New Economics Papers
on Law and Economics
Issue of 2008‒10‒21
seven papers chosen by
Jeong-Joon Lee, Towson University

  1. Social Interactions, Network Fluidity and Network Effects By Catherine Tucker; ;
  2. Marriage, Divorce and Interstate Risk Sharing By Halla, Martin; Scharler, Johann
  3. The Runaway Taxpayer or: Is Prior Tax Notice Effective against Scofflaws? By Simone Pellegrino; Massimiliano Piacenza; Gilberto Turati
  4. Causes and Consequences of Environmental Auditing: Evidence from Regulated Facilities in Michigan By Mary Evans; Lirong Liu; Sarah L. Stafford
  5. Negotiating remedies : revealing the merger efficiency gains By Cosnita, A.; Tropeano, J.P.
  6. Fear of Crime: Does Trust and Community Participation Matter? By Pavel Luengas; Inder J. Ruprah
  7. Gender Differentials in Judicial Proceedings: Field Evidence from Housing-Related Cases in Uruguay By Eduardo Gandelman Author-X-Name_First: Eduardo Author-X-Name_Last: Gandelman; Nestor Gandelman Author-X-Name_First: Nestor Author-X-Name_Last: Gandelman; Julie Rothschild Author-X-Name_First: Julie Author-X-Name_Last: Rothschild

  1. By: Catherine Tucker (MIT Marketing); ;
    Abstract: This paper asks how much the strength of network effects depends on the stability and structure of the underlying social network. I answer this using extensive micro-data on all potential adopters of a firm's internal video-messaging system and their subsequent video-messaging. This firm's New York office had to be relocated due to the terrorist attacks of 2001 which lead to a physical re-organization of teams in that city but not in other comparable cities. I study the consequences of this disruption for adoption of video-messaging and the size of network effects. I find evidence that generally network effects are based on direct social interactions. Potential adopters react to adoption only by people they wish to communicate with: They are not affected by adoption by other people. However, when there is a disruption to the social network and communication patterns become less predictable, users become more responsive to adoption by a broader group of users.
    Keywords: Network Effects, Local Networks, Stability, Option-Value
    JEL: K21 Q31 Q34 L42 L40 L12
    Date: 2008–10
  2. By: Halla, Martin (University of Linz); Scharler, Johann (University of Linz)
    Abstract: In this paper we study the importance of marriage for interstate risk sharing. We find that US states in which married couples account for a higher share of the population are less exposed to state-specific output shocks. Thus, marriages do not just improve the allocation of risk at the individual level, but also have implications for the allocation of risk at the more aggregated state-level. Quantitatively, the impact of marriage on interstate risk sharing varies over divorce regimes.
    Keywords: risk sharing, marriage, divorce, family law
    JEL: J12 E21 K36 G21
    Date: 2008–10
  3. By: Simone Pellegrino (Department of Economics and Finance G. Prato, University of Turin (Italy)); Massimiliano Piacenza (Department of Economics and Finance G. Prato, University of Turin (Italy)); Gilberto Turati (Department of Economics and Finance G. Prato, University of Turin (Italy))
    Abstract: In this paper we study how prior tax notice (following audit and detection of tax fraud by Tax Authorities) affects individual behaviour in terms of tax compliance. We start with a very stylised theoretical framework, considering a situation in which an individual has been already audited and caught as tax evader, and knows that the Tax Authorities are looking for her to cash the due amount of taxes. We concentrate on the decision to move in order to avoid paying the bill, and derive the optimal number of times an individual should move equalising marginal costs and benefits of the decision. We then carry out an empirical analysis based on real data provided by an Italian collection agency for the period 2004-2007. Our results show that previous notice reduces the probability to move, but its cost is not large enough to correct the individual incentive to escape Tax Authorities.
    Keywords: tax-enforcement, individual compliance decisions, prior notice
    JEL: H26 H31 K42 D81
    Date: 2008–05
  4. By: Mary Evans (Department of Economics and Center for Business and Economic Research, University of Tennessee); Lirong Liu (Department of Economics and International Business, Sam Houston State University); Sarah L. Stafford (Department of Economics, College of William and Mary)
    Abstract: Several rationales recently proposed to explain the willingness of firms to voluntarily conduct environmental audits suggest the potential for environmental audits to impact compliance outcomes in the long run. Using a unique facility-level dataset from Michigan, we examine both the determinants of environmental auditing and the effects of environmental auditing on long term compliance with the Resource Conservation and Recovery Act (RCRA). Our empirical methodology accounts for the potential endogeneity of the audit outcome and censoring of the future compliance measure. We find that larger facilities and those subject to more stringent regulations are more likely to audit. We also find that facilities with poor compliance records are less likely to audit. However, we find no significant long-run impact of auditing on RCRA compliance among these Michigan facilities.
    Keywords: Environmental Auditing, Environmental Compliance, Voluntary Environmental Initiatives, Self-Policing
    JEL: K32 K42 Q52 Q58
    Date: 2008–09–25
  5. By: Cosnita, A.; Tropeano, J.P.
    Abstract: This paper contributes to the economic analysis of merger control by taking into account the efficiency gains for the design of structural merger remedies when the competition authorities do not observe the magnitude of efficiency gains. We show that whenever divestitures are necessary, the Competition Authority will need to extract from the merging partners their private information on the merger’s efficiency gains. For this we propose a revelation mechanism combining divestitures with two additional tools, the regulation of the divestitures sale price and a merger fee. We show that an optimal combination of both instruments is effective: the most efficient merged firms are claimed to pay a merger fee while the less efficient divest asets at an upwards distorted sale price.
    JEL: L41 D82 K21
    Date: 2008
  6. By: Pavel Luengas (Office of Evaluation and Oversight at the Interamerican Development Bank.); Inder J. Ruprah (Office of Evaluation and Oversight at the Interamerican Development Bank.)
    Abstract: This paper examines the association between trust and community involvement with fear of crime. Fear of crime is measured by three typical perception measures: neighborhood security; walking alone in the dark; and the risk of becoming a victim. The data is from Chile’s Victimization Survey. The techniques used are a multinomial regression and an impact –propensity score single difference- calculation. We find that while trust matters participation generally does not for fear. However, regressions leave open the direction of causality. An impact calculation confirms that participation in a neighborhood crime prevention program does not affect the fear of crime. Thus the evidence challenges the general idea that involvement in one’s community and the specific idea of community participation in neighborhood crime prevention programs reduce fear and increase feelings of safety.
    Keywords: Fear of crime, perceived safety, trust, community participation, multinomial logit regression, impact evaluation
    JEL: I31 I38 K14 H43
    Date: 2008–07
  7. By: Eduardo Gandelman Author-X-Name_First: Eduardo Author-X-Name_Last: Gandelman; Nestor Gandelman Author-X-Name_First: Nestor Author-X-Name_Last: Gandelman; Julie Rothschild Author-X-Name_First: Julie Author-X-Name_Last: Rothschild
    Abstract: Using micro data on judicial proceedings in Uruguay, this paper presents evidence that female defendants receive more favorable treatment in courts than male defendants. This is due to longer foreclosure proceedings and higher probabilities of being granted extensions in evictions and dispossessions for female defendants.
    Date: 2008–01

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