New Economics Papers
on Law and Economics
Issue of 2013‒11‒29
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Hide or show? Endogenous observability of private precautions against crime when property value is private information By Baumann, Florian; Denter, Philipp; Friehe, Tim
  2. Financial Crisis as a Catalyst of Legal Reforms: The Case of Asia By Kawai, Masahiro; Schmiegelow, Henrik
  3. Role of regulation in micro finance: application of the Micro Savings Requirement Scheme in informal sectors By Marianne, Roedl
  4. Investment Treaties as Corporate Law: Shareholder Claims and Issues of Consistency By David Gaukrodger
  5. In the shadow of the interlocking directorates regulation. A comparative case study By Alberto Baccini; Leonardo Marroni
  6. Investor protection through model case procedures: Implementing collective goals and individual rights under the 2012 Amendment of the German Capital Markets Model Case Act (KapMuG) By Haar, Brigitte
  7. The Law NOME: Some Implications for the French Electricity Markets By Pouyet, Jérôme; Sanin, Maria Eugenia; Creti, Anna
  8. The effect of tax enforcement on tax morale By Antonio Filippin; Carlo V. Fiorio; Eliana Viviano
  9. International tradability indices for services By van der Marel, Erik; Shepherd, Ben
  10. Toward a Multilateral Framework for Identifying National Security Threats Posed by Foreign Acquisitions : With Special Reference to Chinese Acquisitions in the United States, Canada, and Australia By Theodore H. Moran
  11. Eliciting illegal migration rates through list randomization By McKenzie, David; Siegel, Melissa
  12. The economic importance and impacts of intellectual property rights (IPRs) in Sudan By Nour, Samia Satti Osman Mohamed

  1. By: Baumann, Florian; Denter, Philipp; Friehe, Tim
    Abstract: This paper analyzes a contest in which defenders move first, have private information about the value of the objects they are trying to protect, and determine the observability of their defense efforts. The equilibrium consistent with the intuitive criterion depends on the distribution of defender types, the magnitude of the difference between defender types, and the asymmetry between defender and aggressor regarding the valuation of the objects at stake in the contest. Our setting captures key characteristics of the interaction between households and thieves, focusing on the classic distinction between observable and unobservable private precautions against crime. An analysis of welfare implications determines that a setting in which information about the value of the protected objects is private results in a better outcome than a complete-information scenario. --
    Keywords: Contest,Private Information,Timing,Crime,Private Precaution Against Crime
    JEL: D62 D82 K42
    Date: 2013
  2. By: Kawai, Masahiro (Asian Development Bank Institute); Schmiegelow, Henrik (Asian Development Bank Institute)
    Abstract: This paper discusses how financial crises in emerging Asia and Japan worked as catalysts for legal reforms. Findings show that six Asian countries pursued significant legal and judicial reforms following financial crises in 1997–1998, but indicators that measure the quality of legal institutions exhibit mixed results. Reforms of economic laws alone cannot improve the quality of entire legal and judicial systems of countries. What matters is the enforcement of substantive law by procedural law, the efficiency of the justice system, and other political and social factors. Long time lags may be needed to observe how de jure changes to substantive laws lead to de facto improvements of legal institutions.
    Keywords: financial crises; legal reforms; judicial systems; legal institutions
    JEL: G01 G28 G33 K40 O16 O43
    Date: 2013–11–25
  3. By: Marianne, Roedl
    Abstract: An innovative aspect of this paper is evidenced through its recommendation of the Micro-Savings Requirement Scheme - which offers numerous benefits – as will be highlighted in this paper. Furthermore, the paper not only addresses how linkages, direct and facilitating linkages, can benefit microfinance institutions – and particularly in jurisdictions where the Savings Group Outreach involvement is particularly low, but also illustrates ways and means whereby group lending and other more recent innovative methods used by micro lenders to secure repayments, could increase the desired effects, efficiency and impact of microfinance in selected jurisdictions. In so doing, it addresses some of the existing and persisting problems of micro finance in rural areas.
