New Economics Papers
on Law and Economics
Issue of 2011‒12‒13
ten papers chosen by
Jeong-Joon Lee, Towson University

  1. Compliance with the Institutional Wage in Dualistic Models By Ana Paula Martins
  2. The Effect of Education Policy on Crime: An Intergenerational Perspective By Meghir, Costas; Palme, Mårten; Schnabel, Marieke
  3. Informal social networks, organised crime and local labour market By Antonella Mennella
  4. Corruption and the effects of economic freedom By Luca Pieroni; Giorgio D'Agostino
  5. Unlocking the potential of the smart metering technology: How can regulation level the playing-field for new services in smart grids? By Kranz, Johann; Picot, Arnold; Roemer, Benedikt
  6. Regulatory authorities in the EU information and communications technology sectors: The role of trust and transparency in watching the watchdog By Stevens, David
  7. Legal gaps under deregulatory broadband policies and the resurgent rise of corporate power By Cherry, Barbara A.
  8. Juvenile Law and Recidivism in Germany – New Evidence from the Old Continent By Pichler, Stefan; Römer, Daniel
  9. The monopoly benchmark on two-sided markets By Mueller, Christopher; Boehme, Enrico
  10. Did WTO rules restrain protectionism during the recent systemic crisis? By Evenett, Simon J

