nep-law New Economics Papers
on Law and Economics
Issue of 2015‒04‒11
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Optimal enforcement of competition policy : the commitments procedure under uncertainty By GAUTIER, Axel; PETIT, Nicolas
  2. Immigration, Regional Conditions, and Crime: Evidence from an Allocation Policy in Germany By Piopiunik, Marc; Ruhose, Jens
  3. Denying Leniency to Cartel Instigators: Costs and Benefits By Zhiqi Chen; Subhadip Ghosh; Thomas W. Ross
  4. Discovering the Miracle of Large Numbers of Antitrust Investigations in Russia: The Role of Competition Authority Incentives By Svetlana Avdasheva; Dina Tsytsulina; Svetlana Golovanova; Yelena Sidorova
  5. Large capacity magazines and homicide By Carlisle E. Moody
  6. 'High' Achievers? Cannabis Access and Academic Performance By Olivier Marie; Ulf Zölitz
  7. Institutional and Fiscal Analysis of Lower-level Courts in Solomon Islands By World Bank
  8. The Effect of Community Traumatic Events on Student Achievement: Evidence from the Beltway Sniper Attacks By Gershenson, Seth; Tekin, Erdal
  9. The review of constitutional norms concerning local public administration in the view of the European Commission for Democracy through Law (Venice Commission) By Apostolache, Mihai
  10. Black Cat, White Cat: The Identity of the WTO Judges By Johannesson, Louise; Mavroidis, Petros C.
  11. Dynastic Entrepreneurship, Entry, and Non-Compete Enforcement By James Rauch
  12. Does Prescription Drug Coverage Increase Opioid Abuse? Evidence from Medicare Part D By Rosalie Liccardo Pacula; David Powell; Erin Taylor

  1. By: GAUTIER, Axel (Université catholique de Louvain, CORE, Belgium); PETIT, Nicolas (University of Liege)
    Abstract: Since the introduction of a formal commitments procedure in EU an- titrust policy (Article 9 of Council Regulation 1/2003), the European Commission has extensively settled cases of alleged anticompetitive practices. In this paper, we use a formal model of law enforcement (Be- bchuk, 1984; Shavell, 1988) to identify the optimal procedure to resolve cases in a context of uncertainty related to the law (L-uncertainty) and to the facts (F-uncertainty). We show that commitments are subop- timal when L-uncertainty is important. Furthermore, the generalized use of commitments creates an additional risk of under-enforcement when F-uncertainty is significant.
    Keywords: Competition Policy, European Commission, Settlements, Commitments, Law Enforcement
    JEL: K21 K41 L40
    Date: 2014–12–01
  2. By: Piopiunik, Marc (Ifo Institute for Economic Research); Ruhose, Jens (Ifo Institute for Economic Research)
    Abstract: After the collapse of the Soviet Union, more than 3 million people with German ancestors immigrated to Germany under a special law granting immediate citizenship. Exploiting the exogenous allocation of ethnic German immigrants by German authorities across regions upon arrival, we find that immigration significantly increases crime. The crime impact of immigration depends strongly on local labor market conditions, with strong impacts in regions with high unemployment. Similarly, we find substantially stronger effects in regions with high preexisting crime levels or large shares of foreigners.
    Keywords: immigration, crime, allocation policy
    JEL: F22 J15 K42 R10
    Date: 2015–03
  3. By: Zhiqi Chen (Department of Economics, Carleton University); Subhadip Ghosh (Grant MacEwan University); Thomas W. Ross (Sauder School of Business, University of British Columbia)
    Abstract: A large number of countries have introduced successful leniency programs into their competition law enforcement to encourage colluding firms to come forward with evidence that will help detect cartels and punish price-fixers. This paper studies a feature of some of these programs that has received relatively little attention in the literature: the inclusion of “No Immunity for Instigators Clauses” (NIICs). These provisions deny leniency benefits to parties that instigate cartel behavior or function as cartel ringleaders. Our results show that NIICs can lead to increased or decreased levels of cartel conduct. By removing the instigator’s benefit from cooperating with the authorities, a NIIC undoes some of the destabilizing benefit the leniency program was intended to generate and thereby furthers cartel stability. On the other hand, the instigator faces an asymmetrically severe punishment under a NIIC and this can reduce the incentive to instigate in the first place.
