New Economics Papers
on Law and Economics
Issue of 2014‒07‒13
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Low Priority Laws and the Allocation of Police Resources By Amanda Ross; Anne Walker
  2. The Effect of Local Crime on Well-Being: Evidence for Germany By Marie Poprawe; Christian Krekel
  3. Lead jurisdiction concepts: Towards rationalizing multiple competition policy enforcement procedures By Budzinski, Oliver
  4. There Will Be Blood: Crime Rates in Shale-Rich US Counties By Alexander James; Brock Smith
  5. Incentives and optimal antitrust policy By Jellal, Mohamed; Souam, Said
  6. Revisiting the Question "More Guns, Less Crime?" New Estimates Using Spatial Econometric Techniques By Donald J. Lacombe; Amanda Ross
  7. State Bankruptcy Law and Entrepreneurship : Evidence from a Border Analysis By Shawn M. Rohlin; Amanda Ross
  8. Patents and Cumulative Innovation: Causal Evidence from the Courts By Alberto Galasso; Mark Schankerman
  9. How business community institutions can help fight corruption By Dixit, Avinash
  10. The titling role of possession By Benito Arruñada
  11. Judicial System Reform in Italy - A Key to Growth By Gianluca Esposito; Sergi Lanau; Sebastiaan Pompe
  12. FDI Companies and the Indian Company Law: Regulations vs. Disclosures By ISID, Foreign Investments Study Team

  1. By: Amanda Ross (West Virginia University, College of Business and Economics); Anne Walker (University of Colorado at Denver, Department of Economics)
    Abstract: There is an ongoing literature in economics examining the deterrent effect of police officers on criminal activity. However, this literature tends to focus on the aggregate number of officers employed versus the relative allocation of an officer's time. In this paper, we examine how the reallocation of police resources affects police behavior and criminal activity using the adoption of low priority initiatives by some jurisdictions. Low priority initiatives mandated that minor marijuana possession offenses be the lowest enforcement priority for police officers. We first test whether adoption of the initiative decreased the arrest rate for minor marijuana possession offenses. If police officers devote fewer resources towards minor marijuana possession crimes, then more resources will be available to deter and solve more serious crimes. This would suggest that if misdemeanor marijuana arrest rates decreased, there may be a reduction in crime rates or clearance rates for more serious crimes, such as murder or robbery. Using city-level data from California, we find that those jurisdictions that adopted low priority laws experienced a reduction in arrests for misdemeanor marijuana offenses. However, we do not find a significant effect of enacting a low priority initiative on the crime rate or clearance rate of more serious felony crimes. Our findings are important for local policy makers, as we do not find evidence that the initiatives had an impact on more serious crimes as was intended by the legislation.
    Keywords: Police Resource Allocation, Police Incentives, Drug Policy, Low Priority Laws
    JEL: H1 H4 K4 R5
    Date: 2014
  2. By: Marie Poprawe (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Christian Krekel (DIW Berlin, Germany)
    Abstract: This paper investigates the effect of local crime on well-being in Germany, using data from the German Socio-Economic Panel (SOEP) and a novel data set constructed from official police crime statistics, covering both counties and urban districts for the time period between 1994 and 2012. We find that local area crime has a signicantly negative impact on life satisfaction, makes residents worry more frequently, and worry more about crime in Germany. In particular, a 1% increase in the crime frequency ratio results in a 0.043 standard deviation decrease in life satisfaction. This effect is driven almost exclusively by violent crimes, while property crimes and other crimes have no significant impact on well-being.
