New Economics Papers
on Law and Economics
Issue of 2013‒08‒31
two papers chosen by
Jeong-Joon Lee, Towson University

  1. The Role of Social Image Concerns in the Design of Legal Regimes By Bruno Deffains; Claude Fluet
  2. Organizational Forms in the Knowledge Economy: A Comparative Institutional Analysis By Erkan Gürpinar

  1. By: Bruno Deffains; Claude Fluet
    Abstract: We consider situations where legal liability yields insufficient incentives for socially efficient behavior, e.g., individuals who cause harm are not always sued or are unable to pay fully for harm done. Some individuals nevertheless behave efficiently because of intrinsic prosocial concerns. Others have no such concerns but would like people to believe that they do. We show that fault-based liability is generally more effective than strict liability in harnessing social image concerns. This extends to the case where courts can make mistakes. The rules of proof then affect the inferences drawn from court decisions and therefore the stigma attached to an adverse judgment. If fault is a rare event, plaintiffs or prosecutors should bear the burden of proving the defendant’s fault; otherwise there are cases where defendants should prove compliance with the legal standard of behavior. Under either assignment of the burden of proof, incentives to comply are maximized by a standard of proof stronger than a mere preponderance of evidence.
    Keywords: Normative motivations, prosocial behavior, fault, negligence, strict liability, tort law, public enforcement of law, burden of proof, standard of proof
    JEL: D8 K4 Z13
    Date: 2013
  2. By: Erkan Gürpinar
    Abstract: This paper attempts to provide an analytical framework to analyze organizational forms in the knowledge economy. We first outline some historical trends that have transformed the organization of production over the last few decades. We show that this transformation has taken place not only in the realm of intellectual property rights (IPRs) regime, but also in technology. Finally, by recourse to a formal model, we study the determinants of the distribution of alternative institutional arrangements in this new environment. We argue that organizational ecology is mainly determined by knowledge network effects, and complementarities between IPRs and technology.
    Keywords: Institutional complementarities, Organizational forms, Technology, Intellectual property rights
    JEL: K11 L23 O34
    Date: 2013–07

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