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on Law and Economics |
| By: | Atsushi Kato (School of Business, Aoyama Gakuin University); Takahiro Sato (Research Institute for Economics and Business Administration, Kobe University) |
| Abstract: | We examine the effect of threats to property rights on the economic performance of the manufacturing sector of Indian states. We construct indices of the threats from data on crime against property rights. Our estimation results show that not only threats to private property, but also threats to contracts adversely affect the performance of India's manufacturing sector. |
| Keywords: | Property right, Contract, Gross value added, Capital labor ratio, TFP |
| JEL: | K00 O43 P14 P17 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:244&r=law |
| By: | Schauer, Frederick (University of Virginia); Zeckhauser, Richard (Harvard University) |
| Abstract: | For several decades now a debate has raged about policy-making by litigation. Spurred by the way in which tobacco, environmental, and other litigation has functioned as an alternative form of regulation, the debate asks whether policy-making or regulation by litigation is more or less socially desirable than more traditional policy-making by ex ante rule-making by legislatures or administrative agencies. In this paper we step into this debate, but not to come down on one side or another, all things considered. Rather, we seek to show that any form of regulation that is dominated by high-salience particular cases is highly likely, to make necessarily general policy on the basis of unwarranted assumptions about the typicality of one or a few high-salience cases or events. Two cornerstone concepts of behavioral decision--the availability heuristic and related problems of representativeness--explain this bias. This problem is virtually inevitable in regulation by litigation, yet it is commonly found as well in ex ante rule-making, because such rule-making increasingly takes place in the wake of, and dominated by, particularly notorious and often unrepresentative outlier events. In weighing the net advantages of regulation by ex ante rule-making against those of regulation by litigation, society must recognize that any regulatory form is less effective insofar as it is unable to transcend the distorting effect of high-salience unrepresentative examples. |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp09-025&r=law |
| By: | Andrew F. Daughety (Department of Economics, Vanderbilt University); Jennifer F. Reinganum (Department of Economics, Vanderbilt University) |
| Abstract: | In this paper we examine a dynamic model of the process by which multiple related lawsuits may be filed and combined; we also examine actions a defendant may employ that may disrupt the formation of a joint suit. Our initial model involves two potential plaintiffs, with private information about the harm they have suffered, in a multi-period setting with positive costs of filing a suit. If two plaintiffs file, they join their suits to obtain a lower per-plaintiff trial cost and a higher likelihood of prevailing against the defendant. We find that some plaintiff types never file, some wait to see if another victim files and only then file, some file early and then drop their suits if not joined by another victim and, finally, some file and pursue their suits whether or not they are joined; thus, the equilibrium resembles a Òbandwagon.Ó We then consider the effect of allowing preemptive settlement offers by the defendant aimed at discouraging follow-on suits. Preemptive settlement results in a Ògold rushÓ of cases into the first period. In general, plaintiffs (ex ante) strictly prefer that such preemptive settlements not be allowed, and computational results suggest this may be broadly true for defendants as well; however, the inability of defendants to commit to such a policy results in an equilibrium with preemptive settlement. Finally, we consider partial unawareness of victims as to the source of harm; this provides a role for plaintiffs' attorneys, who may seek additional victims to join a combined lawsuit. Confidential preemptive settlements in the case of partial unawareness restrict the plaintiff's attorney from seeking additional victims and therefore leads to higher preemptive settlement amounts. Moreover, the defendant strictly prefers to employ preemptive settlement if the fraction of unaware victims is sufficiently high. |
| Keywords: | Lawsuits, settlement, aggregation, dynamics |
| JEL: | K41 D82 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:0911&r=law |
| By: | Marcello Basili; Antonio Nicita |
| Abstract: | The Law and Economics literature on public law enforcement has generally treated separately the issue of marginal deterrence from that of punishing repeated offenders though escalating penalties. We extend the model provided by Emons (2003) to show how pursuing both policies may generate an inconsistent enforcement design. |
| Keywords: | Marginal Deterrence, Recidivism, Escalating Penalties, Incapacitation. |
| JEL: | K42 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:usi:depfid:0409&r=law |
| By: | Filippo Belloc; Antonio Nicita; Maria Alessandra Rossi |
