New Economics Papers
on Law and Economics
Issue of 2008‒02‒16
seven papers chosen by
Jeong-Joon Lee, Towson University

  1. The Debate on Right-to-Carry Concealed Weapons Laws By Carlisle E. Moody; Thomas B. Marvell
  2. A choice experiment on coca cropping By Ibanez, Marcela; Carlsson, Fredrik
  3. Regulatory choices in global financial markets – restoring the role of aggregate utility in the shaping of market supervision By Granlund, Peik
  4. Neighborhood Violence and Urban Youth By Anna Aizer
  5. The Divergence of Legal Procedures By Aron Balas; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
  6. The Environmental Enforcement in the Civil and the Common Law Systems. A Case on the Economic Effects of Legal Institutions By Anna Rita Germani
  7. The Evolution of Criminal Law and Police By Douglas W. Allen; Yoram Barzel

  1. By: Carlisle E. Moody (Department of Economics, College of William and Mary); Thomas B. Marvell (Justec Research)
    Abstract: There are a large number of studies indicating that “shall-issue” laws reduce crime. Only one study, by Ayres and Donohue, implies that these laws lead to an overall increase in crime. We apply an improved version of the Ayres and Donohue methodology to a more complete data set. We find that Ayres and Donohue’s results, projected beyond five years, and our own analysis imply that shall-issue laws decrease crime and the costs of crime and are therefore socially beneficial.
    Keywords: Crime, gun control, concealed carry laws
    JEL: K14
    Date: 2008–02–11
  2. By: Ibanez, Marcela (Department of Economics, School of Business, Economics and Law, Göteborg University); Carlsson, Fredrik (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Between 1997 and 2005, 5.2 billion USD were invested to reduce cocaine production in Colombia, the world’s main cocaine producer. However, little is known about the effectiveness of policies targeting coca cultivation, this paper evaluates the effects of the two main policies: eradication and alternative development. We measure the responsiveness of farmers to eradication and alternative development programs using a survey based experiment. Our results support Becker’s (1968) model of crime participation and in addition shed light on other non-monetary factors that affect the coca cultivation decision. Social norms, legitimacy, and poverty are found to be affecting coca cultivation. We find that the responses are to a large extent consistent, and the model prediction of the proportion of farmer growing coca is accurate. We also illustrate how the results can be used to draw policy conclusions, but conclude that better information about the costs is needed.<p>
    Keywords: Illegal drugs; Choice experiment; Colombia
    JEL: G11 K42 Z12 Z13
    Date: 2008–02–13
  3. By: Granlund, Peik (FSA/Bank of Finland)
    Abstract: In financial market studies, public supervision has rarely been found to have any effects on financial market development. This is true, even though the primary objective of supervisory legislation is the limitation of market failures and externalities. Studies conducted by eg the World Bank and La Porta & al imply that whereas private enforcement contributes to financial market development, there is limited evidence that public supervision does the same. The objective of the paper is to empirically investigate the relation between public supervision and financial market development. This is done by focusing on major legislative features directing the supervisor and hence affecting market participant activities. The markets investigated comprise banks, investment firms, investment fund companies and listed companies in the United States, United Kingdom, Sweden, Finland, Poland and Estonia for the years 1996 to 2005. The results suggest that certain features of public supervision correlate with financial market development. Strong legal obligations for the supervisor to develop legislation correlate significantly with higher company market values. Emphasizing economic aspects in the formulation of supervisory objectives corresponds with higher market profitability. Furthermore, severe monetary sanctions applicable to company directors correlate negatively with market growth. Unexpectedly, the same is true for a high degree of supervisory independence. The results imply links between public supervision and financial market development in a manner not always in line with previous research. Why this is the case, requires further investigation. One possible explanation may be methodological, based on the fact that in the present study legislative features are perceived in a conceptual rather than a technical manner.
    Keywords: financial institution; regulation; supervision; utility
    JEL: G28 K23 O16
    Date: 2008–01–01
  4. By: Anna Aizer
    Abstract: Three quarters of American children have been exposed to neighborhood violence in their lifetimes. Most of the existing research has concluded that exposure to violence leads to restricted emotional development, aggressive behavior and poor school outcomes. However, this literature fails to account for the fact that children exposed to neighborhood violence are highly disadvantaged in other ways: they are more likely to be black, poor and have poorly educated parents. As such, it is not clear whether exposure to violence or the underlying measures of disadvantage are responsible for the poor child outcomes observed. Using individual survey data on urban youth and their families from Los Angeles, we find that the most violent neighborhoods are also characterized by the highest degree of disadvantage: greatest poverty, highest unemployment, least education. And while living in a violent neighborhood increases the probability of exposure to violence, within violent neighborhoods those personally exposed to street violence are significantly more disadvantaged and are more likely to associate with violent peers than their unexposed neighbors. Once we control for observed and unobserved family disadvantage, the impact of violence declines for some child outcomes, suggesting that underlying disadvantage explains some of the negative outcomes observed, but not all - it is still the case that associating with violent peers is negatively correlated with cognitive test scores. In addition, when we control for underlying differences across families, the relationship between violence and internalizing behavioral problems appears stronger.
    JEL: I1 I3 J15 J24 K42
    Date: 2008–02
  5. By: Aron Balas; Rafael La Porta; Florencio Lopez-de-Silanes; Andrei Shleifer
    Abstract: Djankov et al. (2003a) propose and measure for 109 countries in the year 2000 an index of formalism of legal procedure for two simple disputes: eviction of a non-paying tenant and collection of a bounced check. For a sub-sample of 40 countries, we compute this index every year starting in 1950, which allows us to study the evolution of legal rules. We find that between 1950 and 2000, the formalism of legal procedure did not converge, and possibly diverged, between common law and French civil law countries. At least in this specific area of law, the results are inconsistent with the hypothesis that national legal systems are converging, and support the view that legal origins exert long lasting influence on legal rules.
    JEL: K4 K41 P51
    Date: 2008–02
  6. By: Anna Rita Germani
    Abstract: This paper aims to give a comparative analysis on the different enforcement approaches in respect to both civil and common law systems (i.e. Europe vs. USA) by analyzing some crucial aspects of their underlying normative systems. Therefore, the role of the juridical institutions in these two diverse contexts is analyzed, in order to identify the economic efficiency implications based upon the theory of public enforcement of environmental laws.
    Keywords: environmental enforcement, economic analysis of law, common law, civil law.
    JEL: K0 K42
    Date: 2007–12
  7. By: Douglas W. Allen (Simon Fraser University); Yoram Barzel (University of Washington)
    Abstract: Increased standardization of goods was a by-product of the technical innovations triggering the Industrial Revolution. A side effect of standardization was the new abilities it allowed for theft and embezzlement. Two significant modern institutions radically evolved during the 18th to mid 19th centuries to control these costs: criminal law and public police. These institutions strongly interacted with the pace of the Industrial Revolution. Our argument explains this evolution, and helps to explain several historical facts: the role of early police; the fall of the watch system; the removal of possession immunity; the rise and fall of factory colonies; the fall and rise of court cases during the 18th century; and the delay of per capita income in response to technical innovations in the Industrial Revolution.
    Date: 2007–12

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