nep-law New Economics Papers
on Law and Economics
Issue of 2015‒09‒11
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Dismissal Laws in Australia: Reforms and Enforcement by Labour Courts By Freyens, Benoit Pierre; Gong, Xiaodong
  2. The settlement procedure in EC cartel cases: An empirical assesment By Hüschelrath, Kai; Laitenberger, Ulrich
  3. The Role of the Precautionary and Polluter Pays Principles in Assessing Compensation By ISHIKAWA Tomoko
  4. Potential Effects of the Affordable Care Act on Loss Calculations By Joshua Congdon-Hohman; Victor Matheson
  5. Victimisation, Wellbeing and Compensation: Using Panel Data to Estimate the Costs of Violent Crime By Johnston, David W.; Shields, Michael A.; Suziedelyte, Agne
  6. The duration of the EC merger control process: Determinants and the impact of the 2004 merger regulation reform By Heim, Sven; Hüschelrath, Kai; Laitenberger, Ulrich
  7. Test-Based Promotion Policies, Dropping Out, and Juvenile Crime By Briggs Depew; Ozkan Eren
  8. Deregulation, competition, and consolidation: The case of the German interurban bus industry By Dürr, Niklas S.; Heim, Sven; Hüschelrath, Kai
  9. Crime and the Economy in Mexican States: Heterogeneous Panel Estimates (1993-2012) By Concepción Verdugo Yepes; Peter L. Pedroni; Xingwei Hu
  10. When and How the Punishment Must Fit the Crime By George J. Mailath; Volker Nocke; Lucy White
  11. The Poker-Litigation Game By Enrique Guerra-Pujol
  12. A nation without a corporate income tax: Evidence from nineteenth century Japan By Kazuki Onji; John P. Tang

  1. By: Freyens, Benoit Pierre (University of Canberra); Gong, Xiaodong (NATSEM, University of Canberra)
    Abstract: The paper analyses the arbitration of dismissal disputes by Australian labour courts over a 15 years' time span characterized by two major legal reforms to unfair dismissal statutes. We isolate two channels by which we think the social values of the Federal government affected the decisions of the courts: (i) through changes to established rules (the legal standards guiding decisions) and (ii) through labour court appointments (changing the composition of decision-makers). We study these two questions by analysing the probability of plaintiffs' victory in Australian labour court, using a panel of 81 judges and 2,223 decisions. We test for and subsequently exploit the randomized matching of labour court judges with unfair dismissal cases. We also test for and address the Priest-Klein selection effect, which is known to potentially invalidate analysis of trial cases. Using several model specifications we find significant effects from both channels: statutory reforms and judges' work background have strong and significant effects on case outcomes.
    Keywords: unfair dismissal laws, judicial backgrounds, case outcomes
    JEL: J52 K31 K41
    Date: 2015–08
  2. By: Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: In June 2008, the European Commission (EC) was enabled to introduce a settlement procedure that aims at promoting the procedural efficiency of cartel enforcement in the European Union (EU). We use a data set consisting of 84 cartels decided by the EC from 2000 to 2014 to empirically investigate the impact of the EU settlement procedure on the duration of cartel investigations. Separating the enforcement process into two consecutive stages, we find that the introduction of the settlement procedure is followed by a substantial shortening of the second stage - reaching from the statement of objections (SO) to the decision - while it leaves the duration of the first stage from the beginning of the case to the SO unaffected. Subsequent to a discussion of further evaluation approaches we conclude that the EU Settlement Procedure has increased procedural efficiency of cartel enforcement in the European Union substantially.
    Keywords: competition policy,cartels,settlements,ex-post evaluation,European Union
    JEL: K21 L41
    Date: 2015
  3. By: ISHIKAWA Tomoko
    Abstract: The upsurge of investment treaties and cases of investment arbitration demonstrates the dramatic growth of foreign investment laws in the past few decades. Also, due to the ongoing negotiation of the "mega" free trade agreements, this field of law has received an increasing amount of recognition. This recognition, however, is accompanied by a growing concern over whether investment arbitration has reduced the scope for state regulation. A major source of concern is the lack of consistency between arbitral tribunals in balancing investment protection against the public interests of host states. Against this background, this paper addresses the question of how to properly balance the interests of foreign investors against environmental concerns, focusing on the remedy phase of legal disputes. It is argued that there are cases where, even if the host state is found to have breached investment protection obligations, the awarding of full compensation is inappropriate, and this applies to those that involve difficult balancing between public interest such as environmental protection, and the protection of foreign investment. Based on these considerations, this paper proposes that the precautionary principle and the polluter pays principle—widely accepted international environmental principles—may provide other grounds for awarding partial compensation.
