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Applied and bridge studies study record
Environment, climate & resourcesCorporate Law's Political Escape Hatch
STATUS · Manuscript in progressSSRN · Not yet posted
MECHANISM
Identify the incentive structure and the condition that would falsify the claim.
RULE CHANGE
Read the intervention only after the paper shows how the current payoff space fails to support system welfare.
READER USE
Use the summary to see where private gain creates system exposure, then check the study record.
Contribution — what this adds to the conversation
Contributes to corporate law theory by challenging the efficiency justification and to the SAPM program by adding a new domain. The DA framework application is thorough.
WHAT'S NEW · Original application of MST to corporate law governance, identifying the system-welfare failure. The Chilean reform proof-of-concept adds novelty. However, the core argument (governance bargains exclude public enforcement) is present in neighboring papers.
The paper establishes that corporate law's governance bargains between shareholders and managers systematically exclude the public enforcement system, leading to a 'Hollow Win' where private parties gain while enforcement capacity degrades. Using the Missing System Theory and Decision Accounting, it analyzes three landmark cases and estimates that each dollar of corporate legal revenue destroys $8.30 of public enforcement welfare. The solution: mandatory public-interest standing for enforcement agencies, with a successful proof-of-concept in Chile.