New Economics Papers
on Law and Economics
Issue of 2010‒02‒05
four papers chosen by
Jeong-Joon Lee, Towson University

  1. Welfare Effects of Regressive Taxation and Subsidies in China By Xiaobing Wang; Jenifer Piesse
  2. Global Social Interactions with Sequential Binary Decisions: The Case of Marriage, Divorce, and Stigma By Finn Christensen; Juergen Jung
  3. The Pill and Partnerships: The impact of the birth control pill on cohabitation By Finn Christensen
  4. A framework to enforce anti-predation rules By Hüschelrath, Kai; Weigand, Jürgen

  1. By: Xiaobing Wang; Jenifer Piesse
    Abstract: Using three comparable national representative household surveys for China in 1988, 1995 and 2002, this paper provides micro level evidence of a policy of absolute regressive taxation and an inverted welfare system. It reviews the economic effects of taxes and subsides and shows that a dual and regressive taxation system increases the urban rural income gap and enhances overall inequality. The empirical evidence indicates that the relatively poorer rural population pay net tax while those in the richer urban areas receive net subsidies. This biased system of taxes and welfare payments is one of the major causes of the persisting urban-rural income gap and is largely responsible for overall income inequality in China.
    Date: 2009
  2. By: Finn Christensen (Department of Economics, Towson University); Juergen Jung (Department of Economics, Towson University)
    Abstract: This paper studies global social interactions in a stylized model of marriage and divorce with complementarities across agents. The key point of departure from traditional models of social interactions is that actions are interrelated and sequential. We establish existence and uniqueness results akin to those in traditional models. In contrast to these models, however, we show that the presence of strategic complementarities is no longer sufficient to generate a social multiplier that exceeds one in this environment. Self-fulfilling conformity, whereby a greater desire to conform at the individual level leads to greater homogeneity of choices in the aggregate, is not retained either. Some empirical implications are also discussed.
    Keywords: Social interactions, social multiplier, self-fulfilling conformity, uniqueness under moderate social influence.
    JEL: Z13 C72 D62
    Date: 2010–01
  3. By: Finn Christensen (Department of Economics, Towson University)
    Abstract: This paper investigates the impact on cohabitation behavior of the introduction and dispersion of the birth control pill in the US during the 1960s and early 1970s. A theoretical model generates several predictions that are tested using the first wave of the National Survey of Families and Households. Empirically, the causal effect is identified by exploiting plausibly exogenous variation in state laws granting access to the pill to unmarried women under age 21. The evidence shows that the pill was a catalyst that increased cohabitation's role in selecting marriage partners, but did little in the short run to promote cohabitation as a substitute for marriage.
    Keywords: Early legal access to the pill, cohabitation, marriage trends
    JEL: J11 J12
    Date: 2010–02
  4. By: Hüschelrath, Kai; Weigand, Jürgen
    Abstract: The paper develops a framework to enforce anti-predation rules that explicitly takes the intervention stage into account. In particular, it is proposed to improve predation enforcement by focusing on two channels: refining the current regime, and amending it. With respect to the refinement of the current predation enforcement regime, criteria for the imposition of optimal gain- or harm-based fines are derived in order to sharpen the deterrent effect of predation enforcement. However, given the very low probability of conviction for predators a policy proposal solely based on an increase in the fines for detected and convicted predators might be too weak to significantly amplify the deterrence effect in particular and to improve predation enforcement in general. As a consequence, the introduction of a pre-screening approach is proposed, which aims at identifying industries in which entry is difficult but desirable and a predation strategy might be a suitable instrument for an incumbent to fight such occasional entry attempts. In those industries, it is advisable to reduce the high standard of proof in predation enforcement, as its basic justification - the danger to create a negative deterrence effect - is significantly reduced. --
    Keywords: Competition policy,monopolisation,predation,enforcement,sanctions,screening
    JEL: K21 L41
    Date: 2009

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