New Economics Papers
on Law and Economics
Issue of 2010‒11‒13
seven papers chosen by
Jeong-Joon Lee, Towson University

  1. Import Tariffs Enforcement with Low Administrative Capacity By Tonin, Mirco
  2. Gov-arrrgh-nance: Jolly Rogers and Dodgy Rulers By Olaf J. de Groot; Anja Shortland
  3. Compensation for Indirect Expropriation in International Investment Agreements: Implications of National Treatment and Rights to Invest By Emma Aisbett; Larry Karp; Carol McAusland
  4. The LAS approach: a scheme for a sustainable local development of Southern countries rural areas? By Requier-Desjardins, Denis
  5. Police and Thieves in the Stadium: Measuring the (Multiple)Effects of Football Matches on Crime By Olivier Marie
  6. Economical Crime Control By Philip J. Cook; Jens Ludwig
  7. To Regulate, Litigate, or Both By Helland, Eric; Klick, Jonathan

  1. By: Tonin, Mirco
    Abstract: Import tariff receipts represent an important share of government revenues in many developing countries and there has recently been a surge in empirical studies showing how evasion in this field is a pervasive phenomenon. In the case of import tariffs, the tax base is the product of quantity and unit value, both of which have to be reported and need to be assessed by the custom authority during an audit. I show that when the fiscal authority has an imperfect detection technology, there is an additional incentive for the taxpayer to underdeclare, as a greater declaration in one dimension actually increases the fine when evasion in the other dimension is detected, and a tax base presenting this feature is subject to more evasion compared to a tax base that can be assessed directly. Also, when enforcement capacity is low, voluntary compliance is higher when the importer is required to declare only the total value of imports. <br><br> Keywords; tariff, tax evasion, multiplicative tax base, imperfect detection, low administrative capacity <br><br> JEL Classification: F13, H26, H27, K42, O17, O24
    Date: 2010–10–01
  2. By: Olaf J. de Groot; Anja Shortland
    Abstract: In this paper, we argue that the effect of governance on the emergence of crimes of different levels of sophistication is highly non-linear. State failure, anarchy and a lack of infrastructure are not conducive to establishing any business, including illicit enterprises. At the bottom of the spectrum, therefore, both legal business and criminal gangs benefit from improved governance. With further improvements in governance criminal activities decline. We find strong and consistent support for this hypothesis using the International Maritime Bureau's dataset on piracy. Piracy is reported by ship-owners, giving a unique insight into crime in badly governed countries which were systematically excluded from previous analyses. We show that profitable forms of piracy flourish where on the one hand there is stability and infrastructure, but on the other hand the state does not have the capacity to intervene and/or bureaucrats can be bribed to turn a blind eye. For minor acts of theft from ships the pattern is quadratic: piracy first rises and then falls as governance improves.
    Keywords: Piracy, illegal behaviour, law enforcement, legal institutions
    JEL: K42 P48
    Date: 2010
  3. By: Emma Aisbett; Larry Karp; Carol McAusland
    Abstract: International investment agreements in bilateral treaties or free trade agreements allow investors to bring compensation claims when their investments are hurt by new regulations addressing environmental or other social concerns. Compensation rules such as expropriation clauses in international treaties help solve post-investment moral hazard problems such as hold-ups, thereby helping to prevent inefficient over-regulation and encouraging foreign investment. However, when social or environmental harm is uncertain preinvestment, compensation requirements can interact with National Treatment clauses in a manner that reduces host government welfare and makes them less likely to admit investment. A police powers carve-out from the definition of compensable expropriation can be Pareto-improving and can increase the level of foreign investment.
    Keywords: foreign direct investment, regulatory takings, expropriation, international investment agreements, National Treatment, environment
    JEL: K3 Q58 F21
    Date: 2010–11
  4. By: Requier-Desjardins, Denis
    Abstract: LAS (Localised Agri-food Systems) approach has been viewed until now as either an analysis of a variety of local production system or an anthropological vision of the links between food and places. Although theses approaches are relevant, they prove sometimes hard to differentiate themselves of close concepts such as Local production systems. This paper intends to assess in what measure LAS approach can be redefined as an approach of rural development processes, which could be the basis of a rural development policy. If LAS's are to be considered as the basis of a rural development path, LAS approach must be cast in the current debate on diversification of rural activities. Drawing on that, LAS can be the basis of a rural development policy, but only fit to some places, with a very specific âresidentialâ relationship with the overall economic environment.
