New Economics Papers
on Law and Economics
Issue of 2009‒07‒03
six papers chosen by
Jeong-Joon Lee, Towson University

  1. Deterrence and Incapacitation Models of Criminal Punishment: Can the Twain Meet? By Thomas J. Miceli
  2. Taxes, Permits and the Adoption of Abatement Technology under Imperfect Compliance By Villegas, Clara; Coria, Jessica
  3. Predatory Exclusive Dealing By Klein, Joachim; Zenger, Hans
  4. What discourages participation in the lay judge system (Saiban'in seido) of Japan? : an interaction effect between the secrecy requirement and social network. By Yamamura, Eiji
  5. Central bank’s role and involvement in bank regulation: Lender of last resort arrangements and the Special Resolution Regime (SRR) By Ojo, Marianne
  6. Abortion and Crime: A Review By Theodore J. Joyce

  1. By: Thomas J. Miceli
    Abstract: The standard economic model of crime since Becker (1968) is primarily concerned with deterrence. Actual punishment policies, however, appear to rely on imprisonment to a greater extent than is prescribed by that model. One reason may be the incapacitation function of prison. The model developed in this paper seeks to incorporate incapacitation into the standard model. A key finding of the hybrid model is that when prison is the only form of punishment and the probability of apprehension is fixed, incapacitation can result in a longer or a shorter optimal prison term compared to the deterrence-only model. It is longer if there is underdeterrence, and shorter if there is overdeterrence. When fines are also available and are not constrained by offenders' wealth, the optimal prison term is zero. Since the fine achieves first-best deterrence, only efficient crimes are committed, and hence, there is no gain from incapacitation. Other aspects of the standard model are also studied within the context of the hybrid model.
    Keywords: Deterrence, imprisonment, incapacitation, law enforcement
    JEL: K14 K42
    Date: 2009–06
  2. By: Villegas, Clara (Department of Economics, School of Business, Economics and Law, Göteborg University); Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: his paper analyzes the effects of the choice between price-based and quantity-based emission regulations on compliance incentives and social welfare in the presence of incomplete enforcement and technology adoption. We show that in contrast to taxes, the extent of violations under tradable emission permits (TEPs) decreases with the rate of technology adoption. However, in terms of welfare, the ranking of the instruments is not so straightforward: taxes induce lower emission damages while TEPs induce lower abatement, investment, and expected enforcement costs. Thereby, the overall ranking depends on the extent to which these effects offset each other.<p>
    Keywords: Technological adoption; environmental policy; imperfect compliance; enforcement; social welfare
    JEL: K32 K42 L51 Q55
    Date: 2009–06–16
  3. By: Klein, Joachim; Zenger, Hans
    Abstract: While the previous literature on exclusive dealing has been concerned with the question of how exclusive dealing can raise static profits, this paper analyzes the question of how exclusive dealing can be used to predate in a dynamic context. It is shown that exclusive dealing may arise even if it reduces static profits. Exclusivity provisions may not only allow excluding efficient competitors, but indeed are often a cheaper exclusionary tool than predatory pricing. This is the case if the prey's access to finance is not too limited. Furthermore, it is more likely that exclusive dealing is preferable compared to predatory pricing the more market power the predator has with respect to the prey.
    Keywords: exclusive dealing; predation
    JEL: K21 L11 L12 L41 L42
    Date: 2009–06–09
  4. By: Yamamura, Eiji
    Abstract: The lay judge system, a quasi-jury system, was introduced in Japan from May 2009. This paper attempts to analyze Japanese people’s attitude about the lay judge system by examining whether they show a willingness to serve as a lay judge. The major findings from regression analysis are: (1) In general, people with a spouse inclined to adopt a negative attitude about serving as a lay judge. This tendency is, however, not observed in large cities. (2) Long-time residents and homeowners are more likely to have a negative attitude about serving as a lay judge. These results show that a tightly knitted interpersonal social network discourages people from serving as a lay judge. Because of the life time secrecy obligation and the penalty provisions for those who break this obligation, people with closer interpersonal ties are under greater pressure and strains, leading to larger psychological cost. The obligation and its penalty should be eased to improve people’s attitudes about serving as a lay judge.
    Keywords: Lay judge; Social network; Participation
    JEL: K40 K23 I28
    Date: 2009–06–26
  5. By: Ojo, Marianne
    Abstract: This paper considers developments which have necessitated greater involvement and a greater role for the central bank in financial regulation and supervision. The aftermath of the 2007/08 financial crisis has witnessed the enactment of legislation such as the Banking Act of 2009 which has not only introduced greater statutory powers for the central bank, but also the Special Resolution Regime. As well as a consideration of arguments which are in favour of the central bank’s role as supervisor and lender of last resort, the importance of central bank independence and safeguards which exist to ensure that sufficient accountability is fostered, will be considered. Safeguards and accountability mechanisms which are adequate, such that, whilst ensuring that the regulator is not susceptible to regulatory capture, do not impede the ability of such a regulator to obtain vital and necessary information from systemically important individual financial institutions. In its support of the view that central banks should assume a greater role in supervision, this paper not only seeks to justify why such a degree of involvement is vital to ensuring and maintaining stability in the financial system, but also those factors which are considered to be necessary if such a role is to be effective.
    Keywords: central; bank; lender; last; resort;regulation;monetary;policy
    JEL: K2 E58
    Date: 2009–06
  6. By: Theodore J. Joyce
    Abstract: Ten years have passed since John Donohue and Steven Levitt initially proposed that legalized abortion played a major role in the dramatic decline in crime during the 1990s. Criminologists largely dismiss the association because simple plots of age-specific crime rates are inconsistent with a large cohort affect following the legalization of abortion. Economists, on the other hand, have corrected mistakes in the original analyses, added new data, offered alternative tests and tried to replicate the association in other countries. Donohue and Levitt have responded to each challenge with more data and additional regressions. Making sense of the dueling econometrics has proven difficult for even the most seasoned empiricists. In this paper I review the evidence. I argue that the most straightforward test given available data involves age-specific arrest and homicide rates regressed on lagged abortion rates in the 1970s or indicators of abortion legalization in 1970 and 1973. Such models provide little support for the Donohue and Levitt hypothesis in either the US or the United Kingdom.
    JEL: K4
    Date: 2009–06

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