, 13 tweets, 4 min read Read on Twitter
I'm extremely proud to announce that my coauthored law review essay with @sanjuktampaul, forthcoming at @USTLawMN, is up at SSRN


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The paper has two main components. The first component is an element of @sanjuktampaul's brilliant UCLA law review article "Antitrust as an allocator of coordination rights" ssrn.com/abstract=33378…, expanded to discuss worker cooperatives.
This part shows that while "democratic firms" have access to some of the coordination rights that hierarchical firms do, it is settled SCOTUS precedent that individual democratic coordination is more likely to be seen as illegal cooperation.(There's more to it,read the paper :) )
The second main component is examining how the allocation of coordination rights interacts with finance. Building off lesser known work in which Minsky argued that financiers "capitalize market power" when valuing the liabilities (especially equity liabilities) of firms,
we show that our legal system's current allocation of coordination rights valorizes the liabilities of wealthy and dominant firms over smaller and weaker firms, hierarchical firms over democratic firms and place all firm liabilities over the liabilities of loose associations.
This is essentially because of the coordination rights that loose assocations are denied. You can't pledge rights you do not have, while firms regularly pledge decisionmaking rights (whether through equity liabilities or debt covenants) to creditors.
This brings us to Uber. At first glance, it might seem like unprofitable start ups do not have valuable coordination rights to pledge to creditors. They in fact do. Their equity liabilites are valuable because in an uncertain world those rights might become extremely profitable.
As the company grew, the conventional belief among financiers emerged that Uber would be very profitable in the future despite no actual improvements in profitability. thus the value of those equity liabilities grew,until Uber's IPO this year for a staggering 82.4 billion Dollars
This has all happened in the background of Uber's nakedly illegal conduct because of "rational inattention" to the adverse legal uncertanties that Uber has consistently faced for a decade and continues to face. This reinforces that incorporation is no solution for drivers.
Even if their legal prospects were better than they in fact are, they do not have the financial resources to defend themselves against antitrust liability and they cannot sell equity stakes to outside investors without losing their democratic character becoming a third tier Uber
Contra Williamson, differentials of power do explain why hierarchical organization of production dominates our economy. Inefficiency does not explain it and "transaction costs" either do not explain it or naturalize the legal system's preexisting allocation of coordination rights
Thanks for reading! and read the paper! I cannot thank @sanjuktampaul for the thrilling opportunity to write with her and I'm especially proud that it happened over what I think is an important contribution to the literature on both finance and competition law.
@sanjuktampaul UPDATE: we forgot it takes some time to get approved by SSRN, so in the mean time here's the link

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