New Economics Papers
on Law and Economics
Issue of 2011‒09‒05
six papers chosen by
Jeong-Joon Lee, Towson University

  1. Constitutional Environmental Human Rights: A Descriptive Analysis of 142 National Constitutions By Christopher Jeffords
  2. Measuring Institutions: Indicators of Political and Economic Institutions in Namibia: 1884 - 2008 By B.P. Zaaruka; J.W. Fedderke
  3. The Use of Violence in Illegal Markets: Evidence from Mahogany Trade in the Brazilian Amazon By Chimeli, Ariaster B.; Soares, Rodrigo R.
  4. Access to Justice and Entrepreneurship: Evidence from Brazil's Special Civil Tribunals By Lichand, Guilherme; Soares, Rodrigo R.
  5. Trading and Enforcing Patent Rights By Alberto Galasso; Mark Schankerman; Carlos J. Serrano
  6. Law, Sustainability, and the Pursuit of Happiness By Farber, Daniel A.

  1. By: Christopher Jeffords (University of Connecticut)
    Abstract: This paper provides a detailed keyword analysis of the 142 out of 198 national constitutions that include at least one reference to the environment as of 2010. Out of these 142 constitutions, 125 contain provisions that are explicitly related to environmental human rights, and ten include a direct human right to water. Focusing mostly on the language of the provisions and the age of the constitutions (not the age of the provision itself), the analysis provides insight into the extent to which countries are taking environmental human rights seriously. The findings note that constitutions that reference the environment are, on average, generally younger in age than those that do not. This is also the case for developing versus developed countries, and Non-OECD (Organization for Economic Cooperation and Development) versus OECD member countries. Constitutions that have a direct human right to water are, on average, even younger. The paper also develops a simple index of the legal strength of constitutional environmental human rights provisions and offers the data as an alternative, positive (versus subjective) specification to a similar set of data compiled by the Toronto Initiative for Economic and Social Rights (TIESR).
    Keywords: Constitutions, Environmental Human Rights, Human Right to Water
    JEL: K00 K32 Q50 Q56 Q58
    Date: 2011–08
  2. By: B.P. Zaaruka; J.W. Fedderke
    Abstract: This paper presents a database on institutional measures for Namibia for the period 1884 to 2008. Using the techniques of principal components and factor analysis in aggregating these indicators, the study does two things. First, it illustrates a methodology for constructing de jure and de facto institutional measures by means of using pieces of legislation and quantitative data, respectively. Secondly, these indicators are used to assess the nature of political and economic institutional transformation from the colonial legacy to the modern outcome using Namibia as a natural experiment. The new indicators while covering a long time period (1884-2008), correlate fairly well with some of the widely used institutional indices produced by the Freedom House and the Heritage foundation.
    Keywords: Namibia Institutional Indicators Political Freedom Property Rights Judicial Independence Political Instability
    JEL: K00 N4 O1
    Date: 2011
  3. By: Chimeli, Ariaster B. (Ohio University); Soares, Rodrigo R. (Pontifical Catholic University of Rio de Janeiro (PUC-Rio))
    Abstract: Agents operating in illegal markets cannot resort to the justice system to guarantee property rights, to enforce contracts, or to seek protection from competitors' improper behaviors. In these contexts, violence is used to enforce previous agreements and to fight for market share. This relationship plays a major role in the debate on the pernicious effects of the illegality of drug trade. This paper explores a singular episode of transition of a market from legal to illegal to provide a first piece of evidence on the causal effect of illegality on systemic violence. Brazil has historically been the main world producer of big leaf mahogany (a tropical wood). Starting in the 1990s, policies restricting extraction and trade of mahogany, culminating with prohibition, were implemented. First, we present evidence that large scale mahogany trade persisted after prohibition, through misclassification of mahogany exports as "other tropical timber species." Second, we document relative increases in violence after prohibition in areas with: (i) higher share of mahogany exports before prohibition; (ii) higher suspected illegal mahogany activity after prohibition; and (iii) natural occurrence of mahogany. We believe this is one of the first documented experiences of increase in violence following the transition of a market from legal to illegal.
    Keywords: illegal markets, violence, homicide, mahogany, Brazil
    JEL: K42 O13 O17 Q58
    Date: 2011–08
  4. By: Lichand, Guilherme (Harvard Kennedy School); Soares, Rodrigo R. (Pontifical Catholic University of Rio de Janeiro (PUC-Rio))
    Abstract: Entrepreneurship is usually identified as an important determinant of aggregate productivity and long-term growth. The determinants of entrepreneurship, nevertheless, are not entirely understood. A recent literature has linked entrepreneurship to the development of the justice system. This paper contributes to this literature by evaluating the role of access to justice in determining the incidence of entrepreneurship. We explore the creation of Special Civil Tribunals in the Brazilian state of São Paulo during the 1990s. Special Civil Tribunals increased the geographic presence of the justice system, simplified judicial procedures, and increased the speed of adjudication of disputes. Using census data, and difference-in-differences and instrumental variable strategies, we find that implementation of Special Civil Tribunals led to increased entrepreneurship, defined as the probability that individuals are employers or self-employed. Results are particularly strong and robust for the case of self-employment, and do not seem to be related to other changes in infrastructure or public good provision at the local level, or to pre-existing trends in entrepreneurship.
    Keywords: access to justice, courts, entrepreneurship, institutions, Brazil
    JEL: K1 K41 K42 H41 O12 O17 O54
    Date: 2011–08
  5. By: Alberto Galasso; Mark Schankerman; Carlos J. Serrano
    Abstract: We study how the market for innovation affects enforcement of patent rights. Conventional wisdom associates the gains from trade with comparative advantage in manufacturing or marketing. We show that these gains imply that patent transactions should increase litigation risk. We identify a new source of gains from trade, comparative advantage in patent enforcement, and show that transactions driven by this motive should reduce litigation. Using data on trade and litigation of individually-owned patents in the U.S., we exploit variation in capital gains tax rates as an instrument to identify the causal effect of trade on litigation. We find that taxes strongly affect patent transactions, and that reallocation of patent rights reduces litigation risk, on average. The impact of trade on litigation is heterogeneous, however. Patents with larger potential gains from trade are more likely to change ownership, suggesting that the market for innovation is efficient. We also show that the impact of trade on litigation depends on characteristics of the transactions.
    Keywords: patents, litigation, market for innovation, capital gains taxation
    JEL: K41 H24 O32 O34
    Date: 2011–08
  6. By: Farber, Daniel A.
    Abstract: Environmental law focuses on regulating the production of energy and goods. Less attention has been given to reducing the environmental footprint of consumption. This Article brings together several strands of research, including psychological and economic research on subjective wellbeing; research on energy efficiency; writings by urban planners on sustainable communities; and recent work on individual behavior and sustainability. The conclusion, in a nutshell, is that changes in consumption of goods and energy, assisted by improvements in urban design and transportation infrastructure, can significantly reduce energy use and environmental harm. A variety of legal tools are available to promote these changes. Remarkably, many of the steps needed for sustainability can actually improve quality of life, adding to individual satisfaction. Thus, sustainability for society and the pursuit of individual happiness need not be at odds.
    Keywords: Administrative Law; Economics; Energy and Utilities Law; Environmental Law; Land Use Planning; Law and Economics; Natural Resources Law; Oil, Gas, and Mineral Law; Public Law and Legal Theory; Water Law, Environmental Law
    Date: 2011–08–30

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