New Economics Papers
on Law and Economics
Issue of 2014‒03‒01
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Towards an Economics of Convention-based Approach of the European Competition Policy By Frédéric Marty
  2. Software Piracy: A Critical Survey of the Theoretical and Empirical Literature By Nicolas Dias Gomes; Pedro André Cerqueira; Luís Alçada Almeida
  3. Splitting Nuclear Parks or Not? The Third Party Liability Role By Gérard Mondello
  4. Multilateral Interchange Fees: Competition and regulation in light of recent legislative developments By Malaguti, Maria Chiara; Guerrieri, Alessandra
  5. Does land titling matter? The role of land property rights in the war on illicit crops in Colombia By Juan Carlos Muñoz-Mora; Santiago Tobón-Zapata; Jesse d'Anjou
  6. The Divorce Revolution and Generalized Trust: Evidence from the United States 1973-2010 By Viitanen, Tarja
  7. Moral Damages in Investor-State Dispute Settlement (Japanese) By TAMADA Dai

  1. By: Frédéric Marty (GREDEG CNRS; University of Nice Sophia Antipolis; OFCE - Sciences Po. Paris)
    Abstract: Our paper aims at developing an analysis of the European competition law enforcement dynamics based on an economics of conventions' framework. We question the ordoliberal theoretical foundations of the EU competition policy and we assess to what extent the implementation of a "more economic approach" might pertain to a convention inspired by the Chicago School normative views. We question the economic history, the history of economics thought, and the legal history as we consider that the European courts case law is the main driving force of conventional shifts in matter of competition law enforcement.
    Keywords: Competition policy, abuse of dominant position, ordoliberalism, Chicago school competition law and economics
    JEL: B52 K21 L41 N44
    Date: 2014–02
  2. By: Nicolas Dias Gomes (Faculty of Economics, University of Coimbra and INESC-Coimbra, Portugal); Pedro André Cerqueira (Faculty of Economics, University of Coimbra and GEMF, Portugal); Luís Alçada Almeida (Faculty of Economics, University of Coimbra and INESC-Coimbra, Portugal)
    Abstract: As devices that used software became available to the masses the problem of software piracy arose. Recent theoretical works modeled the software piracy phenomenon; others tried to empirically explain the determinants that can explain this phenomenon. Empirical literature in the latter case is still in it´s infancy. This chapter reviews the theoretical literature focusing on three major models, those that deal with diffusion models, network externalities and with game theory. It also presents the empirical literature in which we identify eight stylized results that reflect key variables across five macroeconomic dimensions that explain software piracy: Economic, Cultural, Technological, Legal and Educational dimensions.
    Keywords: Software Piracy, Copyright, Intellectual Property Rights.
    JEL: C50 C70 D85 L86 O34
    Date: 2014–01
  3. By: Gérard Mondello (GREDEG CNRS; University of Nice Sophia Antipolis)
    Abstract: Starting from the standard analysis of accident theory, this paper shows that determining the first-best level of care of ultra-hazardous activities also involves determining the best industrial structure. The analysis assesses the impact of the civil nuclear liability on the organization of given electro-nuclear parks. The object is to know whether these liability rules induce horizontally concentrating the management of nuclear industry or not. In a model extended from two to n plants, we show that the institutional conditions (cap on the operator’s liability and the insurance compensation) play a fundamental role in the inducement to centralize or not this management. Hence, a priori, no organization framework is more efficient than the other one.
    Keywords: Strict liability, Electric Energy, nuclear plants, limited liability, concentration
    JEL: Q5 Q58 Q53 K23 L13 L52 L94
    Date: 2014–02
  4. By: Malaguti, Maria Chiara; Guerrieri, Alessandra
    Abstract: Two-sided payment card markets generate costs that have to be distributed among the participating actors. For this purpose, payment card networks set an interchange fee, which is the fee paid by the merchant’s bank to the cardholder’s bank per transaction. While in recent years many antitrust authorities all over the world - including the European Commission - have opened proceedings against card brands in order to verify whether agreements to collectively establish the level of interchange fees are anticompetitive, the Reserve Bank of Australia – as a regulator - has directly tried to address market failures by lowering the level of interchange fees and changing some network rules. The US has followed with new legislation on financial consumer protection, which also intervenes on interchange fees. This has opened a strong debate not only on legitimacy of interchange fees, but also on the appropriateness of different public tools to address such issues. Drawing from economic and legal theories and a comparative analysis of recent case law in the EU and other jurisdictions, this work investigates whether a regulation rather than a purely competition policy approach would be more appropriate in this field, considering in particular, at EU level, all of the competition and regulatory concerns that have arisen from the operation of SEPA with multilateral interchange fees. The paper concludes that a wider regulation approach could address some of the shortcomings of a purely antitrust approach, proving to be highly beneficial to the development of an efficient European single payments area.
