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on Law and Economics |
| By: | Shastitko, Andrey (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Pavlova, Natalia (National Research University Higher School of Economics - Institute for Industrial and Market Studies) |
| Abstract: | The work is an attempt to analyze leniency programs for cartel participants in terms of discrete structural alternatives of their design. A set of basic theoretical bifurcations in the structure of such programs is established. Consequently, for each bifurcation the main structural alternatives are defined. Leniency programs in the US and the EU are used to illustrate some of the specifics of programs functioning in practice. The analysis allows us to outline the problem field of developing leniency programs and to offer a number of solutions to emerging problems. |
| Keywords: | leniency programs, cartels, discrete structural alternatives, antitrust policy |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:ppaper:mn32&r=law |
| By: | Ojo, Marianne |
| Abstract: | This paper is aimed at highlighting Posner and Hayek’s consensus on the importance of decentralization, as well as the significance of the incorporation of non-legal actors as tools for facilitating the efficient allocation of resources in common law. In addition to highlighting the consensus on the views of Posner and Hayek, in respect of de centralization of information within the judicial process, this paper aims to address why de centralization serves as a vital tool in facilitating the objective of common law as an efficiency allocation mechanism. Whilst it is argued that lower court judges may not and should not be given such flexibility to make and unmake the law, the principles and decisions of law lords acting in the capacity of legislature, have also illustrated in several leading cases that the flexibility intended by Parliament may be misinterpreted and wrongly applied in future cases. This has also resulted in the criticism of extrinsic aids to statutory interpretation. This paper analyses and expands on these observations. |
| Keywords: | legitimate expectations; certainty; flexibility; judicial precedents; statutory interpretation; allocative efficiency; Pepper v Hart; Daubert; common law; regulatory capture; regulation |
| JEL: | D8 E3 G3 K2 M4 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:64780&r=law |
| By: | Gicoamo Rodano (Bank of Italy); Nicolas Serrano-Velarde (Bocconi University); Emanuele Tarantino (University of Mannheim) |
| Abstract: | Exploiting the timing of the 2005-06 Italian bankruptcy law reforms, we disentangle the effects of reorganization and liquidation in bankruptcy on bank financing and firms’ investment. A 2005 reform introduces procedures facilitating loan renegotiation. The 2006 reform subsequently strengthens creditor rights in liquidation. The first reform increases interest rates and reduces investment. The second reform reduces interest rates and spurs investment. Our results highlight the importance of identifying the distinct effects of liquidation and reorganization, as these procedures address differently the tension in bankruptcy law between the continuation of viable businesses and the preservation of repayment incentives. |
| Keywords: | financial distress, financial contracting, renegotiation, multi-bank borrowing, bankruptcy courts |
| JEL: | G33 K22 |
| Date: | 2015–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1013_15&r=law |
| By: | Alemanno , Alberto; Sibony , Anne-Lise |
| Abstract: | Nudge and the Law explores the legal implications of the emergent phenomenon of behaviourally informed intervention. It focuses on the challenges and opportunities it may offer to the policymaking of the European Union. This dual focus on law and on Europe characterises our endeavour. This volume has been structured by taking as a point of the departure the current nudging debate, which mainly comprises two strands of enquiry: when is it legitimate for States to use psychology to inform policy? (the legitimacy debate) and, to the extent that it is legitimate, how can behavioural insights in practice be incorporated into the decision making processes? (the practicability debate). Against this backdrop we brought together scholars who could analyse what behavioural insights might bring to EU law, both at a horizontal level and at a sectoral level. This volume endeavours to present the results of their research in a manner that is accessible both to EU law specialists who are not yet familiar with behavioural sciences and to behavioural lawyers who are not specialists in EU law. |
| Keywords: | EU Law; behavioural sciences; nudges; regulation; libertarian paternalism; regulatory policy; policymaking; behavioural policy; impact assessment; randomized control trials |
| JEL: | I12 I28 J18 K00 K20 K23 K32 M00 |
| Date: | 2015–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1084&r=law |
