New Economics Papers
on Law and Economics
Issue of 2012‒05‒08
two papers chosen by
Jeong-Joon Lee, Towson University

  1. One Kind of Lawlessness: Estimating the Welfare Cost of Somali Piracy By Tim Besley; Thiemo Fetzer; Hannes Mueller
  2. Certainty and Severity of Sanctions in Classical and Behavioral Models of Deterrence: A Survey By Entorf, Horst

  1. By: Tim Besley; Thiemo Fetzer; Hannes Mueller
    Abstract: This paper estimates the effect of piracy attacks on shipping costs using a unique data set on shipping contracts in the dry bulk market. We look at shipping routes whose shortest path exposes them to piracy attacks and find that the increase in attacks in 2008 lead to around a ten percent increase in shipping costs. We use this estimate to get a sense of the welfare loss imposed by piracy. Our intermediate estimate suggests that the creation of $120 million of revenue for pirates in the Somalia area led to a welfare loss of over $1.5 billion.
    Keywords: piracy, welfare loss, maritime transport, Somalia, private security, law and order, property rights
    JEL: K42 O18 F1 D74
    Date: 2012–04–20
  2. By: Entorf, Horst (Goethe University Frankfurt)
    Abstract: This survey summarizes the classical fundamentals of modern deterrence theory, covers major theoretical and empirical findings on the impact of certainty and severity of punishment (and the interplay thereof) as well as underlying methodological problems, gives an overview of limitations and extensions motivated by recent findings of behavioral economics and discusses 'rational' deterrence strategies in subcultural societies.
    Keywords: economics of crime, behavioral economics, deterrence, survey
    JEL: K4 H0
    Date: 2012–04

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