The US legal system is notoriously complex. Navigating this labyrinthine structure requires knowledge of legal precedents, procedures, and rules, along with the ability to anticipate and adapt to shifts in the legal landscape. Businesses, therefore, require the guidance of seasoned lawyers. Over the past few decades, US corporations have increasingly turned to in-house lawyers for legal services, leading to their rising prominence in the corporate hierarchy and profound changes in the US legal profession and corporate governance. This could also be true for Chinese companies operating in the United States. Hence, this chapter investigates the Chinese companies’ utilization of full-time internal legal managers within the dual institutional context. For those employing such managers, this chapter scrutinizes two key aspects: (1) whether these legal managers are locally hired or are expatriates and (2) whether they hold licenses to practice law in the United States, which approximates their ability to handle US legal risks and opportunities. Analysis under the dual institutional framework reveals not only effects of both home- and host-state institutions but also substantial intercompany variations associated with other institutional and firm-specific variables of theoretical and policy importance.

Digital platforms are marketplaces where a variety of participants gather to exchange goods, information, or services. This chapter examines what makes digital platforms special kinds of marketplaces. Platforms create value by allowing users to connect with each other and interact or transact in some way. The additional benefits include improved matching, trust, and liquidity, and lower costs of search and transaction. Digital platforms may thus create exceptionally efficient markets. However, the market for platforms themselves is anything but competitive and efficient. The benefits of scale in markets are not surprising, but the ability of digital markets to scale globally is much more recent. After platforms achieve critical mass, there is often no point for a rival to even enter, at least if the entrant offers no radical innovation. As a result, network effects allow platforms to concentrate vast market power.

The first book of its kind, Property Law: Comparative, Empirical, and Economic Analyses, uses a unique hand-coded data set on nearly 300 dimensions on the substance of property law in 156 jurisdictions to describe the convergence and divergence of key property doctrines around the world. This book quantitatively analyzes property institutions and uses machine-learning methods to categorize jurisdictions into ten legal families, challenging the existing paradigms in economics and law. Using also other cross-country data, this book empirically tests theories about property law and comparative law. Using economic efficiency as both a positive and a normative criterion, each chapter evaluates which jurisdictions have the most efficient property doctrines, concluding that the common law is not more efficient than the civil law. Unlike many prior studies on empirical comparative law, this book provides detailed citations to laws in each jurisdiction. Data and documentation are released with the book.

This chapter examines two fundamental issues regarding the nature of firms. First, why are they necessary in the business environment? Second, what are their objectives? Addressing these issues involves various aspects of theory which are not always associated with economics: transaction cost theory, property rights theory, motivation theory, information theory and agency theory. Regarding the first issue, the necessity for the existence of firms may appear to be self-evident, but on closer examination we can see that many transactions can be performed between individuals without firms existing at all. The problem is that with complex activities the transaction cost of engagement as individuals can be high, whereas internalizing transactions within firms can reduce this cost. The second issue regarding objectives begins with the concept of profit maximization, and then examines the various assumptions underlying it. Various problem areas related to these assumptions are identified, in particular: the existence of agency problems, the measurement of profit, risk and uncertainty, and multi-product firms. The impact of these problems on firms’ objectives is discussed.

One of the starting assumptions of this book is that the decline of trust in medicine is a negative development and a reason for concern. This claim is only tenable if it can be demonstrated that trust has an intrinsic value. Despite the fact that there is no convincing empirical evidence for the usefulness of trust in the sense of a positive patient welfare outcome, the authors claim that trust has an instrumental value: (1) because it helps patients cope with uncertainty and risk and reduces the transaction costs caused by the inherent risk, (2) because it reduces uncertainty by inducing trustworthiness in physicians, and (3) because it reduces complexity. Moreover, because neither regulations and controls (which are often instituted to compensate for the decline of trust) nor contracts can compensate for the loss of trust or replace trust in the patient–physician relationship, trust is, in the final analysis, inevitable.