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on Law and Economics |
| By: | Katherine A. Pancak (University of Connecticut); Thomas J. Miceli (University of Connecticut) |
| Abstract: | Government seizure of residential mortgage loans by eminent domain is currently being discussed as a way to refinance loans where the debt owed exceeds the current value of the collateral. Given the broad judicial interpretation of public use, just compensation may be the sole viable constitutional check on this novel takings proposal. This article contributes to the present debate by providing a framework for thinking about compensation for mortgage loan takings. Legal precedent suggests a range of possible judicial findings based on either the value of the underlying real estate collateral or the value of the outstanding loan debt. An economic perspective shows that compensation should lie somewhere in the range suggested by the various legal theories, but exactly where depends on borrowers’ unobservable valuations of the underlying real estate. |
| JEL: | G21 K11 K35 |
| Date: | 2015–10 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2015-14&r=law |
| By: | Svetlana Chekhovskaya (National Research University Higher School of Economics) |
| Abstract: | This paper aims to add to the literature on the connection between corporate governance and corporate law development. “Corporate governance” came into vogue in the 1970s in the United States. Corporate governance had become the subject of debate worldwide by scholars, regulators, investors etc. This paper considers the nature and extent of corporate law contribution to the development of corporate governance and vice versa. In the last years, Russia and most continental countries (Germany, France, Italy) have enacted significant corporate law reforms. In Europe these reforms aim to strengthen the mechanisms of internal governance, empower shareholders, enhance disclosure requirements, and toughen public enforcement, which are the most effective tools for countering abuses by dominant shareholders. It is very much discussed among legal professionals in Russia that now we have the urgent need for the comprehensive review and modernization of corporate law and governance. However, the last two years Russian Civil Code and Federal Law “On Joint Stock Companies” were changed deeply. Under the new Civil Code, all legal entities (both commercial and non-commercial) are divided into corporate and unitary entities |
| Keywords: | Russian corporate law, soft corporate law, corporate governance |
| JEL: | K29 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:58/law/2015&r=law |
| By: | Rebeggiani, Luca |
| Abstract: | Betting related corruption in sports has increased considerably during the last years, heavily driven by the globalization and digitalization of the worldwide betting market. Using recent data by Sportradar, we examine the particular case of manipulation control in the context of betting regulation in Germany. Here, the legislator recently introduced the possibility for private betting companies to legally enter the sports betting market. However, after 3 years by now, none of the planned licenses has been granted to any company, leaving the whole market in a legally un-regulated “grey area”. Instead, further restrictions for many betting types are under discussion (e.g. the ban of almost all live bets), officially motivated by the aim of preventing betting related corruption. Our analysis yields the following results, whose validity is not restricted to Germany: 1) Market regulations causing the growth of illegal/informal/grey betting markets are counterpro-ductive. 2) The delegation of the supervision of betting markets (including fraud detection sys-tems) to an independent authority is recommended. The same applies to the sanctioning of sus-pected cheaters, which should not be left to the sport federations alone. 3) The government should play the central role in fighting betting related corruption. One fundamental tool for law enforcement is the creation of a legal basis for criminal prosecution. Such a sport-specific ele-ment of crime, labelled e.g. “sport fraud”, could be part of a legislation covering many types of sports manipulation, including doping. |
| Keywords: | Sports betting; sports economics; regulation; corruption |
| JEL: | D73 L43 L83 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68610&r=law |
| By: | Borcan, Oana (University of Gothenburg); Lindahl, Mikael (University of Gothenburg); Mitrut, Andreea (University of Gothenburg) |
| Abstract: | We investigate the distributional consequences of a corruption-fighting initiative in Romania targeting the endemic fraud in a high-stakes high school exit exam, which introduced CCTV monitoring of the exam and credible punishment threats for teachers and students. We find that the campaign was effective in reducing corruption and, in particular, that monitoring increased the effectiveness of the punishment threats. Estimating the heterogeneous impact for students of different poverty status we show that curbing corruption led to a worrisome score gap increase between poor and non-poor students. Consequently, the poor students have reduced chances to enter an elite university. |
