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on Law and Economics |
| By: | Goel, Rajeev K. (BOFIT) |
| Abstract: | This paper uses recent data on a large cross-section of countries to study the determinants of corrupt activity. The main contribution is to examine the effects of different types and severities of government regulations on corrupt activities. The results show that greater prosperity and democracy lead to less corrupt activity. Variables representing the degree of fractionalization across three dimensions and least developed nations are statistically insignificant. Having more regulation, including number of procedures and time involved across four categories (business startup, licensing, property registration, and taxation), leads to greater corruption. More regulatory procedures, especially for business startups and property registrations, have the most corruption-enhancing effect. Whereas lengthier procedures also generally spur corruption, there are important differences. Finally, higher regulatory transactions costs do not seem to significantly impact corruption. Policy implications are discussed. |
| Keywords: | corruption; business startup; licenses; property; taxes; fractionalization; democracy; prosperity |
| JEL: | H26 H87 K42 |
| Date: | 2008–06–18 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_010&r=law |
| By: | Dan Bogart; Gary Richardson |
| Abstract: | Between 1660 and 1830, Parliament passed thousands of acts restructuring rights to real and equitable estates. These estate acts enabled individuals and families to sell, mortgage, lease, exchange, and improve land previously bound by inheritance rules and other legal legacies. The loosening of these legal constraints facilitated the reallocation of land and resources towards higher-value uses. Data reveals correlations between estate acts, urbanization, and economic development during the decades surrounding the Industrial Revolution. |
| JEL: | D02 D61 D63 D86 K0 K11 N0 N43 N93 O12 P48 R12 R14 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14107&r=law |
| By: | Claudia M. Landeo; Kathryn E. Spier |
| Abstract: | This paper reports the results of an experiment designed to assess the ability of an incumbent seller to profitably foreclose a market with exclusive contracts. We use the strategic environment described by Rasmusen, Ramseyer, and Wiley (1991) and Segal and Whinston (2000) where entry is unprofitable when sufficiently many downstream buyers sign exclusive contracts with the incumbent. When discrimination is impossible, the game resembles a stag-hunt (coordination) game in which the buyers' payoffs are endogenously chosen by the incumbent seller. Exclusion occurs when the buyers fail to coordinate on their preferred equilibrium. Two-way non-binding pre-play communication among the buyers lowers the power of exclusive contracts and induces more generous contract terms from the seller. When discrimination and communication are possible, the exclusion rate rises. Divide-and-conquer strategies are observed more frequently when buyers can communicate with each other. Exclusion rates are significantly higher when the buyers' payoffs are endogenously chosen rather than exogenously given. Finally, secret offers are shown to decrease the incumbent's power to profitably exclude. |
| JEL: | C72 C90 K21 K41 L12 L40 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14115&r=law |
| By: | Jens Arnold; Giuseppe Nicoletti; Stefano Scarpetta |
| Abstract: | This paper relates diverging productivity performances across OECD countries over the past fifteen years to differences in the stringency of regulations in the product market. We first summarize industry-level evidence linking these diverging patterns to delays in service markets reforms in the wake of the ICT shock. The evidence we survey suggests that, especially in continental EU countries, tight regulation of services has slowed down growth in ICT-using sectors, which use intermediate service inputs intensively. Based on harmonised cross-country firm-level data, we then provide new evidence that one of the key channels through which inappropriate service regulations affect productivity growth is by hindering the allocation of resources towards the most dynamic and efficient firms. At the industry level, resources were allocated less efficiently across firms in countries where service regulations are less market-friendly. Firmlevel econometric estimates confirm that anti-competitive service regulations hamper productivity growth in ICT-using sectors, with a particularly pronounced effect on firms that are catching up to the technology frontier and that are close to international best practice. In other words, regulations hurt in particular those firms that have the potential to excel in domestic and international markets. <P>Réglementation, allocation des ressources et productivité dans les pays de l’OCDE : évidence empirique au niveau des secteurs et des entreprises <BR>Cette étude établi un rapport entre trajectoires divergentes de productivité dans les pays OCDE pendant les dernières 15 années, et différences dans la rigidité de la réglementation sur les marchés des biens. La première partie du papier résume les résultats empiriques existants au niveau des industries sur le rapport entre productivité et réglementation dans les secteurs de services, ainsi que son rapport avec le choc technologique dans