New Economics Papers
on Law and Economics
Issue of 2009‒01‒31
fifteen papers chosen by
Jeong-Joon Lee, Towson University

  1. TQuantity versus Quality in Medical Care: Evidence from State Variation in Telemedicine Regulation By Anca Cotet
  2. Lease Defaults and the Efficient Mitigation of Damages By Thomas J. Miceli; C. F. Sirmans; Geoffrey K. Turnbull
  3. Ethnicity and the Immigration of Highly Skilled Workers to the United States By Jasso, Guillermina
  4. Rental Housing and Crime: The Role of Property Ownership and Management By Terance J. Rephann
  5. Does Arbitration Blossom when State Courts are Bad? By Stefan Voigt
  6. On Optimal Legal Standards for Competition Policy: A General Welfare-Based Analysis By Yannis Katsoulacos; David Ulph
  7. On the future of information law as a specific field of law By Larouche, P.
  8. The European Microsoft case at the crossroads of competition policy and innovation By Larouche, P.
  9. Redefining trade-based market manipulation By Nelemans, M.
  10. Sense and nonsense of rules on proof in cartel cases By Parret, L.Y.J.M.
  11. Disposition Choices Based on Energy Footprints instead of Recovery Quota By Krikke, H.R.; Zuidwijk, R.
  12. India's Bond Market-Developments and Challenges Ahead By Schou-Zibell, Lotte; Wells, Stephen
  13. Survey Evidence on Conditional Norm Enforcement By Traxler, Christian; Winter, Joachim
  14. Happiness and Beliefs in Criminal Environments By Rafael Di Tella; Robert MacCulloch; Hugo Nopo
  15. Should Courts Always Enforce What Contracting Parties Write? By Luca Anderlini; Leonardo Felli; Andrew Postlewaite

  1. By: Anca Cotet (Department of Economics, Ball State University)
    Abstract: This paper uses variation in state by state regulation affecting telemedicine to investigate whether the quality standards imposed by current medical regulations are too high. The Physical Examination Requirement (PER) regulation prohibits certain physician-patient telemedicine practices, expected to be of lower quality than face-to-face consultations, in order to prevent the erosion of current quality standards. At the same time however, PER makes it more difficult for some individuals to obtain professional medical advice. The empirical results suggest that states that adopted such regulation experience an increase in mortality in some sub-populations. Specifically, such improved outcomes appear in more sparsely populated areas, in areas with low physician density in total population, for individuals earning relatively low or relatively high wages, and are more likely for infants and adults ages 24 through 65. In aggregate PER leads to an increase in infant mortality and no significant effect on other age groups, an indication that easier access to professional medical advice through telemedicine even at the cost of lower quality improves outcomes.
    JEL: I18 K32
    Date: 2009–02
  2. By: Thomas J. Miceli (University of Connecticut); C. F. Sirmans (Florida State University); Geoffrey K. Turnbull (Georgia State University)
    Abstract: The traditional law of leases imposed no duty on landlords to mitigate damages in the event of tenant breach, whereas the modern law of leases does. An economic model of leases, in which absentee tenants may or may not intend to breach, shows that the traditional rule promotes tenant investment in the property by discouraging landlord entry. In contrast, the modern rule prevents the property from being left idle by encouraging landlords to enter and re-let abandoned property. The model reflects the historic use of the traditional rule for agricultural leases, where absentee use was valuable, and the emergence of the modern rule for residential leases, where the primary use entails continuous occupation.
    Keywords: contracts, land development, leases, mitigation of damages
    JEL: K11 K12 O18 R11
    Date: 2009–01
  3. By: Jasso, Guillermina (New York University)
    Abstract: This paper examines ethnicity among highly skilled immigrants to the United States. The paper focuses on five classic components of ethnicity – country of birth, race, skin color, language, and religion – among persons admitted to legal permanent residence in the United States in 2003 in the three main employment categories (EB-1, EB-2, and EB-3), using data collected in the U.S. New Immigrant Survey. Initial findings include: (1) The visa categories have distinctive ethnic configurations. India dominates EB-2 and European countries EB-1. (2) The ethnicity portfolio contains more languages than religions. (3) Language is shed before religion, and religion may not be shed at all, except among the ultra highly skilled of EB-1. (4) Highly skilled immigrants are mostly male; they are not immune from lapsing into illegality; they have a shorter visa process than their cohortmates; smaller proportions than in the cohort overall intend to remain in the United States. (5) Larger proportions in EB-2 and EB-3 sent remittances than in the cohort overall. (6) A little measure of assimilation – using dollars to describe earnings in the country of last residence, even when requested to use the country's currency – suggests that highly skilled immigrants are more likely to "think in dollars" than their cohortmates. Further work is taking a deeper look at these patterns in a multivariate context, attentive to selectivity processes and the Globalista impulse.