| Keywords: | corruption, high-stakes exam, bribes, monitoring and punishment |
| JEL: | I21 I24 K42 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp9561&r=law |
| By: | Dilmé, Francesc; Garrett, Daniel |
| Abstract: | Successes of law enforcement in apprehending offenders are often publicized events. Such events have been found to result in temporary reductions in offending, or "residual deterrence". We provide a theory of residual deterrence which accounts for the incentives of both enforcement officials and potential offenders. Our theory rests on the costs of reallocating enforcement resources. In light of these costs, we study the determinants of offending such as the role of public information about enforcement and offending. |
| Keywords: | deterrence; enforcement; reputation |
| JEL: | C73 K42 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:10994&r=law |
| By: | Emiliano Tealde |
| Abstract: | An important however understudied challenge in the crime literature is to isolate the causal effect of police presence on crime displacement. Following the announcements of Brazil as the host of the 2014 FIFAWorld Cup and of the city of Rio de Janeiro as the host of the 2016 Summer Olympic Games, the Government of Rio de Janeiro launched the Favela Pacification Program. The program consists in the expulsion of criminals from some favelas (pacified favelas), territories usually controlled by gangs. Using data on homicide rates across Rio de Janeiro before and after the starting date of the Favela Pacification Program,I find that it displaces crime from pacified to non-pacified favelas. |
| Keywords: | police deployment effectiveness, crime displacement, organized crime |
| JEL: | K42 |
| Date: | 2015–09 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:717&r=law |
| By: | Gianmarco Daniele (University of Barcelona & IEB & Vrije Universiteit Brussel (VUB)); Benny Geys (Norwegian Business School BI) |
| Abstract: | Since 1991, the Italian national government can dissolve municipal councils when infiltration by organized crime is suspected (Law 164/1991). We exploit variation over time and space in the application of this law to study voters’ responses to politicians’ publicly exposed ties to criminal organizations. Using a difference-in-differences approach, we find that public exposure of ties to organized crime significantly depresses turnout in local elections, and negatively impacts the electoral performance of incumbents and purely local political parties. The breach in the local political principal-agent relationship also translates into citizens’ reduced willingness to contribute to the financing of local public goods. |
| Keywords: | Political accountability, voter turnout, elections, mafia, tax compliance |
| JEL: | K42 H89 O17 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:ieb:wpaper:doc2015-41&r=law |
| By: | Jason M. Lindo; Peter M. Siminski; Isaac D. Swensen |
| Abstract: | This paper considers the degree to which events that intensify partying increase sexual assault. Estimates are based on panel data from campus and local law-enforcement agencies and an identification strategy that exploits plausibly random variation in the timing of Division 1 football games. The estimates indicate that these events increase daily reports of rape with 17-24 year old victims by 28 percent. The effects are driven largely by 17-24 year old offenders and by offenders unknown to the victim, but we also find significant effects on incidents involving offenders of other ages and on incidents involving offenders known to the victim. |
| JEL: | I23 K42 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21828&r=law |
| By: | Ghosal, Sayantan; Miller, Marcus |
| Abstract: | The presence of ‘holdouts’ in recent sovereign debt swaps poses a challenge to bargaining models which assume all creditors to be homogeneous. We modify the Rubinstein ‘alternating offers’ framework so as to accommodate exogenous creditor heterogeneity - specifically holdouts more patient than other bondholders. The ‘second best’ equilibrium derived is an initial offer and an associated ‘lock-law’ sufficient to tempt impatient creditors into a prompt bond exchange. This is followed by a delayed, but more generous, swap with the patient creditors, timed to take place when the lock-law expires. In practice, however, the presence of holdouts may be endogenous: they may be late-comers who buy distressed bonds with a view to litigating for the full face value plus their costs of waiting. Provisions for protecting other bond holders from the negative externality caused by such tactics are briefly discussed. However, where the judge has mandated good faith bargaining with holdout creditors, the bargaining outcome we derive may be useful to indicate a basis for compromise |
