New Economics Papers
on Law and Economics
Issue of 2007‒11‒03
nine papers chosen by
Jeong-Joon Lee, Towson University

  1. Voting as a Rational Choice: Why and How People Vote to Improve the Well-Being of Others By Aaron Edlin; Andrew Gelman; Noah Kaplan
  2. On Optimal Legal Change, Past Behavior, and Grandfathering By Steven Shavell
  3. Eminent Domain Versus Government Purchase of Land Given Imperpect Information About Owners' Valuation By Steven Shavell
  4. A Retail Benchmarking Approach to Efficient Two-Way Access Pricing By Doh-Shin Jeon; Sjaak Hurkens
  5. Immigration and Crime in Early 20th Century America By Carolyn Moehling; Anne Morrison Piehl
  6. The Resource Curse: A Corporate Transparency Channel By Durnev, Artyom; Guriev, Sergei
  7. “Europe of Knowledge”: Search for a New Pact By Å. Gornitzka, P. Maassen, J. P. Olsen,; B. Stensaker
  8. Bicameral Politics in the European Union By Bjorn Hoyland; Sara Hagemann
  9. Legitimating the European Union: The Contested Meanings of an EU Constitution By Florian Oberhuber

  1. By: Aaron Edlin; Andrew Gelman; Noah Kaplan
    Abstract: For voters with "social" preferences, the expected utility of voting is approximately independent of the size of the electorate, suggesting that rational voter turnouts can be substantial even in large elections. Less important elections are predicted to have lower turnout, but a feedback mechanism keeps turnout at a reasonable level under a wide range of conditions. The main contributions of this paper are: (1) to show how, for an individual with both selfish and social preferences, the social preferences will dominate and make it rational for a typical person to vote even in large elections;(2) to show that rational socially-motivated voting has a feedback mechanism that stabilizes turnout at reasonable levels (e.g., 50% of the electorate); (3) to link the rational social-utility model of voter turnout with survey findings on socially-motivated vote choice.
    JEL: H0 K21
    Date: 2007–10
  2. By: Steven Shavell
    Abstract: When is it socially advantageous for legal rules to be changed in the light of altered circumstances? In answering this basic question here, a simple point is developed -- that past compliance with legal rules tends to reduce the social advantages of legal change. The reasons are twofold: adjusting to a new legal rule often involves costs; and the social benefits of change are frequently only incremental, only in addition to those of past compliance. The general implications are that legal rules should be more stable than would be appropriate were the relevance of past behavior not recognized, and that a policy of grandfathering, namely, of permitting noncompliance, should sometimes be employed. The analysis of these points has broad relevance, applying across legal fields, often explaining what we observe but also indicating possibilities for reform, such as in the regulation of air pollution. The analysis is related to the conventional reliance-based justification for the stability of the law, the literature on legal transitions, and economic writing on optimal legal standards.
    JEL: K1 K2 K32 L5
    Date: 2007–10
  3. By: Steven Shavell
    Abstract: Governments employ two basic policies for acquiring land: taking it through exercise of their power of eminent domain; and purchasing it. The social desirability of these two policies is compared in a model in which the government's information about landowners' valuations is imperfect. Under this assumption, the policy of purchase possesses the market test advantage that the government obtains land only if an owner's valuation is low enough that he is willing to sell it. However, the policy suffers from a drawback when the land that the government needs is owned by many parties. In that case, the government's acquisition will fail if any of the owners refuses to sell. Hence, the policy of eminent domain becomes appealing if the number of owners of the land is large. This conclusion holds regardless of whether the land that the government seeks is a parcel at a fixed location or instead may be located anywhere in a region.
    JEL: D8 H1 H4 K11
    Date: 2007–10
  4. By: Doh-Shin Jeon; Sjaak Hurkens
    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 linear prices, we show that there is a unique linear rule that implements the Ramsey outcome as the unique equilibrium, independently of the underlying demand conditions. In the case of competition in two-part tariffs, we consider a class of access pricing rules, similar to the optimal one under linear prices but based on average retail prices. We show that firms choose the variable price equal to the marginal cost under this class of rules. Therefore, the regulator (or the competition authority) can choose one among the rules to pursue additional objectives such as consumer surplus, network coverage or investment: for instance, we show that both static and dynamic e±ciency can be achieved at the same time.
    Keywords: Networks, Access Pricing, Interconnection, Competition Policy, Telecommunications, Investment
    JEL: D4 K21 L41 L51 L96
    Date: 2007–10
  5. By: Carolyn Moehling (Rutgers University, NBER); Anne Morrison Piehl (Rutgers University, NBER)
    Abstract: Research on crime in the late 20th century has consistently shown, that despite the public rhetoric, immigrants have lower rates of involvement in criminal activity than natives. The earliest studies of immigration and crime conducted at the beginning of the 20th century produced similar conclusions. We show, however, that the empirical findings of these early studies suffer from a form of aggregation bias due to the very different age distributions of the native and immigrant populations. We find that in 1904 prison commitment rates for more serious crimes were quite similar for the two nativity groups for all ages except ages 18 and 19 when the commitment rate for immigrants was higher than for the native born. By 1930, immigrants were less likely than natives to be committed to state and federal prisons at all ages 20 and older. But this advantage disappears when one looks at commitments for violent offenses. Immigrants in their late teens, in fact, were more likely than their native counterparts to be incarcerated for violent offenses.
    Keywords: immigration, crime, prison
    JEL: J1 K4 N3
    Date: 2007–08–03
  6. By: Durnev, Artyom; Guriev, Sergei
    Abstract: We propose and investigate a new channel through which the resource curse - a stylized fact that countries rich in natural resources grow slower - operates. Predatory governments are more likely to expropriate corporate profits in natural-resource industries when the price of resources is higher. Corporations whose profits are more dependent on the price of resources can mitigate the risk of expropriation by reducing corporate transparency. Lower transparency, in turn, leads to inefficient capital allocation and slower economic growth. Using a panel of 72 industries from 51 countries over 16 years, we demonstrate that the negative effect of expropriation risk on corporate transparency is stronger for industries that are especially vulnerable to expropriation, in particular, for industries whose profits are highly correlated with oil prices. Controlling for country, year, and industry fixed effects, we find that corporate transparency is lower in more oil price-dependent industries when the price of oil is high and property rights are poorly protected. Furthermore, corporate growth is hampered in oil price-sensitive industries because of less efficient capital allocation driven by adverse effects of lower transparency.
    Keywords: Autocracy; Expropriation; Industry Growth; Investment Efficiency; Oil Reserves; Property rights; Resource Curse; Transparency and Disclosure
    JEL: G15 G18 K42 L7 O43
    Date: 2007–10
  7. By: Å. Gornitzka, P. Maassen, J. P. Olsen,; B. Stensaker
    Keywords: Europeanization; Europeanization; knowledge; institutionalism; institutionalisation; political science; integration theory
    Date: 2007–02–28
  8. By: Bjorn Hoyland; Sara Hagemann
    Keywords: knowledge; Council of Ministers; European Parliament; political science; political culture; power analysis
    Date: 2007–06–05
  9. By: Florian Oberhuber
    Keywords: constitution building; European public space; media; European Convention; Austria; legitimacy; democracy
    Date: 2007–10–15

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