nep-law New Economics Papers
on Law and Economics
Issue of 2015‒08‒01
five papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Decentralisation and The Evolution of Common Law By Ojo, Marianne
  2. Temporal displacement of environmental crime. Evidence from marine oil pollution By Vollaard, Ben
  3. Rail Rate Mediation and Arbitration for Grain Shippers By Prater, Marvin; Sparger, Adam
  4. Innovation and imitation: effects of intellectual property rights in a product-cycle model of skills accumulation By Chen, Hung-Ju
  5. When Do Punishment Institutions Work? By Patrick Aquino; Robert S. Gazzale; Sarah Jacobson

  1. By: Ojo, Marianne
    Abstract: This paper is aimed at highlighting how common law has evolved over the centuries, namely through the flexibility accorded to judicial precedents, as well as through the evolutionary nature evidenced in the processes and rules applied in statutory interpretation. In addition to illustrating how informational asymmetries can be mitigated through de centralisation, facilitated with courts employing the use of non-legal agents such as expert witnesses - as evidenced in the Daubert case, Pepper v Hart also illustrates how common law has evolved through the scope and permissibility of aids to statutory interpretation. Whilst financial markets and changes in the environment impact legislators, and whilst it is widely accepted that legislation constitutes the supreme form of law, the necessity for judges to introduce a certain level of flexibility will also contribute towards ensuring that legitimate expectations of involved parties are achieved - particularly where the construction of the words within a statute gives rise to considerable ambiguity. By way of reference to landmark rulings in the United States, cases such as Daubert and The Estate of Edgar A. Berg v. Commissioner, this paper also aims to illustrate the vital role increasingly assumed by non-legal actors, and why this approach should constitute a trend to be adopted in European common and civil law jurisdictions. This being the case given the failures and flaws of references to Parliamentary material and whether these should be permitted as an aid to the construction of legislation which is ambiguous or obscure, as illustrated in the case of Pepper v Hart.
    Keywords: legitimate expectations; certainty; flexibility; judicial precedents; statutory interpretation; allocative efficiency; Pepper v Hart; Daubert; common law; regulatory capture; regulation; The Estate of Edgar A. Berg v. Commissioner
    JEL: D8 E2 G3 L5 M4
    Date: 2015–07–28
  2. By: Vollaard, Ben (Tilburg University, Center For Economic Research)
    Abstract: The probability of conviction commonly varies across different circumstances due to imperfect monitoring. Evidence of whether and how offenders exploit gaps in monitoring provides insight into the process by which deterrence is produced. We present an empirical test of temporal displacement of illegal discharges of oil from shipping, a major source of ocean pollution, in response to a monitoring technology that features variation in the probability of conviction by time of day. After sunset and before sunrise, evidence collected using airborne radar day-round becomes contestable in court because the nature of an identified spot cannot be verified visually. Using data from surveillance flights<br/>above the Dutch part of the North Sea during 1992-2011, we only find evidence for temporal displacement after 1999, with further tightening of the regulations. By that time, the overall level of discharges had been reduced considerably, making the observed temporal displacement relatively small in absolute levels.
    Keywords: deterrence; pollution; environmentel crime
    JEL: K32 K42
    Date: 2015
  3. By: Prater, Marvin; Sparger, Adam
    Abstract: Transportation costs have a direct impact on agricultural producers’ profits. Agricultural producers in remote areas have few transportation alternatives, and the price they receive for their products is net of transportation and other marketing and handling costs. When producers and marketers of agricultural products believe the rates they are paying for transportation are too high or uncompetitive, they need access to a dispute-settlement mechanism that is fair, easily understood, accessible, and affordable. Agricultural shippers believe the formal procedures for challenging unreasonable rail freight rates available through the Surface Transportation Board (STB) are too lengthy and expensive, with the risk not being worth the reward, effectively preventing them from accessing meaningful rate relief. Also, although affected by rail rates, agricultural producers do not have access to STB rate-challenge procedures because they typically do not ship their products to the ultimate consumer, but rather sell them to agribusinesses that arrange for transportation to the final customer. Mediation and arbitration of agricultural rail rates offer alternatives to formal STB procedures. A less formal rail rate mediation/arbitration system could potentially provide a fairer and lower cost approach to challenging rail rates. The Montana Grain Growers Association, Montana Farm Bureau Federation, and BNSF Railway Company (BNSF) have developed rail rate mediation/arbitration procedures that can be accessed by producers. Although this system is a step forward, it is limited to only one State and one railroad; no other major railroad thus far has been willing to arbitrate rail rates. A national-level rail rate mediation/arbitration system that is simple and cost-effective is needed to provide a fair and impartial forum for all grain producers and shippers.
    Keywords: rail, railroad, mediation, arbitration, rates, grain, Agribusiness, Agricultural and Food Policy, Marketing,
    Date: 2014–03
  4. By: Chen, Hung-Ju
    Abstract: This paper analyzes the effects of stronger intellectual property rights (IPR) protection in the South on innovation, imitation, the pattern of production and wage inequality based on a North-South product-cycle model with foreign direct investment (FDI) and skills accumulation. This quality-ladder model features innovative R&D in the North and imitative R&D in the South. Two types of innovation are considered: innovation targeting all products and innovation targeting only imitated products. We find that for both types of innovation, strengthening IPR protection reduces the innovation rate and raises the imitation rate. There is also an increase in the proportion of Northern unskilled labor and a decrease in Northern wage inequality. As for the pattern of production, the extent of FDI may decrease while the extent of Northern production may increase.
    Keywords: Imitation; IPR; R&D; Skills; Wage inequality.
    JEL: F12 F23 O31
    Date: 2015–04
  5. By: Patrick Aquino (Harvard Graduate School of Education); Robert S. Gazzale (University of Toronto); Sarah Jacobson (Williams College)
    Abstract: The public good literature has often found that a punishment option increases cooperation while the gift exchange literature has found the opposite. We use a novel experiment to seek the cause of this difference. We begin with a gift exchange game with punishment as it has typically been implemented therein, and modify two features to replicate conditions more like those usually used in a public good game: punishment's power and its timing (whether the punisher publicly pre-commits to punishment before the punishee decides or acts after the punishee). We replicate the result that punishment institutions as they have typically been implemented in gift exchange games "backfire," but show that this bad outcome disappears if punishment is more powerful. We find three reasons that punishment decreases cooperation: lower wages are offered (a stick is substituted for a carrot); punishment is poorly chosen by many punishers; and some agents spitefully choose low cooperation in retribution against a punishing principal, but only if the punishment is weak so that spite is relatively cheap. We find that punishment that is not publicly pre-committed to is not effective in this game, even though this kind of punishment is similar to that used in many public good games in the literature where punishment does seem to increase cooperation. The only punishment institution that increases cooperation is high-power punishment that is publicly pre-committed to. Finally, the existence of a punishment institution often decreases social surplus (when punishment-related losses are considered), although it may eventually increase social surplus if it is powerful and publicly pre-committed to.
    Keywords: punishment, cooperation, reciprocity, gift exchange, public good
    JEL: C91 D03 D64 H41 J41
    Date: 2015–07

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