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on Law and Economics |
| By: | Pääkkönen, Jenni (BOFIT) |
| Abstract: | This paper explores the optimal law enforcement strategy of a Leviathan government in the presence of organized crime. The government is considered too weak to prevent an upsurge in crime, so it allows the mafia to generate a positive payoff by extracting rents in the shadow economy. From a strategic standpoint, the government, if it has the possibility to monitor shadow production and fine offenders, may not want to shut down illegal production or kick out the mafia, but instead can use its policing activity to capture additional revenue through fines on illegal firm activities and an increased tax base when mafia-harassed firms return to the legal sector. The option of escaping into the shadow economy can benefit some firms, even when this utility is diluted by the presence of a mafia. Monitoring hurts both legal and illegal firms, while the government benefits. |
| Keywords: | organized crime; shadow economy; taxation |
| JEL: | H26 H41 K42 |
| Date: | 2009–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:bofitp:2008_030&r=law |
| By: | Antonio Merlo (Department of Economics, University of Pennsylvania); Kenneth I. Wolpin (Department of Economics, University of Pennsylvania) |
| Abstract: | In this paper, we study the relationship among schooling, youth employment and youth crime. The framework, a multinomial discrete choice vector autoregression, provides a comprehensive analysis of the dynamic interactions among a youth’s schooling, work and crime decisions and arrest and incarceration outcomes. We allow for observable initial conditions, unobserved heterogeneity, measurement error and missing data. We use data from the NLSY97 on black male youths starting from age 14. The estimates indicate important roles both for heterogeneity in initial conditions and for stochastic events that arise during one’s youth in determining outcomes as young adults. |
| Keywords: | crime, schooling, work, VAR |
| JEL: | K42 J24 J15 |
| Date: | 2008–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:09-002&r=law |
| By: | Michael R. Baye (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Joshua D. Wright (George Mason University School of Law) |
| Abstract: | Modern antitrust litigation sometimes involves complex expert economic and econometric analysis. While this boom in the demand for economic analysis and expert testimony has clearly improved the welfare of economists—and schools offering basic economic training to judges—little is known about the empirical effects of economic complexity or judges' economic training on decision-making in antitrust litigation. We use a unique data set on antitrust litigation in district courts during 1996—2006 to examine whether economic complexity impacts decisions in antitrust cases, and thereby provide a novel test of the frequently asserted hypothesis that antitrust analysis has become too complex for generalist judges. We also examine the impact of one institutional response to economic complexity - basic economic training by judges. We find that decisions involving the evaluation of complex economic evidence are significantly more likely to be appealed, and decisions of judges trained in basic economics are significantly less likely to be appealed than are decisions by their untrained counterparts. Our results are robust to a variety of controls, including the type of case, circuit, and the political party of the judge. Our tentative conclusion, based on a revealed preference argument that views a party’s appeal decision as an indication that the district court got the economics wrong, is that there is support for the hypothesis that some antitrust cases are too complicated for generalist judges. |
| Keywords: | antitrust, Daubert, complexity, economic training, expert witness |
| JEL: | A2 K21 K41 L4 |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2008-19&r=law |