New Economics Papers
on Law and Economics
Issue of 2014‒05‒09
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Marginal Deterrence When Offenders Act Sequentially By Tim Friehe; Thomas J. Miceli
  2. Large-scale risks and technological change: What about limited liability? By Sandrine SPAETER; Julien JACOB
  3. Digital files dealers and prohibition in the context of the French 3 strikes (HADOPI) law By Sylvain Dejean; Raphaël Suire
  4. Immigration and Crime: Evidence from Canada By Zhang, Haimin
  5. The impact of R&D subsidies on firm innovation By Raffaello Bronzini; Paolo Piselli
  6. Exogenous vs. endogenous governance in innovation communities: Effects on motivation, conflict and justice - An experimental investigation By Störmer, Niclas; Herstatt, Cornelius
  7. Breaking the Link Between Legal Access to Alcohol and Motor Vehicle Accidents: Evidence from New South Wales By Jason Lindo; Peter Siminski; Oleg Yerokhin
  8. Do Corporate Tax Cuts Reduce International Profit Shifting? By Brandstetter, Laura

  1. By: Tim Friehe (University of Bonn); Thomas J. Miceli (University of Connecticut)
    Abstract: Marginal deterrence concerns the incentives created by criminal penalties for oenders to refrain from committing more harmful acts. We show that when offenders act sequentially, it is often optimal for the level of the sanction, not just the expected sanction, to rise with the severity of the act, even when enforcement is specific.
    JEL: K42
    Date: 2014–05
  2. By: Sandrine SPAETER; Julien JACOB
    Abstract: We consider a firm under strict liability that must choose between two risky technologies, one being safer but costlier than the other one. The total potential level of damage increases with the level of activity. We show that, under limited liability, technological change is welfare improving and leads to full risk internalization when the firms are sufficiently capitalized. Nevertheless, the percentage of firms adopting the safer technology and full risk internalization is higher under unlimited liability than under limited liability. We show how an adequate tax policy increases this percentage. We also determine the characteristics of a second-best tax policy.
    Keywords: Technological risk, limited liability, incentives, technical choice, taxes.
    JEL: D81 H23 K39 Q55
    Date: 2014
  3. By: Sylvain Dejean (LR-MOS, University of La Rochelle, France); Raphaël Suire (CREM UMR CNRS 6211, University of Rennes 1, France)
    Abstract: Illegal digital file consumption is widely believed to influence sales of cultural goods. Online piracy is now  regulated  and  prohibited  in  some  countries,  especially  in  France,  where  HADOPI  is  a  legal  authority in charge of Peer-­‐to-­‐Peer (P2P) protocol monitoring. We claim that prohibitions on digital markets  share  some  characteristics  of  other  criminal  activities  such  as  those  of  the  drug  market.  Prohibition of a good or service can lead to the emergence of a black market embedded in a social network.  Based  on  an  original  and  representative  2012  French  survey,  we  show  that  such  a  social  and offline organisation is observed. Indeed, offline swapping is now the largest way to exchange digital  files.  We  show  that  offline  swapping  is  embedded  in  a  hierarchical  social  network  where  different behaviours are observed. On one hand, there are wholesalers of digital files who provide more than they receive from this offline network and maintain online downloading activity through P2P technology. On the other hand, there are also the “simple” consumers who consume only from offline  swapping  and  never  provide  files  to  others.  They  never  use  monitored  P2P  technology  because HADOPI acts as a deterrent. Our econometric analysis suggest that this “fear” of HADOPI plays a significant role in structuring this offline swapping network, as the position in the swapping network is driven by the feeling of being threatened by HADOPI.
