nep-law New Economics Papers
on Law and Economics
Issue of 2015‒01‒14
thirteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Effect of Workfare on Crime: Incapacitation and Program Effects By Fallesen, Peter; Geerdsen, Lars Pico; Imai, Susumu; Tranæs, Torben
  2. How To Balance Interests: Comparative Legal Aspects On The Limitation Of Copyright In International Law By Tatiana Brazhnik
  3. The Importance of Credible Commitments in Marriage: The Effect of Recognizing Homemakers’ Contribution in Property Division at Divorce in Law on Marital Formation and Dissolution By Ho-Po Crystal Wong
  4. The Mechanisms of Alcohol Control By Carpenter, Christopher S.; Dobkin, Carlos; Warman, Casey
  5. The Antecedents and Effects of Corruption - A Reassessment of Current (Empirical) Findings By Dimant, Eugen
  6. The EU’s sense of the rule of law and the issue of its oversight By Gianluigi Palombella
  7. Who Demands Collective Action In An Imperfect Institutional Environment? A Case-Study Of The Professional Community Of Attorneys In Russia By Anton P. Kazun; Andrei A. Yakovlev
  8. Economic Freedom and Recidivism: Evidence from US States By Joshua C. Hall; Kaitlyn Harger; Dean Stansel
  9. Law and structure of the capital markets By Gu, Xian; Kowalewski, Oskar
  10. Mergers in declining industries: puzzles from competition and industrial policies By Angelo Castaldo; Laura Ferrari-Bravo
  11. Are Patent Fees Effective at Weeding out Low-quality Patents? By Gaétan de Rassenfosse; Adam B. Jaffe
  12. Corruption Markets: An Analytical Framework For Assessing Anti-Corruption Campaigns By Varvara M. Vasileva; Anton N. Vorobyev
  13. The impact of the Bosman ruling on the market for native soccer players By Marcén, Miriam

  1. By: Fallesen, Peter (Rockwool Foundation Research Unit); Geerdsen, Lars Pico (Kraks Fond); Imai, Susumu (University of Technology, Sydney); Tranæs, Torben (Rockwool Foundation Research Unit)
    Abstract: In this paper, we estimate the effect of workfare policy on crime by exploiting two exogenous welfare policy changes in Denmark. Our results show a strong decline in the crime rate among treated unemployment uninsured men relative to untreated uninsured and unemployment insured men, and part of this decline can be identified as a direct effect of workfare participation. Moreover, we find that criminal activity was also reduced during weekends, when the workfare programs were closed, allowing us to distinguishing the pure program effect from the incapacitation effect. These results imply a strong and potentially lasting crime reducing effect of workfare policy.
    Keywords: crime reduction, difference-in-differences, policy experiment, secondary effects, workfare policy, workfare and crime, unemployment and crime
    JEL: I38 K42
    Date: 2014–12
  2. By: Tatiana Brazhnik (National Research University Higher School of Economics)
    Abstract: The present article is motivated by the growing interest in the problem of copyright limitation and the comparatively low interest in the problem of legal system connections. Despite the fact that differences in regulation have been recognised for a long period of time, there is still no harmonization in the field. Although recent research works are numerous, it is still not agreed whether common law family or continental law family is better for international use. The issue at hand is influenced by the significant importance of the internet and electronic commerce. Moreover, it addresses the more fundamental question of the division of legal systems. This paper analyses both approaches; shows doctrinal differences in copyright limitation principles; reveals the connection between regulatory frames and existing legal systems; describes the current and potential pitfalls of framework clashes; and identifies modern global legal trends. The findings demonstrate the dependence of recent legal decisions and norms on the philosophical approach applied in a country. In addition, the paper suggests different steps and models of regulatory unification. The theoretical contribution of the work can help the development of new copyright limitation schemes and harmonize international law on this issue
    Keywords: copyright, copyright limitation, common law family, continental law, intellectual property, intellectual rights, “open” regime, “close” regime.
    JEL: O34
    Date: 2014
  3. By: Ho-Po Crystal Wong (West Virginia University, College of Business and Economics)
    Abstract: The unilateral divorce reform in the 1970's has been accompanied by a secular decline in marriage. This paper investigates how the homemaking provision in divorce law that gives recognition to homemakers' contribution during marriage in divorce property division affects marital formation and dissolution. Hypothetically the provision enhances the commitment to homemakers in marriage, which would increase the incentives to form marriage as it encourages spousal co-operation in time-allocation and marriage-specific investment. I find evidence that the homemaking provision stimulates marriage using both state and individual level data. The law also lowers divorce risk for individuals married prior to the reform by at least 9.7 percent.