les technologies de l'information et de la communication (TIC). L’évidence empirique que nous examinons suggère qu’en particulier dans les pays d’Europe continentale la réglementation rigide a ralenti la croissance dans les secteurs «utilisateur des TIC», qui utilisent de manière intensive les services réglementés. Sur la base de données harmonisées au niveau des entreprises, ce papier présente ensuite des résultats nouveaux qui montrent que l’effet de la réglementation sur la croissance de la productivité se transmet principalement à travers des obstacles à l’allocation des ressources vers les entreprises les plus dynamiques et efficientes. L’allocation des ressources au sein de chaque industrie est moins efficiente dans les pays ayant une réglementation plus rigide dans les secteurs des services. Nos estimations économétriques au niveau des entreprises montrent ensuite que la réglementation des services réduit la croissance de la productivité dans les secteurs « utilisateur des TIC », avec un effet particulièrement prononcé sur les entreprises qui sont proches de la frontière technologique et y convergent rapidement. Autrement dit, la réglementation nuit surtout aux entreprises qui ont le plus haut potentiel de succès dans les marchés nationaux et internationaux. |
| Keywords: | product market regulation, productivity, productivité, allocative efficiency, firm-level data, réglementation dans les marchés des biens, efficience dans l’allocation de ressources, données individuelles d’entreprise |
| JEL: | D24 E23 K23 L11 L51 |
| Date: | 2008–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:616-en&r=law |
| By: | B. LEYMAN; K. SCHOORS; P. COUSSEMENT |
| Abstract: | We analyze the debt dynamics of corporations that reorganize under Belgian court-supervised restructuring, using a unique sample of small corporations. Small firms systematically accumulate unsecured trade credit and unpaid taxes and social contributions in the running up to bankruptcy-reorganization. First, small firms accumulate overdue taxes and social contributions, pushing the government administration in the unintended role of lender of last resort during the pre-bankruptcy period. Second, we find that the pecking order theory and specific trade credit theories predict the levels of trade credit accumulated during the pre-bankruptcy period very well. Our findings suggest that pre-bankruptcy dynamics strongly affect the debt structure at the moment of initiation of the procedure and in this way the ultimate outcome of the restructuring process. |
| Keywords: | court-supervised reorganization; bankruptcy; pecking order theory |
| JEL: | G33 G38 K20 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:08/507&r=law |
| By: | B. LEYMAN; K. SCHOORS; P. COUSSEMENT |
| Abstract: | Unlike Chapter 11 in the U.S., the Belgian reorganization legislation requires that distressed firms remain under court-supervision during plan execution. In principle, the court-supervised post confirmation stage takes a fixed period of 24 months. Using a unique sample of small Belgian firms, we analyze both the likelihood of failure and the time spent before transfer to bankruptcy-liquidation during this post-confirmation stage. More profitable debtors are less likely to fail. If banks are secured by collateral with high liquidation value, debtors are more likely to fail. The mandatory repayment of government debt, like unpaid taxes and social contributions, also renders the distressed firm more likely to fail. Judicial discretion sharply affects the likelihood of failure in a sub sample of individual debtors seeking to preserve a sole proprietorship. |
| Keywords: | court-supervised reorganization; bankruptcy; insolvency legislation |
| JEL: | G33 G38 K20 |
| Date: | 2008–04 |
| URL: | http://d.repec.org/n?u=RePEc:rug:rugwps:08/509&r=law |
| By: | Joyce P. Jacobsen (Department of Economics, Wesleyan University) |
| Abstract: | Scheduled to appear as Chapter 7 in "Labor and Employment Law and Economics", a volume in Edward Elgar’s second edition of the Encyclopedia of Law and Economics |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:wes:weswpa:2008-004&r=law |
| By: | Tim Krieger (University of Paderborn); Daniel Meierrieks (University of Paderborn) |
| Abstract: | Popular beliefs link terrorism to economic, political and social under- development. In this contribution, we comprehensively review the related, most relevant cross-country analyses to ascertain the true determinants of terrorism. The related theoretical underpinnings are presented and com- mon analytical and methodological objections are discussed. In general, we nd that terrorism is closely linked to political instability, sharp divides within the populace, country size and further demographic, institutional and international factors. Sound counter-terrorism policies should work on these prominent root causes of terrorism. Evidence is only marginal that economic performance, structural economic conditions, democrati- zation, education or religious aliation signicantly interact with terror- ism. Thus, we are skeptical towards popular policy advice that focuses on poverty alleviation, a promotion of economic development, democratiza- tion, education or the like. |
| Keywords: | Determinants of Terrorism, Political Violence, Counter-Terrorism Policies |
| JEL: | D74 H56 K40 N40 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:wpaper:12&r=law |