    Keywords: Crime, Well-Being, Germany
    JEL: I31 K42 R50
    Date: 2014–06
  3. By: Budzinski, Oliver
    Abstract: Lead jurisdiction models represent one option how to extend and enhance contemporary interagency cooperation among competition policy regimes. They constitute a multilateral, case-related form of cooperation that is suited to effectively create a one-stop-shop for the prosecution of international cartels, the handling of cross-border mergers and acquisitions and the governance of international antitrust cases. Thus, lead jurisdiction models offer considerable economic benefits. However, they also entail several caveats. Three possible working problems and downside effects of lead jurisdiction models in international competition policy enforcement are discussed in this paper. --
    Keywords: international competition policy,lead jurisdiction models,international governance,interjurisdictional cooperation,interagency cooperation,competition economics,antitrust
    JEL: F02 F53 F55 K21 L40 D02
    Date: 2014
  4. By: Alexander James; Brock Smith
    Abstract: Over the past decade, the production of shale oil and gas significantly increased in the United States. This paper uniquely examines how this energy boom has affected regional crime rates throughout the United States. There is evidence that, as a result of the ongoing shale-energy boom, shale-rich counties experienced faster growth in rates of both property and violent crimes including rape, assault, murder, robberty, burglary, larceny and grandtheft auto. These results are particularly robust for rates of assault, and less so for other types of crimes. Policymakers should anticipate these effects and invest in public infrastructure accordingly.
    Keywords: Natural Resources, hydraulic fracturing, crime, resource curse
    JEL: Q3 R11 K42
    Date: 2014
  5. By: Jellal, Mohamed; Souam, Said
    Abstract: We analyze a model where an antitrust authority delegates to an audit inspector the mission of gathering the sufficient information to condemn a cartel. The authority has two instruments at her disposal: rewarding the inspector with a proportion of the collected fine or providing him with information which enhances the probability of the success of the prosecution. More precisely, we explore the efficiency consequences of a contest between the audit inspector and the cartel. Both of them bid to win the contest by expending efforts. We show that the race issue depends positively on the financial incentives proposed to the inspector but the impact of an increase of the level of the fine, to be paid once an illegal agreement is detected, is ambiguous. Moreover, we show that the optimal combination of the two instruments consists in two regimes. When the marginal cost of providing the relevant information is relatively high, the antitrust authority equally shares the collected fine and does not provide the inspector with any information. Conversely, when this marginal cost is relatively small, the authority uses the two instruments. She has to provide him with the maximum level of information consistent with winning the contest with certainty.
    Keywords: Antitrust Enforcement, Incentives, Collusion, Moral Hazard, Contest
    JEL: K2 K21 K42 L4 L44
    Date: 2014–07–10
  6. By: Donald J. Lacombe (West Virginia University, Department of Agricultural and Resource Economics and Economics); Amanda Ross (West Virginia University, College of Business and Economics)
    Abstract: In a highly debated paper, Lott and Mustard (1997) found that allowing citizens to carry concealed handguns reduced crime. Since then, numerous researchers have questioned the validity of the findings. In addition, ongoing work has shown there is an important spatial component to crime. In this paper, we use spatial econometric techniques to estimate the impact of adoption of concealed weapons laws by some states on crime rates across the U.S. We find there are spillover effects of concealed weapons laws and that spatial dependence plays an important role when estimating the effect of these laws on crime.
    Date: 2014
  7. By: Shawn M. Rohlin (Kent State University, Department of Economics); Amanda Ross (West Virginia University, College of Business and Economics)
    Abstract: This paper examines how differences in state bankruptcy laws, specifically the amount of the homestead exemption, affect business location decisions within a few miles of the state boundary. By focusing on these border areas, we are able to more effectively control for unobserved local attributes and isolate the effect of more wealth protection. We find that an increase in the homestead exemption attracts new businesses. We also find that a more generous homestead exemption has a positive impact on existing businesses, suggesting that asset protection through bankruptcy law encourages successful entrepreneurs to incur the risks. Our results indicate that the wealth protection provided by personal bankruptcy law is an important policy tool that state governments can use to attract new, successful businesses owners.