    Keywords: credible commitments, divorce law, divorce, homemakers, marriage, property rights, unilateral divorce
    JEL: D13 J12 J2
    Date: 2014–12
  4. By: Carpenter, Christopher S. (Vanderbilt University); Dobkin, Carlos (University of California, Santa Cruz); Warman, Casey (Dalhousie University)
    Abstract: A substantial economics literature documents that tighter alcohol controls reduce alcohol related harms, but far less is known about mechanisms. We use the universe of Canadian mortality records to document that Canada's Minimum Legal Drinking Age (MLDA) significantly reduces mortality rates of young men but has much smaller effects on women. Using drinking data that are far more detailed than in prior work, we document that the MLDA substantially reduces 'extreme' drinking among men but not women. Our results suggest that alcohol control efforts targeting young adults should focus on reducing extreme drinking behavior.
    Keywords: alcohol control, MLDA, mechanisms
    JEL: I18
    Date: 2014–12
  5. By: Dimant, Eugen
    Abstract: Corruption has fierce impacts on economic and societal development and is subject to a vast range of institutional, jurisdictional, societal and economic conditions. Research indicates that corruption’s predominantly negative effects have arisen to a massive transborder threat while creating high obstacles to sustainable and prospective development. It is this paper’s aim to provide a reassessment and a comprehensive state-of-the-art survey of existing literature on corruption and its antecedents and effects. A particularly strong focus is put on presenting and discussing insights resulting from empirical research.
    Keywords: Bribery, Corruption, Measuring Corruption, Determinants, Consequences, Survey
    JEL: D73 H1 K42 O17
    Date: 2014–12
  6. By: Gianluigi Palombella
    Abstract: The chapter addresses the much debated role of the European Union in defending its Treaty art. 2 values even inside the Member states’ borders. The nature of the EU as a two-level systems is admittedly the first reason for a peculiar complexity of the issue. But some common places are discussed that might still foreclose an appropriate approach to the problem. To the forefront are brought questions, often overlooked in this context, concerning the meaning of the Rule of law that the EU upholds and practices, the possibility of a transitive notion of that normative ideal, its relation to democracy, both in the conceptual sense and in the EU contextual frame.
    Keywords: rule of law; democracy
    Date: 2014–12–10
  7. By: Anton P. Kazun (National Research University Higher School of Economics); Andrei A. Yakovlev (National Research University Higher School of Economics)
    Abstract: We analyse the professional community of attorneys in Russia in order to understand their potential for collective action in an imperfect institutional environment. In 2013 we conducted a survey of 372 attorneys in 9 regions of Russia. Two main hypotheses are tested: 1) lawyers with strong ethical values have higher demand for collective actions; 2) the negative experience of clients rights violation by law enforcement officers can motivate attorneys to support the foundation of a strong professional association. Also we suggest that attorneys’ professional community with bona fide members at the core could be an instrument for an estimation of the quality of law enforcement in Russia.
    Keywords: collective actions, professional community of attorneys, legal ethics, lawyer associations, quality of law enforcement system, violations of the rights of defendants.
    JEL: K49 D71 L84
    Date: 2014
  8. By: Joshua C. Hall (West Virginia University, College of Business and Economics); Kaitlyn Harger (West Virginia University, College of Business and Economics); Dean Stansel (Florida Gulf Coast University, Lutgert College of Business)
    Abstract: This paper provides an exploratory analysis into factors contributing to differences across states in recidivism rates. We provide the first such examination that incorporates differences in economic freedom. Using a panel data set from 1998-2010, we find that higher levels of economic freedom within a state are associated with lower recidivism rates within that state. A one percent increase in economic freedom is associated with a 0.47 percent decrease in recidivism. The relationship is stronger and more statistically significant for labor market freedom, with a one percent increase in labor market freedom being associated with a 0.67 percent decline in recidivism.
    Keywords: recidivism, institutions, prison, parole
    JEL: D02 K14 K42 Z13
    Date: 2014–12
  9. By: Gu, Xian; Kowalewski, Oskar
    Abstract: In this paper, we examine whether legal systems affect the structure of capital markets in terms of the development of bond markets versus equity markets. Using a dataset of 42 developed and developing countries, we document that a country's legal system, especially investor protections, determines the structure of the capital markets in a country. Our results indicate that in countries with stronger creditor rights, the bond markets are more developed than the equity markets. Alternatively, in countries with stronger shareholder rights, the equity markets are more developed than the bond markets. Additionally, we determine that the effects of financial reforms are strongly dependent on the strength of investor protections and information disclosure.
