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on Law and Economics |
| By: | Bueren, Eckart; Hüschelrath, Kai; Veith, Tobias |
| Abstract: | Public and private action against cartels is an internationally recognized cornerstone of antitrust enforcement. Effective private enforcement requires that cartel victims can receive (at least) full compensation for the harm suffered. Academics and competition authorities support this goal with guidance for the calculation of cartel damages. However, they usually neglect that the prosecution of competition law infringements can be very time-consuming, so that it often takes several years until cartel victims obtain damages. Interest and inflation are thus two key drivers of adequate compensation. This paper is the first to provide a comparative law and economics perspective on this topic: We investigate how various legal systems treat interest and inflation as part of competition law actions for damages, and, using real-world data from the lysine cartel, simulate the economic differences, which turn out to be substantial. By comparing and evaluating the regulatory techniques, our paper provides important insights for regulators, litigation practitioners and the ongoing reform discussions in the EU and the US. At the same time, our approach is a first step towards a quantitative comparative law and economics analysis of the law on interest in the field of tort law. -- |
| Keywords: | Antitrust policy,cartels,private enforcement,damages,interest,inflation |
| JEL: | K21 L41 L61 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14008&r=law |
| By: | Michael Frakes; Anupam B. Jena |
| Abstract: | Despite the fundamental role of deterrence in justifying a system of medical malpractice law, surprisingly little evidence has been put forth to date bearing on the relationship between medical liability forces on the one hand and medical errors and health care quality on the other. In this paper, we estimate this relationship using clinically validated measures of health care treatment quality constructed with data from the 1979 to 2005 National Hospital Discharge Surveys and the 1987 to 2008 Behavioral Risk Factor Surveillance System records. Drawing upon traditional, remedy-centric tort reforms—e.g., damage caps—we estimate that the current liability system plays at most a modest role in inducing higher levels of health care quality. We contend that this limited independent role for medical liability may be a reflection upon the structural nature of the present system of liability rules, which largely hold physicians to standards determined according to industry customs. We find evidence suggesting, however, that physician practices may respond more significantly upon a substantive alteration of this system altogether—i.e., upon a change in the clinical standards to which physicians are held in the first instance. The literature to date has largely failed to appreciate the substantive nature of liability rules and may thus be drawing limited inferences based solely on our experiences to date with damage-caps and related reforms. |
| JEL: | I18 K13 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19841&r=law |
| By: | Friehe, Tim (University of Bonn); Schildberg-Hörisch, Hannah (University of Bonn) |
| Abstract: | We explore the individual and joint explanatory power of concepts from economics, psychology, and criminology for criminal behavior. More precisely, we consider risk and time preferences, personality traits from psychology (Big Five and locus of control), and a self-control scale from criminology. We find that economic preferences, personality traits, and self-control complement each other in predicting criminal behavior. The most significant predictors stem from all three disciplines: risk aversion, conscientiousness, and high self-control make criminal behavior less likely. Our results illustrate that integrating concepts from various disciplines enhances our understanding of individual behavior. |
| Keywords: | crime, risk preferences, time preferences, personality traits, self-control, experiment |
| JEL: | K42 D03 D81 D90 C21 C91 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7894&r=law |
| By: | Andrey V. Kashanin (National Research University Higher School of Economics) |
| Abstract: | This article addresses the problem of identifying criteria for copyrightability and non-copyrightability in the Russian legal system, especially in judicial practice. An analysis of court rulings issued over the past few years warrant the conclusion that there is a trend towards setting looser standards of originality and creativity. The article also describes a trend in Russian judicial practice to grant copyright protection to works of low authorship and goes into problems and contradictions that this entails. It compares principles that evolved in Russian law with similar principles used abroad, mainly in Germany. |
| Keywords: | copyright, intellectual property, intellectual rights, personal non-property rights, exclusive rights, copyrightable work, copyrightability, works of low authorship, originality, creativity |
| JEL: | O34 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:30/law/2014&r=law |
| By: | Gérard Mondello (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - CNRS : UMR7321 - Université Nice Sophia Antipolis [UNS]) |
| 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 agree 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 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-00929948&r=law |
| By: | Prantl, Susanne; Böhme, Ulrike |
| Abstract: | In this paper, we study the impact of the entry costs imposed by the German Limited Liability Company Law on firm entry. The law implies an expensive and complex incorporation process. As entrepreneurs choose between legal forms when entering the market, either a legal form with limited liability or without it, we suggest an empirical approach for identifying entry cost effects that takes this decision into account by exploiting the natural experiment in entry regulation following from German reunification. The empirical findings show, in particular, that entry costs based on the German Limited Liability Company Law cause an increase in entry size for limited liability firms. In addition, we report that the entry rate for limited liability firms, as well as the sustained entry rate, is lowered. -- |
| JEL: | K22 L25 L26 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc13:80486&r=law |