    Keywords: antitrust, collusion, leniency programs, instigators
    JEL: L41 L12 K21
  4. By: Svetlana Avdasheva (National Research University Higher School of Economics); Dina Tsytsulina (National Research University Higher School of Economics); Svetlana Golovanova (National Research University Higher School of Economics); Yelena Sidorova (National Research University Higher School of Economics)
    Abstract: Many antitrust investigations in Russia continue to present a challenge for the assessment of competition policy and international enforcement ratings. On the one hand, many infringement decisions may be interpreted as an indicator of high enforcement efforts in the context of rigid competition restrictions and the significant related harm to social welfare. On the other hand, many investigations proceed under poor legal and economic standards; therefore, the impact of decisions and remedies on competition is questionable. In fact, large number of investigations may indicate the ineffectiveness of antitrust enforcement. The article explains the possible effects of antitrust enforcement in Russia. Using a unique dataset of the appeals of infringement decisions from 2008-2012, we classify the investigated cases according to their potential impact on competition. A case-level analysis reveals that the majority of cases would never be investigated under an appropriate understanding of the goals of antitrust enforcement, restrictions on competition and basic cost-benefit assessments of agency activity. There are diverse explanations for the distorted structure of enforcement, including the incompleteness and imperfection of sector-specific regulations, rules concerning citizen complaints against the executive authorities and the incentives of competition authorities. Our analysis shows that competition agencies tend to pay more attention to the investigation of cases, which requires less input and, at the same time, results in infringement decisions with a lower probability of being annulled
    Keywords: antitrust enforcement, authorities’ incentives, harm, Russia
    JEL: K21 K42
    Date: 2015
  5. By: Carlisle E. Moody (Department of Economics, The College of William and Mary)
    Abstract: Recent events have resulted in calls to ban large capacity magazines (LCMs) holding more than 10 rounds of ammunition. Using data from a Virginia data base of crime guns seized by police between 1993 and 2013, we find that the proportion of crime guns with LCMs declined after the 1994 Federal assault weapons ban and increased after the ban was lifted in 2004. However, we can find no evidence that LCMs increased either murder or gun murder, implying that the Federal LCM ban did not have the intended effect and that LCM bans are likely to be ineffective.
    Keywords: : large capacity magazines, homicide, gun homicide
    JEL: K42
    Date: 2015–04–02
  6. By: Olivier Marie; Ulf Zölitz
    Abstract: This paper investigates how legal cannabis access affects student performance. Identification comes from an exceptional policy introduced in the city of Maastricht which discriminated legal access based on individuals' nationality. We apply a difference-in-difference approach using administrative panel data on over 54,000 course grades of local students enrolled at Maastricht University before and during the partial cannabis prohibition. We find that the academic performance of students who are no longer legally permitted to buy cannabis increases substantially. Grade improvements are driven by younger students, and the effects are stronger for women and low performers. In line with how THC consumption affects cognitive functioning, we find that performance gains are larger for courses that require more numerical/mathematical skills. We investigate the underlying channels using students' course evaluations and present suggestive evidence that performance gains are driven by improved understanding of material rather than changes in students' study effort.
    Keywords: Cannabis, legalization, student performance
    JEL: I18 I20 K42
    Date: 2015–03
  7. By: World Bank
    Keywords: Law and Development - Judicial System Reform Gender - Gender and Law Public Sector Corruption and Anticorruption Measures Legal Institutions of the Market Economy Public Sector Development
    Date: 2015–02
  8. By: Gershenson, Seth (American University); Tekin, Erdal (American University)
    Abstract: Community traumatic events such as mass shootings, terrorist attacks, and natural or man-made disasters have the potential to disrupt student learning in numerous ways. For example, these events can reduce instructional time by causing teacher and student absences, school closures, and disturbances to usual classroom routines. Similarly, they might also disrupt home environments. This paper uses a quasi-experimental research design to identify the effects of the 2002 "Beltway Sniper" attacks on student achievement in Virginia's public schools. In order to identify the causal impact of these events, the empirical analysis uses a difference-in-differences strategy that exploits geographic variation in schools' proximity to the attacks. The main results indicate that the attacks significantly reduced school-level proficiency rates in schools within five miles of an attack. Evidence of a causal effect is most robust for third grade reading and third and fifth grade math proficiency, suggesting that the shootings caused a decline in school proficiency rates of about five to nine percentage points. Particularly concerning from an equity standpoint, these effects appear to be entirely driven by achievement declines in schools that serve higher proportions of racial minority and socioeconomically disadvantaged students. Finally, results from supplementary analyses suggest that these deleterious effects faded out in subsequent years.