| Abstract: | The broadband plans deployed by governments have not benefited so far from substantive theoretical or empirical economic insights on the relative effectiveness of alternative combinations of policy interventions (on which more will be said in the next section). This paper make a first attempt at filling this gap by exploring whether some (set of) policy tools has so far proven to be more effective than others. We collected detailed data on the policies adopted by 21 OECD countries and perform a cross-country analysis. Our evidence suggests the relevance of the institutional environment form one side and the importance of demand-side interventions from the other. Interventions on the supply side appear to be less effective on broadband diffusion than those on the demand side |
| Keywords: | telecommunications policy, broadband, infrastructure investment |
| JEL: | K20 L96 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:567&r=law |
| By: | Simona Benedettini; Antonio Nicita |
| Abstract: | We investigate the deterrent effect on driving behavior due to the introduction of Demerit Point System in Italy. In addition, we measure the incapacitation effect on fatal accidents. Our findings highlight the high potential of the penalty system in reducing road fatalities through deterrence and incapacitation. Despite this, its aggregate effectiveness in Italy ultimately depended on the consistency of the enforcement design. We then suggest several policy options to increase road safety through a credible enforcement. |
| Keywords: | deterrence, incapacitation, law enforcement, road safety |
| JEL: | K42 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:564&r=law |
| By: | Richard Startz (University of Washington); Albert Yoon (University of Toronto) |
| Abstract: | This paper develops an informational model of litigation in which court decisions are a function of legal representation. In this model, resource constraints determine how much parties expend on legal representation. The allocation of resources across parties influences court decisions in two important ways. First, in individual cases the party with greater resources can produce more information, thereby increasing her probability of a favorable decision by the court. Second, as the cost of litigation increases relative to parties’ resources, courts have less information upon which to make decisions. We model the evolution of precedent as a dynamic externality under stare decisis. These factors determine the evolution of legal precedent. In areas of law in which parties on a particular side have persistently greater resources, the law is likely to evolve in a direction that favors that side. The extent of information provided determines the variability of outcomes. |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:udb:wpaper:uwec-2009-18&r=law |
| By: | David A. Weiner; Byron F. Lutz; Jens Ludwig |
| Abstract: | One of the most striking features of crime in America is its disproportionate concentration in disadvantaged, racially segregated communities. In this paper we estimate the effects of court-ordered school desegregation on crime by exploiting plausibly random variation in the timing of when these orders go into effect across the set of large urban school districts ever subject to such orders. For black youth, we find that homicide victimization declines by around 25 percent when court orders are implemented and homicide arrests also decline significantly, which seem to be due at least in part to increased schooling attainment. We also find positive spillover effects to other groups, with beneficial changes in homicide involvement for black adults and perhaps whites as well. Our estimates imply that imposition of these court orders in the nation’s largest school districts lowered the homicide rate to black teens and young adults nationwide by around 13 percent, and might account for around one-quarter of the convergence in black-white homicide rates over the period from 1970 to 1980. |
| JEL: | I2 J15 J18 K42 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15380&r=law |
| By: | Christopher Khawand (Department of Economics, Florida International University) |
| Abstract: | Most prior research on military enlistment has focused on characteristics that can be used to identify potential recruits, but has rarely looked at the psychological histories of those recruits. Data on Wisconsin seniors in 1957 from the Wisconsin Longitudinal Study was used to build a large profile of socio-economic controls for testing the “cycle of violence” hypothesis – that physical abuse in childhood leads to violent adult impulses – as manifested through aspirations for a military career. Results were generated using a probit model with reported military aspirations as the dependent variable. For (mostly Caucasian) male Wisconsin respondents in 1957, retrospective self-reports of physical abuse by the respondents’ fathers was associated with an (average) increase in probability of an aspiration to a military career of approximately 8%, which may be underestimated due to underreporting of abuse. The relationship of military aspiration to verbal abuse and physical abuse by the respondent’s mother was unclear, likely due to collinearity or alternative, negative abuse outcomes that make military life unappealing. There are two significant implications to these results: first, that military employment serves as a psychologically similar but alternative outcome to domestic abuse or violent crime, except without the associated stigma; and second, that military life presents challenges that reward psychological adaptations and defenses deriving from childhood victimization, thereby increasing its appeal to child abuse victims. |
| JEL: | J12 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:fiu:wpaper:0912&r=law |