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on Law and Economics |
| By: | Bernd Hayo; Stefan Voigt |
| Abstract: | We argue that a higher degree of de facto independence of the legal system from the other government branches as well as public trust in the legal system may reduce the average inflation record of countries through a direct and an indirect channel. The direct channel works by affecting potential output, while the indirect channel helps to increase the de facto independence of the central bank. In the empirical section of the paper, we present evidence in favor of both channels in a sample containing both industrial and Third World countries. A model that contains legal trust in addition to de jure central bank independence, checks and balances within government, and openness can explain 60% of the variation in the logarithm of the inflation rate. |
| Keywords: | Judicial Independence; Legal Trust; Central Bank Independence; Inflation |
| JEL: | D D H K |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:icr:wpicer:02-2005&r=law |
| By: | Langinier, Corinne; Marcoul, Philippe |
| Abstract: | The contributory infringement rule assesses liability to a third party that contributes to the infringement of a patent. Not only are firms that directly infringe liable, those who indirectly contribute are also liable. In the e-commerce world, this rule takes on an important dimension because of the network structure of the Internet. We investigate how the contributory infringement rule affects the creation of a network of members (membership program) and whether this rule is harmful to consumers and firms. We find that the enforcement of the contributory infringement rule does not induce more trials in equilibrium. However, because of the threat of trial, it decreases the network size, and then reduces the social welfare. Surprisingly we find that if the compensation paid by the indirect infringers is high, the contributory infringement rule does not benefit the patentholder and does not give enough R&D incentives ex ante. It is even possible to find a direct compensation for the patentholder that is socially preferable (as it increases the network size). |
| JEL: | K0 |
| Date: | 2005–04–11 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12268&r=law |
| By: | Giovanni B. Ramello (Cattaneo University (LIUC)); Donatella Porrini (Cattaneo University (LIUC)) |
| Abstract: | The antitrust intervention in banking has always been heavily influenced by considerations of stability. Regulation has historically given precedence to the stability objective, relegating thus competition to second place. In fact, in the case of banking, price competition tends to encourage overly speculative behaviours, which essentially entail acceptance of excessive risk, with a resultant volatility that could potentially harm depositors, and ultimately compromise the stability of the economic system as a whole. The consequence of this approach is that banking market becomes extremely rigid on the supply side and structurally not equipped for a competitive orientation, and banks come to occupy a privileged position vis-à-vis governments that--to a greater or lesser extent, depending on the countries and the situations--enables them to sidestep the antitrust authorities. In such a scenario, the trade-off between stability and competition cannot be totally resolved through traditional antitrust actions, which are sometimes at odds with the stability objective and hampered by the constraints of the previously defined regulatory framework. It is precisely these considerations, found in a significant portion of the literature, that provide the starting base for the hypothesis of this work and namely the proposal of a novel demand side perspective, i.e. one which focuses on the central role of consumers in the competitive process. If intervention on the supply side is hampered a priori by the regulatory framework, it is nevertheless possible to implement pro-competition actions on the demand side, for example by enhancing the ability of consumers to change from one provider to the other without impacting on the market structure. In operational terms, the proposed approach is to leverage consumer mobility in order to stimulate the currently weakened competition between firms. This would make it possible to pursue the traditional antitrust objectives of efficiency and welfare maximisation, without necessarily impacting on stability. |
| Date: | 2004–09 |
| URL: | http://d.repec.org/n?u=RePEc:liu:liucec:153&r=law |
| By: | Giovanni B. Ramello (Cattaneo University (LIUC)) |