    Keywords: HADOPI, social network, piracy, prohibition, offline swapping
    Date: 2014–04
  4. By: Zhang, Haimin
    Abstract: There is growing belief in many developed countries, including Canada, that the large influx of the foreign-born population increases crime. Despite the heated public discussion, the immigrant-crime relationship is understudied in the literature. This paper identifies the causal linkages between immigration and crime using panel data constructed from the Uniform Crime Reporting Survey and the master files of the Census of Canada. This paper distinguishes immigrants by their years in Canada and defines three groups: new immigrants, recent immigrants and established immigrants. An instrumental variable strategy based on the historical ethnic distribution is used to correct for the endogenous location choice of immigrants. Two robust patterns emerge. First, new immigrants do not have a significant impact on the property crime rate, but with time spent in Canada, a 10% increase in the recent-immigrant share or established-immigrant share decreases the property crime rate by 2% to 3%. Neither underreporting to police nor the dilution of the criminal pool by the addition of law-abiding immigrants can fully explain the size of the estimates. This suggests that immigration has a spillover effect, such as changing neighbourhood characteristics, which reduces crime rates in the long run. Second, IV estimates are consistently more negative than their OLS counterparts. By not correctly identifying the causal channel, OLS estimation leads to the incorrect conclusion that immigration is associated with higher crime rates.
    Keywords: Immigration; Crime
    JEL: F22 J15 K42
    Date: 2014–04–28
  5. By: Raffaello Bronzini (Bank of Italy); Paolo Piselli (Bank of Italy)
    Abstract: This paper evaluates the impact of an R&D subsidy program implemented in a region of northern Italy on innovation by beneficiary firms. In order to verify whether the subsidies enabled firms to increase patenting activity, we exploit the mechanism used to allot the funds. Since only projects that scored above a certain threshold received the subsidy, we use a sharp regression discontinuity design to compare the number of patent applications, and the probability of submitting one, of subsidized firms with those of unsubsidized firms close to the cut-off. We find that the program had a significant impact on the number of patents, more markedly in the case of smaller firms. Our results show that the program was also successful in increasing the probability of applying for a patent, but only in the case of smaller firms.
    Keywords: research and development, investment incentives, regression discontinuity design, patents
    JEL: R0 H2 L10
    Date: 2014–04
  6. By: Störmer, Niclas; Herstatt, Cornelius
    Abstract: In this study we examine the effects of exogenous vs. endogenous governance rules on a virtual community handling an innovative task. Specifically we investigate the relationship between the two modes (exogenous vs. endogenous) and factors such as motivation, conflict and justice. We conducted an experiment with 70 students, divided into teams of five. We manipulated procedural legitimacy by allowing one group to choose a set of rules and giving the other group the same rules exogenously. Our study indicates, that letting a team choose its own governance rules leads to increasing level of conflict negatively impacting motivation. --
    Keywords: Governance,Collaborative Innovation Communities
    Date: 2014
  7. By: Jason Lindo; Peter Siminski (University of Wollongong); Oleg Yerokhin (University of Wollongong)
    Abstract: A large literature has documented signicant public health benets associated with the minimum legal drinking age in the United States, particularly because of the resulting eects on motor vehicle accidents. These benets form the primary basis for continued eorts to restrict youth access to alcohol. It is important to keep in mind, though, that policymakers have a wide variety of alcohol-control options available to them, and understanding how these policies may complement or substitute for one another can improve policy making moving forward. Towards this end, we propose that investigating the causal eects of the minimum legal drinking age in New South Wales, Australia provides a particularly informative case study, because Australian states are among the world leaders in their eorts against drunk driving. Using an age-based regression-discontinuity design applied to restricted-use data from several sources, we nd no evidence that legal access to alcohol has eects on motor vehicle accidents of any type in New South Wales, despite having large eects on drinking and on hospitalizations due to alcohol abuse.
    Keywords: health, alcohol, minimum legal drinking age, drunk driving
    JEL: I18 K32
    Date: 2014
  8. By: Brandstetter, Laura
    Abstract: This paper analyzes whether a corporate tax cut reduces profit shifting to low-tax countries. I use firm-level data of 2,812 German corporations around the Business Tax Reform in 2008. Applying a difference-in-differences framework with a one-on-one matching strategy, which compares earnings of multinational and domestic corporations, I do not find empirical evidence that even a 10 percentage points cut in the business tax rate leads to a reduction of profit shifting activities. --
    Keywords: corporate taxation,international profit shifting
    JEL: F23 H25 H26
    Date: 2014

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