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on Regulation |
| By: | Siddhartha Bandyopadhyay and Kalyan Chatterjee |
| Abstract: | We examine the effects of giving incentives for people to report crime on crime rates. In particular, we look at what happens when the costs of reporting are negligible and the cost of being interrogated by the police are high in a rational choice model of crime and crime reporting. Perverse equilibria where everyone reports or no one reports (and thus reports have no informational value) emerge. This happens both in a model where police make rational inferences about crime based on reports as well as in a model where police investigate according to fixed rules, operating under a fixed budget. Importantly, generating more reports about crime could actually increase equilibrium crime rates. This occurs via a resource thinning effect caused by "too many" reports. Hence, from a policy perspective increasing incentives for neighbours to report suspicious activities may prove to be counterproductive. We also show how different ways of profiling certain groups of people can either increase or decrease crime rates in the profiled group. |
| Keywords: | Neighbourhood, crime reporting and multiple equilibria |
| JEL: | C72 D82 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:bir:birmec:06-04&r=reg |
| By: | Hylke, VANDENBUSSCHE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics); Maurizio, ZANARDI (Tilburg University) |
| Abstract: | Advocates of antidumping (AD) laws downplay their effects by arguing that the trade flows that are subject to AD are small and their distortions negligible. This paper is the first to counter that notion by quantifying the worldwide effect of AD laws on aggregate trade flows. The recent proliferation of AD laws across countries provides us with a natural experiment to estimate the trade effects of adopting versus using AD laws; differences in the intensity of use among countries with older AD laws allow us to investigate reputation effects. For this purpose, we estimate worldwide trade flows using a gravity equation spanning 21 years (1980-2000) of annual observations. Our estimates confirm that AD effects are not small. Among other findings, new tough users have their aggregate imports depressed by 15.7 billion US$ a year (or6.7%) as a result of the AD measures they have imposed. For a traditional user like the United States, current AD measures depress annual imports by almost 20 billions US$ on top of the cumulative negative effect of reputation. For some countries, the dampening effects of AD laws on trade flows are found to nearly offset the gains from trade liberalization. |
| Keywords: | Antidumping; gravity equation, trade liberalization; trade flows |
| JEL: | F13 F14 |
| Date: | 2006–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvec:2006009&r=reg |
| By: | Leigh L. Linden; Jonah E. Rockoff |
| Abstract: | We combine data from the housing market with data from the North Carolina Sex Offender Registry to estimate how individuals value living in close proximity to a convicted criminal. We use the exact location of these offenders to exploit variation in the threat of crime within small homogenous groupings of homes, and we use the timing of sex offenders’ arrivals to control for baseline property values in the area. We find statistically and economically significant negative effects of sex offenders’ locations that are extremely localized. Houses within a one-tenth mile area around the home of a sex offender fall by four percent on average (about $5,500) while those further away show no decline. These results suggest that individuals have a significant distaste for living in close proximity to a known sex offender. Using data on crimes committed by sexual offenders against neighbors, we estimate costs to victims of sexual offenses under the assumptions that all of the decline in property value is due to increased crime risk and that neighbors’ perceptions of risk are in line with objective data. We estimate victimization costs of over $1 million—far in excess of estimates taken from the criminal justice literature. However, we cannot reject the alternative hypotheses that individuals overestimate the risk posed by offenders or view living near an offender as having costs exclusive of crime risk. |
| JEL: | R2 K4 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12253&r=reg |
| By: | Daron Acemoglu; Amy Finkelstein |
| Abstract: | This paper examines the implications of regulatory change for the input mix and technology choices of regulated industries. We present a simple neoclassical framework that emphasizes the change in relative factor prices associated with the regulatory change from full cost to partial cost reimbursement, and investigate how this affects firms’ technology choices through substitution of (capital embodied) technologies for tasks previously performed by labor. We examine these implications empirically by studying the change from full cost to partial cost reimbursement under the Medicare Prospective Payment System (PPS) reform, which increased the relative price of labor faced by U.S. hospitals. Using the interaction of hospitals’ pre-PPS Medicare share of patient days with the introduction of these regulatory changes, we document a substantial increase in capital-labor ratios and a large decline in labor inputs associated with PPS. Most interestingly, we find that the PPS reform seems to have encouraged the adoption of a range of new medical technologies. We also show that the reform was associated with an increase in the skill composition of these hospitals, which is consistent with technology-skill or capital-skill complementarities. |
| JEL: | H51 I18 L50 L51 O31 O33 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12254&r=reg |
| By: | Maria Fátima Rocha (Faculdade de Economia, Universidade do Porto and Universidade Fernando Pessoa); Aurora A.C. Teixeira (CEMPRE, Faculdade de Economia, Universidade do Porto) |
| Abstract: | Today’s economics and business students are expected to be our future’s business people and potentially our tomorrow’s economic leaders and politicians. Thus, their beliefs and practices are likely to affect the definition of acceptable economics and business ethics. The empirical evaluation of the cheating phenomenon in academia has been almost exclusively focused on the US context, and the non-US studies involve, in general, a narrow scope of countries. In the present paper we perform a wide cross-country study on the determinants of economics and business undergraduate cheating which involves 21 countries from the American (4), European (14), Africa (2) and Oceania (1) Continents and 7213 students. We found that the average magnitude of copying among the economics and business undergraduates is quite high (62%) but with a significant cross-country heterogeneity. The probability of cheating is significantly lower in students enrolled in schools located in the Nordic or the US plus British Isles blocks when compared with their South Europe counterparts; quite surprisingly that probability is also lower for the African block. Distinctly, students enrolled in schools from the Western and especially from the Eastern Europe observe statistically significant higher propensities for perpetrating academic fraud. Our findings further suggest that average cheating propensity in academia is significantly correlated with ‘real world’ business corruption. |
