New Economics Papers
on Law and Economics
Issue of 2007‒05‒12
four papers chosen by
Jeong-Joon Lee, Towson University

  1. Bribery in Health Care in Peru and Uganda By Jennifer Hunt
  2. Two optimistic traditions in the dismal science: rationalism and the "invisible hand" By Stan du Plessis
  3. The rigour of EPO's patentability criteria: An insight into the "induced withdrawals". By George Lazaridis; Bruno Van Pottelsberghe
  4. The Demand for Vice: Inter-Commodity Interactions with Uncertainty By Kenneth W Clements; Yihui Lan; Xueyan Zhao

  1. By: Jennifer Hunt (McGill University, NBER and IZA)
    Abstract: In this paper, I examine the role of household income in determining who bribes and how much they bribe in health care in Peru and Uganda. I find that rich patients are more likely than other patients to bribe in public health care: doubling household consumption increases the bribery probability by 0.2-0.4 percentage points in Peru, compared to a bribery rate of 0.8%; doubling household expenditure in Uganda increases the bribery probability by 1.2 percentage points compared to a bribery rate of 17%. The income elasticity of the bribe amount cannot be precisely estimated in Peru, but is about 0.37 in Uganda. Bribes in the Ugandan public sector appear to be fees-for-service extorted from the richer patients amongst those exempted by government policy from paying the official fees. Bribes in the private sector appear to be flat-rate fees paid by patients who do not pay official fees. I do not find evidence that the public health care sector in either Peru or Uganda is able to pricediscriminate less effectively than public institutions with less competition from the private sector.
    Keywords: corruption, bribery, governance, health care
    JEL: H4 K4 O1
    Date: 2007–04
  2. By: Stan du Plessis (Department of Economics, University of Stellenbosch)
    Abstract: This paper explores two traditions of optimism in economics. In one of these traditions optimism is based on the comprehension of a spontaneous (and often progressive) order in a decentralised (or market) economy – what I will call the optimism of the “invisible hand”. Against the optimism of the invisible hand stands another optimistic tradition in economics, whereby we might take courage from our ability to do right by society through instructing governments with the keen edge of our most enlightened plans. This tradition is called “constructivist rationalism” here. The paper explores the logic of each tradition and their historical development and applies both to a recent example of policy making in South Africa: government’s fundamental regulatory overhaul of the pharmaceutical industry based on the Medicines Act of 1997, specifically, the decision to implement price controls on medicines.
    Keywords: Spontaneous order, Modernism, Planning, Optimism, Information, Uncertainty, Price controls, Institutions, Constitutions, Law and Economics
    JEL: N10 N17 O40 O47 O49 O55
    Date: 2007
  3. By: George Lazaridis (European Patent Office - EPO, München.); Bruno Van Pottelsberghe (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels)
    Abstract: The EPO traditionally grants at least 60% of all patent applications, the rest being either withdrawn (30-35 %) or refused (5%). This paper provides quantitative evidence suggesting that up to 54% of all patent withdrawals could be considered as induced by the work of EPO examiners, and hence may be taken as a more appropriate indicator of the rigour of the EPO. “Induced withdrawals” and refusals occur for up to 23% of all applications at the EPO. This share varies according to 1) the route chosen for an EPO filing; 2) the technological field that is considered; and 3) the country of residence of the assignee. The number of claims only slightly affects the share of withdrawals. However, on average, two additional claims induce an additional communication from the EPO, which in turn prolongs the procedural duration by an additional year.
    Keywords: European Patent Office, grant, patent filing, induced withdrawals, claims, communications, examination procedure.
    JEL: K1 K3 L1 O3
    Date: 2007–04
  4. By: Kenneth W Clements (UWA Business School, The University of Western Australia); Yihui Lan (UWA Business School, The University of Western Australia); Xueyan Zhao (Department of Econometrics and Business Statistics, Monash University)
    Abstract: This paper analyses consumption patterns of vice -- marijuana, tobacco and alcohol. To deal with imperfect marijuana data, we exploit the interdependencies in the consumption of the three drugs identified in prior research, and introduce a Monte Carlo simulation procedure to formally account for the inherent uncertainty in marijuana-related data and parameters. To illustrate the application of the framework, we use Australian data to simulate the impact on the consumption of vice of a reduction in the price of marijuana; changes in pre-existing taxes on tobacco and alcohol; legalisation of marijuana, which is then subject to taxation; and a tax tradeoff involving the introduction of a revenue-neutral tax on marijuana that is offset by reduced alcohol taxation. The revenue-maximising tax rate for marijuana of about 50% is estimated to yield additional revenue of about 15% of the pre-existing proceeds from vice taxation. The role of uncertainty surrounding marijuana is highlighted by providing the entire probability distributions of all endogenous variables in a consistent multivariate framework.
    JEL: H2 K0 I0 D5 C6
    Date: 2006

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