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on Law and Economics |
| By: | Giovanni Immordino; Michele Polo |
| Abstract: | We study the interaction of a firm that invests in research and, if successful, undertakes a practice to exploit the innovation, and an enforcer that sets legal standards, fines and accuracy. In this setting deterrence on actions interacts with deterrence on research. When the practice increases expected welfare the enforcer commits not to intervene by choosing a more rigid per-se legality rule to boost investment, moving to a more flexible discriminating rule combined with type-I accuracy for higher probabilities of social harm. Patent and antitrust policies act as substitutes in our setting; additional room for per-se (illegality) rules emerges when fines are bounded. Our results on optimal legal standards extend from the case of (uncertain) investment in research to the case of (deterministic) investment in physical assets. |
| Keywords: | legal standards, accuracy, antitrust, innovative activity, enforcement. |
| JEL: | D73 K21 K42 L51 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:bcu:iefewp:iefewp54&r=law |
| By: | Marvao, Catarina (Stockholm Institute of Transition Economics); Spagnolo, Giancarlo (Stockholm Institute of Transition Economics) |
| Abstract: | Over the last decade a large body of economic research has emerged that has sought to empirically test the effectiveness of leniency policies as tools to enhance the detection, prosecution and deterrence of cartel conduct. This research has considerable potential value in assisting competition authorities design optimal policies by having a better understanding of the impact that such policies, their specific features and manner of administration, have on the behaviour of cartel participants. Some researchers have taken the approach of testing empirically the effects of actual policies – predominantly those administered by the United States Department of Justice (USDOJ) and the European Commission (EC) – while others have tested different hypothetical policies in the lab. This section reviews the key studies which have been undertaken to date, it highlights the main findings and compares their results. After appreciating the main contributions and limitations of these studies, it concludes with a general assessment and an agenda for future research. |
| Keywords: | Cartels; competition policy; Leniency Programme |
| JEL: | D43 K21 K42 L13 L40 L51 |
| Date: | 2014–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:hasite:0028&r=law |
| By: | Ojo, Marianne |
| Abstract: | This paper is aimed at highlighting how common law has evolved over the centuries, namely through the flexibility accorded to judicial precedents, as well as through the evolutionary nature evidenced in the processes and rules applied in statutory interpretation. In addition to illustrating how informational asymmetries can be mitigated through decentralisation, the paper also illustrates how a particular case, Pepper v Hart has revolutionised the scope and permissibility of aids to statutory interpretation. Whilst the decision in the case has been criticised as having facilitated a transfer of powers from the executive and legislature, to the judiciary, it is also evident that any form of aid to statutory interpretation - which would greatly assist judges in arriving at reasonable outcomes - in terms of legitimate expectations and efficient allocation of economic resources, should be permitted in judicial proceedings. Whilst financial markets and changes in the environment impact legislators, and whilst it is widely accepted that legislation constitutes the supreme form of law, the necessity for judges to introduce a certain level of flexibility will also contribute towards ensuring that legitimate expectations of involved parties are achieved - particularly where the construction of the words within a statute gives rise to considerable ambiguity. |
| Keywords: | legitimate expectations; certainty; flexibility; judicial precedents; statutory interpretation; allocative efficiency, Pepper v Hart; Posner; Hayek; common law |
| JEL: | E3 G1 G14 G18 K2 |
| Date: | 2014–10–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:59163&r=law |
| By: | Eraslan, Hulya (Rice University); KoÅŸar, Gizem (Johns Hopkins University); Li, Wenli (Federal Reserve Bank of Philadelphia); Sarte, Pierre-Daniel G. (Federal Reserve Bank of Richmond) |
| Abstract: | We build a structural model of Chapter 13 bankruptcy that captures salient features of personal bankruptcy under Chapter 13. We estimate our model using a novel data set we construct from bankruptcy court dockets recorded in Delaware between 2001 and 2002. Our estimation results highlight the importance of debtor’s choice of repayment plan length on Chapter 13 outcomes under the restrictions imposed by the bankruptcy law. We use the estimated model to conduct policy experiments to evaluate the impact of more stringent provisions of Chapter 13 that impose additional restrictions on the length of repayment plans. We find that these provisions would not materially affect creditor recovery rates and would not necessarily make discharge more likely for debtors with income above the state median income. |
| Keywords: | Bankruptcy; Restrictions; Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA); Means Test |
| JEL: | G33 |
| Date: | 2014–10–29 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpwp:14-33&r=law |
| By: | Setsuo YAMADA |
| Abstract: | This paper aims to construct a patent option model suitable for the Japanese patent system, and then to explore empirically the economic effects caused by the significant revision of the Japanese patent maintenance fees in 1998. The revision of patent law in 1998 fundamentally changed the fee schedule so that payments peaked in ten to twelve year after patent registration, followed by a level off, which resulted in major fee reductions. This was a very bold change in the patent fee structure compared to historical structures of patent fee maintenance in Japan and other major countries. The leveling-off of patent maintenance fees was aimed to reduce cost burden on patent owners and to give incentives to their R&D activities. In addition, it served to contain the special patent account's rising surplus. The simulation results based on the patent option model show that the introduction of the leveling-off maintenance fees enables the patent to hold the patent term longer, while minimizing the influence on the patent option value. However, it is confirmed to have a relatively substantial effect on reducing patent fee revenues. |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:esj:esriea:186d&r=law |
| By: | Geert Mesters; Victor van der Geest; Catrien Bijleveld (VU University Amsterdam) |