    Date: 2014–01
  5. By: Juan Carlos Muñoz-Mora (Université Libre de Bruxelles); Santiago Tobón-Zapata (Fondo para el Financiamiento del Sector Agropecuario); Jesse d'Anjou (Université Libre de Bruxelles)
    Abstract: This paper analyzes the role of formalization of land property rights in the war against illicit crops in Colombia. We argue that as a consequence of the increase of state presence and visibility during the period of 2000 and 2009, municipalities with a higher level of formalization of their land property rights saw a greater reduction in the area allocated to illicit crops. We hypothesize that this is due to the increased cost of growing illicit crops on formal land compared to informal, and due to the possibility of obtaining more benefits in the newly in- stalled institutional environment when land is formalized. We exploit the variation in the level of formalization of land property rights in a set of municipalities that had their first cadastral census collected in the period of 1994-2000; this selection procedure guarantees reliable data and an unbiased source of variation. Using fixed effects estimators, we found a significant negative relationship between the level of formalization of land property rights and the number of hectares allocated to coca crops per municipality. These results remain robust through a number of sensitivity analyses. Our findings contribute to the growing body of evidence on the positive effects of formal land property rights, and effective policies in the war on drugs in Colombia.
    Keywords: Land property rights; Coca crops; War on drugs.
    Date: 2014–02
  6. By: Viitanen, Tarja (University of Otago)
    Abstract: This paper examines the effect of exposure to a culture of easier divorce as a minor on generalized trust using the General Social Survey from 1973-2010. The easier divorce culture is defined as the introduction of no-fault including unilateral divorce reforms across the US. According to the results, the divorce revolution seems to have had some effect on trust levels across the US. While there are no discernible effects for the whole sample of men, there are statistically significant effects for women with an additional year of exposure being associated with a 4 percentage point lower generalized trust in the states with easy divorce culture compared to states with fault based divorce culture. An analysis by sub-group of women indicates that married and divorced/separated women have significantly lower levels of trust associated with exposure to easy divorce culture as a child. The findings are in agreement with the predictions of previous literature regarding no-fault divorce reforms reducing the security offered by marriage, in particular for women.
    Keywords: divorce laws, trust, GSS, panel data analysis
    JEL: J12 K36 Z13
    Date: 2014–02
  7. By: TAMADA Dai
    Abstract: Although it has been long thought that the object of protection in investor-state dispute settlement (ISDS) is the economic and material interests of investment, certain recent cases have shown that ISDS protects not only the economic interest of investment, but also some moral or non-material value, which had been damaged by host states by way of "moral damages." Is this implying that ISDS is now changing its character? On this issue, this research shows the following points. First, there was a change of attitude in ISDS, especially by the International Centre for Settlement of Investment Disputes (ICSID), from 2008 to 2011. In the DLP case, the arbitral tribunal emphasized the importance of subjective elements of moral damages, i.e., the fault of the host state. However, on the other hand, in the later Lemire case, the ICSID tribunal made clear that the objective criteria are more important for finding moral damages, i.e., significance of the cause and the consequences. This means that tribunals restrained the possibilities of moral damages in ISDS. Second, there is clearly a distinction between a legal person (company) and a natural person (company's staff members) from the legal point of view. Thus, even when a company, as an investor, suffers moral damages, this does not mean that its staff suffers the same damage. Vice versa, i.e., if a staff suffers moral damages, this does not lead to damages to a company. So, ISDS tribunals make clear the difference in this point, and, in order to admit the natural person's moral damage, they tend to incorporate the latter into the former, i.e., personal damages into company damages. In recent years, investors have needed to protect their staff, especially their personal and non-material interests. Moral damages accordingly will be quite useful in such cases for investors. Third, there has occurred a debate on the issue of whether moral damages can be assimilated to punitive damages, insofar as they are overlapping in the mental criteria, such as faults. On this issue, while academics oppose the similarity between the two notions, it becomes more difficult to distinguish one from another in ISDS cases. In this paper, we examine the problems concerning moral damages, for clarifying to what extent the recent trend in ISDS can be expanded.
    Date: 2014–02
  8. By: Alexander Radygin (Gaidar Institute for Economic Policy); Revold Entov (Gaidar Institute for Economic Policy)
    Abstract: The article focuses on the analysis of the evolution of contemporary theoretic approaches to the choice of an optimal form of ownership, and the corresponding estimation of privatization in the context of the advantages and disadvantages of the public and private sectors of the national economy. Various interpretations of the fundamental privatization theorem are considered: based on the principal-agent relationship; based on the comparison of the structure of information flows; the combination of ownership rights and contractual rights; consideration of sociopolitical factors, etc. The latest trends in Russia’s de-statization policy in 2010-2013 are analyzed in the context of ‘reluctant privatization’, with special emphasis on the asymmetry between the statization and privatization processes.
    Keywords: privatization, government failures, state policy, public choice, allocational efficiency, information
    JEL: H82 K11 L32 L33
    Date: 2014

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