New Economics Papers
on Law and Economics
Issue of 2006‒05‒13
four papers chosen by
Jeong-Joon Lee, Towson University

  1. Intermediaries and Corruption By Cagla Okten Hasker; Kevin Hasker
  2. Endogenous Communication and Tacit Coordination in Market Entry Games - An explorative experimental study By Andersson, Ola; Carlsson, Hans; Holm, Håkan
  3. Buy, Lobby or Sue: Interest Groups' Participation in Policy Making - A Selective Survey By Pablo T. Spiller; Sanny Liao
  4. Economic Efficiency, Nuisance and Sewage: New Lessons from Attorney-General v Council of the Borough of Birmingham, 1858-1895 By Leslie Rosenthal

  1. By: Cagla Okten Hasker; Kevin Hasker
    Date: 2005
  2. By: Andersson, Ola (Department of Economics, Lund University); Carlsson, Hans (Department of Economics, Lund University); Holm, Håkan (Department of Economics, Lund University)
    Abstract: This paper explores experimentally the effects of costly communication possibilities in market entry games. It is shown that these effects depend on whether entry costs are symmetric or asymmetric. In the former, but not the latter case, communication possibilities increase coordination success substantially and are likely to generate inferior outcomes for consumers. Furthermore, cost asymmetries provide a tacit coordination cue that is robust to changes in the game and is used by experienced players as a substitute to communication. It is also shown that although communication opens up for aggressive market domination strategies, such strategies are not used often successful.
    Keywords: Communication; Market Entry; Coordination
    JEL: C72 C91 D43 K21 L41
    Date: 2006–05–03
  3. By: Pablo T. Spiller; Sanny Liao
    Abstract: The participation of interest groups in public policy making is unavoidable. Its unavoidable nature is only matched by the universal suspicion with which it has been seen by both policy makers and the public. Recently, however, there has been a growing literature that examines the participation of interest groups in public policy making from a New Institutional Economics perspective. The distinguishing feature of the New Institutional Economics Approach is its emphasis in opening up the black box of decision-making, whether in understanding the rules of the game, or the play of the game. In this paper we do not attempt to fairly describe the vast literature on interest group's behavior. Instead, the purpose of this essay for the New Institutional Economics Guide Book is to review recent papers that follow the NIE mantra. That is, they attempt to explicate the micro-analytic features of the way interest groups actually interact with policy-makers, rather than providing an abstract high-level representation. We emphasize the role of the institutional environment in understanding interest groups' strategies.
    JEL: H K L
    Date: 2006–05
  4. By: Leslie Rosenthal (Keele University, Department of Economics)
    Abstract: This paper examines the post-litigation history of a celebrated and much-cited English nuisance case of 1858 concerning sewage pollution of the river Tame. This legal case is a classic citation purporting to illustrate the absence in English nuisance law of a ‘‘social benefit’’ defence for nuisance. As the court’s judgment in law found in favour of an individual landowner against the polluting city of Birmingham, population 250,000, property rights were manifestly awarded where benefits were lower. Coase’s Theorem arguments would lead to the expectation that post-litigation negotiations would ensue and evidence is presented that in this case such negotiations did occur, but broke down. The legal conflict stretched on over nearly 40 years, during which period the pollution was, in practice, allowed to continue until adequate sewage treatment techniques developed. The argument is made that the English court, in effect, by failing to enforce their decisions decisively, did take note of the calamitous social effects that would have followed an enforcement of the court’s orders.
    Keywords: Nuisance Law; Coase’s Theorem; Public Health
    JEL: K11 I18 N5
    Date: 2004–09

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