    Keywords: crime, student, school, sniper, trauma, terrorism, achievement, shooting, guns, homicides
    JEL: I12 I21 K42
    Date: 2015–03
  9. By: Apostolache, Mihai
    Abstract: The proposals of the Commission to review the Constitution of Romania were subject to the analysis of experts from the European Commission for Democracy through Law (the Venice Commission), who expressed their opinion in a report adopted at the 98th plenary session of the European body. The article analyzes the recommendations of the Venice Commission regarding the proposed changes to the constitutional norms governing local public administration, comprising some general aspects concerning the role and importance of this advisory body of the Council of Europe
    Keywords: constitutional review, local public administration, the Venice Commission, constitutional court, Constitution
    JEL: K10 K2 K20
    Date: 2015–03–05
  10. By: Johannesson, Louise (Research Institute of Industrial Economics (IFN)); Mavroidis, Petros C. (Columbia Law School)
    Abstract: WTO judges are proposed by the WTO Secretariat and elected to act as ‘judges’ if either approved by the parties to a dispute, or by the WTO Director-General in case no agreement between the parties has been possible. They are typically ‘Geneva crowd’, that is, they are either current or former delegates representing their country before the WTO. This observation holds for both first- as well as second instance WTO judges (e.g. Panelists and members of the Appellate Body). In that, the WTO evidences an attitude strikingly similar to the GATT. Whereas the legal regime has been heavily ‘legalized’, the people called to enforce it remain the same.
    Keywords: Dispute resolution; Panelists; Judicial appointments
    JEL: K40
    Date: 2015–03–31
  11. By: James Rauch
    Abstract: We investigate entry in a dynastic entrepreneurship (overlapping generations) environment created by employee spinoffs. Without finance constraints, enforcement of non-compete agreements unambiguously improves social welfare outcomes, and even increases the rate of spinoffs from original firms. Indeed, if employers have all the bargaining power vis-à-vis their employees, optimal entry of original firms and all subsequent employee spinoffs is achieved, despite the fact that the original firm can only negotiate with the first spinoff. However, if employees are unable to buy out their non-compete contracts, enforcement of these agreements shuts down socially profitable spinoff firms. Non-enforcement sacrifices entry of original firms that would be marginally profitable in the absence of employee spinoffs, but otherwise clearly improves social welfare outcomes over enforcement in the presence of finance constraints.
    JEL: K12 L26
    Date: 2015–04
  12. By: Rosalie Liccardo Pacula; David Powell; Erin Taylor
    Abstract: Opioid abuse, as measured by deaths involving opioid analgesics and substance abuse treatment admissions, has increased dramatically since 1999, including a 20% increase in opioid-related mortality between 2005 and 2006. This paper examines whether the introduction of the Medicare Prescription Drug Benefit Program (Part D) in 2006 may have contributed to the increase in prescription drug abuse by expanding access to prescription drug benefits among the elderly. We test whether opioid abuse increased not only for the population directly affected by Part D (ages 65+) but also for younger ages. We compare growth in opioid prescriptions and abuse in states with relatively large ages 65+ population shares to states with smaller elderly population shares. Using data from the Drug Enforcement Agency’s Automation of Reports and Consolidated Orders System (ARCOS), we find opioid distribution increased faster in states with a larger fraction of its population impacted by Part D. We also find that this relative increase in opioids resulted in increases in opioid-related substance abuse treatment admissions. Interestingly, these states experienced significant growth in opioid abuse among both the 65+ population and the under 65 population, though the latter was not directly impacted by the implementation of Medicare Part D. We also find that opioid-related mortality increased disproportionately in the high elderly share states, though this relationship is not statistically different from zero.
    JEL: I13 I18 K42
    Date: 2015–04

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