| Keywords: | bargaining; delay; holdouts; lock law; second-best; sovereign debt restructuring |
| JEL: | C70 C78 F34 K00 |
| Date: | 2015–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11000&r=law |
| By: | Konstantinos Charistos (Department of Economics, University of Macedonia) |
| Abstract: | Leniency Programs reduce sanctions against cartel members that either report spontaneously the existence of the infringement or cooperate during the investigation and facilitate prosecution. This paper investigates the impact of leniency programs on cartel stability when demand is uncertain and firms cannot perfectly observe their rival’s choices. We show that pre-investigation leniency may or may not be effective in destroying the cartel, but in neither case affects the duration of price wars. Postinvestigation leniency may have ambiguous welfare effects, in affecting both cartel stability and price wars duration. LPs applying in situations where leniency is not urgently needed may be not only ineffective, but also welfare reducing. Hence, in markets where negative demand shocks are sufficiently frequent, leniency policies may produce undesirable effects. |
| Keywords: | antitrust enforcement, collusion, leniency programs, price wars. |
| JEL: | K21 L12 L41 |
| Date: | 2015–02 |
| URL: | http://d.repec.org/n?u=RePEc:mcd:mcddps:2015_08&r=law |
| By: | Juan José Ganuza; Fernando Gomez; Jose Penalva |
| Abstract: | We characterize the best mechanism for a Court to impose liability (and generate incentives) in a setting in which the injurer's behavior is imperfectly observed and Courts also care about judicial errors. First, we show that the optimal decision rule is an evidentiary standard. Then, we make three main contributions. i) We develop a new methodological approach to deal with this classic problem: rewrite the incentive compatibility constraint in terms of Court errors. This approach can be applied to more general incentive problems, and greatly simplies the characterization of the optimal standard. ii)We state that the harshness of the optimal evidentiary standard decreases as the quality (informativeness) of the evidence increases. iii) When the informativeness of the evidence is determined by the injurer's choice of the care technology, the interests of Court and injurer are not aligned. The optimal Court policy is to penalize (even forbid) the use of the less informative care technology. |
| Keywords: | Incentives, evidentiary standards, judicial errors, statistical discrimination and informativeness. |
| JEL: | C44 D82 K13 K40 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1500&r=law |
| By: | Böckerman, Petri; Skedinger, Per; Uusitalo, Roope |
| Abstract: | We construct a multi-country employer-employee data to examine the consequences of employment protection. We identify the effects by comparing worker exit rates between units of the same firm that operate in two countries that have different seniority rules. The results show that last-in-first-out rules reduce dismissals of older, more senior workers, especially in shrinking multinational firms, and increase their bargaining power, resulting in a steeper seniority-wage profile. |
| Keywords: | Multi-country linked employer-employee data, Employment protection legislation, Seniority rules |
| JEL: | J08 J63 K31 K32 L50 |
| Date: | 2015–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:68581&r=law |
| By: | Filippo Belloc |
| Abstract: | We analyse how countries' innovation outcomes are affected by national legislations of worker participation to corporate governance. We develop a model of employee representation laws (ERL) and innovation in the presence of incomplete labour contracts and predict heterogeneous ERL effects across different systems of dismissal regulation. We then perform a panel regression analysis, exploiting 2-digit panel data for 21 manufacturing sectors of USA, UK, India, France and Germany, over the 1977-2005 period. We find that ERL effects on aggregate innovation output are positive, statistically significant and higher in magnitude where national labour laws impose significant ring costs to the firm with respect to institutional settings in which ring costs are low or absent. These results are robust to possible technology selection dynamics, endogeneity and institutional changes in the legal system of patent protection. We also estimate ERL effects on innovation conditional on ring costs at an industry level and show that the impact of ERL is relatively larger in those sectors where the human capital contribution to production is higher. Our results have relevant implications for the optimal design of employee representation legislations. |
| Keywords: | employee representation law, innovation, panel data |
| JEL: | K31 O31 P51 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:719&r=law |