    Keywords: bankruptcy law, entrepreneurship, border methodology
    JEL: K30 K36 R11 R14
    Date: 2014
  8. By: Alberto Galasso; Mark Schankerman
    Abstract: Cumulative innovation is central to economic growth. Do patent rights facilitate or impede follow-on innovation? We study the causal effect of removing patent rights by court invalidation on subsequent research related to the focal patent, as measured by later citations. We exploit random allocation of judges at the U.S. Court of Appeals for the Federal Circuit to control for endogeneity of patent invalidation. Patent invalidation leads to a 50 percent increase in citations to the focal patent, on average, but the impact is heterogeneous and depends on characteristics of the bargaining environment. Patent rights block downstream innovation in computers, electronics and medical instruments, but not in drugs, chemicals or mechanical technologies. Moreover, the effect is entirely driven by invalidation of patents owned by large patentees that triggers more follow-on innovation by small firms.
    JEL: O33 O34
    Date: 2014–06
  9. By: Dixit, Avinash
    Abstract: This paper considers the possibility of collective action by the business community to counter corruption in the award of government licenses and contracts. The analogy is with contract enforcement institutions studied by economic historians and contract law scholars. The institution in this context comprises a no-bribery norm, a community system to detect violations, and a multilateral ostracism penalty upon conviction in a community tribunal. The requirements such an institution must meet if it is to be effective are analyzed. It is shown that an institution of sufficient quality -- combining probability of correct detection and severity of punishment -- can eliminate bribery. If the private institution is not sufficiently good, then in conjunction with the state's formal apparatus it reduces the level of bribes demanded, but increases the probability of winning the license or contract through bribery. An improvement in the government's formal anti-corruption mechanism, holding the private institution constant, reduces both the level of bribes and the probability of success through bribery. The two institutions together are shown to achieve substantially better outcomes than either can on its own.
    Keywords: Public Sector Corruption&Anticorruption Measures,E-Business,Corruption&Anticorruption Law,Crime and Society,Social Accountability
    Date: 2014–06–01
  10. By: Benito Arruñada
    Abstract: This paper proposes two hypotheses on the publicity requirement and the limitations of possession to provide information for legal titling. It then tests these hypotheses by examining how legal systems deal with possession in movable and immovable property, and comparing actual and documentary possession. It concludes that exercise of possession is effective as a titling mechanism when it is observed by independent parties, thus providing publicity and verifiability of titling-relevant elements. However, given that possession is only effective to inform about a single in rem right, direct and automatic reliance on possession for titling requires that all other rights be diluted to in personam status or be burdened by the possessory in rem right. In any case, public knowledge of possession, either in its delivery and/or its exercise, is essential for possession to play a public titling function. Similarly, documentary possession is only effective as a public titling mechanism in the absence of multiple rights in rem.
    Keywords: property rights, enforcement, transaction costs, registries.
    JEL: D23 G38 K11 K12 L85 O17 P48
    Date: 2014–06
  11. By: Gianluca Esposito; Sergi Lanau; Sebastiaan Pompe
    Abstract: The inefficiency of the Italian judicial system has contributed to reduced investments, slow growth and a difficult business environment. The enforcement of civil and commercial claims suffers from excessive delays in court proceedings, resulting in a very large number of pending cases. The Italian authorities have over the years taken steps to remove bottlenecks and speed up judicial proceedings. While these measures are generally steps in the right direction, more can be done. Consideration could be given, inter alia, to reviewing court fees, improving the new mandatory mediation scheme, strengthening court management, and reforming the appeal system.
    Keywords: Governance;Italy;Legislation;Foreign direct investment;Economic growth;judicial reform, growth, business environment, Italy, efficiency of justice, FDI, firm size
    Date: 2014–02–13
  12. By: ISID, Foreign Investments Study Team
    Abstract: In India companies with substantial foreign direct investment can register as private companies irrespective of the size of their operation whether in India or abroad. Under the Indian company law private companies can prevent public access to certain critical information on their operations. While many FDI companies got delisted (gone 'private')over the past few years ,indications are that most FDI companies are registered as private companies. The Discussion Note argues for withdrawal of the exemption for all companies registered in india which have certain minimum paid-up-capital, assets or turnover.
    Keywords: FDI, companies act, corporate disclosures, India
    JEL: F23 G38 K22
    Date: 2014–07–01

This issue is ©2014 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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