| Abstract: | This paper attempts to systematise the law and economics theory as it relates to intellectual property rights, while at the same time suggesting new perspectives for analysis. The standard literature on IPRs relies essentially on the thesis of the incentive to create and/or disclose new ideas. However, although this argument doubtless remains valid in the general case, it fails to satisfactorily take into account various consequences arising from the new legal institutions and the specific technological context. One important such consequence is the dynamic effect of intellectual property rights on the market structure of the sectors involved, which can at times interfere with the original competitive processes, or even drastically alter them. An economic analysis based on these premises --though as yet fragmented and non systematic-- might reveal a different overall balance of welfare for the individual rights and therefore lead to different regulatory and policy indications |
| Date: | 2004–12 |
| URL: | http://d.repec.org/n?u=RePEc:liu:liucec:161&r=law |
| By: | Thomas A. Zimmermann (Swiss Institute for International Economics & Applied Economic Research SIAW-HSG) |
| Abstract: | ENGLISH ABSTRACT: On 1 January 1995, the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU) entered into force. During its first ten years, the DSU has since been applied to 324 complaints – more cases than dispute settlement under the GATT 1947 had dealt with in nearly five decades. The system is perceived, both by practitioners and in academic literature, to work generally well. However, it has also revealed some flaws. Negotiations to review and reform the DSU have been taking place since 1997 (“DSU review”), however, without yielding any result so far. In the meantime, WTO Members and adjudicating bodies managed to develop the system further through evolving practice. While this approach may remedy some practical shortcomings of the DSU text, the more profound imbalance between relatively efficient judicial decisionmaking in the WTO (as incorporated in the DSU) and nearly blocked political decisionmaking evolves into a serious challenge to the sustainability of the system. This article provides an overview of the first ten years of DSU practice, the on- going DSU review negotiations, and the challenges to the dispute settlement system. GERMAN ABSTRACT: Am 1. Januar 1995 trat das Übereinkommen über Regeln und Verfahren für die Streitschlichtung (Dispute Settlement Understanding; DSU) als Teil des WTO-Abkommens in Kraft. In den ersten zehn Jahren seines Bestehens fand das DSU auf 324 Klagebegehren Anwendung – mehr Fälle, als unter den Streitschlichtungsregeln des GATT 1947 in dessen nahezu fünfzigjähriger Geschichte behandelt wurden. Die Funktionsweise des Systems wird sowohl in der handelspolitischen Praxis als auch in der wissenschaftlichen Literatur als gut eingestuft. Gleichwohl hat der Mechanismus in seiner Anwendung auch einige Schwächen offenbart. Diese sollen auf dem Verhandlungswege („DSU Review“) behoben werden, doch blieben die seit Ende 1997 laufenden Gespräche bislang erfolglos. Zugleich ist es den Mitgliedstaaten und den Spruchorganen aber stellenweise gelungen, das System im Rahmen der praktischen Anwendung fortzuentwickeln. Während auf diesem Weg einige praktische Probleme des Verfahrenstextes behoben werden konnten, dürfte das beträchtliche Ungleichgewicht in der WTO zwischen einem vergleichsweise effizienten juristischen Entscheidungsmechanismus (in Form des DSU) und den häufig blockierten politischen Entscheidungsmechanismen fortbestehen. Dieses Ungleichgewicht bedroht die Systemnachhaltigkeit. Der vorliegende Artikel gibt einen Überblick über die ersten zehn Jahre DSU-Praxis, die laufenden DSU-Review-Verhandlungen sowie einen Ausblick auf zukünftige Herausforderungen. |
| Keywords: | WTO, Dispute Settlement, DSU Review Negotiations |
| JEL: | F02 F13 K33 K41 |
| Date: | 2005–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpit:0504003&r=law |
| By: | Horst Entorf (Technische Universität Darmstadt); Hannes Spengler (Technische Universität Darmstadt) |
| Abstract: | This paper contains a documentation of the EU regional crime database (EURCD). The EURCD is the basis of the analyses presented in our recently published book 'Crime in Europe' which, in turn, is the result of a research project conducted on behalf of the EU Commission. The EURCD is a panel dataset containing information on 12 Interpol crime categories (murder, sex offences, rape, serious assault, theft, aggravated theft, robbery and violent theft, breaking and entering, theft of motor cars, fraud, drug offences and total offences) across eight EU member states (Denmark, Germany, Spain, Italy, the Netherlands, Finland, Sweden and England & Wales) for the maximal period 1980-1998 (length of period depends on country and region). The spatial structure of the EURCD is organised according to Eurostat's NUTS-system, meaning that it contains data broken down into, for instance, German 'Kreise', Spanish 'Provincias' and Italian 'Provincias'. Crime data obtained for countries which, for reasons explained in the paper, could not (Belgium, Greece, Portugal) or only partly (England & Wales) be integrated into the analyses is (or will soon be) provided in country-specific files. There is a lack of data for Ireland and Luxemburg because regional crime data does not exist for these countries, and for France and Austria which refused to participate in the project. In order to allow multivariate analyses of the causes and consequences of crime the EURCD also contains a sizeable number of non-crime variables. By providing this data to the public we hope to enhance empirical crime research in Europe which until today has been denied adequate attention by both criminologists and economists. |
