New Economics Papers
on Law and Economics
Issue of 2012‒11‒03
two papers chosen by
Jeong-Joon Lee, Towson University

  1. Intra-Firm Trade Law - Contract-Enforcement & Dispute Resolution in Transnational Corporations By Gralf-Peter Calliess; Stephan Freiherr von Harder
  2. Fighting corruption when existing corruption-control levels count : what do wealth-effects tell us in Africa? By Simplice A , Asongu

  1. By: Gralf-Peter Calliess (University of Bremen - Faculty of Law & ZenTra); Stephan Freiherr von Harder (University of Bremen - Faculty of Law)
    Abstract: While intra-firm trade accounts for at least one third of world exports, we know very little about the institutions which are employed to resolve intra-firm trade conflicts. According to Oliver Williamson, courts are not accessible and conflicts resulting from intra-firm trade are resolved by directives based on the authority of ownership instead (law of forbearance). Williamson's description of the law of forbearance, however, depicts an ideal typical form of a firm, which is characterised by low incentive intensity and high administrative costs. Yet, in order to improve on these attributes, large transnational enterprises changed their organisational structure in the past decades. Nowadays, large-scale enterprises usually have a decentralised structure and use intra-firm pricing and incentive systems. Against this backdrop, Williamson's description of the contract law regime of intra-firm trade appears all too general. This paper addresses the question of how contract enforcement in transnational corporations is institutionally organized on the basis of preliminary results of expert interviews conducted with officials from transnational corporations. In a first step we illustrate that conflicts originating in intra-firm transactions are basically of the same type and nature than conflicts arising out of market transactions. We argue that the settlement of these disputes is of relevance both for legal (e.g. corporate and tax law) and economic reasons (e.g. coordination, control and motivation functions of profit centers). In a second step we analyze the governance mechanisms which are employed by transnational corporations to resolve intra-firm trade conflicts.
    Keywords: transaction cost economics, intra-firm trade, private ordering, alternative dispute resolution, mediation, arbitration, transnational law
    JEL: D23 D29 D74 K12 K40 L22 M52
    Date: 2012–10
  2. By: Simplice A , Asongu
    Abstract: Why are some nations more effective at battling corruption than others? Are there different determinants in the fight against corruption across developing nations? How do wealth effects play-out when existing corruption-control levels matter in the corruption battle? To investigate these concerns we examine the determinants of corruption-control throughout the conditional distribution of the fight against corruption. The following broad findings are established. (1) Population growth is a (an) tool (impediment) in (to) the fight against corruption in Low (Middle) income countries. (2) Democracy increases (decreases) corruption-control in Middle (Low) income countries. As a policy implication, blanket corruption-control strategies are unlikely to succeed equally across countries with different income-levels and political wills in the fight against corruption. Thus to be effective, corruption policies should be contingent on the prevailing levels of corruption-control and income-bracket.
    Keywords: Corruption; Democracy; Government quality; Quantile regression; Africa
    JEL: H10 C10 O55 O10 K10
    Date: 2012–10–24

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.