Balancing test

Abstract: Conventional wisdom tells us that in Korea–Beef, the Appellate Body interpreted the word ‘necessary’ in GATT Article XX to require a cost–benefit balancing test. The Appellate Body is supposed to have applied this test also in EC–Asbestos, US–Gambling (involving GATS Article XIV), and Dominican Republic–Cigarettes. In this article I demonstrate, by detailed analysis of the opinions, that the Appellate Body has never engaged in such balancing. They have stated the balancing test, but in every case they have also stated the principle that Members get to choose their own level of protection, which is logically inconsistent with judicial review by cost–benefit balancing. And they have decided every case by reference to the ‘own level of protection’ principle. The Appellate Body is right not to balance. Balancing is not authorized by the treaty texts, and it is not needed to prevent inefficient harm to foreign interests.

Abstract: The efficiency of two-party incomplete information sequential bargaining over an entitlement relating to external harm is analyzed under two alternative property rights regimes: definite entitlements, where a rule allocates the entitlement to one of the parties in an ex ante certain way; and contingent entitlements, where the assignment of the entitlement depends on the outcome of an ex post judicial balancing test that weighs the value of the activity against the external harm it generates. It is shown that a contingent entitlement may make credible a threat to take-cause harm without consent-that is not credible under a definite entitlement, and that such a credible taking threat may supplant strategic delay as a screening device. Such a threat may induce immediate ex post efficient agreement. However, such a result obtains as a Perfect Bayesian Equilibrium only if the legal balancing process is imperfect in measuing and balancing harm against value.

Abstract: This paper focuses on the role of balancing tests when employing propensity score matching methods. The idea behind these tests are to check to see if observations with the same propensity score have the same distribution of observable covariates independent of treatment status. Currently, multiple versions of the balancing test exist in the literature. One troubling aspect is that different balancing tests sometimes yield different answers. This paper highlights the importance of distinguishing between balancing tests that are conducted before matching and after matching, and provides a Monte Carlo examination of four commonly employed balancing tests. We highlight the poor size properties of these commonly employed balancing tests and demonstrate how non-parametric versions of before and after matching tests provide much better test sizes. Finally, we illustrate how balancing tests are of little utility if the conditional independence assumption underlying matching estimators is not fulfilled.

Abstract: The Supreme Court's 2006 eBay ruling marked a turning point in injunctive relief policy. Unfortunately, there seems to be considerable confusion about the implications of the decision. Some authors, concerned over patent holdup and excessive royalty rates, interpret the eBay decision as giving a green light to district courts to deny injunctive relief to non-manufacturing patent owners. Using an error cost framework, we examine the theory and evidence behind patent holdup concerns as they relate to injunctive relief policy. We find that the holdup theory justifying categorical limitations on injunctive relief rests upon overly narrow assumptions. As a result, categorical limitations are likely to result in substantial false positives, where patent holders with no designs of patent holdup are nonetheless denied injunctive relief. Instead of advocating categories of denial, we argue that the majority opinion in eBay can and should be read as a return to a balancing test, where costs and benefits are weighed carefully before granting or denying a patent injunction.