| Keywords: | cheating; corruption; university; economics; business; countries |
| JEL: | A22 I23 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:214&r=reg |
| By: | Serkan Ozbeklik |
| Abstract: | In this paper we examine the long-term impact of legalized abortion on teenage out-of-wedlock childbearing in the United States using the birth data from the Vital Statistics of the U. S. Our fundamental argument is analogous to Donahue and Levitt’s (2001): by decreasing the number of unwanted children, legalized abortion had potentially a negative impact on the likelihood of the teenage out-of-wedlock childbearing for the cohorts affected by the legalization. Our preliminary findings indicate that for African-Americans, both 1970 legalization in repeal states and Roe vs. Wade had a long-term impact on out-of-wedlock teenage childbearing so that the cohorts exposed to legalized abortion were less likely to give birth out-of-wedlock as teenagers. For Whites, even though we do not find evidence regarding the impact of the 1970 legalization, our findings suggest that cohorts affected by Roe vs. Wade were less likely to give birth out-of-wedlock as teenagers. Our results support Donahue and Levitt’s findings regarding the crime by showing the importance of selected abortion for the cohorts who were born after abortion was legalized and suggest a different avenue for obtaining a complete understanding of the observed decline in out-of-wedlock teenage childbearing in 1990’s. |
| Keywords: | Abortion legalization, teenage out-of-wedlock childbearing, Roe vs. Wade |
| JEL: | J13 J19 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:scp:wpaper:06-50&r=reg |
| By: | Jennifer Hunt; ; |
| Abstract: | Using detailed Peruvian data measuring bribery, I assess which types of public official are most corrupt and why. I distinguish between the bribery rate and the size of bribes received, and seek to explain the variation in each across public institutions. The characteristics of officials’ clients explain most of the variation for bribery rates, but none for bribe amounts. A measure of the speed of honest service at the institution explains much of the remaining variation for both bribery rates and amounts. The results indicate that the bribery rate is higher at institutions with bribe-prone clients, and that bribery rates and bribe amounts are higher where clients are frustrated at slow service. Faster and better service would reduce corruption. Overall, the judiciary and the police are by far the most corrupt institutions. |
| Keywords: | Corruption, bribery, institutions, governance. |
| JEL: | H4 K4 O1 |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-790&r=reg |
| By: | Jennifer Hunt; Sonia Laszlo; |
| Abstract: | We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the payoffs to the client’s decision. We test this frame work using a new data set on bribery of Peruvian public officials by households. The theory predicts that bribery is more attractive to both parties when the client is richer, and we find empirically that both bribery incidence and value are increasing in household income. However, 65% of the relation between bribery incidence and income is explained by greater use of officials by high–income households, and by their use of more corrupt types of official. Compared to a client dealing with an honest official, a client who pays a bribe has a similar probability of concluding her business, while a client who refuses to bribe has a probability 16 percentage points lower. This indicates that service improvements in response to a bribe merely offset service reductions associated with angling for a bribe, and that clients refusing to bribe are punished. We use these and other results to argue that bribery is not a regressive tax. |
| Keywords: | Corruption, bribery, institutions, governance. |
| JEL: | H4 K4 O1 |
| Date: | 2005–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2005-792&r=reg |
| By: | Tamura, Yuji (Department of Economics, University of Warwick) |
| Abstract: | Akerlof’s (1970) model of asymmetric information is adapted for the migrant smuggling market where smugglers differ in their capacities to exploit their clients in the destination. Migrants may gain a greater surplus when informationally disadvantaged than under symmetric information, which can be a source of the market’s prosperity. We show a static equilibrium where both exploitative and non-exploitative smugglers are active is subject to adverse selection in the long run in an environment where migrants trust social networks and distrust exploitative smugglers. We predict the market may converge to a stable state where only exploitative smugglers are active due to the very information transmission through social networks that is commonly used to evade hiring exploitative smugglers. Exploitative and non-exploitative smugglers then coexist only temporarily. Policymakers are likely to face a dilemma of whether to reduce the exploitation of smuggled migrants or the availability of smuggling services, for there seems to be a trade-off between these. |
| Keywords: | irregular migration ; migrant smuggling ; migrant trafficking ; adverse selection |
| JEL: | F22 J61 D82 L15 K42 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:730&r=reg |
| By: | Fabio Manenti (University of Padua); Paolo Lupi (Autorita' per le garanzie nelle comunicazioni (Italy)) |
| Abstract: | Despite a general trend of lower charges for mobile calls, prices for international roaming calls have remained at levels surprisingly high. The apparent reluctance of European mobile network operators to lower roaming tariffs is generating many antitrust concerns. This paper discusses in a two country - two firm framework, the distortions associated with the functioning of the current system governing wholesale international roaming agreements based on Inter Operator Tariffs (IOTs) and the role played by cross border roaming alliances between foreign operators. We describe how competition between roaming operators at the wholesale level is influenced by the adoption of traffic redirection techniques. The paper shows that when mobile operators act un-cooperatively and traffic redirection techniques allow only partial control on traffic flows, competition between roaming operators may not guarantee a reduction in IOTs and, consequently, on retail tariffs. We propose a simple and effective regulatory price cap mechanism to restore efficiency in the wholesale market. When mobile operators cooperate within a cross border alliance, internal IOTs are set at cost and retail prices are lower. |
| JEL: | L13 L51 L42 L96 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0019&r=reg |