| By: | Michael, Bryane; Wojick, Dariusz; Arner, Douglas W.; Tong, Wilson; Lin, Chen; Zhou, Simon |
| Abstract: | Roughly 60% of all publically announced advisors to China’s “Going Out” M&A transactions from 2000 to 2014 were from international financial centres (representing over 70% of deal value). Why did advisors, located so far away from both acquirer and target, manage to dominate the M&A advisory market in the early stages of the “Going Out” policy? What can we learn from the smaller advisors located outside of these financial centres who managed to capture a growing share of this business in “Going Out’s” more recent stages? In this paper, we hypothesize the existence of a “legal complexity externality” that had the effect of increasing a financial centre’s ability to attract international business. We look at the way Going Out advisors have responded to advisory opportunities using what management theorists call “blue ocean strategy.” We show that relationships across geography changed, as large global advisors lost their share of advisory business to advisors outside of international financial centres due to the interplay of these legal complexity externalities and blue ocean strategies. As cities helps foster changes in the law governing Going Out transactions – and as financial and legal advisors adapted their strategies to compete – cities gained or lost Going Out business. We provide 5 recommendations to existing and aspiring international financial centres looking to capture a larger share of global M&A and other investment advisory business. |
| Keywords: | law schools,international financial centre,mergers and aquisitions,Going Out Policy,legal complexity externality,professional services |
| JEL: | K40 G34 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:110603&r=law |
| By: | Avdic, Daniel; Bünnings, Christian |
| Abstract: | Indirect psychological effects induced by crime are likely to contribute significantly to the total costs of crime beyond the financial costs of direct victimization. Using detailed crime statistics for the whole of Germany and linking them to individual-level mental health information from the German Socio-Economic Panel, we analyze whether local crime rates affect the mental health of residents. We estimate that a one standard deviation increase in local violent crime rates significantly decreases individual mental well-being among residents by, on average, one percent. Smaller effects are found for property and total crime rates. Results are insensitive to migration and not isolated to urban areas, but are rather driven by less densely populated regions. In contrast to previous literature on vulnerability to crime, we find that men, more educated and singles react more to variation in violent crime rates in their neighborhoods. One potential explanation could be that those who are more fearful of crime have developed better coping strategies and, hence, react less to changes in crime. |
| Abstract: | Indirekte psychologische Effekte stellen möglicherweise einen erheblichen Teil der durch Kriminalität verursachten Gesamtkosten dar. Um zu analysieren, ob regionale Kriminalitätsraten die mentale Gesundheit beeinflussen, nutzen wir detaillierte Kriminalitätsinformationen für Deutschland und verknüpfen diese mit Informationen zu individueller mentaler Gesundheit aus dem Sozio-ökonomischen Panel. Unsere Schätzergebnisse implizieren, dass der Anstieg um eine Standardabweichung in der Gewaltverbrechensrate das mentale Wohlbefinden der lokalen Bevölkerung signifikant um durchschnittlich ein Prozent reduziert. Für Eigentumsdelikte und die Gesamtkriminalitätsrate beobachten wir geringere Effekte. Die Ergebnisse werden weder durch Wohnortwechsler beeinflusst noch sind sie auf urbane Regionen begrenzt, sondern sind vielmehr durch weniger dicht besiedelte Regionen getrieben. Im Gegensatz zur Literatur zur Angst vor Kriminalität beobachten wir, dass Männer, höher Gebildete und Alleinstehende sensibler auf Veränderungen in der regionalen Gewaltverbrechensrate reagieren. Eine Erklärung hierfür könnte sein, dass diejenigen, die mehr Angst vor Kriminalität haben, entsprechende Coping-Strategien entwickelt haben und daher auch weniger auf Veränderungen in der Kriminalitätsrate reagieren. |
| Keywords: | fear of crime,spillover effect,mental health,vulnerability,neighborhood effects,panel data |
| JEL: | C23 I18 K42 R23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:540&r=law |
| By: | De Simone, Lisa (Stanford University); Sansing, Richard (Dartmouth College and CentER, Tilburg University) |