    Keywords: bond market; equity market; law, financial reform; information disclosure; crisis
    JEL: G10 G18 G20 G28
    Date: 2014–12–25
  10. By: Angelo Castaldo (Sapienza Università di Roma); Laura Ferrari-Bravo (Sapienza Università di Roma)
    Abstract: Exit strategies referred to specific industry characteristics have been widely studied in the economic literature (Harrigan, 1980; Ghemawat et al., 1985, 1990; Lieberman, 1990; Reynolds, 1988; Fundenberg et al., 1989; Baptista et al., 2006). These studies show that exit dynamics – by setting new boundaries and changing the dynamic of sectorial competition – may reallocate activities towards more efficient outcomes. In declining industries particularly exit strategies play a crucial role in granting efficiency. When demand declines, efficiency rules call out for a shrink in production capacity. We focus on M&A as a strategy of orderly exiting from a declining industry. We argue that merger strategies in such a context could represent an efficient solution to the attrition game. However, mergers often give rise to competitive concerns. This raises the question of how to reconcile the enforcement of competition rules with the need of mergers as efficient devices for orderly exiting from declining industries. We suggest a two-step approach to merger scrutiny that, beginning from market definition from both a competition law and industrial policy perspective, attempts to solve the trade-off between fostering competition and recovering from decline, thereby reducing the possibility of committing Type I and II errors in assessing the competitive impact of mergers.
    Keywords: Declining Industries, Mergers
    JEL: G34 K21 L41 L52
    Date: 2014–12
  11. By: Gaétan de Rassenfosse; Adam B. Jaffe
    Abstract: The paper investigates whether patent fees are an effective mechanism to deter the filing of low-quality patent applications. The study analyzes the effect of the Patent Law Amendment Act of 1982, which resulted in a substantial increase in patenting fees at the U.S. Patent and Trademark Office, on patent quality. Results from a series of difference-in-differences regressions suggest that the increase in fees led to a weeding out of low-quality patents. About 16–17 per cent of patents in the lowest quality decile were filtered out. The figure reaches 24–30 per cent for patents in the lowest quality quintile. However, the fee elasticity of quality decreased with the size of the patent portfolio held by applicants. The study is relevant to concerns about declines in patent quality and the financial vulnerability of patent offices.
    JEL: K2 O31 O34 O38
    Date: 2014–12
  12. By: Varvara M. Vasileva (National Research University Higher School of Economics); Anton N. Vorobyev (National Research University Higher School of Economics)
    Abstract: Assuming that there is a “missing factor” in the modern corruption studies, authors develop a new conceptual approach to the study of corruption and effectiveness of anti-corruption regulations in the public service. This “missing factor” is a “corruption market”, particularly, its size, type and nature. Conflict of interest regulations aim at controlling key channels of corruption behavior, and corruption market in its turn determines prevailing channels of existing corruption behavior. Misidentification of corruption market’s type is the main reason for the failure of anti-corruption policies, no matter how new and effective models are imported. Corruption market’s size is defined as the number and average price of corruption deal. The nature of corruption market depends on the side, capable of setting the final price of corruption deal. Resulting from institutional characteristics of public administration, corruption markets are either seller’s or buyer’s markets. Seller’s corruption markets are sensible to ethic regulations of public service, and the only effective way of tackling buyer’s corruption markets are “cut-red-tape” reforms and introduction of compliance-based regulation of conflict of interest. Type of corruption market encompasses 3 dimensions: quality of institutions, scope of regulations and degree of regulations. Basing on the introduced model, authors identify and analyze 8 types of existing corruption markets. Each type of corruption market has its own transformational dynamics and, consequently, own opportunities for anti-corruption policies. A new conceptual model of corruption market evolution is introduced in the article. Transformations of corruption markets depend on several factors. The key factors are personalization of political regime, “new public management” reforms of public administration, populist policies and creation of rentier states, and set up of the Welfare State
    Keywords: corruption market, corruption deal, quality of institutions, scope of regulations, degree of regulations, conflict of interest, public service, patronage networks, seller’s market, buyer’s market, demand and supply of corruption
    Date: 2014
  13. By: Marcén, Miriam
    Abstract: This paper examines whether the Bosman ruling plays an important role in the market for native soccer players. Through the abolition of transfer fees after the expiration of contracts, as well as the liberalization of the migration of professional soccer players within the European Union, the Bosman ruling could negatively impact the number of national players participating in their national leagues. To explore this issue, we use data on the First Division of the Spanish League for the seasons 1980/1981 to 2011/2012. Results point to a decline in the number of native Spanish players after the Bosman ruling, although the impact does not appear to be permanent. This finding is consistent with the use of different subsamples, and to the introduction of controls for unobserved characteristics varying at the team level or over time, and to observed characteristics such as GDP per capita, population, the age of players, and potential TV revenues. This work also explores the impact of other, similar legislative changes, such as the Kolpak case and the Cotonou agreement, which appeared in the post-Bosman period. In addition, we incorporate empirical evidence of the potential impact that the Bosman ruling may have on the performance of the Spanish players. Our findings indicate that the Bosman case has had a negative impact on the number of minutes played and on the participation of national players in the first team, suggesting that an average Spanish player is less important to his team.
    Keywords: Bosman ruling, Spanish League, National Labor Market, Kolpak-Nihat-Simutenkov cases, Cotonou agreement, TV rights.
    JEL: F22 J22 K19 L83
    Date: 2014–12–12

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