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on Law and Economics |
| By: | Arguedas,Carmen (Tilburg University, Center for Economic Research) |
| Abstract: | We investigate the features of optimal regulatory policies composed of pollution standards and probabilities of inspection, where fines for non-compliance depend not only on the degree of violation but alson on nongravity factors. We show that optimal policies can induce either compliance or noncompliance with the standards, the latter being more plausible when monitoring costs are large and, surprisingly, when gravity-based fines are large. Also, both tghe convexity of the sanctions and the level of the non-gravity-based penalties play a key role as to whether optimal policies induce noncompliance. |
| JEL: | D82 K32 K42 L51 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200509&r=law |
| By: | Arguedas,Carmen (Tilburg University, Center for Economic Research) |
| Abstract: | We study optimal policies composed of pollution standards, probabilities of inspection and fines dependant on the degree of noncompliance with the standards, in a context where regulated firms own private information. In contrast with previous literature, we show that optimal policies, being either pooling or separating, can imply violations to strictly positive standards. This results crucially depends on the monitoring costs, the types of firms and the regulator's degree of uncertainty. |
| JEL: | D82 K32 K42 L51 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200510&r=law |
| By: | Rexford Santerre; John A. Vernon |
| Abstract: | This paper uses national data for the period 1960 to 2000 to estimate an aggregate private consumer demand for pharmaceuticals in the U.S. The estimated demand curve is then used to simulate the value of consumer surplus gains from a drug price control regime that holds drug price increases to the same rate of growth as the general consumer price level over the time period from 1981 to 2000. Based upon a 7 percent real interest rate, we find that the future value of consumer surplus gains from this hypothetical policy would have been $319 billion at the end of 2000. According to a recent study, that same drug price control regime would have led to 198 fewer new drugs being brought to the U.S. market over this period. Therefore, we approximate that the average social opportunity cost per drug developed during this period to be approximately $1.6 billion. Recent research on the value of pharmaceuticals suggests that the social benefits of a new drug may be far greater than this estimated social opportunity cost. |
| JEL: | I1 L5 K2 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11139&r=law |
| By: | Mihir A. Desai; Robert J. Yetman |
| Abstract: | In the absence of owners, how effective are the constraints imposed by the state in promoting effective firm governance? This paper develops state-level indices of the legal and reporting rules facing not-for-profits and examines the effects of these rules on not-for-profit behavior. Stronger non-distribution constraints are associated with greater charitable expenditures and foundation payouts while more stringent reporting requirements are associated with lower insider compensation. The paper also examines how governance influences an alternative metric of not-for-profit performance %uF818 the provision of social insurance. Stronger governance measures are associated with intertemporal smoothing of resources and greater activity in response to negative economic shocks. |
| JEL: | L30 G30 H40 K20 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11140&r=law |
| By: | Herschel I. Grossman; Daniel Mejia |
| Abstract: | This paper develops a model of a war against the producers of illegal hard drugs. This war occurs on two fronts. First, to prevent the cultivation of crops that are the raw material for producing drugs the state engages the drug producers in conflict over the control of arable land. Second, to impede further the production and exportation of drugs the state attempts to eradicate crops and to interdict drug shipments. The model also includes an interested outsider who uses both a stick and a carrot to strengthen the resolve of the state in its war against drug producers. The results of the calibration of the model yield an estimate that from 2001 through 2003 subsidies from the United States to the Colombian armed forces under Plan Colombia caused a decrease in the exportation of drugs from Colombia to about 44 percent of what exportation was before Plan Colombia was implemented. The results of the calibration of the model also suggests that a more efficient allocation of the about $2 billion that the United States spent on Plan Colombia through 2003 would have involved larger subsidies to the conflict over control of arable land and smaller subsidies to eradication and interdiction efforts. |
| JEL: | D74 K42 |
| Date: | 2005–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:11141&r=law |