New Economics Papers
on Law and Economics
Issue of 2006‒07‒28
two papers chosen by
Jeong-Joon Lee, Towson University

  1. Welfare gains by reducing transaction costs: Linking trade and innovation policy By Baeten, Joost; Butter, Frank A.G. den
  2. Estimating the costs of crime in New Zealand in 2003/04 By Tim Roper; Andrew Thompson

  1. By: Baeten, Joost (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Butter, Frank A.G. den
    Abstract: Specialisation and trade are major sources of productivity increases, and therefore of welfare gains. With reference to the Netherlands this paper discusses how (international) fragmentation of production and outsourcing may enhance productivity. In order to promote further specialisation and trade, innovations which lead to lower transaction costs - trade innovations - are needed. When trading countries, which are likely to have a comparative advantage in reducing transaction costs, focus on the coordination function in the production chain, they are able to internalize part of the welfare gains from increased trade. Infrastructure and knowledge investments that reduce transaction costs, the so called trade capital, partly have the character of a public good. Moreover, trade innovations bring about positive externalities, which is another reason for government intervention and for linking trade and innovation policy. From this perspective the paper gives some policy recommendations.
    Keywords: Outsourcing; transaction costs; Knowledge spill-overs; Trade policy; Innovations; Coordination function
    JEL: F10 Z13 D23 K12
    Date: 2006
  2. By: Tim Roper; Andrew Thompson (New Zealand Treasury)
    Abstract: We estimate that the total costs of crime in New Zealand in 2003/04 amounted to $9.1 billion. Of this, the private sector incurred $7 billion in costs and the public sector $2.1 billion. Offences against private property are the most common crimes but offences against the person are the most costly, accounting for 45% of the total estimated costs of crime. Empirically-based measures like those presented here – the total and average costs of crime by category – are a useful aid to policy analysis around criminal justice operations and settings. However, care needs to be taken when interpreting these results because they rely considerably on assumptions, including the assumed volume of actual crime, and the costs that crime imposes on victims. This difficulty in constructing robust estimates also implies that care should be taken not to draw conclusions about whether the Government should be putting more or less resources into any specific categories of crime, based on their relative costs alone.
    Keywords: crime; justice; costs; New Zealand
    JEL: K42
    Date: 2006–07

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