    Keywords: immigration policy, immigrant selection criteria, employment immigration, highly skilled immigration, illegal immigration, ethnicity, race, language, religion, remittances, assimilation, globalization
    JEL: F22 F24 J15 J24 J61 J68 K42 O15
    Date: 2009–01
  4. By: Terance J. Rephann (Weldon Cooper Center for Public Service)
    Abstract: This paper examines how residential rental property ownership characteristics affect crime. It examines the incidence and frequency of disturbances, assaults, and drug possession and distribution using police incident report data for privately owned rental properties. Results show that a small percentage of rental properties generate incident reports. Count model regressions indicate that the distance that the owner resides from the rental property, size of rental property holdings, tenant Section 8 voucher use, and neighborhood owner-occupied housing rates are associated with reported violations. The paper concludes with recommendations about local government policies that could help to reduce crime in rental housing.
    Keywords: crime; rental housing; management; count model
    JEL: R29 K42
    Date: 2008–01–30
  5. By: Stefan Voigt (Marburg Center for Institutional Economics, Philipps University Marburg)
    Abstract: It is often conjectured that non-state dispute resolution blossoms when state courts are not independent or are perceived as low-quality courts. This conjecture implies a substitutive relationship between state and non-state dispute resolution. An alternative hypothesis argues that both the quality and the frequency of use of these two alternative mechanisms are complementary: societies with high-quality state courts would also be able to provide high-quality non-state dispute resolution. This is the first study that puts these hypotheses to an empirical test. It turns out that the lower the perceived quality of state courts, the less frequently conflicting firms resort to them. Second, firms in common-law countries turn away from state courts significantly more often than firms in civil-law countries. This result sheds doubt on the robustness of results generated within the legal traditions literature. Finally, in states that have created the preconditions for arbitration, businesspeople resort significantly more often to state courts. We interpret this as evidence in favor of the complementarity hypothesis.
    Keywords: Alternative Dispute Revolution, Quality of Justice, Judicial Independence, Corruption, Private Provision of Public Goods.
    JEL: H42 K42 O17
    Date: 2009
  6. By: Yannis Katsoulacos; David Ulph
    Abstract: We present a new welfare-based framework for optimally choosing legal standards in a variety of regulatory contexts. We formalise the decision-theoretic considerations widely discussed in the existing literature by capturing the quality of the underlying analysis and information available to a regulatory authority, and we obtain a precise set of conditions for determining when a Rule of Reason approach would be able to effectively discriminate between benign and harmful actions and consequently dominate Per Se as a decision-making procedure. We then show that in a welfare-based approach the choice between legal standards must additionally take into account (i) indirect (deterrence) effects of the choice of standard on the behaviour of all firms when deciding whether or not to adopt a particular practice; and (ii) procedural effects of certain features of the administrative process in particular delays in reaching decisions; and the coverage rate of the actions taking place. We therefore derive necessary and sufficient conditions for adopting discriminating rules (such as Rule of Reason). We also examine what type of discriminating rule will be optimal under different conditions that characterise different business practices. We apply our framework to two recent landmark decisions – Microsoft vs. EU Commission (2007) and Leegin Vs. PSKS (2007) – in which a change in legal standards has been proposed, and show that it can powerfully clarify and enhance the arguments deployed in these cases.
    Keywords: Legal standards, decision theoretic approach, Per Se, Rule of Reason, Competition Policy, discriminating decision rules.