| By: | Klein, Gordon J.; Günster, Andrea |
| Abstract: | The study analyzes the impact of European antitrust enforcement on industry performance measured as competition intensity (Price Cost Margin) and productivity (labor productivity and distance to the frontier). For a panel of OECD countries on the industry level since 1988, we estimate the impact of an infringement decision by the European Commission on the competitive market structure. We find that enforcement has a considerable e ffect, both on competition intensity and on productivity. However, the impact di ffers with the anticompetitive economic conduct. Cartels behave as theoretically predicted with an increase in competition and productivity after the cartel break-up. The impact of vertical conduct is more complex, with positive and negative effi ciency eff ects of antitrust enforcement depending on the exclusivity of the vertical restraint. -- |
| JEL: | L40 K21 K20 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc13:79989&r=law |
| By: | Duso, Tomaso; Argentesi, Elena; Aguzzoni, Luca; Ciari, Lorenzo; Tognoni, Massimo |
| Abstract: | This paper empirically evaluates the effects of a merger between the two largest book retail chains in the UK. We build an original dataset of book titles with data on the prices at the store level and at the national level. We then apply difference-in-differences techniques to assess the impact of the merger. A key feature of the books market is that titles become obsolete very quickly. Therefore, we compare different titles before and after the merger in an hedonic approach. Since retail mergers may have either local or national effects (or both) according to the level at which retail chains set prices, we undertake an ex post assessment of the impact of the merger at both aggregation levels. At the local level, we compare the changes in the average price charged before and after the merger in the shops located in overlap areas (i.e. areas where both chains were present before the merger) and in non-overlap areas (i.e. areas where only one chain was present before the merger). Our results do not show any significant difference between non-overlap and overlap areas where the merger could have been expected to generate the strongest effect. To investigate the effects of the merger at the national level, we employ two distinct control groups, namely the competitors and the top-selling titles. In both cases we find that the merger did not result in an increase in prices at the national level. -- |
| JEL: | K21 L44 D22 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc13:80025&r=law |
| By: | Michael Arnold (Department of Economics, University of Delaware, US); Éric Darmon (CREM UMR CNRS 6211, University of Rennes 1, France); Sylvain Dejean (LR-MOS, University of La Rochelle, France); Thierry Pénard (CREM UMR CNRS 6211, University of Rennes 1 & University of Delaware) |
| Abstract: | Most developed countries have tried to restrain digital piracy by strengthening laws against copyright infringement. In 2009, France implemented the Hadopi law. Under this law individuals receive a warning the first two times they are detected illegally sharing content through peer to peer (P2P) networks. Legal action is only taken when a third violation is detected. We analyze the impact of this law on individual behavior. Our theoretical model of illegal behavior under a graduated response law predicts that the perceived probability of detection has no impact on the decision to initially engage in digital piracy, but may reduce the intensity of illegal file sharing by those who do pirate. We test the theory using survey data from French Internet users. Our econometric results indicate that the law has no substantial deterrent eect. In addition, we find evidence that individuals who are better informed about the law and piracy alternatives substitute away from monitored P2P networks and illegally access content through unmonitored channels. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:tut:cremwp:201401&r=law |
| By: | Maria Kravtsova (National Research University Higher School of Economics,); Aleksey Oshchepkov (National Research University Higher School of Economics,); Christian Welzel (Center for the Study of Democracy, Leuphana University) |
| Abstract: | Using World Values Survey data from dozens of countries around the world, this article analyzes the relationship between postmaterialist values and attitudes towards bribery in a multi-level framework. This is an inherently interesting and under-researched topic because the various propensities attributed to postmaterialism lead to conflicting expectations about how these values affect attitudes towards bribery. On one hand, the alleged tendency of postmaterialists towards impartiality should lead them to condemn bribery. On the other hand, condemning bribery is a social desirability issue and postmaterialists are known to be less susceptible to desirability pressures and more relaxed about norm deviations. From this point of view, postmaterialists might be more tolerant toward bribery. Reflecting these conflicting expectations, we obtain an ambivalent result, evident in an inverted U-shaped relationship: as we move from pure materialism to mixed positions, people tend to justify bribery more, but then moving from mixed positions to pure postmaterialism, people become again more dismissive of bribery. What is more, the demographic prevalence of postmaterialists in a country moderates these values’ effect on bribery: where postmaterialists are more prevalent, the disapproving effect on bribery outweighs the approving effect. This finding contributes to a better understanding of the pronounced negative correlation between corruption and postmaterialism at the country level and has some important implications. |
| Keywords: | corruption, bribery, social values, postmaterialism, impartiality, norm deviations. |
| JEL: | D73 A13 K42 Z10 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:34/soc/2014&r=law |
| By: | Acheson, Graeme G.; Campbell, Gareth; Turner, John D.; Vanteeva, Nadia |
