New Economics Papers
on Law and Economics
Issue of 2012‒09‒22
two papers chosen by
Jeong-Joon Lee, Towson University

  1. Liability versus Regulation for Dangerous Products When Consumers Vary in Their Susceptibility to Harm and Misperceive Risk By Thomas J. Miceli; Rebecca Rabon; Kathleen Segerson
  2. Poor Institutions, Rich Mines: Resource Curse and the Origins of the Sicilian Mafia By Paolo Buonanno; Ruben Durante; Giovanni Prarolo; Paolo Vanin

  1. By: Thomas J. Miceli (University of Connecticut); Rebecca Rabon (University of Connecticut); Kathleen Segerson (University of Connecticut)
    Abstract: When consumers vary in their susceptibility to product-related harm, safety regulation dominates liability because when consumers bear their own damages they are induced to selfselect in their purchase decisions. When consumers also misperceive risk, however, liability may be preferred because the price of the product accurately conveys the risk, thereby eliminating any distortions due to misperception. Generally, regulation is preferred when consumers accurately perceive risk, and liability is preferred when they do not. JEL Classification: K13, L51 Key words: Products liability, regulation, risk perceptions
    Date: 2012–08
  2. By: Paolo Buonanno; Ruben Durante; Giovanni Prarolo; Paolo Vanin
    Abstract: This study explains the emergence of the Sicilian mafia in the XIX century as the product of the interaction between natural resource abundance and weak institutions. We advance the hypothesis that the mafia emerged after the collapse of the Bourbon Kingdom in a context characterized by a severe lack of state property-right enforcement in response to the rising demand for the protection of sulfur - Sicily's most valuable export commodity - whose demand in the international markets was soaring at the time. We test this hypothesis combining data on the early presence of the mafia and on the distribution of sulfur reserves across Sicilian municipalities and find evidence of a positive and significant effect of sulphur availability on mafia's diffusion. These results remain unchanged when including department fixed-effects and various geographical and historical controls, when controlling for spatial correlation, and when comparing pairs of neighboring municipalities with and without sulfur.
    Keywords: Natural Resource Curse, Weak Institutions, Mafia-type Organizations
    JEL: K42 N33 N54
    Date: 2012

This issue is ©2012 by Jeong-Joon Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.