New Economics Papers
on Law and Economics
Issue of 2010‒03‒06
two papers chosen by
Jeong-Joon Lee, Towson University

  1. The Deterrent Effects of Penalty Point System in Driving Licenses: A Regression Discontinuity Approach By Maria De Paola; Vincenzo Scoppa; Mariatiziana Falcone
  2. A Simple Theory of Predation By Chiara Fumagalli; Massimo Motta

  1. By: Maria De Paola; Vincenzo Scoppa; Mariatiziana Falcone (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: Using data on road accidents, traffic fatalities and driving offences taking place in Italy over the period 2001-2005, we estimate the effects of the introduction on July 2003 of a penalty point system for driving offences. To identify the causal effect of the penalty point system on road safety we use a Regression Discontinuity Design. It emerges that, controlling for weather conditions, police patrols, speed cameras, gasoline price, the introduction of the penalty point system has led to a reduction of about 10% of road accidents and of about 25% of traffic fatalities. These findings are robust to different specifications of the model and different time windows. Moreover, it emerges that the driving offences for which the introduction of the new regime has determined a sharp change in the sanction scheme have reacted more than offences for which the change was less relevant.
    Keywords: Law Enforcement, Deterrence, Safety and Accidents, Panel Estimations
    JEL: K32 K42 R41 R48 C23
    Date: 2010–02
  2. By: Chiara Fumagalli (Università Bocconi, CSEF and CEPR); Massimo Motta (Università di Bologna and CEPR)
    Abstract: We propose a simple theory of predatory pricing, based on scale economies and sequential buyers (or markets). The entrant (or prey) needs to reach a critical scale to be successful. The incumbent (or predator) is ready to make losses on earlier buyers so as to deprive the prey of the scale it needs, thus making monopoly profits on later buyers. Several extensions are considered, including markets where scale economies exist because of demand externalities or two-sided market effects, and where markets are characterised by common costs. Conditions under which predation may take place in actual cases are also discussed.
    Keywords: Anticompetitive Behaviour, Exclusion, Below-Cost Pricing, Antitrust
    JEL: K21 L12 L40
    Date: 2010–02

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