| Abstract: | Using ownership and control data for 890 firm-years, this paper examines the concentration of capital and voting rights in British companies in the second half of the nineteenth century. We find that both capital and voting rights were diffuse by modern-day standards. This implies that ownership was separated from control in the UK much earlier than previously thought, and given that it occurred in an era with weak shareholder protection law, it undermines the influential law and finance hypothesis. We also find that diffuse ownership is correlated with large boards, a London head office, non-linear voting rights, and shares traded on multiple markets. -- |
| Keywords: | corporate ownership and control,law and finance hypothesis,shareholder protection law,British financial history |
| JEL: | G32 K22 N24 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eabhps:1402&r=law |
| By: | Aichele, Markus |
| Abstract: | I model the optimal semi-collusive strategy of firms using forward contracts in volatile markets. It has been shown that forward contracts can be used to stabilize a collusive agreement under deterministic (Liski and Montero, 2006) as well as under stochastic market conditions (Aichele, 2012). However, forward trading has a negative effect on the expected profit for collusive firms, since firms have the obligation to fulfill their forward contracts in booms as well as in recessions. Thus, in recessions firms involuntarily sell more than the optimal collusive amount. This profit decreasing effect of forward trading is in contrast to the existing literature, since under certainty forward trading does not alter the collusive profit. -- |
| JEL: | L13 D43 K21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc13:79755&r=law |
| By: | Hornuf, Lars; Engert, Andreas |
| Abstract: | We examine network effects as an impediment to optimal financial contracting. In devising the terms of their transaction, the parties may prefer to conform to a market standard rather than matching their own contracting needs. To study this possibility, we investigate choice of contract law provisions in European debt securities. In order to disentangle network effects from the effects of substantive differences of contract laws, we take advantage of a natural experiment: In 1999, eleven countries adopted the Euro as an official currency. As a consequence, the investor base of European issuers expanded beyond their respective home states. We hypothesize that the demand for an international standard contract law increased as the national securities markets converged into a single Euro area market. Using a difference-in-difference approach, we show that there is a strong and significant shift to English law for debt securities in Euro area member states as compared to other European countries. Our results are robust to alternative hypotheses and various statistical tests. Choice of law in debt securities may follow a market standard rather than quality differences among the competing contract laws. -- |
| JEL: | G15 L14 K12 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc13:79867&r=law |
| By: | Muthers, Johannes; Inceoglu, Firat; Doganoglu, Toker |
| Abstract: | The literature on the licensing of an innovation has mainly focused on some speci c contract types. We show within the framework of a fairly general model that removing these contractual limitations will lead to extreme market outcomes. Speci cally, we nd that when the patentee can employ observable contracts that can condition on market entry, it can achieve the monopoly outcome. Furthermore, when the patentee can only use unconditional quantity forcing contracts, it captures the entire market, albeit not at monopoly price, via a single licensee. Our results point out to the signi cance, and perhaps the particularity, of observable, nonrenegotiable contracts. -- |
| JEL: | D45 K11 L11 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc13:79757&r=law |
| By: | Wey, Christian; Dertwinkel-Kalt, Markus |
| Abstract: | We analyze the effects of structural remedies on merger activity in a Cournot oligopoly when the antitrust agency applies a consumer surplus standard. Remedies increase the scope for profitable and acceptable mergers, while divestitures to an entrant firm are most effective in this regard. Remedial divestitures are most attractive from a social welfare point of view, when the merging parties can extract the entire gains associated with the asset sale. We also show that the merging parties have strong incentives to search for the most efficient buyer and we identify instances so that a remedy rule induces strictly price-decreasing mergers. Finally, under incomplete information an effcient merger type is to be doomed to "overshoot" with its divestiture proposal in a pooling equilibrium which is also possible under separation. -- |
| JEL: | L13 L41 K21 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:vfsc13:79888&r=law |
| By: | Jennings R.; Lev B.; Billings M.B. (GSBE) |
| Abstract: | Survey evidence suggests that managers voluntarily disclose information, particularly earnings guidance, with an aim toward dampening share price volatility. Yet, consultants and influential institutions advise against providing guidance citing fears of litigation and market penalties associated with missed earnings targets, as well as a lack of evidence that disclosure actually curbs volatility. Furthermore, recent research links guidance to increased volatility and heightened crash risk. Hence, many argue that guidance not only fails to promote tranquility but may actually prompt turbulence. In this paper, we consider the interplay between guidance and volatility. Consistent with the notion that volatility does indeed factor into managers decisions to supply earnings guidance, we provide evidence of a link between increased volatility and the likelihood that a manager chooses to bundle a forecast with the firms earnings announcement in the current quarter. In particular, our findings indicate that firms in more volatile information environments exhibit a general reticence to offer guidance, but given a recent spike in volatility, managers are more likely to jump in with a forecast seemingly in an effort to calm the market. Subsequent tests indicate that managers efforts do not go unrewarded, as we document a greater post-announcement run-down in volatility for guiding firms. Taken collectively, this evidence supports the view that managers can and do positively shape their firms information environments by an earnings guidance. |
| Keywords: | Information and Market Efficiency; Event Studies; Business and Securities Law; Accounting; |
| JEL: | M41 K22 G14 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2013039&r=law |