New Economics Papers
on Law and Economics
Issue of 2012‒03‒14
two papers chosen by
Jeong-Joon Lee, Towson University

  1. Does Religiosity Promote Property Rights and the Rule of Law? By Niclas Berggren; Christian Bjørnskov
  2. "Government Intervention to Prevent Bankruptcy: the Effect of Blind-Bidding Laws on Movie Theaters" By James G. Mulligan; Daniel J. Wedzielewski

  1. By: Niclas Berggren (Research Institute of Industrial Economics (IFN) and University of Economics in Prague); Christian Bjørnskov (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: Social and cultural determinants of economic institutions and outcomes have come to the forefront of economic research. We introduce religiosity, measured as the share for which religion is important in daily life, to explain institutional quality in the form of property rights and the rule of law. Previous studies have only measured the impact of membership shares of different religions, with mixed results. We find, in a cross-country regression analysis comprising up to 112 countries, that religiosity is negatively related to our institutional outcome variables. This only holds in democracies (not autocracies), which suggests that religiosity affects the way institutions work through the political process. Individual religions are not related to our measure of institutional quality.
    Keywords: Religion, religiosity, rule of law, property rights, institutions
    JEL: K11 K42 Z12
    Date: 2012–03–06
  2. By: James G. Mulligan (Department of Economics, University of Delaware); Daniel J. Wedzielewski
    Abstract: In the 1970s motion picture studios increased their use of blind bidding and non-refundable guarantees in an attempt to reduce the risks associated with producing a small number of large budget films. However, theater owners claimed that blind bidding and guarantees shifted risk to them and increased the likelihood of bankruptcy, since they were required to bid for the right to exhibit a movie without seeing it first. In response to the lobbying of theater owners, twenty-four states passed laws between 1978 and 1984 that banned blind bidding, while seven states also banned non-refundable guarantees. This paper provides the first empirical analysis of the conflicting claims made by theater owners and movie studios about the impact of these laws on the survival rates of independent theaters, admission prices, and delays in the release of movies. We find that the laws were not only ineffective in keeping theater owners at risk of bankruptcy from exiting the market; they may have been even detrimental to those theater owners converting theaters to multiplexes at that time.
    Keywords: blind-bidding, motion picture industry, vertical restriction, state intervention
    JEL: K00 K11 K12 K23 K35 L10 L82
    Date: 2012

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