nep-law New Economics Papers
on Law and Economics
Issue of 2015‒05‒09
seven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Penalty Structures and Deterrence in a Two-Stage Model: Experimental Evidence By Lisa R. Anderson; Gregory DeAngelo; Winand Emons; Beth Freeborn; Hannes Lang
  2. The Role of Constitutions on Poverty: A Cross-NationalInvestigation By Lanse Minkler; Nishith Prakash
  3. \"The parts and the whole”: Unbundling and re-bundling institutional systems and their effect on economic development By ROUGIER Eric
  4. On the Effect of State fragility on Corruption By Simplice Asongu
  5. Intellectual Property Protection And Drug Plan Coverage: Evidence From Ontario By Paul Grootendorst; Minsup Shim; Adam Falconi; Tyler Robinson; Ethar Ismail; Joel Lexchin
  6. The Maximum Punishment Principle and Precision of Audits under Limited Commitment - Preliminary and Incomplete Version - By Martin Pollrich
  7. Dance Participation and Attendance in Denmark By Karol J. Borowiecki; Catarina Marvao

  1. By: Lisa R. Anderson; Gregory DeAngelo; Winand Emons; Beth Freeborn; Hannes Lang
    Abstract: Increasing penalty structures for repeat offenses are ubiquitous in penal codes, despite little empirical or theoretical support. Multi-period models of criminal enforcement based on the standard economic approach of Becker (1968) generally find that the optimal penalty structure is either flat or declining. We experimentally test a two-stage theoretical model that predicts decreasing penalty structures will yield greater deterrence than increasing penalty structures. We find that decreasing fine structures are more effective at reducing risky behavior. Additionally, our econometric analyses reveal a number of behavioral findings. Subjects are deterred by past convictions, even though the probability of detection is independent across decisions. Further, subjects appear to take the two-stage nature of the decision making task into account, suggesting that subjects consider both current and future penalties. Even controlling for the fine a subject faces for any given decision, being in a decreasing fine structure has a significant effect on deterrence.
    JEL: C91 K42 K10
    Date: 2015–04
  2. By: Lanse Minkler (University of Connecticut); Nishith Prakash (University of Connecticut)
    Abstract: We use novel historical data on economics and social rights from the constitutions of 195 countries and an instrument variable strategy to answer two important questions. First, do economic and social rights provisions in constitutions reduce poverty? Second, does the strength of constitutional language of the economic and social rights matter? Constitutional provisions can be framed either more weakly as directive principles or more strongly as enforceable law. Our OLS results suggest three findings. First, we do not find an association between constitutional rights generally framed and poverty. Second, we do not find an association between economic and social rights framed as directive principles and poverty. Third, we do find a strong negative association between economic and social rights framed as enforceable law and poverty. When we use legal origins as our IV, we find evidence that this result is causal. Our results survive a variety of robustness checks. The policy implication is that constitutional provisions framed as enforceable law provide effective meta-rules with incentives for policymakers to initiate, fund, monitor and enforce poverty reduction policies.
    Keywords: Economic and Social Rights, Constitutions, Enforceable Law, Directive Principles, Poverty, Instrumental Variables, Legal Origin
    JEL: I24 I32 I38 O1 O38
    Date: 2015–09
  3. By: ROUGIER Eric
    Abstract: This paper surveys the growing empirical neo-institutional literature dealing with economic development and shows that it has essentially developed a one-dimensional perspective on institutions and their effect on economic development that has overlooked the fact that economic effects of institutions actually tend to cluster. The paper introduces an original framework to analyze institutional systems and the clustered effect of institutions. Drawing on this framework and on recent empirical studies having attempted to unbundle or re-bundle institutional systems along these lines, it is argued that understanding how institutions cluster their impact on economic outcomes imposes to give more attention to institutional systems, notably by (1) unbundling the specific economic effects of specialized institutions from those of such general purpose institutions as rule of law or property right enforcement, and by (2) re-bundling these effects so that de jure and de facto complementarities and hierarchies can be identified between specialized and general purpose institutions.