    Date: 2015–09
  4. By: Joshua Congdon-Hohman (Department of Economics, College of the Holy Cross); Victor Matheson (Department of Economics, College of the Holy Cross)
    Abstract: This paper examines how the Affordable Care Act might affect the analysis of future care costs in medical malpractice, product or accident liability, or workplace injury cases. Prior to the ACA, it was reasonable to presume that a great deal of a victim’s future health care costs would be paid for out-of-pocket as there was little guarantee that the plaintiff would have access to affordable insurance. Since January 2014, however, a plaintiff can obtain insurance that will cover a significant portion of any future medical costs. This paper examines the basic structure of the ACA, how it has affected health insurance markets, and provides examples of how the ACA might be introduced into an analysis of future life care costs. In addition, case law regarding the application of the ACA is examined as well as arguments for and against considering the availability of health insurance in medical litigation. Finally, additional details regarding the application of the ACA by the practicing forensic economist are addressed. Length: 20 pages
    Keywords: Affordable Care Act, forensic economics, tort awards, lawsuits, health insurance
    JEL: I13 I18 K41
    Date: 2015–09
  5. By: Johnston, David W. (Monash University); Shields, Michael A. (Monash University); Suziedelyte, Agne (Monash University)
    Abstract: The costs of violent crime victimisation are often left to a judge, tribunal or jury to determine; leading to the potential for considerable subjectivity and variation. Using unique panel data, this paper provides compensation estimates that can help reduce the subjectivity of awards by giving a benchmark for the compensation required to offset direct and intangible costs. First, individual-area fixed-effects models allowing for adaptation to crime are estimated to assess the effects of violent crime victimisation on diverse measures of wellbeing. These results are then subsequently used to calculate the monetary compensation required to offset the wellbeing losses. Estimates allowing for the endogeneity of income suggest that A$88,000 is required to compensate the average crime victim. We find some evidence that compensation estimates are larger if the wellbeing losses of female family members are considered, and are larger for females if the perpetrator of the crime is a stranger rather than a partner, friend or relative.
    Keywords: violent crime, victimisation, wellbeing, compensation, panel data
    JEL: I31 K30
    Date: 2015–08
  6. By: Heim, Sven; Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: The duration of merger proceedings held by competition authorities is an important determinant of the efficiency of the entire merger control process. We use a dataset of 2953 Phase I and 92 Phase II investigations completed by the European Commission (EC) between 1999 and 2008 to examine the key determinants of their duration. Differentiating between authority- and caserelated drivers, we find that while the duration of Phase I investigations largely depends on the type of decision and use of simplified procedure, the duration of Phase II investigations is driven by factors such as industry knowledge, the duration of the preceding Phase I investigation, the origin of the notifying firm or the number of identified relevant markets. We also provide evidence that the significant increase in average duration identified after the 2004 merger regulation reform does not imply a decrease in administrative efficiency, as the probability of indepth investigations was correspondingly reduced.
    Keywords: competition policy,ex-post evaluation,merger control,European Union
    JEL: K21 L41
    Date: 2015
  7. By: Briggs Depew; Ozkan Eren
    Abstract: Over the past decade, several states and school districts have implemented accountability systems that require students to demonstrate a minimum level of proficiency through standardized tests. With many states and school districts ending social promotion, policy makers and researchers have gained renewed interest in the role of grade retention and remedial education in US schools. This paper examines the potential effects of summer school and grade retention on high school completion and juvenile crime. To do so, we use administrative data from a number of state agencies in Louisiana and a regression discontinuity design to analyze Louisiana's statewide promotion policy administered to students in fourth and eighth grades. In general, our results indicate that potential grade retention, even at fourth grade, increases the propensity that a student drops out of school at a later point in time. In addition, eighth grade remedial education assignment in the form of summer school appears to provide a positive benefit by decreasing the likelihood that a student later drops out. As for fourth grade students, however, we do not find any effect of summer school assignment on the likelihood of dropping out. Finally, for eighth graders, we find that the test-based promotion policies decrease the probability of committing serious juvenile offenses.
