New Economics Papers
on Law and Economics
Issue of 2013‒11‒02
ten papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Ambiguous Beliefs on Damages and Civil Liability Theories By Gérard Mondello
  2. How much should debtors be punished in case of default? By Aloisio Araujo; Bruno Funchal
  3. Criminal Victims, Victimized Criminals, or Both? A Deeper Look at the Victim-Offender Overlap By Entorf, Horst
  4. Cooperation vs. Collusion: How Essentiality Shapes Co-opetition By Rey, Patrick; Tirole, Jean
  5. Seasonality in Smoking Behaviour: Re-evaluating the Effects of the 2005 Public Smoking Ban in Italy By Del Bono, Emilia; Grünberger, Klaus; Vuri, Daniela
  6. What shall we do with the bad dictator? By Tim Willems; Shaun Larcom; Mare Sarr
  7. Monopoly and Dominant Firms: Antitrust Economics and Policy Approaches By Lawrence J. White
  8. The Impact of Incarceration on Food Insecurity among Households with Children By Robynn Cox; Sally Wallace
  9. Engaging in Corruption: The Influence of Cultural Values and Contagion Effects at the Micro Level By Lee, Wang-Sheng; Guven, Cahit
  10. Firms’ financing constraints: Do perceptions match the actual situation? By A. FERRANDO; K. MULIER

  1. By: Gérard Mondello (University of Nice Sophia Antipolis, CREDECO, GREDEG, UMR 7321,CNRS)
    Abstract: This paper analyzes the meaning of comparing the economic performance of strict liability and negligence rule in a unilateral standard accident model under Knightian uncertainty. It focuses on the cost expectation of major harm on which the injurers form beliefs. It shows first that, when the Court agrees with the regulator, whatever the liability regime, the first best level of care is never reached but under both regimes the tortfeasors define the same level of care. Second, when, judge and regulator disagree, it is impossible to discriminate among liability standards because the issue depends on the injurer’s optimism degree.
    Keywords: Strict Liability, Negligence Rule, Ambiguity Theory, Uncertainty, Accident Model
    JEL: K0 K32 Q01 Q58
    Date: 2013–09
  2. By: Aloisio Araujo (EPGE-FGV/RJ and IMPA); Bruno Funchal (FUCAPE Business School)
    Abstract: This study investigates the relationship between debtor punishment and the development of the credit market. We empirically analyze how the level of debtor punishment relates to the credit market expansion. We find evidence that an increase in debtor punishment tends to produce a positive effect on credit markets for states with low level of punishment and a negative effect for states with high level of punishment. Hence, there is an intermediate level of debtor punishment that maximizes the size of the personal credit market. This intermediate level accounts for the need of creditors' protection to reduce moral hazard, to encourage the supply of credit, and for the need to protect borrowers from a bad state of nature
    Keywords: Credit; bankruptcy; regulation and business law; personal bankruptcy law
    Date: 2013–10
  3. By: Entorf, Horst (Goethe University Frankfurt)
    Abstract: Offenders are more likely than non-offenders to be victims, and victims are more likely than non-victims to be offenders. The overlap between offenders and victims is not well understood in criminology, and in the economics of crime the stylized empirical fact is even widely ignored. The paper gives a survey of leading theoretical interpretations and empirical results. It summarizes findings from criminology and focuses on economic explanations, where rational choice, behavioral economics, as well as bounded and ecological rationality are discussed. The paper presents new econometric evidence based on German survey data covering victimization experiences and criminal activities. Using recursive bivariate Probit modeling, econometric results confirm that victimization depends on offending but not vice versa. Among the joint covariates of the bivariate system, broken homes, criminal records of parents and personal indebtedness turn out as highly relevant factors of offending behavior, whereas individual victimization risks are significantly linked to education, employment and size of peer groups.
    Keywords: victim-offender overlap, crime, victimization, rational choice, behavioral economics, negative reciprocity, recursive bivariate probit, education and victimization, indebtedness
    JEL: C35 C25 J12 K42 Z13
    Date: 2013–10
  4. By: Rey, Patrick; Tirole, Jean
    Abstract: The paper makes two related contributions. First, and in contrast with the rich body of literature on collusion with (mainly perfect) substitutes, it derives general results on the sustainability of tacit coordination for a class of nested demand functions that allows for the full range between perfect substitutes and perfect complements. Second, it studies the desirability of joint marketing alliances, an alternative to mergers. It shows that a combination of two informationfree regulatory requirements, mandated unbundling by the joint marketing entity and unfettered independent marketing by the firms, makes joint-marketing alliances always socially desirable, whether tacit coordination is feasible or not.
    Keywords: tacit collusion, cooperation, substitutes and complements, essentiality, joint marketing agreements, patent pools, independent licensing, unbundling, co-opetition.