| Abstract: | This study investigates three mechanisms used by multinational corporations (MNCs) to shift valuable intellectual property (IP) offshore to low-tax foreign jurisdictions. We identify two major effects that determine the optimal mechanism: the divergence from arm's length effect and the marketing intangible effect. First, if the MNC can understate the fair market value of IP, it prefers to sell domestically developed IP to a foreign subsidiary, which in turn will develop the IP; if the tax authority can overstate the value by imposing retroactive revaluations of the IP, the MNC prefers to develop the IP domestically. Second, we find that using a cost sharing arrangement (CSA) to develop the IP enables the MNC to shift income to low-tax foreign jurisdictions when the MNC has valuable domestic marketing intangibles, such as a global brand. |
| JEL: | D23 H25 |
| Date: | 2015–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:stabus:3265&r=law |
| By: | Rezaee, Amir; Kirat, Thierry |
| Abstract: | The paper offers an empirical analysis of the effects of sanctions decided by the Financial Markets Authority (AMF) on the reputation of firms in France. Using an event study, we intend to show the impact of three events on the stock prices : opening of an investigation by the AMF ; issuance of a monetary sanction ; publication of the information about sanction a newspaper. The reputational impact issue raises the broader issue of understanding of financial regulation enforcement operates in concreto. We find a strong negative impact of the announcement of sanction in press on the firms’ stock prices. We observe a reputational loss of the deferred firm following the disclosure of sanction in press. We observe also a weak decrease in stock prices when the firm has been notified of the opening of investigation on its misconducts, however we find no evidence on the impact of announcement of sanction directly to the firm on the stock prices. We carry out an OLS cross-section regression to assess the impact of the amount of sanction on the reputational loss of firm. The amount of monetary sanctions are too low, compared the market size of deferred companies, to influence stock prices and contribute in reputational loss. |
| Keywords: | Sanctions; Finances internationales; Autorité des marchés financiers; Finance regulation; |
| JEL: | K00 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:dau:papers:123456789/15152&r=law |
| By: | Tröger, Tobias H. |
| Abstract: | This paper looks into the specific influence that the European banking union will have on (future) bank client relationships. It shows that the intended regulatory influence on market conditions in principle serves as a powerful governance tool to achieve financial stability objectives. From this vantage, it analyzes macro-prudential instruments with a particular view to mortgage lending markets - the latter have been critical in the emergence of many modern financial crises. In gauging the impact of the new European supervisory framework, it finds that the ECB will lack influence on key macro-prudential tools to push through more rigid supervisory policies vis-à-vis forbearing national authorities. Furthermore, this paper points out that the current design of the European bail-in tool supplies resolution authorities with undue discretion. This feature which also afflicts the SRM imperils the key policy objective to re-instill market discipline on banks' debt financing operations. The latter is also called into question because the nested regulatory technique that aims at preventing bail-outs unintendedly opens additional maneuvering space for political decision makers. |
| Keywords: | banking union,macro-prudential supervision,real estate lending,bail-in,market discipline |
| JEL: | E44 G01 G18 G21 G28 K22 K23 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:safewp:109&r=law |
| By: | Cristina Bellés-Obrero; Sergi Jiménez-Martín; Judit Vall-Castello |
| Abstract: | We use an exogenous variation in the Spanish legal working age to investigate the effect of education on fertility and infant health. The reform introduced in 1980 raised the minimum legal age to work from 14 to 16 years old. We show that the reform increased educational attainment, which led to 1786 more women remaining childless and 3307 less children being born in the 10 generations after the reform. These negative effects operate through a postponement of first births until an age where the catching up effect cannot take place. We show that woman’s marriage market is one channel through which education impacts fertility, delaying the age at which women marry for the first time and reducing the likelihood that a woman marries. Even more importantly, this postponement in fertility seems to be also detrimental for the health of their offspring at the moment of delivery. The reform caused 2,789 more children to be born with less than 37 weeks of gestation, 268 died during the first 24 hours of life and 4,352 were born with low birth weight. We are able to document two channels that contribute to the negative effects on infant health: the postponement in age of delivery as well as a higher employment probability of more educated women, which enhances unhealthier behaviors (smoking and drinking). |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1484&r=law |