  8. By: Dürr, Niklas S.; Heim, Sven; Hüschelrath, Kai
    Abstract: We provide an empirical assessment of the German interurban bus industry two years after its deregulation in January 2013. In addition to a general description of key developments of the industry, we use a unique route-level price data set to study both competitive interaction in general and the potential price effects of a recently announced merger of the two largest players in the market in particular. We find that route-level average prices, inter alia, do not only depend on the number of competitors but especially on the composition of firms operating on a particular route. Although our empirical results suggest short-term price increases on certain route types post-merger, it remains an open question whether the merger should be classified as anticompetitive.
    Keywords: deregulation,competition,merger,interurban bus services,Germany
    JEL: L11 L41 L92 K21 K23
    Date: 2015
  9. By: Concepción Verdugo Yepes; Peter L. Pedroni; Xingwei Hu
    Abstract: This paper studies the transmission of crime shocks to the economy in a sample of 32 Mexican states over the period from 1993 to 2012. The paper uses a panel structural VAR approach which accounts for the heterogeneity of the dynamic state level responses in GDP, FDI and international migration flows, and measures the transmission via the impulse response of homicide rates. The approach also allows the study of the pattern of economic responses among states. In particular, the percentage of GDP devoted to new construction and the perception of public security are characteristics that are shown to be associated with the sign and magnitude of the responses of economic variables to crime shocks.
    Keywords: Foreign direct investment;Mexico;Mexico;Migrations;Panel analysis;Regional shocks;Time series;Structural vector autoregression;Crime, Panel Structural VAR, homicides, homicide, security, crimes, Macroeconomic Analyses of Economic Development, Analysis of Growth, Development, and Changes, Illegal Behavior and the Enforcement of Law,
    Date: 2015–06–04
  10. By: George J. Mailath; Volker Nocke; Lucy White
    Abstract: In repeated normal-form (simultaneous-move) games, simple penal codes (Abreu,1986, 1988) permit an elegant characterization of the set of subgame-perfect outcomes.We show that the logic of simple penal codes fails in repeated extensive-form games. By means of examples, we identify two types of settings in which a subgame-perfect outcome may be supported only by a profile with the property that the continuation play after a deviation is tailored not only to the identity of the deviator, but also to the nature of the deviation.
    Keywords: Simple Penal Code, Subgame Perfect Equilibrium, Repeated Extensive Game, Optimal Punishment
    JEL: C70 C72 C73
    Date: 2015–02
  11. By: Enrique Guerra-Pujol
    Abstract: Is litigation a serious search for truth or simply a game of skill or luck? Although the process of litigation has been modeled as a Prisoner's Dilemma, as a War of Attrition, as a Game of Chicken and even as a simple coin toss, no one has formally modeled litigation as a game of poker. This paper is the first to do so. We present a simple "poker-litigation game" and find the optimal strategy for playing this game.
    Date: 2015–06
  12. By: Kazuki Onji; John P. Tang
    Abstract: This study provides evidence on tax distortion to organizational choices of firm using historical data. We utilize the 1887 introduction of a personal income tax (PIT) in Japan as a quasi-experiment to examine tax-motivated incorporation. We circumvent the data limitation in the 19th century by drawing on a firm-level dataset constructed from genealogies of Japanese corporations. The sample is 3,203 firm-year observations spanning 1880-1892. We find that the introduction of PIT affected the adoption of simpler types of corporations and increased the corporate share of establishments by about 3 percentage points. The evidence indicates the role of a corporate income tax as a backstop to maintain revenue performance of PIT.
    Keywords: Tax Avoidance, Organizational Form, Business Incorporation
    JEL: G34 H25 K34
    Date: 2015–05

This nep-law issue is ©2015 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.