    Keywords: microfinance; regulation; agency theory; Micro-Savings Requirement Scheme; Africa; Asia; Latin America
    JEL: D82 G2 G21 K2
    Date: 2013–11–03
  4. By: David Gaukrodger
    Abstract: Claims by company shareholders seeking damages from governments for so-called "reflective loss" now make up a substantial part of the investor-state dispute settlement (ISDS) caseload. (Shareholders’ reflective loss is incurred as a result of injury to “their” company, typically a loss in value of the shares; it is generally contrasted with direct injury to shareholder rights, such as interference with shareholder voting rights.) This paper considers the consistency issues raised by shareholder claims for reflective loss in ISDS. The paper first compares the approach to shareholder claims in ISDS with advanced systems of national corporate law (and other international law). ISDS arbitrators have consistently found that shareholders can claim individually for reflective loss in ISDS under typical BITs. This can be seen as a success story from the point of view of consistency of legal interpretation and improves investor protection for potential claimant shareholders in many cases. In contrast, however, advanced national systems and international law generally apply what has been called a "no reflective loss" principle to shareholder claims. Second, the paper analyses the policy issues relating to consistency that are raised by shareholder claims for reflective loss in ISDS. National and international law barring shareholder claims for reflective loss is often explicitly driven by policy considerations relating to consistency, predictability, avoidance of double recovery and judicial economy. Limiting recovery to the company is seen as both more efficient and fairer to all interested parties. In contrast, ISDS tribunals and commentators have generally given limited consideration to the policy consequences of allowing shareholder claims for reflective loss. The third part of the paper addresses the issue of company recovery (including two different existing systems which expand the ability of foreign-controlled companies to recover in ISDS) and its relevance to shareholder claims for reflective loss. The paper also contains a series of questions for discussion and has been discussed by governments participating in an OECD-hosted investment roundtable.
    Keywords: shareholders, creditors, international investment, international investment law, foreign investment, international economic law, comparative law, arbitrators, company law, consistency, corporate law, shareholder claims, shareholder remedies, stockholder remedies, stockholders, treaty shopping, double jeopardy, double recovery, investment arbitration, judicial economy, shareholder rights, international arbitration, domestic impact of investment law, level playing field, investment treaties, derivative action, derivative loss, multiple claims, reflective loss, competitive neutrality, international investment agreements, investor-state dispute settlement, access to justice, consistency of arbitral decisions, bilateral investment treaties, creditors’ rights, derivative injury, reflective injury, settlement
    Date: 2013–11–19
  5. By: Alberto Baccini; Leonardo Marroni
    Abstract: - Network analysis techniques are used for investigating the probable effects of a change in the regulation that aims to prevent the anticompetitive effects of the crossed presence of the same administrators in the boards of directors of competing firms, known as interlocking directorates (ID). The case study considered is a recent Italian law (Section 36 of Law Decree n. 201/2011) which prohibits ID on the boards of credit, insurance and financial companies. The ID networks of the top-100 Italian listed companies and of the financial companies in this same list are considered and compared with the analogous networks in the U.S.. The U.S. networks represent a benchmark given that in the U.S. companies act in the shadow of the Section 8 of the Clayton Act that has banned ID since 1914. The effects on the ID networks of the new Italian law are simulated under two different interpretations of the law. If the law will be applied according to a narrow interpretation, Italian ID network will rest substantially unaltered. On the other hand if the law will be applied according to a broad interpretation, the ID network for financial firms will be completely modified with a network configuration very similar to the American benchmark.
    JEL: K2 L41 G2 G34
    Date: 2013–09
  6. By: Haar, Brigitte
    Abstract: The German Capital Markets Model Case Act (KapMuG) and its amendment of 2012 highlight some fundamentals of collective redress in civil law countries at the example of model case procedures in the field of investor protection. That is why a survey of the ongoing activities of the European Union in the area of collective redress and of its repercussions on the member state level forms a suitable basis for the following analysis of the 2012 amendment of the KapMuG. It clearly brings into focus a shift from sector-specific regulation with an emphasis on the cross-border aspect of protecting consumers towards a 'coherent approach' strengthening the enforcement of EU law. As a result, regulatory policy and collective redress are two sides of the same coin today. With respect to the KapMuG such a development brings about some tension between its aim to aggregate small individual claims as efficiently as possible and the dominant role of individual procedural rights in German civil procedure. This conflict can be illustrated by some specific rules of the KapMuG: its scope of application, the three-tier procedure of a model case procedure, the newly introduced notification of claims and the new opt-out settlement under the amended §§ 17-19. --
    Date: 2013
  7. By: Pouyet, Jérôme; Sanin, Maria Eugenia; Creti, Anna
    Abstract: The French law `Nouvelle Organisation du March e de l'Electricit e' makes available, at a regulated price, withdrawal rights to source low-cost electricity production from nuclear plants owned by the incumbent. Downstream market retailers bene t from such a measure, up to a given amount xed by the law, to compete on a level playing eld with the historical supplier. Our analysis assesses whether this production release pro- gramme is likely to result in a lower retail price. We show that whether pro-competitive e ects arise depends not only on the amount of the preassigned capacity but also on the rules used to allocate it to retailers.
