nep-law New Economics Papers
on Law and Economics
Issue of 2014‒10‒22
eleven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Internet piracy and book sales: a field experiment By Wojciech Hardy; Michał Krawczyk; Joanna Tyrowicz
  2. Extending The Scope Of Antitrust Legislation Over The Area Of Exclusive Ip-Rights Exercise: Evidence From Russia By Mikhail S. Zhuravlev
  3. Merger control on two-sided markets: is there need for an efficinecy defense? By Edmond Baranes; Thomas Cortade; Andreea Cosnita-Langlais
  4. Corporate Governance Enforcement in the Middle East and North Africa: Evidence and Priorities By Alissa Amico
  5. Patent Licensing Networks By Doh-Shin Jeon; Yassine Lefouili
  6. Business Dispute Resolution: Taking Arbitration Clause Seriously By Agarwal, Anurag K.
  7. The Juncker Commission: A New Start for EU Justice and Home Affairs Policy? By Carrera, Sergio; Guild, Elspeth
  8. Forensic Finance By Verwijmeren, P.
  9. Does Bank Monitoring Matter to Bondholders? By Joel F. Houston; Chen Lin; Junbo Wang
  10. Political institutions behind good governance By Raffaella SANTOLINI; David BARTOLINI
  11. Consumer financial protection regulations: how do they measure up? By Ritter, Dubravka

  1. By: Wojciech Hardy (Faculty of Economic Sciences, University of Warsaw); Michał Krawczyk (Faculty of Economic Sciences, University of Warsaw); Joanna Tyrowicz (Faculty of Economic Sciences, University of Warsaw)
    Abstract: We report the results of an experimental study analyzing the effects of Internet piracy on book sales. We conducted a year-long controlled large-scale field experiment with pre-treatment pair matching. Half of the book titles received experimental treatment, in which a specialized agency would immediately remove any unauthorized copy appearing on the Internet. For the other half we merely registered such occurrences, but no countermeasures were taken. For all the titles we obtained print and e-book sales statistics from the publishers. We find that removal of unauthorized copies was an effective method of curbing piracy, but this had no bearing on legal sales.
    Keywords: digital piracy, e-books, field experiment
    JEL: C93 D12 K42 L82 O34
    Date: 2014
  2. By: Mikhail S. Zhuravlev (National Research University Higher School of Economics)
    Abstract: This paper deals with the issues of competition law and IP law interaction. Current Russian legislation provides absolute immunity from extending the antitrust prohibitions over the exercise of exclusive IP-rights. The idea of the article is that this approach needs to be revised. Russian court practice, legal doctrine and economic theory necessitate more flexible antitrust regulation in the area of IP. The analysis of US, EU, and Japanese models of legal regulation has revealed different approaches to the issues of antitrust policy in this field of social relations. Therefore, this paper suggests a different concept of regulation¬ – keep the general immunity from the application of antitrust prohibitions to rightholders, but make it conditional. At the same time, in order to ensure the optimal balance between private and public interests and to maintain the incentives for innovative activity, antitrust legislation should provide a system of guarantees for rightholders
    Keywords: competition law, IP law, anticompetitive exercise of IP-rights, Russian antitrust legislation, economic approach, balance of interests, amendments to legislation
    JEL: K21
    Date: 2014
  3. By: Edmond Baranes (LAMETA-CNRS and Labex Entreprendre, Faculté d'Economie, Université de Montpellier, Rue Raymond Dugrand, CS 79606, 34960 Montpellier Cedex 2, France); Thomas Cortade (BETA-CNRS, Université de Lorraine, Ile du Saulcy, BP 80794, 57012 Metz cedex 1, France); Andreea Cosnita-Langlais (EconomiX-CNRS, Université Paris Ouest Nanterre La Défense, 200 Avenue de la République, 92001 Nanterre cedex, France)
    Abstract: We study horizontal mergers on two-sided markets between horizontally differentiated platforms. We provide a theoretical analysis of the merger's price effect based on the amount of cost savings it generates, the behavior of outsider platforms, and the size of cross-group network effects. We point out differences as compared with the standard, one-sided merger analysis, and also discuss the merger control policy implications.