  1. By: Ana Paula Martins
    Abstract: This research extends simple two-sector models in order to inquire the impact of the extent of coverage or enforcement of minimum wage legislation in one of the sectors on the equilibrium outcome. Two versions of institutional wage avoidance are presented. They may be seen as representing different institutional detection rules: one working through worker complaint, the other through firm sampling inspection (and enforcement) by the legal system. Both cases are modelled as enlargements of two dualistic models: Harris-Todaro (the wage in the other sector is market determined) and Bhagwati-Hamada (the wage in the other sector is institutionally fixed and coverage is complete). Impact on population flows of changes in degree of coverage (compliance) is also confronted with the effect of a change in the institutional wage for each scenario.
    Keywords: Migration, Mobility, Minimum Wages, Segmented Labor Markets, Informal Sector, Regional Labor Markets, Dualistic Models, Coverage.
    JEL: O15 O17 O18 R23 J38 J42 J61 J62 F22 K42
    Date: 2011–11–15
  2. By: Meghir, Costas (Yale University); Palme, Mårten (Stockholm University); Schnabel, Marieke (University College London)
    Abstract: A number of studies have shown that education reforms extending compulsory schooling reduce criminal behavior of those affected by the reform. We consider the effects of a major Swedish educational reform on crime by exploiting its staggered implementation across Sweden. We first show that the reform reduced crime rates for the generation directly affected by the reform. We then show that the benefits extended to the next generation with large reductions in the crime rates of the children of those affected. The effect operates only through the father and points in the direction of improved parenting rather than resources.
    Keywords: comprehensive school, economics of crime, returns to education, returns to human capital
    JEL: I20 I21 I28 K42 N34
    Date: 2011–11
  3. By: Antonella Mennella
    Abstract: This paper’s purpose is to show a new informal social networks interpretation, according to which social networks change their nature if they are located in social contexts where organised crime is relevant. Here the perusal of a social network is just a necessary condition to enter the labour market rather than a deliberate choice. Moreover this labour market is the ground where favouritisms and social and electoral consensus policies take place
    Keywords: social networks, organised crime, labour market
    JEL: D85 J64 K00
    Date: 2011–03
  4. By: Luca Pieroni; Giorgio D'Agostino
    Abstract: The predictions that economic freedom is beneficial in reducing corruption have not been found to be universally robust in empirical studies. The present work reviews this relation- ship by using rms' data in a cross-country survey and argues that approaches using aggreg- ated macro data have not been able to explain it appropriately. We model cross-country variations of the microfounded economic freedom-corruption relationship using multilevel models. Additionally, we analyze this relationship by disentangling the determinants for several components of economic freedom because not all areas a ect corruption equally. The results show that the extent of the macro-e ects on the measures of (micro)economic freedom for corruption, identi ed by the degree of economic development of a country, can explain why a lack of competition policies and government regulations may yield more cor- ruption. Estimations for Africa and transition economy subsamples con rm our conjectures
    Keywords: Corruption, economic freedom, multilevel models
    JEL: H10 H11 H50 K20 O50
    Date: 2011–09
  5. By: Kranz, Johann; Picot, Arnold; Roemer, Benedikt
    Abstract: By integrating a communications system with the existing power grid, smart grids provide end-to-end connectivity. This enables all entities and components integrated in the electricity supply system to exchange information without knowing the network's structure. New services and applications such as demand response or virtual power plants that will aid to improve and optimize the use of electricity depend on the availability of a smart grid communication network. End-to-end communication networks require that the missing communications gap between consumers' premises and the remaining energy network is bridged by deploying an Advanced Metering Infrastructure (AMI). Given the current liberalized electricity markets' structure incumbent distribution system operators (DSOs) will control the AMI and the meter data. This gives rise to concerns about anti-competitiveness. We argue that leveraging the AMI in a social welfare maximizing way requires non-discriminatory access for all entitled parties to the (1) AMI and the (2) meter data through (3) interoperable standards. We discuss possible regulatory remedies to ensure a level playing-field for innovative services in smart grids and consider implications for research and regulation. --
    Keywords: Regulation,Smart Grid,Smart Meter,Antitrust
    JEL: K21 O31 L51 L94
    Date: 2011
  6. By: Stevens, David
    Abstract: Our research starts from the general observation that everywhere around the globe, an increasing number of regulatory tasks, traditionally falling under the responsibility of government, are being transferred to so-called independent regulatory authorities (i.e. independent from market actors, but quite often, also from political actors). This is, for instance, the case in the recently liberalized network industries (e.g. energy, railways), but also in the financial or the audiovisual media sector. In some cases (e.g. the electronic communications sector in the European Union), powers attributed to these regulatory authorities even prevent other, more democratically legitimate, institutions, like governments or parliaments, to interfere with the regulatory policy (cf. Judgment 424/07 of the Court of Justice in the German regulatory holidays case of December 3rd, 2009). Especially in that case, the question becomes: who's watching the watchdog? --
    Keywords: Independent regulatory bodies,regulation,media and communications law
    JEL: K23 K21
    Date: 2011
  7. By: Cherry, Barbara A.
    Abstract: This paper considers the likely combinatorial effects of U.S. deregulatory broadband policies and the evolution of law as applied to corporations as a general matter. It explains how legal developments in both areas have dismantled bodies of law or doctrines that had developed to address corporate power in both commercial and political spheres and to protect consumers from vulnerability in commercial activities. Moreover, the coexistence of these developments enables an unprecedented transfer of corporate power between economic and policymaking institutions. With the decline in regulatory constraints, as well as the rise in constitutional rights to block attempts to impose regulatory constraints, there is a resurgent rise of corporate power. The result may be a phase transition undermining the rule of law so critical to sustainable democracies. --
    Keywords: Antitrust,broadband,common carriers,constitutional rights,consumer protection,corporations,telecommunications
    JEL: K23
    Date: 2011
  8. By: Pichler, Stefan; Römer, Daniel
    Abstract: In this paper, we analyze the effect of the criminal justice system on juvenile recidivism. Using a unique sample of German inmates, we are able to disentangle the selection into criminal and juvenile law from the subsequent recidivism decision of the inmate. We base our identification strategy on two distinct methods. First, we jointly estimate selection and recidivism in a bivariate probit model. In a second step, we use a discontinuity in law assignment created by German legislation and apply a (fuzzy) regression discontinuity design. In contrast to the bulk of the literature, which mainly relies on US data, we do not find that the application of criminal law increases juvenile recidivism. Rather, our results suggest that sentencing adolescents as adults reduces recidivism in Germany.
    Keywords: crime; juvenile recidivism; regression discontinuity; bivariate probit
    JEL: K14 C21 C14 K42
    Date: 2011–12–02
  9. By: Mueller, Christopher; Boehme, Enrico
    Abstract: The literature on the effects of market concentration in platform industries or two-sided markets often compares the competitive outcome against a benchmark. This benchmark is either the “joint management” solution in which one decision maker runs all platforms or a “pure” monopoly with just one platform. Literature has not generally discussed, which benchmark is the appropriate one. We show that the appropriate benchmark, i.e. how many platforms the monopolist will operate, depends on whether agents multi- or singlehome, whether the externalities are positive or negative, and in some cases on the properties of the demand functions. Different situations require different benchmarks. Our results also help to anticipate the effects of proposed platform mergers, where the assessment might crucially depend on the number of platforms after a merger.
    Keywords: two-sided markets; market concentration; monopoly
    JEL: K20 L51 L13 D42 D43 L12
    Date: 2011–11–01
  10. By: Evenett, Simon J
    Abstract: This paper challenges the contention that WTO rules had much impact on state behaviour during the recent global economic crisis. Evidence on the variety of discrimination implemented by governments, characteristics of the recent systemic crisis, as well as on certain, often overlooked features of WTO obligations are used to support a conclusion that the WTO rules altered at most the composition of crisis-era protectionism. As to the quantum of protectionism, it is unclear how WTO rules could have prevented many governments from adopting tariff increases on the scale of the Smoot Hawley tariff. Pessimistic implications are drawn concerning the future restraining role that multilateral trade obligations could ever play during systemic economic crises. Realistically, the fate of the open world trading system must rely on other incentives to refrain from protectionism.
    Keywords: crisis; protectionism; WTO
    JEL: F02 F13 F53
    Date: 2011–12

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