    Keywords: Economic institutions; Political institutions; Economic development; Institutional complementarities; Institutional hierarchies; Institutional systems; Institutional clusters
    JEL: O17 P51 K11 K31
    Date: 2015
  4. By: Simplice Asongu (Yaoundé/Cameroun)
    Abstract: The Kodila-Tedika & Bolito-Losembe (2014, ADR) finding on no evidence of causality flowing from State fragility to classical corruption or extreme corruption could have an important influence on academic and policy debates. Using updated data (1996-2010) from 53 African countries, we provide evidence of a positive (negative) nexus between political stability/no violence and corruption-control (corruption). As a policy implication, the finding of the underlying paper maybe more expositional than factual and should be treated with caution.
    Keywords: Fragility; Corruption; Conflicts; Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2014–04
  5. By: Paul Grootendorst; Minsup Shim; Adam Falconi; Tyler Robinson; Ethar Ismail; Joel Lexchin
    Abstract: Canada has strengthened intellectual property (IP) protections for pharmaceutical drugs several times over the last three decades. These changes were intended to lengthen the period of market exclusivity for new brand drugs and thereby allow them to earn additional sales revenues that could be used to recoup R&D investments. Whether these policies achieved their objective of increasing sales revenues is unclear, however. Whether they did depends on the coverage decisions of the major drug plans. Longer periods of market exclusivity amount to a price increase for brand drugs. In response to higher prices, drug plans could have become more selective in the drugs they cover, and they could have waited longer to list these drugs on their formularies, reducing formulary exclusivity periods. To investigate, we assembled data on the coverage of brand drugs approved for use in Canada over the last 35 years by the Ontario Drug Benefit (ODB) program, the largest and most influential drug plan in Canada. We find that, except for a brief period of time, the marked strengthening of Canadian pharmaceutical IP laws over the last 25 years have not lead to an increase in the exclusivity period that brand-name drugs enjoy on the ODB formulary. In fact, exclusivity periods have been dropping more or less consistently since the mid 1970s. The causes of these changes remain to be explored.
    Keywords: intellectual property, pharmaceuticals, public drug coverage, ontario
    JEL: I18 I13 O34
    Date: 2015–05
  6. By: Martin Pollrich (Humboldt-Universitaet zu Berlin)
    Abstract: For optimal audit contracts the principle of maximum deterrence applies: penalties imposed by the contract are either zero or at their maximal level. Additionally, an imperfect audit technology which reveals the agent’s type only with an error makes the principal worse off. In this paper I show that both statements are no longer true when the principal cannot commit to an audit strategy. Both intermediate penalties and imperfect audits facilitate the creation of incentives for the principal to carry out an audit. Creation Date: 2015-03-18
    Keywords: Auditing, limited commitment, contract theory
    JEL: D82 D86 C72
  7. By: Karol J. Borowiecki (Department of Business and Economics, University of Southern Denmark, Odense,Denmark); Catarina Marvao (SITE-Stockholm School of Economics, Stockholm, Sweden)
    Abstract: Dancing may be one of the most competitive professions availabl career-wise. The lack of job opportunities and the competitiveness, the inherent expense in costumes and training and the high risk of injuries mean that only few dancers are able to make it their profession. However, dancing is an activity that comes with positive externalities, as various socioeconomic benefits are experienced by those who practice dance non-professionally. Despite the importance of dancing, very little is known with respect to the profiles of dancers. This paper, by availing of an information database on cultural preferences and habits in Denmark for 2004, illustrates the profiles of dancers and dance audiences and so deepens the current knowledge on the functioning of the dance market. We show that there exists a very strong positive correlation between cultural participation and the well-being of a society. These links are carefully described in the paper.
    Keywords: Cultural consumption, Book markets, Cultural policy, Value added tax, fiscal policy
    JEL: H21 H31 I30 K34 Z11
    Date: 2015–04

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