    Keywords: horizontal merger; two-sided markets; cost savings; merger control
    JEL: L41 D82 K21
    Date: 2014–09
  4. By: Alissa Amico
    Abstract: Corporate governance frameworks in the Middle East and North Africa region have undergone a substantial evolution in the past decade. Better enforcement of corporate governance rules and regulations has in the past three years emerged as both a policy challenge and a priority for the region. This emphasis on better enforcement reflects a number of trends including political changes in some countries of the region, the global call for better surveillance of the adoption of governance rules as well as low investor engagement in the region. This paper examines key developments in public and private corporate governance enforcement in the region. It highlights the growing level of public enforcement as expertise within the securities regulators is growing. The paper provides policy recommendations on specific aspects of governance frameworks such as the treatment of related party transactions and board member responsibilities which - if better regulated - could result in more effective governance enforcement in the region.
    Keywords: enforcement, corporate governance, Middle East and North Africa, investor engagement, company law, securities regulator, listing requirements, stock exchange, commercial courts, minority shareholder, shareholder rights, redress, board appointment
    JEL: G38 K22 K42
    Date: 2014–09–30
  5. By: Doh-Shin Jeon (Toulouse School of Economics and CEPR); Yassine Lefouili (Toulouse School of Economics)
    Abstract: This paper investigates the patent licensing networks formed by competing firms. Assuming that licensing agreements can involve the payment of fixed fees only and that firms compete à la Cournot, we show that the complete network is always bilaterally efficient and that the monopoly network is bilaterally efficient if the patents are complementary enough. In the case of independent patents, we fully characterize the bilaterally efficient networks and find that when the cost reduction resulting from getting access to a competitor's technology is large enough, the complete network is the only bilaterally efficient one. We also show that the bilaterally efficient networks can be sustained as subgame-perfect Nash equilibria with symmetric payoffs. This implies that the Pareto-dominance criterion selects the network that maximizes industry profits when more than one bilaterally efficient network exists.
    Keywords: Licensing; Networks; Antitrust and Intellectual Property
    JEL: L12 L13 L41
    Date: 2014–09
  6. By: Agarwal, Anurag K.
    Abstract: Dispute resolution through arbitration is the chosen method for businesses, however, it has often been experienced that due to a poorly drafted arbitration clause in the main contract or in a separate contract, there is no effective arbitration between the parties and there is a new dispute regarding the existence of the arbitration clause, which has to be resolved at the preliminary stage so as to enable the parties to take part in arbitration proceedings or go ahead with litigation in the public courts. The possibility of a decision regarding the interpretation of arbitration clause be appealed in a higher court depends on the nature of parties and the amount at stake. Litigious parties, not willing to budge even a little, have no qualms in fighting it out till the highest court. And, in this process the original dispute takes a back seat. The paper examines some of the interesting disputes regarding the arbitration clause, which were decided by courts, and could have easily been avoided had the parties been cautious at the time of entering into the contract. The paper also provides suggestions for some common and avoidable problems to help businesses save time, effort and money which otherwise get wasted in getting the dispute resolution clause interpreted in the courts.
  7. By: Carrera, Sergio; Guild, Elspeth
    Abstract: Does Jean-Claude Juncker’s Commission herald a new start for Justice and Home Affairs cooperation in the EU? This essay outlines the main structural and thematic changes introduced by the new Commission, in particular those with direct or indirect relevance to Justice and Home Affairs or to the Area of Freedom, Security and Justice. The authors also reflect on what the new institutional configuration might mean for the substantive work of the Commission services and for their intra- and inter-institutional relations. They conclude with a set of policy priorities for the new European Commission.
