New Economics Papers
on Law and Economics
Issue of 2009‒04‒13
three papers chosen by
Jeong-Joon Lee, Towson University

  1. Role, Usage and Motivation for Contracting in Agriculture By Pavel Vavra
  2. Democracy, Judicial Attitudes and Heterogeneity: The Civil Versus Common Law Tradition By Guerriero, C.
  3. Financial Regulation and Risk Management: Addressing Risk Challenges in a Changing Financial Environment By Ojo, Marianne

  1. By: Pavel Vavra
    Abstract: Agri-food sectors have been going through a remarkable transformation worldwide. This process has been accompanied by an increasing use of contracts, which raises concerns about market transparency, possible consequences for actors of the food supply chains and the role a government in this changing environment. This paper provides a brief overview of structural changes in the sector and main incentives behind the increased use of contracts in agriculture, together with identifying some emerging policy issues.
    JEL: K12 L14 Q18
    Date: 2009–03
  2. By: Guerriero, C.
    Abstract: A key issue in the design of a legal system is the choice of the mechanism aggregating preferences over the level of deterrence. While under Case law appellate judges’ biases offset one another at the cost of volatility of precedents, under Statute law the Legislator chooses certain rules that are biased only when bribes are accepted: i.e., when political institutions are weak and/or the preference heterogeneity is sufficiently high. Thus, only in the last scenario, Case law can outperform Statute law. Also, institutions fostering limited discretion by lower courts improve the performance of Case law. Instrumental variables estimates based on historical data from 156 countries confirm this prediction.
    Keywords: legal origins, culture, democracy, economic development.
    JEL: K40 Z1 H11 P16
    Date: 2009–04–08
  3. By: Ojo, Marianne
    Abstract: Amongst other things, this paper aims to address complexities and challenges faced by regulators in identifying and assessing risk, problems arising from different perceptions of risk, and solutions aimed at countering problems of risk regulation. It will approach these issues through an assessment of explanations put forward to justify the growing importance of risks, well known risk theories such as cultural theory, risk society theory and governmentality theory. In addressing the problems posed as a result of the difficulty in quantifying risks, it will consider a means whereby risks can be quantified reasonably without the consequential effects which result from the dual nature of risk that is, risks emanating from the management of institutional risks. Current attempts by the European Union to regulate risks will also be discussed. This discussion will be facilitated through a consideration of recent developments in the EU which are aimed at addressing risks posed by hedge funds. The results obtained from a consultation process on hedge funds, and which will be discussed in the concluding section of this paper, reveal whether the systemic relevance of hedge funds and prime brokerage regulation need to be reviewed. Questions also addressed during the consultation process, which include whether indirect prudential regulation is inadequate to shield the financial system from hedge funds’ failure and whether prudential authorities have necessary tools to monitor exposures of the core financial system to hedge funds, will also be discussed.
    Keywords: risk; management; regulation; hedge funds
    JEL: K2
    Date: 2009–04–06

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