New Economics Papers
on Law and Economics
Issue of 2009‒11‒21
six papers chosen by
Jeong-Joon Lee, Towson University

  1. Mobile termination and mobile penetration By Hurkens, Sjaak; Jeon, Doh-Shin
  2. Law and Economic Change in Traditional China: A Comparative Perspective By Ma, Debin
  3. How do local-level legal institutions promote development ? By Gauri, Varun
  4. Public interest litigation in India : overreaching or underachieving ? By Gauri, Varun
  5. Marrying in the Cathedral: a Framework for the Analysis of Corporate Governance By Ugo Pagano
  6. Heterogeneity in the effect of regulation on entrepreneurship and entry size By Silvia Ardagna; Annamaria Lusardi

  1. By: Hurkens, Sjaak (Institute for Economic Analysis); Jeon, Doh-Shin (Toulouse School of Economics)
    Abstract: In this paper, we study how access pricing affects network competition when subscription demand is elastic and each network uses non-linear prices and can apply termination-based price discrimination. In the case of a fixed per minute termination charge, we find that a reduction of the termination charge below cost has two oppos- ing effects: it softens competition but helps to internalize network externalities. The former reduces mobile penetration while the latter boosts it. We find that firms al- ways prefer termination charge below cost for either motive while the regulator prefers termination below cost only when this boosts penetration. Next, we consider the retail benchmarking approach (Jeon and Hurkens, 2008)that determines termination charges as a function of retail prices and show that this approach allows the regulator to increase penetration without distorting call volumes.
    Keywords: Mobile Penetration; Termination Charge; Access Pricing; Networks; Interconnection; Regulation; Telecommunications;
    JEL: K23 L51 L96
    Date: 2009–09–01
  2. By: Ma, Debin
    Abstract: This article offers a critical review of recent literature on Chinese legal tradition and argues that some subtle but fundamental differences between the Western and Chinese legal traditions are highly relevant to our explanation of the economic divergence in the modern era. By elucidating the fundamental feature of traditional Chinese legal system within the framework of a disciplinary mode of administrative justice, this article highlights the contrasting growth patterns of legal professions and legal knowledge in China and Western Europe that would ultimately affect property rights, contract enforcement and ultimately long-term growth trajectories. The paper concludes with some preliminary analysis on the inter-linkages between the historical evolution of political institution and legal regimes.
    Date: 2009–09
  3. By: Gauri, Varun
    Abstract: This paper develops a framework and some hypotheses regarding the impact of local-level, informal legal institutions on three economic outcomes: aggregate growth, inequality, and human capabilities. It presents a set of stylized differences between formal and informal legal justice systems, identifies the pathways through which formal systems promote economic outcomes, reflects on what the stylized differences mean for the potential impact of informal legal institutions on economic outcomes, and looks at extant case studies to examine the plausibility of the arguments presented. The paper concludes that local-level, informal legal institutions can support social substitutes for the enforcement of contracts, although these substitutes tend to be limited in range and scale; they are flexible and could conceivably be adapted to serve the interests of the poor and marginalized if supportive organizational and social resources could be brought to support the legal claims of the disempowered; and they are more likely to support personal integrity rights than the positive liberties that are also constitutive of development as freedom.
    Keywords: Legal Products,Children and Youth,Public Institution Analysis&Assessment,Gender and Law,Legal Institutions of the Market Economy
    Date: 2009–11–01
  4. By: Gauri, Varun
    Abstract: Public interest litigation has historically been an innovative judicial procedure for enhancing the social and economic rights of disadvantaged and marginalized groups in India. In recent years, however, a number of criticisms of public interest litigation have emerged, including concerns related to separation of powers, judicial capacity, and inequality. These criticisms have tended to abstraction, and the sheer number of cases has complicated empirical assessments. This paper finds that public interest litigation cases constitute less than 1 percent of the overall case load. The paper argues that complaints related to concerns having to do with separation of powers are better understood as criticisms of the impact of judicial interventions on sector governance. On the issue of inequality, the analysis finds that win rates for fundamental rights claims are significantly higher when the claimant is from an advantaged social group than when he or she is from a marginalized group, which constitutes a social reversal, both from the original objective of public interest litigation and from the relative win rates in the 1980s.
    Keywords: Gender and Law,Judicial System Reform,Human Rights,Information Security&Privacy,Legal Institutions of the Market Economy
    Date: 2009–11–01
  5. By: Ugo Pagano
    Abstract: The firm can be seen as a centralization of market transactions and as a decentralization of a public ordering which allows the management of joint liabilities. The paper advances the view that the main reason for the firm’s existence is the unification and the internalization of liabilities. From this perspective, Coase's and Fuller's contributions to the theory of the firm can be married within the architecture of Calabresi's Cathedral. Because of specific (dis)investments, fundamental transformations from competition to managed bilateral monopoly take place either in the public or the private sphere and provide an explanation for the ultimate nature of the firm
    JEL: K13 K22 D23 D52
    Date: 2009–09
  6. By: Silvia Ardagna; Annamaria Lusardi
    Abstract: We use cross-national harmonized micro data from a broad sample of developed and developing countries and investigate the heterogeneity of the effect of entry, contract enforcement regulation, and financial development on both the decision to become an entrepreneur and the level of employment of newly created businesses. We focus on the interaction between the level of regulation and financial development and some individual characteristics that are important determinants of entrepreneurship, such as gender, business skills, and social networks. We find that entry regulation moderates the effect of business skills, while accentuating the effect of gender, even after accounting for the level of financial development. Specifically, women are more likely to enter into entrepreneurship in countries with higher levels of entry regulation, but mainly because they cannot find better work. This effect is also more pronounced in countries that are less financially developed. Furthermore, individuals who report having business skills are less likely to enter entrepreneurship in countries with higher entry regulation. Finally, we also find that individuals who know other entrepreneurs are less likely to start large businesses in countries with higher levels of entry and contract enforcement regulation.
    JEL: K23
    Date: 2009–11

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