    Keywords: Nome law; Retail competition; Electricity markets; France;
    JEL: L50 D43 L94
    Date: 2013–04
  8. By: Antonio Filippin (University of Milan); Carlo V. Fiorio (University of Milan); Eliana Viviano (Bank of Italy)
    Abstract: In this paper we argue that tax enforcement is an additional contextual factor affecting tax morale, one of the most important determinants of tax compliance. By using a unique dataset that merges a representative sample of Italian households with administrative data on tax enforcement, we find first that tax morale is positively correlated with tax enforcement. Second, to deal with possible endogeneity of tax enforcement, we show that results are confirmed in an IV specification using the change in the tax gap at the provincial level as an instrument for tax enforcement. Finally, we provide evidence that the impact of tax enforcement and social environment is stronger at low quantiles of tax morale. Our results show that apart from lowering the expected value of tax evasion, tax enforcement has an additional and indirect effect on tax compliance through its effect on tax morale.
    Keywords: tax morale, tax enforcement, tax gap.
    JEL: H26 H29 D70
    Date: 2013–10
  9. By: van der Marel, Erik; Shepherd, Ben
    Abstract: This paper uses a theoretically grounded model of international trade to estimate the cross-border tradability of services. The resulting indices cover up to 99 countries and ten sectors. The results show that information and communications technology capital and legal institutions are particularly important determinants of a country's ability to successfully export services. The tradability indices are strongly correlated with outcome indicators, such as trade shares of individual countries. In addition, they are strongly correlated with important inputs, including country productivity and size, factor endowments, trade costs, and regulatory measures. In particular, the results suggest that a more restrictive regulatory environment significantly reduces the international tradability of services.
    Keywords: Economic Theory&Research,Trade and Services,Free Trade,ICT Policy and Strategies,Trade Law
    Date: 2013–11–01
  10. By: Theodore H. Moran (Georgetown University)
    Abstract: This paper presents a framework for differentiating between foreign acquisitions of companies that might plausibly pose a national security threat to the home country of the target acquisition and those that do not. 1 This framework originally derives from the experience of the United States. The framework is then shown to be relevant and useful for foreign acquisitions in Canada and Australia. In each case, Chinese acquisitions of US, Canadian, or Australian firms are highlighted. The paper concludes by arguing that this framework can serve as an effective non-discriminatory basis for separating genuine from implausible national security threats from foreign acquisitions across OECD states, to include all countries around the world.
    Keywords: Multinational Firms and International Business, Globalization and Finance, Policies to Deal with the Impacts of Globalization, Regulation and Business Law
    JEL: F23 K23
    Date: 2013–11
  11. By: McKenzie, David (World Bank, CEPR, and IZA); Siegel, Melissa (UNU-MERIT/MGSoG, Maastricht University)
    Abstract: Most migration surveys do not ask about the legal status of migrants due to concerns about the sensitivity of this question. List randomization is a technique that has been used in a number of other social science applications to elicit sensitive information. We trial this technique by adding it to surveys conducted in Ethiopia, Mexico, Morocco and the Philippines. We show how, in principle, this can be used to both give an estimate of the overall rate of illegal migration in the population being surveyed, as well as to determine illegal migration rates for subgroups such as more or less educated households. Our results suggest that there is some indication in this method: we find higher rates of illegal migration in countries where illegal migration is thought to be more prevalent and households who say they have a migrant are more likely to report having an illegal migrant. Nevertheless, some of our other findings also suggest some possible inconsistencies or noise in the conclusions obtained using this method, so we suggest directions for future attempts to implement this approach in migration surveys.
    Keywords: migration, illegal migration, research methods, list randomization, item count method, survey techniques, surveys
    JEL: F22 C83 J61 K42
    Date: 2013
  12. By: Nour, Samia Satti Osman Mohamed (Faculty of Economic and Social Studies, Khartoum University, and UNU-MERIT/MGSoG)
    Abstract: This paper explains the importance of IPRs and examines the factors hindering and those contributing toward enhancing IPRs in Sudan. We find that the inadequacy of IPRs protection in Sudan is attributed to low integration in the international institutions, lack of legal issues, lack of government concern, lack of private sector concern, weak institutions setting, lack of public awareness, lack of resources, weak culture for IPRs, lack of cooperation between universities and industry and lack of coordination. The inadequate IPRs protection in Sudan leads to poor national system of innovation, hindering FDI and hindering transfer of technology. The factors contributing toward enhancing IPRs in Sudan include promotion of adequate IPRs legislations and enforcement; planning, commitment to international IPRs agreements; finance, investment and resources; social partnership to encourage IPRs protection, government concern, private sector concern, public awareness, cooperation between universities and industry, institutions setting, coordination and culture for IPRs protection.
    Keywords: IPRs, economic importance, economic impacts, Sudan, Africa
    JEL: O30 O34
    Date: 2013

This issue is ©2013 by Eve-Angeline Lambert. 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.
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