| JEL: | K42 |
| Date: | 2005–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0501004&r=law |
| By: | Horst Entorf (Technische Universität Darmstadt); Hannes Spengler (Technische Universität Darmstadt) |
| Abstract: | This paper contains a documentation of the EU regional crime database (EURCD). The EURCD is the basis of the analyses presented in our recently published book 'Crime in Europe' which, in turn, is the result of a research project conducted on behalf of the EU Commission. The EURCD is a panel dataset containing information on 12 Interpol crime categories (murder, sex offences, rape, serious assault, theft, aggravated theft, robbery and violent theft, breaking and entering, theft of motor cars, fraud, drug offences and total offences) across eight EU member states (Denmark, Germany, Spain, Italy, the Netherlands, Finland, Sweden and England & Wales) for the maximal period 1980-1998 (length of period depends on country and region). The spatial structure of the EURCD is organised according to Eurostat's NUTS-system, meaning that it contains data broken down into, for instance, German 'Kreise', Spanish 'Provincias' and Italian 'Provincias'. Crime data obtained for countries which, for reasons explained in the paper, could not (Belgium, Greece, Portugal) or only partly (England & Wales) be integrated into the analyses is (or will soon be) provided in country-specific files. There is a lack of data for Ireland and Luxemburg because regional crime data does not exist for these countries, and for France and Austria which refused to participate in the project. In order to allow multivariate analyses of the causes and consequences of crime the EURCD also contains a sizeable number of non-crime variables. By providing this data to the public we hope to enhance empirical crime research in Europe which until today has been denied adequate attention by both criminologists and economists. |
| JEL: | K42 |
| Date: | 2005–01–23 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0501005&r=law |
| By: | Ben Vollaard (CPB) |
| Abstract: | We present evidence on the effect of greater numbers of police personnel on crime and nuisance reduction in the Netherlands. We use a multiple time series design with police regions as the unit of analysis, covering the period 1996-2003. During this period, police resources increased substantially. The growth in additional resources differed greatly between regions, allowing us to use this policy intervention to identify the effect of police on crime and nuisance. We control for regional economic, social and demographic factors and for national trends that might obscure the effect of police on crime. We find significantly negative effects of higher police levels on property crime, violent crime and nuisance. Our estimates suggest that a substantial proportion of the decline in crime and nuisance during the period 1996-2003 is attributable to the increase in police personnel. |
| Keywords: | police, crime, nuisance, effectiveness, victimisation survey |
| JEL: | K4 |
| Date: | 2005–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0501006&r=law |
| By: | Steven Huddart (Pennsylvania State University); Bin Ke (Pennsylvania State University); Charles Shi (University of California, Irvine) |
| Abstract: | We document how insider trading is associated with two significant information releases occuring each fiscal quarter: the earnings announcement, which is a summary measure of firm performance, and the subsequent Form 10-K or 10-Q, which contains additional price-relevant information. The association of trades before the earnings announcement and the abnormal return at the announcement suggests that insiders avoid profitable trades in this period. In contrast, trades after the earnings announcement are associated with both the preceding earnings announcement and the forthcoming 10-K or 10-Q release in a manner that suggests insider seek profitable trades. These findings are consistent with insiders conditioning their trading on foreknowledge of price- relevant public disclosures, but limiting their trades to periods when the jeopardy due to trade is low. |
| Keywords: | accounting standards, government regulation, insider trading, litigation risk, stock-based compensation |
| JEL: | K22 J33 M12 |
| Date: | 2005–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0502001&r=law |
| By: | Paul A. David (Stanford University & The Oxford Internet Institute) |
