New Economics Papers
on Law and Economics
Issue of 2008‒08‒21
ten papers chosen by
Jeong-Joon Lee, Towson University

  1. Rethinking the Role of History in Law & Economics: The Case of the Federal Radio Commission in 1927 By David A. Moss; Jonathan B. Lackow
  2. Corruption in international sports and how it may be combatted By Wolfgang Maennig
  3. Governance Processes, Employee Voice and Performance Outcomes in the Construction of Heathrow Terminal 5 By Simon Deakin; Aristea Koukiadaki
  4. Regulatory Competition in Europe after Laval By Simon Deakin
  5. Legal Origin, Juridical Form and Industrialisation in Historical Perspective: The Case of the Employment Contract and the Joint-Stock Company By Simon Deakin
  6. The Stock Market, the Market for Corporate Control and the Theory of the Firm: Legal and Economic Perspectives and Implications for Public Policy By Simon deakin; Ajit Singh
  7. The Influence of Stock Market Listing on Human Resource Managment: Evidence for France and Britain By Neil Conway; Simon Deakin; Suzzanne J. Konzelmann; Héloïse Petit; Antoine Rebérioux; Frank Wilkinson
  8. Assessing the Long-Run Economic Impact of Labour Law Systems: A theoretical Reappraisal and Analysis of New Time Series Data By Simon Deakin; Prabirjit Sarkar
  9. GAMESMANSHIP, third parties and arbitration: reflecting on the paradigm of PPP disputes By Dimitrios, Athanasakis
  10. Why the DEA STRIDE Data are Still Useful for Understanding Drug Markets By Jeremy Arkes; Rosalie Liccardo Pacula; Susan M. Paddock; Jonathan P. Caulkins; Peter Reuter

