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on Law and Economics |
| By: | Douhou, S.; Magnus, J.R.; Soest, A.H.O. van (Tilburg University, Center for Economic Research) |
| Abstract: | Violations of social norms can be costly to society and they are, in the case of large crimes, followed by prosecution. Minor misbehaviors — small crimes — do not usually result in legal proceedings. Although the economic consequences of a single small crime can be low, such crimes generate substantial losses in the aggregate. In this paper we measure perceptions of incorrect behavior or ‘small crime’, based on a questionnaire administered to a large representative sample from the Dutch population. In the questionnaire we ask the respondents to rate the severity and justifiability of a number of small crimes. We present short questions that only state the nature of the small crime, as well as vignette questions, describing in detail the fictitious person committing the small crime and other factors related to the circumstances in which the small crime is committed. We find that the perceived severity of small crimes varies systematically with characteristics of the respondent as well as of the person committing the crime. Small crimes are considered less serious if committed by someone with lower income. Also, the association between respondent characteristics and perceived seriousness changes if the respondents are given more information about the offender and the circumstances of the offense. |
| Keywords: | Crime seriousness;Social norms;Vignettes |
| JEL: | K42 K14 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:2010115&r=law |
| By: | Tomaso Duso (Humboldt University Berlin and Wissenschaftszentrum Berlin (WZB)); Lars-Hendrik Roeller (European School of Management and Technology (ESMT) and Humboldt University Berlin); Jo Seldeslachts (University of Amsterdam) |
| Abstract: | This paper tests whether upstream R&D cooperation leads to downstream collusion. We consider an oligopolistic setting where firms enter in research joint ventures (RJVs) to lower production costs or coordinate on collusion in the product market. We show that a sufficient condition for identifying collusive behavior is a decline in the market share of RJV-participating firms, which is also necessary and sufficient for a decrease in consumer welfare. Using information from the US National Cooperation Research Act, we estimate a market share equation correcting for the endogeneity of RJV participation and R&D expenditures. We find robust evidence that large networks between direct competitors -created through firms being members in several RJVs at the same time- are conducive to collusive outcomes in the product market which reduce consumer welfare. By contrast, RJVs among non-competitors are efficiency enhancing. |
| Keywords: | Research Joint Ventures; Innovation; Collusion; NCRA |
| JEL: | K21 L24 L44 O32 |
| Date: | 2010–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20100112&r=law |
| By: | Alfredo R. Paloyo; Colin Vance; Matthias Vorel |
| Abstract: | Using a unique panel dataset, we estimate the impact of the military base realignments and closures (BRACs) in Germany on the intensity of criminal activity surrounding the base. We use a fixed-effect model to account for time-invariant unobservables in our panel of 298 military bases for the period 2003–2007. We also take advantage of geographic information system software to mitigate estimation issues arising from the spatial nature of the dataset. Estimation results are presented for total crime and four other subcategories: breaking and entering, automobile-related crime, violent crime, and drug-related crime. The estimates indicate that there is no effect of BRACs on criminal activity surrounding the base. We also confirm existing findings in the literature on the determinants of crime. |
| Keywords: | Armed forces; BRAC; deviant behavior; geographic information system |
| JEL: | H56 K42 R19 |
| Date: | 2010–10 |
| URL: | http://d.repec.org/n?u=RePEc:rwi:repape:0211&r=law |
| By: | Andrew F. Daughtey (Department of Economics and Law School, Vanderbilt University); Jennifer F. Reinganum (Department of Economics and Law School, Vanderbilt University) |
| Abstract: | We model the game between an informed seller (a lawyer) and an uninformed buyer (a potential client) over the choice of compensation for the lawyer to take a case to trial, when there is post-contracting investment by the lawyer (effort at trial) that involves moral hazard. Clients incur a one-time search cost to contact a lawyer, which parametrically influences the monopoly power of the lawyer when he makes a demand of the client for compensation for his service. The client uses the demand to decide whether to contract with the lawyer or to visit a second lawyer so as to seek a second opinion, which incurs a second search cost. Seeking a second opinion shifts the bargaining power to the client by causing the lawyers to bid for the right to represent the client. We allow for endogenously-determined contingent fees alone (that is, the lawyer covers all costs and obtains a percentage of any amount won at trial) or endogenously-determined contingent fees and transfers; in this latter analysis, lawyers could buy the client’s case. Under asymmetric information with only a contingent fee, in equilibrium the first lawyer visited demands a higher contingent fee for lower-valued cases, signaling the case’s value to the client. If a transfer is also allowed, then in equilibrium the higher contingent fee (and transfer from the lawyer to the client) is obtained by the more valuable case, with only the highest-value case resulting in the lawyer buying the entire case (100% contingent fee with a transfer); again, in equilibrium, the value of the case is signaled. In both settings the client uses an equilibrium strategy that involves seeking a second opinion a fraction of the time, which induces separation. In equilibrium the presence of asymmetric information does not affect the client’s expected payoff, but it does reduce the lawyer’s expected payoff and it does increase moral-hazard-induced inefficiency on the part of the lawyer in the post-contracting investment. |
| Keywords: | Signaling, Agency, Search, Contingent Fee |
| JEL: | D8 K4 L2 |
| Date: | 2010–06 |
| URL: | http://d.repec.org/n?u=RePEc:van:wpaper:1009&r=law |
| By: | Ojo, Marianne |
| Abstract: | Rescue cases involving guarantees (contrasted with restructuring cases) during the recent Financial Crisis, have illustrated the prominent position which the goal of promoting financial stability has assumed over that of the prevention or limitation of possible distortions of competition which may arise when granting State aid. The recent Financial Crisis has also illustrated how the traditional role of central banks has been extended to incorporate more innovative roles. The reduction of interest rates by central banks to all time lows – along with other unprecedented actions which have been undertaken by central banks, as evidenced by the recent Financial Crisis, have been regarded as „extensions of traditional methods of operation which have resulted in a new territory in which tools have been implemented in very new ways.“ As well as providing an analysis of how the traditional role of central banks has evolved through the duration of the Financial Crisis, this paper attempts to highlight how far central banks and governments should intervene and how far distortions of competition should be permitted during periods of financial crises. |
| Keywords: | competition; central banks; recapitalisation; stability; regulation; financial crises; fundamentally sound financial institutions; macro prudential; Basel III; systemic risk; supervision; liquidity; state aid; monetary policy |
| JEL: | K2 E58 |
| Date: | 2010–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:26605&r=law |