New Economics Papers
on Law and Economics
Issue of 2012‒07‒23
four papers chosen by
Jeong-Joon Lee, Towson University

  2. The Future of Higher Education in Europe: The Case for a Stronger Base in EU Law. By Sacha Garben
  3. The Democratic Security Policy: Socioeconomic Effects in the Rural Areas, 2002-2006 By Gerson Javier Pérez V.
  4. A Theory of Rational Jurisprudence By Scott Baker and Claudio Mezzetti

  1. By: Juan José Ganuza (Universitat Pompeu Fabra); Fernando Gomez (Universitat Pompeu Fabra)
    Abstract: The European Commission has launched the Regulation Proposal on a Common European Sales Law as an optional instrument for European firms and consumers. Several critical opinions have been raised against the optional nature, characterizing it as an instrument for social dumping (i. e. lowering consumer protection standards, given that no set of rules with higher levels of protection would ever be chosen by firms), as depriving consumers of any meaningful choice, and emphasizing its futility. In this paper we present a simple model showing how these critiques present theoretical flaws, even if one does not rely on the efficiency gains that increasing cross border trade may bring in terms of having more efficient firms serving consumers in other national markets. The role of verification or compliance costs, and of the impact of legal diversity on firms' operating costs is crucial for understanding the effects of an optional instrument, and may make high levels of consumer protection, and consumer choice implementable. We also characterize how different levels of the standard may lead to complete replacement of national standards and to the joint use of European and national standards.
    Keywords: Legal standards, harmonization of legal rules, economic integration and trade.
    JEL: K13 K23 L51 H24
    Date: 2012–06
  2. By: Sacha Garben
    Abstract: Under the budgetary strain of the economic crisis, many European governments have introduced spending cuts in higher education. As a consequence, universities increasingly have to rely on tuition fees and private sources of funding to sustain themselves. This development fits in with a broader tendency of treating higher education increasingly as an economic resource and commodity, which is fostered by European-level processes such as most notably the Bologna Process and the Lisbon Strategy. Considering the fundamental importance of these issues, touching upon the core of our views on what an equitable and egalitarian society entails, it is imperative that the decisions that are being taken are democratically legitimate and that the policy makers are accountable for the measures they enact. Therefore, it is worrying that many of the most crucial and influential decisions are taken in intergovernmental contexts and implemented by means of soft law - of which the democratic legitimacy is doubtful. The Bologna Process is an intergovernmental policy forum, participation in which is voluntary and whose decisions are non-binding, suffering from all the accountability defects inherent in international policy making - magnified by its soft law character. The Lisbon/Europe 2020 Strategy does take place within the EU's institutional framework, but is an area where the EU's democratic deficit is particularly worrisome. Therefore, as this contribution shall argue, we need to consider a stronger and more democratic basis for these important policies, if we decide to pursue them. That basis is to be found in EU law.
    Date: 2012–07
  3. By: Gerson Javier Pérez V.
    Abstract: This paper measures the impact of strengthening the security policy on the rural labour market in Colombia by exploiting the structural change in the number of rural seizures. The new policy produced dissimilar effects across gender, age-groups, and types of occupation. For adults, especially for women, there were important reductions in the labour participation, with simultaneous reductions in the income across the most representative types of workers, self-employees and day-laborers. For male youths and children there was an increase in the labor participation through the day-labor activities, while females seemed to participate less as self-employees. In general there was a socioeconomic loss in terms of reductions of adult’s labour supply and income, while for youths and children there is a differentiated effect by gender in the labour participation, and no significant connections were found with school enrollment.
    Keywords: Labour Supply; Crime; Regional Economics Classification JEL: J21, K15, R23
    Date: 2012–07
  4. By: Scott Baker and Claudio Mezzetti
    Abstract: We examine a dynamic model of up-or-down problem solving. A decision maker can either spend resources investigating a new problem before deciding what to do, or decide based on similarity with precedent problems. Over time, a decision making framework, or jurisprudence, develops. We focus on the model?s application to judge-made law. We show that judges summarily apply precedent in some cases. The law may converge to efficient or inefficient rules. With positive probability, identical cases are treated di¤erently. As the court learns over time, inconsistencies become less likely. We discuss the existing empirical evidence and the model?s testable implications.
    Keywords: Law and Economics, Incompleteness of Law, Judge-Made Law, Evolution
    JEL: K10 K40
    Date: 2012

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