New Economics Papers
on Law and Economics
Issue of 2006‒07‒02
five papers chosen by
Jeong-Joon Lee, Towson University

  1. Firms merge in response to constraints By Boone,Jan
  2. The Impact of Black Male Incarceration on Black Females’ Fertility, Schooling, and Employment in the U.S., 1979-2000 By Stephane Mechoulan
  3. Original Sin, Good Works, and Property Rights in Russia: Evidence From a Survey Experiment By Timothy Frye; ;
  4. Towards Patent Pools in Biotechnology? By Patrick Gaulé
  5. The Evolution of Citizenship: Economic and Institutional Determinants By Graziella Bertocchi; Chiara Strozzi

  1. By: Boone,Jan (Tilburg University, Center for Economic Research)
    Abstract: Theoretical IO models of horizontal mergers and acquisitions make the critical assumption of efficiency gains. Without efficiency gains, these models predict either that mergers are not profitable or that mergers are welfare reducing. A problem here is the empirical observation that on average mergers do not create efficiency gains. We analyze mergers in a model where firms cannot equalize marginal costs and marginal revenues over all dimensions in their action space due to constraints. In this type of model mergers can still be profitable and welfare enhancing while they create a loss in efficiency. The merger allows a firm to relax constraints. Further, this set up is consistent with the following stylized facts on mergers and acquisitions: M&A's happen when new opportunities have opened up or industries have become more competitive (due to liberalization), they happen in waves, shareholders of the acquired firms gain while shareholders of the acquiring firms lose from the acquisition. Standard IO merger models do not explain these empirical observations.
    Keywords: Pro/anti-competitive mergers;efficiency defence;constraints;merger waves; deregulation
    JEL: G34 K21 L40
    Date: 2006
  2. By: Stephane Mechoulan
    Abstract: We examine how the rising incarceration of Black men and the sex ratio imbalance it induces shapes young Black women’s behavior during their late teens and early twenties. Combining data from the BJS and the CPS to match incarceration rates with individual observations, we show that Black male incarceration lowers the odds of non-marital teenage fertility and increases single Black women’s school attainment and early employment. We do not find consistent evidence that high Black male incarceration rates decrease the likelihood of getting married for young Black women. These results are robust to using sentencing changes and prison capacity expansions as instruments for incarceration.
    Keywords: incarceration, prison, prison capacity, sentencing laws, teenage fertility, education, school, labor force participation
    JEL: I21 K42 J12 J13 J15 J22 J24
    Date: 2006–06–22
  3. By: Timothy Frye; ;
    Abstract: Are property rights obtained through legally dubious means forever tainted with original sin or can rightholders make their ill-gotten gains legitimate by doing good works?2 This is a critical question for developing countries (and Russia in particular) where privatization is often opaque and businesspeople may receive property, but remain unwilling to use it productively due to concerns about the vulnerability of their rights to political challenge. Using a survey of 660 businesspeople conducted in Russia in February 2005, I find that the original sin of an illegal privatization is difficult to expunge. Businesspeople, however, can improve the perceived legitimacy of property rights by doing good works, such as investing in the firm and by providing public goods for the region. Finally, managers that provide public goods for their region are more likely to invest in their firms than those who did not. The finding that public goods providers invest at higher rates is at odds with standard economic logic, but fits well with the more political view of property rights developed here. These findings have implications for political economy and contemporary Russia.
    Keywords: Property Rights, Transition, Rule of Law, Privatization
    JEL: K11 P14 P16
    Date: 2005–09–01
  4. By: Patrick Gaulé (Chaire en Economie et Management de l'Innovation, Ecole Polytechnique Fédérale de Lausanne)
    Abstract: We analyze the extent to which patent pools (agreements where patent holders agree to license their intellectual property as a package) could be used as an institution to facilitate technology transactions in biotechnology. Patent pools have been used with success in the consumer electronics and other sectors but they are untested in biotechnology despite their transaction cost reducing potential. We suggest two explanations for the fact that patent pools have not been used in this industry. The first is that the current antitrust requirements are difficult to meet in biotechnology. The second is the availability of simpler alternatives that will often be more profitable to patent holders: aggregation of rights by one party and cross-licensing.
    Keywords: patent pools, licensing, intellectual property management, biotechnology
    JEL: O32 O34 K11 K21
    Date: 2006–04
  5. By: Graziella Bertocchi (University of Modena and Reggio Emilia, CEPR, CHILD and IZA); Chiara Strozzi (University of Modena and Reggio Emilia)
    Abstract: We investigate the origin and evolution of the legal institution of citizenship. We compile a new data set on citizenship laws across countries of the world which documents how these institutions have evolved from the legal tradition of common and civil law established in the course of the 19th century. We show that in the postwar period citizenship laws have responded endogenously and systematically to economic and institutional determinants. Original citizenship laws tend to affect the current legislation persistently, with a particularly strong tendency for jus sanguinis to be preserved despite discontinuities in the transplanting process for former colonies. The presence of a large stock of migrants tends to limit the application of jus soli elements, although there is also evidence of a contrasting tendency for those jus sanguinis countries exposed to large immigration. The results hold after controlling for additional factors such as the degree of democracy, border stability, the welfare burden, demographics, and cultural characteristics.
    Keywords: citizenship laws, international migration, legal origins, democracy, borders
    JEL: P16 K40 F22 O15
    Date: 2006

This issue is ©2006 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.