What We Are Reading Today: Dark Commerce

Updated 03 November 2018
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What We Are Reading Today: Dark Commerce

Author: Louise I. Shelley


Though mankind has traded tangible goods for millennia, recent technology has changed the fundamentals of trade, in both legitimate and illegal economies. In the past three decades, the most advanced forms of illicit trade have broken with all historical precedents and, as Dark Commerce shows, now operate as if on steroids, tied to computers and social media, says a review on the Princeton University Press website.
In this new world of illicit commerce, which benefits states and diverse participants, trade is impersonal and anonymized, and vast profits are made in short periods with limited accountability to sellers, intermediaries, and purchasers. Louise Shelley examines how new technology, communications, and globalization fuel the exponential growth of dangerous forms of illegal trade — the markets for narcotics and child pornography online, the escalation of sex trafficking through web advertisements, and the sale of endangered species for which revenues total in the hundreds of millions of dollars.


What We Are Reading Today: When Insurers Go Bust

Updated 11 December 2018
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What We Are Reading Today: When Insurers Go Bust

Authors: Guillaume Plantin & Jean-Charles Rochet

In the 1990s, large insurance companies failed in virtually every major market, prompting a fierce and ongoing debate about how to better protect policyholders. Drawing lessons from the failures of four insurance companies, When Insurers Go Bust dramatically advances this debate by arguing that the current approach to insurance regulation should be replaced with mechanisms that replicate the governance of non-financial firms.
Rather than immediately addressing the minutiae of supervision, Guillaume Plantin and Jean-Charles Rochet first identify a fundamental economic rationale for supervising the solvency of insurance companies: Policyholders are the “bankers” of insurance companies. But because policyholders are too dispersed to effectively monitor insurers, it might be efficient to delegate monitoring to an institution — a prudential authority. Applying recent developments in corporate finance theory and the economic theory of organizations, the authors describe in practical terms how such authorities could be created and given the incentives to behave exactly like bankers behave toward borrowers, as “tough” claimholders.
Guillaume Plantin is assistant professor of finance at London Business School. He is the coauthor of Théorie du Risque et Réassurance. Jean-Charles Rochet is professor of mathematics and Economics at the University of Toulouse and a visiting professor of finance at the London School of Economics and Political Science.