  1. By: David A. Moss (Harvard Business School, Business, Government and the International Economy Unit); Jonathan B. Lackow (Ropes & Gray LLP)
    Abstract: In the study of law and economics, there is a danger that historical inferences from theory may infect historical tests of theory. It is imperative, therefore, that historical tests always involve a vigorous search not only for confirming evidence, but for disconfirming evidence as well. We undertake such a search in the context of a single well-known case: the Federal Radio Commission's (FRC's) 1927 decision not to expand the broadcast radio band. The standard account of this decision holds that incumbent broadcasters opposed expansion (to avoid increased competition) and succeeded in capturing the FRC. Although successful broadcaster opposition may be taken as confirming evidence for this interpretation, our review of the record reveals even stronger disconfirming evidence. In particular, we find that every major interest group, not just radio broadcasters, publicly opposed expansion of the band in 1927, and that broadcasters themselves were divided at the FRC's hearings.
    Date: 2008–07
  2. By: Wolfgang Maennig (University of Hamburg)
    Abstract: This contribution attempts a delimitation of the concept of corruption in sport and gives an overview of topical instances. It is thereby demonstrated why the definition of corruption in sport is especially problematic. The causes of the corruption and their social costs are analysed. The anti-corruption measures of the Amateur International Boxing Association (AIBA) and the German Football Association (DFB) are described. These are based on two fundamentally different approaches and can be regarded as representative of many anti-corruption measures in sport
    Keywords: Corruption, sports
    JEL: K42 L83
    Date: 2008–08
  3. By: Simon Deakin; Aristea Koukiadaki
    Abstract: The Major Projects Agreement (MPA) is a framework agreement designed to improve performance in large mechanical and electrical engineering projects. It is built on integrated team working and includes the trade union as a partner in strategic, organizational and employment decisions. The agreement was recently implemented in the construction of Heathrow Terminal 5 (T5). The use of the MPA at T5 illustrates how the promotion of a framework that legitimizes a role for unions in continuing dialogue with employers can positively affect organizational outcomes in large construction projects. While serving as a reminder that mechanisms exist within UK corporate governance for the representation and articulation of the interests of non-shareholder constituencies, T5 may be a unique case: the currently uncertain future of the MPA is indicative of wider constraints on the adoption of the partnership model in Britain.
    Keywords: corporate governance, labour-management relations, partnership, stakeholder theory
    JEL: J52 K12 K31 L14
    Date: 2008–06
  4. By: Simon Deakin
    Abstract: This paper considers the implications for regulatory competition of the recent judgment of the European Court of Justice in Laval. This case is potentially the most important decision on European labour law for a generation. The Court has greatly extended the scope for judicial review of state-level labour laws on the grounds that they restrict freedom of movement from one member state to another. It has also undermined the principle of the territorial effect of labour legislation and has given a strictly pre-emptive interpretation to social policy directives. The Laval judgment is, however, open to attack on a number of grounds. It fails to mount a coherent economic case for judicial intervention on the scale envisaged, and is, more generally, incompatible with the recent experimentalist or reflexive turn in European governance represented by the open method of coordination.
    Keywords: regulatory competition, experimentalism, labour law, free movement of workers, Laval case
    JEL: J83 K31
    Date: 2008–06
  5. By: Simon Deakin
    Abstract: The timing and nature of industrialization in Britain and continental Europe had significant consequences for the growth and development of labour market institutions, effects which are still felt today and which are visible in the conceptual structure of labour law and company law in different countries. However, contrary to the claims of the legal origin hypothesis, a liberal model of contract was more influential in the civilian systems of the continent than in the English common law, where the consequences of early industrialization included the lingering influence of master-servant legislation and the weak institutionalization of the juridical form of the contract of employment. Claims for a strong-form legal origin effect, which is time invariant and resistant to pressures for legal convergence, are not borne out by a growing body of historical evidence and time-series data. The idea that legal cultures can influence the long-run path of economic development is worthy of closer empirical investigation but it is premature to use legal origin theory as a basis for policy initiatives.
    Keywords: varieties of capitalism; legal origin; labour law; company law; corporate governance
    JEL: J53 J83 K31
    Date: 2008–06
  6. By: Simon deakin; Ajit Singh
    Abstract: It is argued here that - contrary to current conventional wisdom - an active market for corporate control is not an essential ingredient of either company law reform or financial and economic development. The absence of such a market in coordinated market systems during their modern economic development was not an evolutionary deficit, but an effective and positive institutional arrangement. The economic and social costs associated with restructuring driven by hostile takeover bids, which are increasingly seen as prohibitive in the liberal market economies, would most likely harm the prospects for growth in developing and transition systems.
    Keywords: takeovers, market for corporate control, varieties of capitalism
    JEL: G34 G38 K22
    Date: 2008–06
  7. By: Neil Conway; Simon Deakin; Suzzanne J. Konzelmann; Héloïse Petit; Antoine Rebérioux; Frank Wilkinson
    Abstract: We use data from REPONSE 2004 and WERS 2004 to analyse whether approaches to HRM differ according to whether an establishment is part of a company with a stock exchange listing. In both countries we find that listing is positively associated with teamworking and performance-related pay, while in France, but not in Britain, it is also linked to worker autonomy and training. Our findings are inconsistent with the claim that shareholder pressure operates as a constraint on the adoption of high-performance workplace practices. The pattern is similar in the two countries, but with a slightly stronger tendency for listing to be associated with high-performance workplace practices in France.
    Keywords: corporate governance, human resource management, employment relations
    JEL: G32 G38 K22 K31 J53 J88
    Date: 2008–06
  8. By: Simon Deakin; Prabirjit Sarkar
    Abstract: Standard economic theory sees labour law as an exogenous interference with market relations and predicts mostly negative impacts on employment and productivity. We argue for a more nuanced theoretical position: labour law is, at least in part, endogenous, with both the production and the application of labour law norms influenced by national and sectoral contexts, and by complementarities between the institutions of the labour market and those of corporate governance and financial markets. Legal origin may also operate as a force shaping the content of the law and its economic impact. Time-series analysis using a new dataset on legal change from the 1970s to the mid-2000s shows evidence of positive correlations between regulation and growth in employment and productivity, at least for France and Germany. No relationship, either positive or negative, is found for the UK, and although the US shows a weak negative relationship between regulation and employment growth, this is offset by productivity gains.
    Keywords: labour law, employment, productivity, redistribution, complementarities, legal origins, varieties of capitalism
    JEL: K31 J83
    Date: 2008–06
  9. By: Dimitrios, Athanasakis
    Abstract: Disputes occurring in PPP projects pervade three interfacing levels of agreements: internal, downstream, and peripheral. PPP disputes have been free from arbitral dispute resolution and their legal environment is uncertain and deregulated. While project partners appear to have a natural monopoly of joining parties in the supply chain to their pending disputes, their decision is often driven by diversified expectations and conflict agendas. Analysis will investigate parameters of risk exposure as a business imperative of the parties’ choice of multiparty arbitration. Emphasis throughout is put on the game-playing capabilities of original and third project parties and the concomitant formulation of pairs, prior to their participation in a single arbitral setting. The impact of their synergistic interplay on the outcome of multiparty arbitration is also explored. The aim is to test the responsiveness of English law and institutionalised practice to the idiosyncrasies of PPP disputes. The results of this study seek to conceptualise multiparty arbitration as part of the parties’ informed business plans and alert legal researchers and industry practitioners to workable institutional arrangements.
    Keywords: joinder; multiparty arbitration; risk
    JEL: K33 D74 K22 F21 K41
    Date: 2007–09
  10. By: Jeremy Arkes; Rosalie Liccardo Pacula; Susan M. Paddock; Jonathan P. Caulkins; Peter Reuter
    Abstract: In 2001, use of the STRIDE data base for the purposes of analyzing drug prices and the impact of public policies on drug markets came under serious attack by the National Research Council (Manski et al., 2001; Horowitz, 2001). While some of the criticisms raised by the committee were valid, many of the concerns can be easily addressed through more careful use of the data. In this paper, we first disprove Horowitz's main argument that prices are different for observations collected by different agencies within a city. We then revisit other issues raised by the NRC and discuss how certain limitations can be easily overcome through the adoption of random coefficient models of drug prices and by paying serious attention to drug form and distribution levels. Although the sample remains a convenience sample, we demonstrate how construction of city-specific price and purity series that pay careful attention to the data and incorporate existing knowledge of drug markets (e.g. the expected purity hypothesis) are internally consistent and can be externally validated. The findings from this study have important implications regarding the utility of these data and the appropriateness of using them in economic analyses of supply, demand and harms.
    JEL: H3 I18 K42
    Date: 2008–08

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