New Economics Papers
on Law and Economics
Issue of 2012‒06‒25
eight papers chosen by
Jeong-Joon Lee, Towson University

  1. Reputation in the Market for Stolen Data By Andrew Mell
  2. Youth Crime and Education Expansion By Machin, Stephen; Marie, Olivier; Vujić, Sunčica
  3. Medical Marijuana Laws and Teen Marijuana Use By Anderson, D. Mark; Hansen, Benjamin; Rees, Daniel I.
  4. Using Difference-in-Differences to Estimate Damages in Healthcare Antitrust: A Case Study of Marshfield Clinic By Martha A. Starr; R. Forrest McCluer
  5. Political influence on environmental sanction charges in Swedish municipalities By Sjöberg, Eric
  6. Criminal Networks: Who is the Key Player? By Xiaodong Liu; Eleonora Patacchini; Yves Zenou; Lung-Fei Lee
  7. Assessing the Impact of Deterrence on Road Safety due to the Demerit Point System By Chandler, Vincent
  8. Does Strengthening Self-Defense Law Deter Crime or Escalate Violence? Evidence from Castle Doctrine By Cheng Cheng; Mark Hoekstra

  1. By: Andrew Mell
    Abstract: Internet commerce has made it easier to compare prices and shop online. However, it has also exposed consumers to a new kind of crime in the form of the electronic theft of payment details. However the skills required to successfully intercept payment data differ from the skills required to use that information for one’s own gain. This creates gains to trade between those who steal the data and those who know how to use it. This particular illicit market has the added disadvantage that trade takes place online and the only identification of any paticular trader comes from a username which can be changed at zero cost. This paper examines the reputation mechanisms that keep this market working and considers whether they might constitute an Achilles’ Heel that governments keen to reduce crime might exploit.
    Keywords: Reputation, Illicit trade, Illegal behavior and the enforcement of law
    JEL: K42 D02 D82
    Date: 2012
  2. By: Machin, Stephen (University College London); Marie, Olivier (ROA, Maastricht University); Vujić, Sunčica (University of Bath)
    Abstract: We present new evidence on the causal impact of education on crime, by considering a large expansion of the UK post-compulsory education system that occurred in the late 1980s and early 1990s. The education expansion raised education levels across the whole education distribution and, in particular for our analysis, at the bottom end enabling us to develop an instrumental variable strategy to study the crime-education relationship. At the same time as the education expansion, youth crime fell, revealing a significant cross-cohort relationship between crime and education. The causal crime reducing effect of education is estimated to be negative and significant, and considerably bigger in (absolute) magnitude than ordinary least squares estimates. The education boost also significantly impacted other productivity related economic variables (qualification attainment and wages), demonstrating that the incapacitation effect of additional time spent in school is not the sole driver of the results.
    Keywords: education expansion, youth crime
    JEL: I2 K42
    Date: 2012–05
  3. By: Anderson, D. Mark (Montana State University); Hansen, Benjamin (University of Oregon); Rees, Daniel I. (University of Colorado Denver)
    Abstract: While at least a dozen state legislatures are considering bills to allow the consumption of marijuana for medicinal purposes, the federal government has recently intensified its efforts to close medical marijuana dispensaries. Federal officials contend that the legalization of medical marijuana encourages teenagers to use marijuana and have targeted dispensaries operating within 1,000 feet of schools, parks and playgrounds. Using data from the national and state Youth Risk Behavior Surveys, the National Longitudinal Survey of Youth 1997 and the Treatment Episode Data Set, we estimate the relationship between medical marijuana laws and marijuana use. Our results are not consistent with the hypothesis that legalization leads to increased use of marijuana by teenagers.
    Keywords: marijuana, youth risky behavior, medical marijuana laws
    JEL: K4 I1 D8
    Date: 2012–05
  4. By: Martha A. Starr; R. Forrest McCluer
