New Economics Papers
on Law and Economics
Issue of 2014‒05‒17
seven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. “Are traffic violators criminals? Searching for answers in experiences of European countries” By José I. Castillo-Manzano; Mercedes Castro-Nuño; Xavier Fageda
  2. Enforcement vs Deterrence in Merger Control: Can Remedies Lead to Lower Welfare? By Cosnita-Langlais, Andreea; Sørgard, Lars
  3. The Right To Life In Light Of The Integration Between The Norms Of International Humanitarian And Human Rights Law By Vera Rusinova
  4. Why Go to Court? Bargaining Failure under the Shadow of Trial with Complete Information By Michael McBride; Stergios Skaperdas; Pi-Han Tsai
  5. How the new leniency program in Korea affect cartel formation and cartel detection? By Hyo Won Lee; Yun Jeong Choi
  6. The Effect of Medical Marijuana Laws on Marijuana, Alcohol, and Hard Drug Use By Hefei Wen; Jason M. Hockenberry; Janet R. Cummings
  7. Do Industrial Disputes Reduce Employment? Evidence from South Africa By Haroon Bhorat; Elne Jacobs; Carlene van der Westhuizen

  1. By: José I. Castillo-Manzano (Facultad de Ciencias Económicas y Empresariales, University of Seville (Spain)); Mercedes Castro-Nuño (Facultad de Ciencias Económicas y Empresariales, University of Seville (Spain)); Xavier Fageda (Faculty of Economics, University of Barcelona)
    Abstract: The connection between road traffic safety and criminal behavior has recently become a topic of interest in the literature, although little emphasis placed on the relationship with road accidents. Evidence worldwide shows that people who commit other offences characteristic of antisocial attitudes, are more prone to suffer road traffic accidents and infringe traffic laws. Here we examine the records of the 28 current member states of the European Union over the period 1999-2010. Our aim is to test the hypothesis that crime rates (and specifically, motor vehicle-related crimes) may be considered as predictors of fatal road traffic accidents. If they may, this could justify, at least prima facie, the tendency in several countries to consider traffic offences as crimes in their penal codes and to toughen the punishment imposed on those who commit them. We also analyze the effect of the severity of the legal system applied to traffic offences. Our results reveal that road traffic fatality rates are higher in countries whose inhabitants have more aggressive behavior, while the rates are lower in countries with more severe penal systems.
    Keywords: Road fatalities, Motor Vehicle Crime, Law enforcement, Panel Data, European Union JEL classification: C33, I18, K42, R41.
    Date: 2014–05
  2. By: Cosnita-Langlais, Andreea (University Paris Ouest Nanterre La Défense); Sørgard, Lars (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: This paper deals with the enforcement of merger policy, and aims to study how merger emedies affect the deterrence accomplished by controlling mergers. We determine the optimal frequency of investigations launched by the agency, and identify situations where the introduction of remedies can lead to a lower welfare. We find that the potential for remedies can make it less likely that the worst mergers are deterred. Even if the worst mergers are deterred, the potential for remedies can lead to more mergers with a negative impact to be proposed, and eventually to more decision errors by the antitrust authorities.
    Keywords: Merger control; merger remedies; enforcement; deterrence.
    JEL: K21 L41
    Date: 2014–03–25
  3. By: Vera Rusinova (National Research University Higher School of Economics)
    Abstract: This paper casts doubts on the existence of a contradiction between the norms of International Humanitarian Law and International Human Rights Law in the sphere of the protection of the right to life and concludes that the wording and systematic interpretation of international treaties, and the subsequent application allowing the inference of an integrated approach to the determination of the negative and positive obligations of states in respect of the right to life
    Keywords: right to life; armed conflicts; International Humanitarian Law; International Human Rights Law; legal contradiction; investigation
    JEL: K
    Date: 2014
  4. By: Michael McBride (Department of Economics, University of California-Irvine); Stergios Skaperdas (Department of Economics, University of California-Irvine); Pi-Han Tsai (Department of Economics, University of California-Irvine)
    Abstract: Why do legal disputes ever go to trial? Prior research emphasizes the role of mistakes, irrationalities, or asymmetric information because rational litigants with complete or symmetric information should choose pre-trial settlements over the costs and risks of trial. Using a dynamic incomplete-contracting framework, we provide an overlooked rationale for going to court. Even though risky and costly, going to court can be both rational and socially efficient when a court decision enhances property rights and deters future costly litigation. Experimental evidence supports these predictions. Our findings provide new insights into the incidence of litigation and trial.
    Keywords: Litigation; Court; Conflict; Contests
    JEL: C72 K11 K41
    Date: 2014–05
  5. By: Hyo Won Lee (Yonsei University); Yun Jeong Choi (Yonsei University)
    Abstract: The corporate leniency program has played an important role in detecting cartels that damages consumer welfare and competition. This study investigates the impacts of Korea¡¯s leniency revision in 2005 on cartel stability by using a Poisson regression. The estimation results show that the new leniency program increases the detection rate and decreases the formation rate, confirming the validity of the theoretical model of Miller(2008). Therefore, the effectiveness of the full leniency to the first applicants under the new leniency program provides some policy implication on the revision direction of the leniency program.
    Keywords: Collusion, Corporate Leniency Program, Poisson regression, Cartel duration
    JEL: C72 D43 K21 L41
    Date: 2014–04
  6. By: Hefei Wen; Jason M. Hockenberry; Janet R. Cummings
    Abstract: 21 states and the District of Columbia currently have laws that permit marijuana use for medical purposes, often termed medical marijuana laws (MMLs). We tested the effects of MMLs adopted in seven states between 2004 and 2011 on adolescent and adult marijuana, alcohol, and hard drug use. We employed a restricted-access version of the National Survey on Drug Use and Health (NSDUH) micro-level data with geographic identifiers. For those 21 and older, we found that MMLs led to a relative increase in the probability of marijuana use of 16 percent, an increase in marijuana use frequency of 12-17 percent, and an increase in the probability of marijuana abuse/dependence of 15-27 percent. For those 12-20 years old, we found a relative increase in marijuana use initiation of 5-6 percent. Among those aged 21 or above, MMLs increased the frequency of binge drinking by 6-9 percent, but MMLs did not affect drinking behavior among those 12-20 years old. MMLs had no discernible impact on hard drug use in either age group. Taken together, MML implementation increases marijuana use mainly among those over 21, where there is also a spillover effect of increased binge drinking, but there is no evidence of spillovers to other substance use.
    JEL: I18 K32
    Date: 2014–05
  7. By: Haroon Bhorat; Elne Jacobs; Carlene van der Westhuizen (Development Policy Research Unit; Director and Professor)
    Abstract: Theory predicts that an increase in employment protection may reduce employment levels by acting as a tax on firms by constraining hiring and firing decisions. We use a unique administrative database of the country’s dispute resolution body – the Commission for Conciliation, Mediation and Arbitration (CCMA) – to create a nuanced and empirically based measure of employment protection for the labour market in South Africa.
    Keywords: CCMA, Industrial Disputes, Employment, South Africa
    JEL: J23 J32 J41 K31 L51
    Date: 2013–12

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