| Abstract: | A new generation of information and communication infrastructures, including advanced Internet computing and Grid technologies, promises to enable more direct and shared access to more widely distributed computing resources than was previously possible. Scientific and technological collaboration, consequently, is more and more coming to be seen as critically dependent upon effective access to, and sharing of digital research data, and of the information tools that facilitate data being structured for efficient storage, search, retrieval, display and higher level analysis. A recent (February 2003) report to the U.S. NSF Directorate of Computer and Information System Engineering urged that funding be provided for a major enhancement of computer and network technologies, thereby creating a cyberinfrastructure whose facilities would support and transform the conduct of scientific and engineering research. The articulation of this programmatic vision reflects a widely shared expectation that solving the technical engineering problems associated with the advanced hardware and software systems of the cyberinfrastructure will yield revolutionary payoffs by empowering individual researchers and increasing the scale, scope and flexibility of collective research enterprises. The argument of this paper, however, is that engineering breakthroughs alone will not be enough to achieve such an outcome; success in realizing the cyberinfrastructure’s potential, if it is achieved, will more likely to be the resultant of a nexus of interrelated social, legal and technical transformations. The socio-institutional elements of a new infrastructure supporting collaboration – that is to say, its supposedly “softer” parts -- are every bit as complicated as the hardware and computer software, and, indeed, may prove much harder to devise and implement. The roots of this latter class of challenges facing “e-Science” will be seen to lie in the micro- and meso-level incentive structures created by the existing legal and administrative regimes. Although a number of these same conditions and circumstances appear to be equally significant obstacles to commercial provision of Grid services in interorganizational contexts, the domain of publicly supported scientific collaboration is held to be the more hospitable environment in which to experiment with a variety of new approaches to solving these problems. The paper concludes by proposing several “solution modalities,” including some that also could be made applicable for fields of information-intensive collaboration in business and finance that must regularly transcends organizational boundaries. |
| JEL: | K |
| Date: | 2005–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0502002&r=law |
| By: | Tapen Sinha (ITAM, Mexico); Bradly J Condon (ITAM, Mexico) |
| Abstract: | As of January 1, 2005, all developing country members of the WTO are required to implement the WTO Agreement on Trade Related Intellectual Property Rights (TRIPS). We analyze the issue of access to patented medicine to treat global and neglected diseases in developing countries in the context of WTO law. We present legal and economic arguments that support balancing the rights of producers and users on a market-by- market basis and argue against taking a uniform approach globally. We conclude that global patent rights are not necessary to provide research incentives to pharmaceutical firms to invent treatments for global and neglected diseases. We develop an analytical framework for assessing special and differential treatment of developing countries in WTO law and apply this framework to TRIPS. We then propose a formula for assessing the correct balance between the rights of producers and users on a market-by-market basis. |
| Keywords: | WTO, TRIPS, AIDS, Chapter 6, HIV, Index Construction |
| JEL: | K |
| Date: | 2005–02–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0502003&r=law |
| By: | Paul A. David (Stanford University & Oxford Internet Institute) |
| Abstract: | Scientific and technological collaboration is more and more coming to be seen as critically dependent upon effective access to, and sharing of digital research data, and of the information tools that facilitate data being structured for efficient storage, search, retrieval, display and higher level analysis. A February 2003 report to the U.S. NSF Directorate of Computer and Information System Engineering urged that funding be provided for a major enhancement of computer and network technologies, thereby creating a cyberinfrastructure whose facilities would support and transform the conduct of scientific and engineering research. The argument of this paper is that engineering breakthroughs alone will not be enough to achieve such an outcome; success in realizing the cyberinfrastructure’s potential, if it is achieved, will more likely to be the resultant of a nexus of interrelated social, legal and technical transformations. The socio-institutional