New Economics Papers
on Law and Economics
Issue of 2007‒10‒20
seven papers chosen by
Jeong-Joon Lee, Towson University

  1. Love, Hate and Murder: Commitment Devices in Violent Relationships By Anna Aizer; Pedro Dal Bó
  2. A Retail Benchmarking Approach to Efficient Two-way Access Pricing: Two-Part Tariffs By Doh-Shin Jeon; Sjaak Hurkens;
  3. Self reporting reduces corruption in law enforcement By Motta, Alberto; Burlando, Alfredo
  4. Different Rules for Different Owners: Does a Non-Competing Patentee have a Right to Exclude? A Study of Post-eBay Cases By Sujitha Subramanian
  5. Legal Families and Environmental Protection: Is there a Causal Relationship? By Giuseppe Di Vita
  6. The effect of voter identification laws on turnout By Alvarez, R. Michael; Bailey, Delia; Katz, Jonathan
  7. Creditor Passivity: The Effects of Bank Competition and Institutions on the Strategic Use of Bankruptcy Filings By Hainz, Christa

  1. By: Anna Aizer; Pedro Dal Bó
    Abstract: Many violent relationships are characterized by a high degree of cyclicality: women who are the victims of domestic violence often leave and return multiple times. To explain this we develop a model of time inconsistent preferences in the context of domestic violence. This time inconsistency generates a demand for commitment. We present supporting evidence that women in violent relationships display time inconsistent preferences by examining their demand for commitment devices. We find that "no-drop" policies -- which compel the prosecutor to continue with prosecution even if the victim expresses a desire to drop the charges -- result in an increase in reporting. No-drop policies also result in a decrease in the number of men murdered by intimates suggesting that some women in violent relationships move away from an extreme type of commitment device when a less costly one is offered.
    JEL: J12 J16 K4
    Date: 2007–10
  2. By: Doh-Shin Jeon (Department of Economics and Business, Universitat Pompeu Fabra); Sjaak Hurkens (Institute for Economic Analysis);
    Abstract: We study a retail benchmarking approach to determine access prices for interconnected networks. Instead of considering fixed access charges as in the existing literature, we study access pricing rules that determine the access price that network i pays to network j as a linear function of the marginal costs and the retail prices set by both networks. In the case of competition in two-part tariffs, we consider a class of access pricing rules, similar to the optimal one under competition in linear prices, derived by Jeon (2005), but based on average retail prices. We show that firms choose the variable price equal to the marginal cost under the class of rules. Therefore, the regulator can choose one among the rules to pursue additional objectives such as consumer surplus, network coverage or investment: in particular, we show that the regulator can achieve static and dynamic efficiency at the same time.
    Keywords: Networks, Access Pricing, Interconnection, Competition Policy, Telecommunications, Investment, Two-part Tariff
    JEL: D4 K21 L41 L51 L96
    Date: 2007–09
  3. By: Motta, Alberto; Burlando, Alfredo
    Abstract: We consider a model of law enforcement where homogenous, risk neutral, and corruptible inspectors are responsible for monitoring citizens who may have committed criminal acts. A welfare maximizing, budget constrained government can implement appropriate wage policies to prevent collusion, but we find that governments characterized by high administrative costs in administrating fines, or by a low ability to spot and prosecute corruption, may prefer to let corruption happen. By allowing citizens to avoid all monitoring by reporting their own violations first, the government is able to increase welfare by hiring fewer inspector, and in some instances by shifting from a regime of corruption to a regime where there is none. Moreover, self reporting fully eliminates any deadweight losses that arise from the incentive schemes when inspectors are risk averse. In order for self-reporting to have these effects, it is necessary that the government maintains also an optimal incentive scheme for its inspectors.
    Keywords: self reporting; corruption; collusion; law enforcement; wage policy; leniency program;
    JEL: K00 O10
    Date: 2007–01–10
  4. By: Sujitha Subramanian (Centre for Competition Policy, University of East Anglia)
    Abstract: Courts have traditionally granted injunctive relief ‘automatically’ upon finding infringement of valid patents on the basis that it is the essence of the patent right to exclude others. But the U.S. Supreme Court signalled a change in 2006 when they vacated the Federal Court’s order granting injunction against eBay for willfully infringing valid patents of MercExchange. The ruling comes at a time when the debate on what have pejoratively been called ‘patent trolls’ have taken centre stage. This paper examines the issues connected to patent trolls and analyses cases post-eBay to study the effect that eBay has had on patent infringement litigation. The analysis shows that the economic status of the patentee and the nature of the patent itself can adversely affect the exclusive rights granted by the patent. This is because non-competing patentees and a patent which covers only a small component of the overall product are less likely to obtain an injunctive relief. Denial of injunctive relief results in judicially-instituted compulsory licensing of patents which dramatically scales down the bargaining power of the patentee during licensing fee negotiations. Wrongly being adjudged a ‘troll’ can have dramatic effects on the incentive for investment and innovation. Consequently, the paper argues that acceptance of the concept of patent ‘troll’ is likely to result in more harm to innovation that otherwise.
    Keywords: Patents, patentees, right to exclude, patent trolls, compulsory licensing
    JEL: K19 K20
    Date: 2007–09
  5. By: Giuseppe Di Vita (University of Catania)
    Abstract: In this paper we build up the analysis of La Porta et al. (1998), to investigate the importance of legal families in explaining the variations in pollution emissions in different countries. The main intuition behind our analysis is that the nations in which the rights of shareholders are more protected, promote real and financial investment; this increases the speed at which the per-capita income corresponding to the declining branch of the Environmental Kutznets Curve (EKC) is achieved. In econometrics different regression analyses were performed using as dependent variables three different kinds of pollutants (CO2, fine suspended particulates and waste), including as an explanation some financial variables never before considered in this kind of study.
    Keywords: Dummy Variables, Environmental Kutznets Curve, Legal Families, Panel Data, Pollution Emissions
    JEL: K4 Q0
    Date: 2007–07
  6. By: Alvarez, R. Michael; Bailey, Delia; Katz, Jonathan
    Date: 2007–10
  7. By: Hainz, Christa
    Abstract: Why do banks remain passive? In a model of bank-firm relationship we study the trade-off a bank faces when having defaulting firms declared bankrupt. First, the bank receives a payoff if a firm is liquidated. Second, it provides information about a firm’s type to its competitors. Thereby, asymmetric information between banks is reduced and bank competition intensifies. We find that the better the institutions and the more competitive the banking sector, the higher the bank’s incentive to bankrupt defaulting firms. This makes information between banks less asymmetric and thus leads to lower interest rates and less credit rationing.
    Keywords: Creditor passivity; bank competition; information sharing; institutions; bankruptcy; relationship banking
    JEL: G21 G33 K10 D82
    Date: 2007–09

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