    Keywords: LAS, rural development, new rurality, Sustainable rural livelihoods, residential economy., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  5. By: Olivier Marie
    Abstract: During large sporting events criminal behaviour may be affected via three main channels: (i)fan concentration, (ii) self incapacitation, and (iii) police displacement. In this paper I exploitinformation on football (soccer) matches for nine London teams linked to detailed recordedcrime data at the area level to empirically estimate these different effects. My findings showthat only property crime significantly increases in the communities hosting football matchesbut that they experience no changes in violent offences. These results are robust tocontrolling for a large number of game type and outcome characteristics. There is noevidence of temporal displacement of criminal activity. Our conceptual model suggests thatthe away game attendance effect on crime is due to voluntary incapacitation of potentialoffenders. I argue that the police displacement effect of hosting a match increases propertycrime by 7 percentage point for every extra 10,000 supporters.
    Keywords: Football, police, crime
    JEL: K10 K42
    Date: 2010–10
  6. By: Philip J. Cook; Jens Ludwig
    Abstract: This paper is the introductory chapter for the forthcoming NBER volume Controlling Crime: Strategies and Tradeoffs. The Great Recession has led to cuts in criminal justice expenditures, and the trend towards ever-higher incarceration rates that has been underway since the 1970s in the U.S. appears to have turned the corner. That raises the question of whether the crime drop can be sustained. State and local revenue shortfalls have engendered intense interest in cost-cutting measures that do not sacrifice public safety. We argue that there is some reason for optimism, simply because current criminal justice allocations and policies appear to be inefficient – more crime control could be accomplished with fewer resources. The crime problem is often framed as a debate between those who favor a “tough” punitive approach versus those who favor a “soft” approach that focuses on prevention or remediation programs. But the canonical economic model of crime from Becker (1968) suggests that the decision to commit crime involves a weighing of both benefits and costs, implying that both tough and soft approaches might be useful. It is ultimately an empirical question about how the marginal crime-control dollar may be most effectively deployed. The evidence presented in this edited volume suggests that a more efficient portfolio of crime-control strategies would involve greater attention to enhancing the certainty rather than the severity of punishment for criminal behavior, stimulating private-sector cooperation for controlling crime, and making strategic investments in the human capital of at-risk populations, including in particular efforts to improve the social-cognitive skills of justice-system-involved populations. To help illustrate the magnitude of the inefficiencies within the current system, the essay concludes with a thought experiment that considers how much additional crime-prevention could be obtained by reverting average sentence lengths back to 1984 levels (midway through the Reagan era) and redirecting the freed-up resources (on the order of $12 billion annually) to alternative uses.
    JEL: K42
    Date: 2010–11
  7. By: Helland, Eric; Klick, Jonathan
    Abstract: In the United States insurance is regulated both by state insurance commissions and class action litigation. The interaction of these two systems has not been extensively studied. We examine four different facets of the regulation litigation tradeoff. The first is to examine whether regulator’s interest in a particular cause of action reduces the likelihood that class actions covering this cause of action will be filed in the regulator’s home state. We also examine several measures of regulatory stringency in the state to determine whether there is a substitution effect between regulatory action and litigation. We also examine whether class actions are less frequent when regulators issued an administrative decision on a particular issue previously or if there are no existing state laws on the particular issue. We examine the impact of electing judges on patterns of filing. The hypothesis is that elected judges are more sympathetic to plaintiffs and hence class actions are more likely to be filed in states that elect their judges. Lastly, we examine the impact of pervious litigation both in the state and the specific line of litigation.
    Date: 2010–02

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