elements of a new infrastructure supporting collaboration that is to say, its supposedly “softer” parts -- are every bit as complicated as the hardware and computer software, and, indeed, may prove much harder to devise and implement. The roots of this latter class of challenges facing “e- Science” will be seen to lie in the micro- and meso-level incentive structures created by the existing legal and administrative regimes. Although a number of these same conditions and circumstances appear to be equally significant obstacles to commercial provision of Grid services in interorganizational contexts, the domain of publicly supported scientific collaboration is held to be the more hospitable environment in which to experiment with a variety of new approaches to solving these problems. The paper concludes by proposing several “solution modalities,” including some that also could be made applicable for fields of information-intensive collaboration in business and finance that must regularly transcends organizational boundaries. |
| JEL: | K |
| Date: | 2005–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0502004&r=law |
| By: | Roger Koppl (Fairleigh Dickinson University) |
| Abstract: | Some institutional structures for inquiry produce better approximations to truth than others. The current institutional structure of police forensics gives each lab a monopoly in the analysis of the police evidence it receives. Forensic workers have inadequate incentives to produce reliable analyses of police evidence. Competition would create such incentives. I outline a system of “competitive self regulation” for police forensics. Each jurisdiction would have several competing forensic labs. Evidence would be divided and sent to one, two, or three separate labs. Chance would determine which labs and how many would receive evidence to analyze. Competitive self regulation improves forensics by creating incentives for error detection and reducing incentives to produce biased analyses. |
| Keywords: | forensics, forensic science, epistemics, DNA, fingerprints, vouchers, privatization |
| JEL: | K |
| Date: | 2005–03–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0503001&r=law |
| By: | Raphaela Seubert (University of Passau, Germany) |
| Abstract: | Applying the modern Property Rights Approach to depict employment and firm-internal delegation relationships, this paper addresses the question how to prevent corporate bribery. The analysis and the answers that follow take into account interaction effects between firm-internal delegation relationships, the possibly devilish side function of formal corporate ethics efforts (namely to shield firms or superiors from criminal accountability by shifting it onto their subordinate employees), the distribution of criminal liability, and the necessity for courts to rely on available evidence. From the simple theoretical framework, a bundle of implications follows: (1) conditions under which formal corporate ethics guidelines can take on a Janus-faced nature, i.e. lack credibility, (2) suggestions how firms can enhance the credibility of their corporate ethics efforts, (3) starts how to avoid the possible “second-order” lack of credibility of such credibility- enhancing measures, (4) clear-cut statements as to (a) where criminal liability should be situated within the firm and (b) how corporate and individual liabilities should be combined to both restrain corruption and to sustain the credibility of corporate ethics. These implications allow comparatively evaluating the effectiveness of international anti- corruption laws – specifically the desirability of corporate vs. personal criminal liabilities. |
| Keywords: | Non-verifiable contracts, bribery, hard-copy evidence, delegation, mixed incentives, exit, voice, corporate ethics, all-for- one, victimize, Janus-faced, corporate liability |
| JEL: | K42 L20 M12 M14 |
| Date: | 2005–03–18 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0503002&r=law |
| By: | Maheshjani (G.H.Jani.charitable trust,kampteelane,Rajnandgaon- 491441 C.G. India) |
| Abstract: | In this democratic political system the huge amount is wasted in election system, and the person ,who will invest the money ,naturally wants to recover it, and government expenditure cannot be properly used without moral control on politics,sothat this is new system of politics. Maheshjani |
| Keywords: | Political control through new constitution to avoid misuse of funds. |
| JEL: | K |
| Date: | 2005–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0503003&r=law |
| By: | Ana María Cerro (Universidad Nacional de Tucumán); Osvaldo Meloni (Universidad Nacional de Tucumán) |