    JEL: D43 L24 L41 O34
    Date: 2013–10–23
  5. By: Del Bono, Emilia (ISER, University of Essex); Grünberger, Klaus (University of Rome Tor Vergata); Vuri, Daniela (University of Rome Tor Vergata)
    Abstract: This paper investigates the impact of the public smoking ban which came into effect in Italy on January 2005 on individual smoking behaviour. Current empirical evidence supports the existence of a negative effect of the Italian ban on smoking prevalence and consumption in the general population. This is in contrast to what has been found in some other European countries. Our analysis shows that the apparent success of the Italian smoking ban is due to the fact that existing results do not take into account seasonal differences in smoking behaviour. Using quarterly data from the 1999/2000 and 2004/2005 Italian Health Surveys and adopting a difference-in-difference approach that nets out monthly variation in smoking rates, we show that the Italian smoking ban had no impact on individual smoking behaviour for the population as a whole, and only small effects on some groups of individuals.
    Keywords: smoking, cigarette consumption, public smoking ban, treatment effects
    JEL: I12 I18 K32 C31
    Date: 2013–10
  6. By: Tim Willems; Shaun Larcom; Mare Sarr
    Abstract: Recently, the international community has increased its commitment to prosecute malicious dictators - for example by establishing the International Criminal Court.� This has raised the international community's loss associated with being time-inconsistent (i.e.: granting amnesties ex post), the idea being that a reduced prospect of amnesty deters dictators from committing atrocities ex ante.� Simultaneously, however, this elects dictators of a worse type.� Moreover, when the costs of being time-inconsistent are lower than those associated with keeping the dictator in place, the international community will still grant amnesty - thereby making the effective punishment function non-monotonic.� Consequently, increased commitment to ex post punishment may actually induce dictators to worsen their behaviour, purely to "unlock" the amnesty option by forcing the international community into time-inconsistency.
    Keywords: dictatorship, time-inconsistency, International Criminal Court, amnesty, institutions
    JEL: F55 K14 O12
    Date: 2013–09–12
  7. By: Lawrence J. White
    Date: 2013
  8. By: Robynn Cox (Spelman College); Sally Wallace (Georgia State University)
    Abstract: This study seeks to determine the role that parental incarceration plays on the probability of food insecurity among families with children and very low food security of children using micro-level data from the Fragile Families and Child Well Being Study (FFCWS). The data set contains the 18-question food security module which allows us to explore the link between incarceration and food insecurity and very low food security among children, families, and adults. The incidence of very low food security in our data is somewhat higher than the national average, but the incidence of other levels of food security is similar to national aggregates. Since there is likely reverse causality in the relationship between parental incarceration and food insecurity, we employ a variety of program evaluation techniques to identify the causal relationship between food insecurity and parental incarceration. We employ imputation techniques to account for non-response among the food security variables and independent variables. Our ordinary least squares results suggest that having at least one parent that has ever been incarcerated has a small positive effect (1 to 4 percentage points) on the probability of very low food security among children, adults and households with children, but the results are not significant in various specification. Food insecurity for adults and households with children (a less dire level of food insecurity than very low food security) is affected by parental incarceration under most specifications with magnitudes of impact from 4 to 15 percentage points. This research provides some evidence that incarceration adversely affects children and families in terms of food insecurity. Policies to mitigate the impact could be addressed through the court system whereby children are provided with court-sanctioned support to address food needs.
    Keywords: food security, prison, parents, incareration, children
    JEL: D19 D63 H32 I38 J13
    Date: 2013–03
  9. By: Lee, Wang-Sheng (Deakin University); Guven, Cahit (Deakin University)
    Abstract: Previous empirical work on corruption has generally been cross-country in nature and focused on utilizing country-level corruption ratings. By using micro-level data for over 20 European countries that directly measure individual characteristics, corruption experiences, gender roles, trust and values to examine the determinants of corruption, this paper goes beyond the search for associations between various macro factors and perceptions of corruption that is prevalent in the economic literature. One focus of the paper is on how cultural norms such as gender roles and risk preferences influence corruption and whether there are gender differences in the determinants of corruption. In addition, this paper also seeks to determine if there are contagion effects in corruption at the micro level. Using a seemingly unrelated probit approach, this paper provides empirical estimates of how past experiences with corruption affects both how bribery is viewed and the actual act of offering a bribe.
    Keywords: risk preference, gender roles, corruption, seemingly unrelated probit
    JEL: K42 O17
    Date: 2013–10
    Abstract: This paper uses a non parametric matching procedure to match survey replies to balance sheet information. It draws on the SAFE survey on access to finance for a sample of 11886 firms in the euro area which are matched with their nearest neighbour in an extended dataset with balance sheet information on 2.3 million firms. We investigate the role of firm characteristics with respect to the experience of facing financing obstacles in the period 2009-2011. We distinguish between firms' perceived financing constraints and actual financing constraints. We find that more profitable firms are less likely to face actual financing constraints. Also firms with more working capital and lower leverage ratios are less likely to be actually financially constrained, however profitability measures seem to be more robust. Firms are more likely to perceive access to finance problematic when they have more debt with short term maturity. Finally, firm age, but not size, is important in explaining both the perceived and the actual financial constraints.
    Keywords: SMEs, financial constraints, survey data, statistical matching of data
    JEL: E22 G30 G10 O16 K40
    Date: 2013–07

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