Unveiling Fairness for the Consumer:The Law, Economics and Justice of Expanded Arbitration

In recent years, the US Supreme Court has rather controversially extended the ambit of the Federal Arbitration Act to extend arbitration’s reach into, inter alia¸ consumer matters, with the consequence that consumers are often (and unbeknownst to them) denied remedies which would otherwise be available. Such denied remedies include recourse to class action proceedings, effective denial of punitive damages, access to discovery and the ability to resolve the matter in a convenient forum.

The court’s extension of arbitration’s ambit is controversial. Attempts to overturn this extension have been made in Congress, but to no avail. In contrast to American law, European consumer law looks at pre-dispute agreements to arbitrate directed at consumers with extreme suspicion, and does so on the grounds of fairness. In contrast, some argue that pre-dispute agreements in consumer (and employment) matters are consumer welfare enhancing: they decrease the costs of doing business, which is then passed on to the consumer. This Article examines these latter claims from both an economic and normative perspective.

The economic analysis of these arguments shows that their assumptions do not hold. Rather than being productive of consumer surplus, the use of arbitration is likely to have the opposite effect. The industries from which the recent Supreme Court cases originated not only do not exhibit the industrial structure assumed by the proponents of expanded arbitration, but are also industries which exhibit features that facilitate consumer welfare reducing collusion.

The normative analysis addresses the fairness concerns. It is explicitly based upon John Rawls’ notion of “justice as fairness,” which can provide a lens to evaluate social institutions. This Rawlsian analysis considers the use of extended arbitration in consumer matters in the light of the earlier economic results. It suggests that the asymmetries present in the contractual allocation of rights serve as prima facie evidence that such arbitration–induced exclusions are prima facie unjust/unfair. However, as asymmetry is only a prima facie test, a generalized criticism of the arbitration exclusions (of the sort found in Congress and underlying the European regime) is overbroad.

Intellectual Property and the EU’s Deep Trade Agenda

The EU is considered to be one of the main proponents of what has been called the deep trade agenda—that is, the push for further trade liberalization with an emphasis on the removal of domestic non-tariff regulatory measures affecting trade, as opposed to the traditional focus on the removal of trade barriers at borders. As negotiations on the Doha Development Round have stalled, the EU has attempted to achieve these aims by entering into comprehensive free trade agreements (FTAs) that are not only limited exclusively to tariffs but also extend to non-tariff barriers, including services, intellectual property rights (IPRs), competition, and investment. These FTAs place great emphasis on regulatory convergence as a means to secure greater market openings. The paper examines the EU's current external trade policy in the area of IP, particularly its attempts to promote its own regulatory model for the protection of IP rights through trade agreements. By looking at the IP enforcement provisions of such agreements, the article also examines how the divisive issues that are currently hindering the progress of negotiations at WTO level, including the demands from developing countries to maintain a degree of autonomy in the area of IP regulation as well as the need to balance IP protection with human rights protection, are being dealt with in recent EU FTAs.

The Economics of Total War and Reconstruction, 1914-1922

This chapter features a discussion of the economy and mobilization for the First World War. The authors analyse the implications and cost of total war, concluding with an examination of its contradictory legacies. In studying the war’s impact on Germany in particular, the chapter provides an in-depth look at the consequences of war on Europe’s strongest pre-war economy, without the complications of separating out the issues of a developing country, which can mimic those faced in wartime. The economic challenges that warring parties faced during the war included mobilization, warfare, labour shortage, impaired domestic economic activity, restricted international trade, a systematic redistribution of resources towards the war economy, food rationing, the predictable emergence of black markets, and a drop in living standards. The authors also discuss strategies to meet the significant financial demands associated with the war, and its tumultuous economic and political aftermath.

Characterisations of the weak expectation property

We use representations of operator systems as quotients to deduce various characterisations of the weak expectation property (WEP) for C∗ -algebras. By Kirchberg’s work on WEP, these results give new formulations of Connes’ embedding problem.

Demand response to improved walking infrastructure: A study into the economics of walking and health behaviour change

Walking is the most common form of moderate‐intensity physical activity among adults, is widely accessible and especially appealing to obese people. Most often policy makers are interested in valuing the effect on walking of changes in some characteristics of a neighbourhood, the demand response for walking, of infrastructure changes. A positive demand response to improvements in the walking environment could help meet the public health target of 150 minutes of at least moderate‐intensity physical activity per week. We model walking in an individual’s local neighbourhood as a ‘weak complement’ to the characteristics of the neighbourhood itself. Walking is affected by neighbourhood
characteristics, substitutes, and individual’s characteristics, including their opportunity cost of time.  Using compensating variation, we assess the economic benefits of walking and how walking behaviour is affected by improvements to the neighbourhood.  Using a sample of 1,209 respondents surveyed over a 12 month period (Feb 2010‐Jan 2011) in East Belfast, United Kingdom, we find that a policy that increased walkability and people’s perception of access to shops and facilities  would lead to an increase in walking of about 36 minutes/person/week, valued at £13.65/person/week. When focusing on inactive residents, a policy that improved the walkability of the area would lead to guidelines for physical activity being reached by only 12.8% of the population who are currently inactive. Additional interventions would therefore be needed to encourage inactive residents to
achieve the recommended levels of physical activity, as it appears that interventions that improve the walkability of an area are particularly effective in increasing walking among already active citizens, and, among the inactive ones, the best response is found among healthier, younger and wealthier citizens.

Economics of Non-Communicable Diseases in Indonesia

The Economics of Non-Communicable Diseases in Indonesia provides new data on the economic burden of NCDs in the country, and puts it in perspective by drawing a comparison with India and China. With this new addition to the series on the economics of NCDs, the World Economic Forum aims to advance the understanding of the expected economic output loss at the country level, particularly in countries in economic and epidemiological transition. The evidence presented provides a starting point in reorienting the dialogue on investing in healthy living and NCD prevention in Indonesia towards the view that a healthy population is an important factor for sustainable growth.