| Abstract: | Since Adam Smith, economists have emphasized income distribution and unemployment as key elements to explain criminal behavior. However, the empirical evidence did not always confirm such conjecture. Departing from the theoretical framework proposed by Becker (1968), the present paper identifies the determinants of the crime rate in Argentina using a panel data for 1990-99. As in previous papers studying the Argentina case, it is found that deterrence variables are important. However, unlike those papers, income distribution, unemployment and per capita GDP also played crucial roles, which has important implications for policy design. Classification JEL: K4, I3 |
| Keywords: | Crime rate, income distribution, unemployment, Argentina |
| JEL: | K |
| Date: | 2005–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwple:0504001&r=law |
| By: | Axel Dreher (Konstanz University); Christos Kotsogiannis (Exeter University); Steve McCorriston (Exeter University) |
| Abstract: | This paper analyzes a simple model that captures the relationship between institutional quality, the shadow economy and corruption. It shows that an improvement in institutional quality reduces the shadow economy and affects the corruption market. The exact relationship between corruption and institutional quality is, however, ambiguous and depends on the relative effectiveness of the institutional quality in the shadow and corruption markets. The predictions of the model are empirically tested - by means of Structural Equation Modelling that treats the shadow economy and the corruption market as latent variables - using data from OECD countries. The results show that an improvement in institutional quality reduces the shadow economy directly and corruption both directly and indirectly (through its effect on the shadow market). |
| Keywords: | Corruption, Shadow Economies, OECD countries, Latent Variables, Structural Equation Modelling |
| JEL: | H10 O1 K49 C39 |
| Date: | 2005–02–22 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0502012&r=law |
| By: | Rafael Di Tella (Harvard Business School); Federico Weinschelbaum (Universidad de San Andrés) |
| Abstract: | In the standard moral hazard model, withholding of effort by the agent is not observable to the principal. We argue that this assumption has to be changed in applications that study corruption. The overwhelming majority of cases where corrupt politicians have been punished involve the detection of consumption levels that appear to be too high. The informativeness of an agent’s level of consumption depends on his initial level of wealth as conspicuous consumption of luxuries by wealthy agents leads to little updating of the principal’s belief about their honesty. This introduces a tendency to choose poor agents as they are easier to monitor. More generally, we show that, even if agents have similar preferences, there are contractual advantages to selecting particular types. We describe the basic problem of choosing agents and monitoring consumption, and discuss a number of features of the practical applications. We show that selecting rich politicians may not help fight corruption and that the political class will exhibit lower variance in consumption than the population. In settings were formal contracts matter, we show that monitoring consumption introduces a tendency towards low powered incentive schemes (and more generally low wages) and that the measure of “moral” costs that is often employed in the literature can be derived (not assumed). |
| Keywords: | Choosing agents, monitoring consumption, low wages, moral costs |
| JEL: | K42 D82 L52 |
| Date: | 2005–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwppe:0503003&r=law |
| By: | Elif Bascavusoglu (TEAM); Maria Pluvia Zuniga (TEAM) |
| Abstract: | Developing countries, and particularly, those with a growing technological capacity, expect foreign technology transfers to increase when strengthening their intellectual property protection (IPR) rights. This paper evaluates empirically the impact of IPR on disembodied knowledge trade. It presents an exploration on Bilateral French Technology Receipts at the industry level for the period 1994-2000. Two main findings stem from our analysis. First, it is found that IPR affects positively international knowledge contracting. Nevertheless, our findings show that the impact of IPR protection differs according to countries' income level and technological capacity. Stronger IPR rights can deter technology contracting in developing economies. Second, the effects of IPR protection are found to differ across industries. Stronger protection is found to be irrelevant to attract knowledge contracting in R&D-intensive industries, contrarily to middle R&D-intensive industries. Lastly, our findings on industries' sensitivity to foreign IPR protection differ from the results reported by survey studies (Mansfield et alii, 1968; Levin et alii, 1987; Cohen et alii, 2000) concerning the relative importance of IPR protection across industries to appropriate innovation. |
| Keywords: | Intellectual property rights, international technology transfer, patent protection. |
| JEL: | O34 K42 F14 O31 |
| Date: | 2005–01 |
| URL: | http://d.repec.org/n?u=RePEc:mse:wpsorb:bla05009&r=law |