| Abstract: | We test economic and sociological theories for the relationship between employment and crime, where social welfare is used as an identifying mechanism. We consider a sample of disadvantaged males from The Netherlands who are observed between ages 18 and 32 on a monthly time scale. We simultaneously model the offending, employment and social welfare variables using a dynamic discrete choice model, where we allow for state dependence, reciprocal effects and time-varying unobserved heterogeneity. We find significant negative bi-directional structural effects between employment and property crime. Robustness checks show that only regular employment is able to significantly reduce the offending probability. Further, a significant uni-directional effect is found for the public assistance category of social welfare on property offending. The results highlight the importance of economic incentives for explaining the relationship between employment and crime for disadvantaged individuals. For these individuals the crime reducing effects from the public assistance category of social welfare equivalent to those from employment, which suggests the importance of financial gains. Further, the results suggest that stigmatizing effects from offending reduce the future employment probability. |
| Keywords: | dynamic discrete choice, strain, social control, state dependence, reciprocal, unobserved heterogeneity |
| JEL: | K42 C32 C33 |
| Date: | 2014–07–22 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20140091&r=law |
| By: | Ahmed Fayez Abdelgouad (Leuphana University Lueneburg, Germany) |
| Abstract: | This study introduces a review of the institutional framework in the Egyptian labor market to show how it is regulated by discussing extensively the most recent labor law regulations in Egypt and the main reasons behind enacting this law. The paper guides also to different data sources that can be used and highlights a number of empirical studies about the labor market in Egypt. Finally, itconcludes that further reforms are still required to improve labor market efficiency in Egypt. |
| Keywords: | labor law, reforms, labor market flexibility, Egypt |
| JEL: | J31 J41 J51 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:314&r=law |
| By: | Francesco Fasani (Queen Mary University of London, CReAM - Centre for Research and Analysis of Migration and IZA) |
| Abstract: | Programs aimed at reducing the presence of unauthorised immigrants are often at the core of the migration policy debate in host countries. In recent years, a growing body of empirical literature has attempted to understand the effect of lacking legal status on immigrants' outcomes and behaviour. The main difficulties in this field are the scarcity of data and the identification challenge posed by endogenous selection into legal status. The vast majority of these articles have therefore used amnesty programs (or similar policy changes) to establish causal relationships. In this paper, we propose a first systematic review of the empirical literature for the US and Europe on the impact of legal status on different immigrants' outcomes. We then present some new evidence of the relationship between labour market outcomes and legal status in the Italian context. In our empirical analysis, we first provide some descriptive evidence on differences in the outcomes for groups with different residence statuses, and we then exploit a specific amnesty programme to produce causal estimates of the impact of legal status. Our results confirm previous findings in the literature and show that the design of the specific amnesty analysed matters in shaping its effects. |
| Keywords: | illegal migration, amnesty, migration policy |
| JEL: | F22 J61 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:1439&r=law |
| By: | Hiroshi Uemura (School of Management, Kochi University of Technology) |
| Abstract: | This study examines Japanese corporations that disclose significantdeficiencies (SDs) in internal controls and analyses whether replacing the chief executive (CEO), enhancing the independence of boards of directors, and upgrading the financial expertise of corporate boards are followed by a remediation of SDs. This study demonstrates that Japanese companies which report SDs are more likely to replace their CEOs and to increase the independence of their board of directors. In addition, it finds that replacing CEOs and increasing the board’s independence are unrelated to remediating SDs. However, upgrading the board’s accounting expertise correlates positively with remediation of SDs. |
| Keywords: | internal controls, significant deficiencies, executive turnover, corporate governance independence, corporate governance expertise |
| JEL: | M41 M42 J63 K2 |
| Date: | 2014–10 |
| URL: | http://d.repec.org/n?u=RePEc:kch:wpaper:sdes-2014-4&r=law |
| By: | Viscusi, W. Kip (Vanderbilt University); Zeckhauser, Richard (Harvard University) |
| Abstract: | The U.S. Food and Drug Administration (FDA) balances risks and benefits before approving pharmaceuticals, as rationality would require. But powerful behavioral biases that lead to the mishandling of uncertainty also influence its approval process. The FDA places inordinate emphasis on errors of commission versus those of omission, a bias that is compounded by the FDA's desire to avoid blame should risks eventuate. Despite extensive testing, uncertainties inevitably remain. We often learn about the risks of drugs after they are on the market. And there are off-label uses of drugs, which are not part of the initial testing. The FDA shows a strong aversion to ambiguous risks. This is the opposite of what is desirable. For any given initial expected risk level, optimal risk-taking decisions involving uncertainty in a multi-period world should prefer ambiguous risks, and the potential for learning, relative to well-established risks of the same magnitude. |
| JEL: | D80 I18 K23 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp14-005&r=law |
| By: | Risse, Mathias (Harvard University) |
| Abstract: | This paper develops and defends the approach to distributive justice the author presents in his 2012 book On Global Justice. Characteristic of that approach is that the notion of distributive justice is understood as capturing the most stringent moral demands while at the same time being broadly applicable. This is unusual: normally, distributive justice is either understood very stringently, or as broadly applicable, but not both. Immanuel Kant does the former, Ernst Tugendhat does the latter. This paper argues that the author's approach should be preferred to both of those other approaches. One result of this inquiry is also to display the conceptual unity in the author's approach to global justice in terms of different grounds of justice. |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp14-010&r=law |