    Abstract: In calculating damages in healthcare antitrust cases, the difference-in-difference (DID) approach provides a potentially valuable means of controlling for lawful factors that influence prices, such as case-mix and quality of care, as distinct from price differentials due to unlawful behavior. After first comparing DID to traditional methods of estimating damages, this paper uses DID to analyze data from a well-known case against Marshfield Clinic, a large multispecialty group practice that was found to have illegally allocated markets for physician services in Central Wisconsin. Using a specification similar to what was used in the case, we find that illegal behavior accounted for about two-fifths of the Clinic's extra increase in costs per patient during the damage period. The courts, however, were not persuaded that the analysis adequately controlled for legal factors. We discuss potential pitfalls in using DID to estimate damages suggested by the case, as well as possible ways around them.
    Keywords: healthcare antitrust, differences-in-differences, damage estimation JEL Classifications: I11, L4, K21, K41, C20
    Date: 2012–02
  5. By: Sjöberg, Eric (Dept. of Economics, Stockholm University)
    Abstract: Earlier literature has established that enforcement of the Swedish Environmental Code varies greatly across municipalities. This is problematic due to differences in application of the law and from an efficiency perspective. This study shows that the variation can to some extent be explained by the ruling political coalition. Green Party representation in the ruling coalition is estimated to have a positive effect on the number of environmental sanction charges handed out by the local environmental offices. A difference in differences approach and IV- estimation is used to address the endogeneity issues. I argue for the random distribution of local party representation in the municipal council and use the absence of local parties as an instrument for Green Party representation in the ruling coalition.
    Keywords: Environmental code; Decentralization; Law enforcement
    JEL: K32 K42 Q01
    Date: 2012–06–11
  6. By: Xiaodong Liu (University of Colorado at Boulder); Eleonora Patacchini (La Sapienza University of Rome, EIEF and CEPR); Yves Zenou (Stockholm University, Research Institute of Industrial Economics (IFN) and GAINS); Lung-Fei Lee (The Ohio State University)
    Abstract: We analyze delinquent networks of adolescents in the United States. We develop a dynamic network formation model showing who the key player is, i.e. the criminal who once removed generates the highest possible reduction in aggregate crime level. We then structurally estimate our model using data on criminal behaviors of adolescents in the United States (AddHealth data). Compared to other criminals, key players are more likely to be male, have less educated parents, are less attached to religion and feel socially more excluded. We also find that, even though some criminals are not very active in criminal activities, they can be key players because they have a crucial position in the network in terms of betweenness centrality.
    Keywords: Crime, Bonacich Centrality, Dynamic Network Formation, Crime Policies
    JEL: A14 D85 K42 Z13
    Date: 2012–05
  7. By: Chandler, Vincent
    Abstract: This paper assesses the impact of a decrease in demerit points on the probability of traffic violation. To address the inherent heterogeneity of drivers, I use the expiration process of points to compare the behaviour of similar drivers with different demerit points. I find that a 3-point decrease in the number of demerit points only has an impact for drivers close to the limit, but increases their probability of violation by 50 to 80 percent.
    Keywords: Demerit point system; deterrence; driving; road safety; traffic violation
    JEL: K32 K42 C25
    Date: 2012–06
  8. By: Cheng Cheng; Mark Hoekstra
    Abstract: Since Florida adopted the first castle doctrine law in 2005, more than 20 other states have passed similar self-defense laws that justify the use of deadly force in a wider set of circumstances. Elements of these laws include removing the duty to retreat in places outside of one’s home, adding a presumption of reasonable belief of imminent harm necessitating a lethal response, and removing civil liability for those acting under the law. This paper examines whether aiding self-defense in this way deters crime or, alternatively, escalates violence. To do so, we apply a difference-in-differences research design by exploiting the within-state variation in law adoption. We find no evidence of deterrence; burglary, robbery, and aggravated assault are unaffected by the laws. On the other hand, we find that murder and non-negligent manslaughter are increased by 7 to 9 percent. This could represent either increased use of lethal force in self-defense situations, or the escalation of violence in otherwise non-lethal situations. Regardless, the results indicate that a primary consequence of strengthening self-defense law is increased homicide.
    JEL: K0 K14
    Date: 2012–06

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