    JEL: K0 K2 K4 L4 L5
    Date: 2008–10
  7. By: Larouche, P. (Tilburg University, Tilburg Law and Economics Center)
    Date: 2008
  8. By: Larouche, P. (Tilburg University, Tilburg Law and Economics Center)
    Date: 2008
  9. By: Nelemans, M. (Tilburg University, Tilburg Law and Economics Center)
    Date: 2008
  10. By: Parret, L.Y.J.M. (Tilburg University, Tilburg Law and Economics Center)
    Date: 2008
  11. By: Krikke, H.R.; Zuidwijk, R. (Tilburg University, Center for Economic Research)
    Abstract: This paper addresses the impact of disposition choices on the energy use of closed-loop supply chains. In a life cycle perspective, energy used in the forward chain which is locked up in the product is recaptured in recovery. High quality recovery replaces virgin production and thereby saves energy. This so called substitution effect is often ignored. Governments worldwide implement Extended Producer Responsibility (EPR). Policies are based on recovery quota and not effective from an energy point of view. This in turn leads to unnecessary emissions of amongst others CO2. This research evaluates current EPR policies and presents six policy alternatives from an energy standpoint. The Pareto-frontier model used is generic and can be applied to other closed loops supply chains under EPR, exploiting the substitution effect. The measures modeled are applied to five WEEE cases. We discuss results, pros an cons of various alternatives and complementary measures that might be taken.
    Keywords: extended producer responsibility;disposition;energy perspective;substitution effect;government policies;Pareto efficiency
    JEL: Q28 K32 C61
    Date: 2008
  12. By: Schou-Zibell, Lotte (Asian Development Bank); Wells, Stephen (ICMA Centre, University of Reading)
    Abstract: While India boasts a world-class equity market and increasingly important bank assets, its bond market has not kept up. The government bond market remains illiquid. The corporate bond market, in addition, remains restrictive to participants and largely arbitrage-driven. Securitization, which once had the jump on other Asian markets, has failed to take off. To meet the needs of its firms and investors, the bond market must therefore evolve. This will mean creating new market sectors such as exchange-traded interest rate and foreign exchange derivatives contracts. It will mean relaxing exchange restrictions, easing investment mandates on contractual savings institutions, reforming the stamp duty tax, and revamping disclosure requirements for corporate public offers. This paper reviews the development and outlook of the Indian bond market. It looks at the market participants-including life insurance, pension funds, mutual funds and foreign investors-and it discusses the importance to development of learning from the innovations and experiences of others.
    Keywords: India; emerging East Asia; bond market; securitization; collateralized borrowing and lending obligations (CBLO)
    JEL: F34 G28 K22 O53
    Date: 2008–12–01
  13. By: Traxler, Christian; Winter, Joachim
    Abstract: We discuss survey evidence on individuals' willingness to sanction norm violations - such as evading taxes, drunk driving, fare dodging, or skiving o work - by expressing disapproval or social exclusion. Our data suggest that people condition their sanctioning behavior on their belief about the frequency of norm violations. The more commonly a norm violation is believed to occur, the lower the individuals' inclination to punish it. Based on an instrumental variable approach, we demonstrate that this pattern reflects a causal relationship.
    Keywords: Norm Enforcement; Sanctioning; Social Norms; Survey Evidence
    JEL: K42 Z13 D1
    Date: 2009–01–21
  14. By: Rafael Di Tella; Robert MacCulloch; Hugo Nopo
    Abstract: This paper uses newly available data to describe the distribution of crime victimization and other criminal activities (including drug trafficking and corruption) around the world. The paper then documents a negative (positive) correlation between measures of criminal activity and happiness and measures of positive (negative) emotions. The paper also studies the correlation between ideological beliefs and criminal activity, finding that crime victims are more likely to believe that hard work does not pay and that the government should increase the amount of redistribution to the poor.
    Keywords: Happiness, crime, beliefs, income distribution
    JEL: I39 K42 Y80
    Date: 2009–01
  15. By: Luca Anderlini (Department of Economics, Georgetown University); Leonardo Felli (Department of Economics, London School of Economics and Political Science); Andrew Postlewaite (Department of Economics, University of Pennsylvania)
    Abstract: We find an economic rationale for the common sense answer to the question in our title - courts should not always enforce what the contracting parties write. We describe and analyze a contractual environment that allows a role for an active court. An active court can improve on the outcome that the parties would achieve without it. The institutional role of the court is to maximize the parties' welfare under a veil of ignorance. We study a buyer-seller model with risk-neutral agents and asymmetric information. The court must decide when to uphold a contract and when to void it. The parties know their private information at the time of contracting, and this drives a wedge between ex-ante and interim-efficient contracts. In particular, if the court enforces all contracts, inefficient pooling obtains in equilibrium. By voiding some contracts the court is able to induce them to separate, and hence improve ex-ante welfare.
    Keywords: Optimal Courts, Informational Externalities, Ex-Ante Welfare
    JEL: C79 D74 D89 K40 L14
    Date: 2009–01–23

This issue is ©2009 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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