Semester

Spring

Date of Graduation

2012

Document Type

Dissertation

Degree Type

PhD

College

Chambers College of Business and Economics

Department

Economics

Committee Chair

Andrew T Young

Committee Co-Chair

Roger Congleton

Committee Member

Christopher J Coyne

Committee Member

Santiago M. Pinto

Committee Member

Russel S. Sobel.

Abstract

This dissertation is a collection of essays, each of which studies certain aspects of and differences between state legal frameworks within the U.S. Specifically, I analyze how even marginal differences between laws across the states can lead to radically different outcomes and incentives for both public and private actors. The first chapter explores state antitrust enforcement, as carried out by each state's attorney general, to empirically test the potential policy business cycle that is created during elections for that office and for those sitting attorneys general that simultaneously pursue a gubernatorial position within their respective state. The second chapter applies Schumpeter's (1942) process of creative destruction in the light of its impact on legal formation and creation. In particular, this chapter explores how the process of entrepreneurial creative destruction creates a gap in existing law and legal precedent, which simultaneously sets in motion a process of legal creative destruction. In this framework, entrepreneurs, at the margin, will shed the legal risks they face by shifting their activities to those jurisdictions that will most predictably create new law or legal precedent to cope with the new entrepreneurial processes or discoveries. The third chapter explores the sovereign debt crisis that swept the U.S. between 1839 and 1842, the aftermath of which caused eight states and one territory to default on their debt obligations, five of them eventually repudiating all or part of those obligations. This chapter further empirically analyzes the post default period when many states passed constitutional constraints meant to prevent future state governments from pursuing similar behavior through time. I test whether financial markets considered those constitutional constraints to be both binding and credible. Overall, the results suggest that markets did in fact react positively to these constitutional constraints, which allowed state governments to reenter capital markets relatively rapidly and on relatively favorable terms, even after defaulting.

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