New Economics Papers
on Law and Economics
Issue of 2013‒06‒09
four papers chosen by
Jeong-Joon Lee, Towson University

  1. The Distortive Effects of Antitrust Fines Based on Revenue By Spagnolo, Giancarlo; Bageri, Vasiliki; Katsoulacos, Yannis
  2. Digital music consumption on the internet By Luis Aguiar; Bertin Martens
  3. Behavioral Law and Economics: Empirical Methods By Christoph Engel
  4. To Root or Not to Root? The Economics of Jailbreak By Leung, Tin Cheuk; Ng, Travis; Ho, Chun-Yu; Chao, Hong

  1. By: Spagnolo, Giancarlo (Stockholm Institute of Transition Economics); Bageri, Vasiliki (Athens University of Economics and Business); Katsoulacos, Yannis (Athens University of Economics and Business)
    Abstract: In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple models to characterize their comparative static properties, and quantify them with simulations based on market data. We conclude by discussing the obvious need to depart from these distortive rules-of-thumb that appear to have the potential to substantially reduce social welfare.
    Keywords: Antitrust; Deterrence; Fines; Law Enforcement
    JEL: K21 L40
    Date: 2012–12–08
  2. By: Luis Aguiar (European Commission – JRC - IPTS); Bertin Martens (European Commission – JRC - IPTS)
    Abstract: The goal of this paper is to analyze the behaviour of digital music consumers on the Internet. Using clickstream data on a panel of more than 16,000 European consumers, we estimate the effects of illegal downloading and legal streaming on the legal purchases of digital music. Our results suggest that Internet users do not view illegal downloading as a substitute to legal digital music. Although positive and significant, our estimated elasticities are essentially zero: a 10% increase in clicks on illegal downloading websites leads to a 0.2% increase in clicks on legal purchases websites. Online music streaming services are found to have a somewhat larger (but still small) effect on the purchases of digital sound recordings, suggesting complementarities between these two modes of music consumption. According to our results, a 10% increase in clicks on legal streaming websites lead to up to a 0.7% increase in clicks on legal digital purchases websites. We find important cross country difference in these effects.
    Keywords: Digital Music, Copyright, Downloading, Streaming, Piracy on the internet
    JEL: K42 L82 L86 Z1
    Date: 2013–02
  3. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Originally, behavioral law and economics was an exercise in exploring the implications of key findings from behavioral economics (and psychology) for the analysis and reform of legal institutions. Yet as the new discipline matures, it increasingly replaces foreign evidence by fresh evidence, directly targeted to the legal research question. This chapter surveys the key methods: field evidence, survey data, vignette and lab experiment, discusses their pros and cons, illustrates them with key publications, and concludes with methodological paths for fu-ture development. It quantifies statements with descriptive statistics about the 77 behavioral papers that have been published in the Journal of Empirical Legal Studies since its foundation until the end of 2012.
    Keywords: behavioral law and economics, law and psychology, criminology, field data, survey data, vignette, lab experiment
    JEL: K00 D02 C91 D03 C01 C83
    Date: 2013–01
  4. By: Leung, Tin Cheuk; Ng, Travis; Ho, Chun-Yu; Chao, Hong
    Abstract: We construct a structural model that allows us to jointly estimate the demand for smartphones and paid apps using a Bayesian approach. Our data comes from more than 500 college students in Hong Kong and Shanghai. We find that the moral cost rather than the monetary cost of jailbreaking smartphones determines its prevalence. Users mainly jailbreak smartphones to use paid apps for free, a reason more important among Android users than iPhone users. Paid apps contribute the lion's share of the profits (between 53% and 71%) for both the Android and iPhone. Strictly prohibiting jailbreaking would decrease the aggregate market share of smartphones in the cell phone market. Apple, however, would sell even more iPhones at the expense of Android smartphones.
    Keywords: jailbreak; demand estimation; smartphones
    JEL: K42 L14 L86 O34
    Date: 2013–06–05

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