New Economics Papers
on Law and Economics
Issue of 2010‒07‒10
four papers chosen by
Jeong-Joon Lee, Towson University

  1. The Crime Reducing Effect of Education By Stephen Machin; Olivier Marie; Suncica Vujic
  2. Crime and Immigration: Evidence from Large Immigrant Waves By Brian Bell; Francesco Fasani; Stephen Machin
  3. Insecure Land Rights and Share Tenancy in Madagascar By Bellemare, Marc F.
  4. Comparing Monopoly and Duopoly on a Two-Sided Market without Product Differentiation By Böhme, Enrico; Müller, Christopher

  1. By: Stephen Machin; Olivier Marie; Suncica Vujic
    Abstract: In this paper, we present evidence on empirical connections between crime and education, usingvarious data sources from Britain. A robust finding is that criminal activity is negatively associatedwith higher levels of education. However, it is essential to ensure that the direction of causation flowsfrom education to crime. Therefore, we identify the effect of education on participation in criminalactivity using changes in compulsory school leaving age laws over time to account for theendogeneity of education. In this causal approach, for property crimes, the negative crime-educationrelationship remains strong and significant. The implications of these findings are unambiguous andclear. They show that improving education can yield significant social benefits and can be a keypolicy tool in the drive to reduce crime.
    Keywords: Crime, education, offenders
    JEL: I2 K42
    Date: 2010–05
  2. By: Brian Bell; Francesco Fasani; Stephen Machin
    Abstract: This paper examines the relationship between immigration and crime in a setting where largemigration flows offer an opportunity to carefully appraise whether the populist view thatimmigrants cause crime is borne out by rigorous evidence. We consider possible crimeeffects from two large waves of immigration that recently occurred in the UK. The first ofthese was the late 1990s/early 2000s wave of asylum seekers, and the second the large inflowof workers from EU accession countries that took place from 2004. A simple economics ofcrime model, when dovetailed with facts about the relative labour market position of thesemigrant groups, suggests net returns to criminal activity are likely to be very different for thetwo waves. In fact, we show that the first wave led to a small rise in property crime, whilstthe second wave had no such impact. There was no observable effect on violent crime foreither wave. Nor were immigrant arrest rates different to natives. Evidence fromvictimization data also suggests that the changes in crime rates during the immigrant wavescannot be ascribed to crimes against immigrants. Overall, our findings suggest that focusingon the limited labour market opportunities of asylum seekers could have beneficial effects oncrime rates.
    Keywords: Crime, immigration
    JEL: F22 K42
    Date: 2010–06
  3. By: Bellemare, Marc F.
    Abstract: While most studies looking at the consequences of tenurial insecurity on land markets in developing countries focus on the effects of tenurial insecurity on the investment behavior of landowners, this paper studies the hitherto unexplored relationship between tenurial insecurity and contract choice in land tenancy. Based on a distinct feature of the interaction between formal law and customary rights in Madagascar, this paper augments the canonical model of share tenancy by making the strength of the landlord’s property right increasing in the amount of risk she chooses to bear within the contract. Sharecropping may thus emerge as the optimal contract even when the tenant is risk-neutral. Using data on landlords’ subjective perceptions of tenurial insecurity in a rural area of Madagascar, empirical tests strongly support the hypothesis that insecure property rights drive contract choice while offering little support in favor of the canonical hypothesis that risk sharing considerations drive contract choice.
    Keywords: Sharecropping; Property Rights; Tenurial Insecurity; Subjective Expectations
    JEL: D86 O13 Q15 K11 O12
    Date: 2010–07–03
  4. By: Böhme, Enrico; Müller, Christopher
    Abstract: We propose both a monopoly and a duopoly model of a two-sided market. Both settings are fully comparable, as we impose a homogeneous good produced at zero costs without capacity constraints, as well as identical parameterization of market sizes. We determine the duopoly equilibrium and the monopoly optimum in terms of the parameters and obtain solutions with and without subsidization (prices below marginal cost) of one market side. We show that there exists a continuum of economically plausible parameter sets for which duopoly equilibrium prices exceed optimal monopoly prices and one with no observable price effect of competition, i.e. one where optimum and equilibrium prices become equal. Despite the fact that virtually everything except for the number of platform operators is identical in the latter situations, total demand on both market sides in the duopoly market exceeds total demand in the monopoly market. Furthermore, even though there is no observable price effect, there is still a competitive effect in so far that total profits in the duopoly equilibrium are strictly smaller than monopoly profits. The relationship of total welfare is ambiguous in subsidization cases, while it is strictly greater in duopoly, if no subsidization takes place. Our results sharply contradict economic intuition and common economic knowledge from one-sided markets.
    Keywords: two-sided markets; platform competition; price-concentration relationship; welfare analysis
    JEL: K20 L51 L13 D42 D43 L12
    Date: 2010–06–29

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