling and energy integration strategies. In this paper, a comprehensive modeling environment for heat and power integration in batch and semi-continuous processes is presented. Moreover, a general procedure concerning utility generation and utility system design optimization is described. This framework has been tested and evaluated as part of an industrial case study. The results obtained indicate that the general design methodology developed is effective for process integration of time-dependent processes with combined heat and power.

Notes: This paper attempts to address a common difficulty encountered when trying to justify a process control revamp or upgrading project -- the ability to quantify potential savings/profits. A relatively simple procedure that is applicable to both continuous and digital controllers is described. Given models of the process and the controller, knowledge of the disturbance frequencies and their variances, the method is able to predict accurately the variance of the controlled output of linear control systems.

Notes: In the modeling of hindered-settling bed separators, the published separation mechanisms are based on differences of particle density and size distributions, without the details of the complexity of particles-liquid interactions. A fluid dynamic model for the separator is developed using the Euler-Lagrangian approach of Computational Fluid Dynamics (CFD). Fluid motion is obtained from solving the movement of liquid governing equations. The damping effect on flow patterns caused by the movement of particles resulting in liquid-particle coupling is included in the models. Effects of particle size, particle density compositions, feed rate, feed water flow rate, and upward fluidizing water flow rate, etc., are simulated in the 2-D separation model. Flow pattern effects on the separation of fine particles in the separators with center downward-flow and side cross-flow feed systems are investigated.

Notes: The Local Municipal Corporation operates a centralized treatment facility (CTF) to facilitate effective and safe disposal of hazardous biomedical waste generated from various health care facilities (HCFs) in a region. Managing these wastes is a challenging task due to unpredictable variation in amount of waste received at a CTF. In this paper a mathematical model is presented that predicts the load on CTF as a function of bed occupancy of some representative hospitals in the region. Models are available to predict waste generated from a particular hospital in terms of bed occupancy; however, it is difficult to predict total waste received at CTF that also includes wastes from HCFs other than hospitals. To develop the model, data for the waste generated at source and for waste incinerated at CTF were collected for two consecutive years on daily basis. It was observed that two hospitals are representative of the rate of biomedical waste generation in the region from all HCFs. In two consecutive years, there were significantly different trends in overall waste incinerated at CTF. The reason for variation in waste load at CTF was observed to be due to uneven load on the HCFs in two consecutive years.

Notes: There is an increasing focus on the hydrometallurgical processing of nickel-rich laterite ore due to declining global reserves of nickel sulphides. The development of new technology called hybrid nickel leaching circuit that encompasses pressure acid leaching (PAL) and atmospheric leaching (AL) processes has made processing of low-grade ores (with nickel content as low as 0.5%) a possibility. However, significant challenges exist in lowering the operating costs for this new process including the reduction of sulphuric acid and the energy required to heat the pulp to the desired temperature (250oC). To address above challenges, a detailed understanding of the process chemistry together with interactions between unit operations feeding into and out of the system is required. To accomplish this, a software package with powerful convergence algorithms, control loops, background chemical equilibrium, aqueous thermodynamics and extensive databases containing information on the physical properties of desired components is needed. Using such a process simulator, it is possible to produce numerically rigorous mass/energy balances for as many variations of the model as desired. This allows enhanced analysis of the flowsheet, better process design, and ultimately, better business decisions. Although there have been several studies on hybrid circuit, most of these studies have only dealt with the effects of process variable such as temperature, acidity, pulp density. Thus far, no complete study has been published on the modelling of different proposed scenarios. The present work constitutes an effort towards bridging this gap. A number of possible flowsheeting combinations were simulated using a commercial software packages SysCAD, and some optimal configurations were identified.