    Date: 2014–09
  8. By: Verwijmeren, P.
    Abstract: The financial world does not have the best reputation. One of the problems is the perceived lack of integrity of financial markets, which is fuelled by examples of financial misconduct. I argue that with financial data becoming more widely available and constantly improving, financial researchers could help in identifying suspicious behavior in financial markets. I will provide examples of potentially fraudulent behavior surrounding executive compensation and security issuance. Allegedly, companies have backdated executives’ stock options and as such have increased executives’ effective compensation, and there might be widespread insider trading before the announcements of privately placed securities. Systematic analyses of the available data could detect these examples of misconduct. Overall, forensic finance has the potential to detect suspicious behavior and as such could play an important role in understanding and improving the integrity of the financial world.
    Keywords: Financial markets, executive compensation, stock options price, insider trading, financial research, forensic finance
    JEL: G12 G14 G24 G28 G3 K14
    Date: 2014–09–19
  9. By: Joel F. Houston (University of Florida and Hong Kong Institute for Monetary Research); Chen Lin (The University of Hong Kong and Hong Kong Institute for Monetary Research); Junbo Wang (City University of Hong Kong and Hong Kong Institute for Monetary Research)
    Abstract: In this paper, we examine the existence of a cross-monitoring effect between bank debt and public debt by exploring the effects that loan defaults have on the lead arranger's perceived monitoring ability in the public debt markets. Generating a sample of major loan defaults among U.S. firms between 2002 and 2010, we empirically test the effects that these loans had on the bond returns of publicly traded firms that had existing loans made by the same lead lender as the defaulting firm. We show that the abnormal returns of these "affected firms" are negative and statistically significant. Moreover, these abnormal returns are economically significant - with a mean about -1% when measured over an eleven day window surrounding the announcement of the defaulting loan. Interestingly, we find that these results are even stronger if the defaulting firm had a strong and/or long-standing relationship with its lead lender. We also find that the negative bond market effect is particularly strong if the defaulting loan is an important deal to the lender, if it is a recently originated loan, and if the borrower has better governance, higher profitability and higher firm value in the loan origination year. In contrast, the negative bond market effect is weakened if the affected firms have more intensive analyst coverage and higher firm values. Taken together, these results strongly confirm the existence of a cross-monitoring effect between bank debt and public debt.
    JEL: G30 G33
    Date: 2014–07
  10. By: Raffaella SANTOLINI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); David BARTOLINI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali)
    Abstract: The present work looks at the role of political institutions - political regimes and electoral rules - in determining the performance of the government to define and implement sound policies for the economy. The results of the empirical investigation on a panel of 80 democracies over the period 1996-2011, show an important impact of the political regime on the performance of the government - the presidential regimes reduces the quality of the government -, while electoral rules do not matter. However, the analysis shows that the interaction between political regimes and electoral rules plays a crucial role for the quality of the government. In particular, a presidential regime improves the government performance when associated with a majoritarian rule, while worsens it when combined with a proportional rule.
    Keywords: electoral rule, government eectiveness, political system, regulatory quality
    JEL: D72 H11
    Date: 2014–09
  11. By: Ritter, Dubravka (Federal Reserve Bank of Philadelphia)
    Abstract: The Payment Cards Center's September 2012 policy conference advanced the discussion of targeted design and outcome measurement as central features of public policy in the area of consumer financial protections. Speakers considered regulations addressing the disclosure of credit terms; standards for assessing the unfairness, deceptiveness, and abusiveness of lending acts or practices; the management of revolving credit accounts; and the challenges of analyzing consumer complaints in the context of consumer financial protections. The concluding panel discussed unanswered questions and research priorities going forward. Discussion focused on the data and methodology required and available for assessing the contribution of consumer financial protections to the advancement of, and the challenges inherent in, measuring social welfare. Panelists also considered the intended and unintended effects of these regulations on prices, quantities, competition, innovation, and the overall business risk market participants face.
    Keywords: Measurement; Consumer financial protection; Disclosure; UDAP; Unfair Deceptive Acts and Practices; UDAAP; Unfair; Deceptive; or Abusive Acts or Practices; Account management; Mortgages; Credit Cards; Consumer complaints
    JEL: G28 K23
    Date: 2014–09–13

This nep-law 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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.