nep-law New Economics Papers
on Law and Economics
Issue of 2015‒10‒10
eighteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. An Economic Analysis of Debarment By Auriol, Emmanuelle; Fourati, Maleke
  2. Determination of genocide in the case-law of the International Court of Justice By Sandra Fabijani
  3. Crime, Compulsory Schooling Laws and Education By Brian Bell; Rui Costa; Stephen Machin
  4. The impact of fine size and uncertainty on punishment and deterrence: Theory and evidence from the laboratory By Feess, Eberhard; Schildberg-Hörisch, Hannah; Schramm, Markus; Wohlschlegel, Ansgar
  5. Education and Criminal Behavior: Insights from an Expansion of Upper Secondary School By Aslund, Olof; Grönqvist, Hans; Hall, Caroline; Vlachos, Jonas
  6. The International Criminal Court and the National Judicial System in African States: Analysis of the Failsafe Judicial Mechanism By Lawal Olawale
  7. Orlandi and others v Italy: Same Sex Marriage in Italy, a Problem of Private International Law By Giulia Dondoli
  8. The International Criminal Court in International Law By DEMET SEFIKA MANGIR
  9. On the Social Value of Disclosed Information and Environmental Regulation By Jihad C. Elnaboulsi; W. Daher; Yigit Saglam
  10. Courts in a Transition Economy: Case Disposition and the Quantity-Quality Tradeoff in Bulgaria By VALENTINA DIMITROVA-GRAJZL; PETER GRAJZL; ATANAS SLAVOV; KATARINA ZAJC
  11. The effects of ethnobotanical drugs on human body By Nicoleta-Elena Buzatu
  12. A model of patent trolls By CHOI, Jay Pil; GERLACH, Heiko
  13. The Right to Be Forgotten in the European Union and Russia: Comparison and Criticism By Ruslan Nurullaev
  14. Towards smarter regulation of innovation? By Serge Gijrath
  15. Laboratory measure of cheating predicts misbehavior at school By Alain Cohn; Michel André Maréchal
  16. When secured and unsecured creditors recover the same: The emblematic case of the Tunisian corporate bankruptcies By Régis BLAZY; Aziza LETAIEF
  17. Modeling a Satisficing Judge By Christoph Engel; Werner Güth
  18. How do bankruptcy systems perform in Eastern Europe? By Régis BLAZY; Nicolae STEF

  1. By: Auriol, Emmanuelle; Fourati, Maleke
    Abstract: With a view to reducing the consequences of corruption in public procurement, many governments have introduced debarment of suppliers found guilty of corrup- tion and some other forms of crime. This paper explores the market effects of debarment on public procurement. Debarment is found to make little difference in markets with high competition, while in markets with low competition it may deter corruption as long as firms value public procurement contracts in the future and there is a certain risk of being detected in corruption. On the other hand, debarment when it works has an anti-competitive effect, and this effect will contribute to facilitate collusion between suppliers. Debarment may work as a tool against collusion, but only if targeting one firm at the time (such as a ring-leader or the specific beneficiary when the collusion is detected) and not all the members of a cartel. If designed with an understanding of the market mechanisms at play, debarment can deter both collusion and corruption, thus improving the results of public procurement. If so, most current debarment regimes need modification.
    Keywords: Debarment, Corruption, Collusion, Procurement
    JEL: H57 K21 K23 K42 L41
    Date: 2015–09–11
  2. By: Sandra Fabijani (Faculty of Law)
    Abstract: Genocide is one of the most serious crimes, recognized in 1948 by the Convention on the Prevention and Punishment of the Crime of Genocide. It is an act committed with intent to destroy, in whole or in part, a national, ethnical, racial or religious group. Genocide consists five basic acts of violence: a) killing members of the group; b) causing serious bodily or mental harm to members of the group; c) deliberately inflicting on the group conditions of life calculated to bring about its physical destruction in whole or in part; d) imposing measures intended to prevent births within the group and e) forcibly transferring children of the group to another group. There are several cases where the individuals were held responsible for the crime of genocide and punished before international criminal courts (e.g. International Criminal Tribunal for the former Yugoslavia and International Criminal Tribunal for Rwanda). Beside the question of individual responsibility, 1948 Genocide Convention also contains a provision with regard to the responsibility of the state for the crime itself, and prescribe that disputes between states relating to the interpretation, application or fulfilment of the Genocide Convention, including those relating to the responsibility of a state for genocide or for any of the other acts previously enumerated, shall be submitted to the International Court of Justice (ICJ). There were two cases submitted so far and two Judgments delivered on this issue: first one in 2007 (Bosnia and Herzegovina v. Serbia and Montenegro); the second one in 2015 (Croatia v. Serbia). The essential element that „heave“ genocide beyond other „ordinary“ international crimes is an intention to destroy, in whole or in part, a national, ethnical, racial or religious group. The case-law of international courts indicates the problem of evidence of such genocidal intention. In accordance to the Dissenting opinion of Judge A.A. Cançado Trindade to the 2015 ICJ Judgment (Croatia v. Serbia), the International Court of Justice has pursued and insisted upon pursuing too high a standard of proof for the determination of the occurrence of genocide or complicity in genocide. Undoubtedly Genocide Convention is meant to prevent and punish the crime of genocide, as a mean of liberating humankind from that scourge. But, if the threshold is indeed imposed too high – may the application of the Convention become too difficult task to achieve?
    Keywords: genocide, International court of Justice (ICJ), case-law
    JEL: K33
  3. By: Brian Bell; Rui Costa; Stephen Machin
    Abstract: Do compulsory schooling laws reduce crime? Previous evidence for the U.S. from the 1960s and 1970s suggests they do, primarily working through their effect on educational attainment to generate a causal impact on crime. In this paper, we consider whether more recent experience replicates this. There are two key findings. First, there is a strong and consistent negative effect on crime from stricter compulsory schooling laws. Second, there is a weaker and sometimes non-existent link between such laws and educational attainment. As a result, credible causal estimates of the education-crime relationship cannot in general be identified for the more recent period, though they can for some groups with lower education levels (in particular, for blacks).
    Keywords: Crime, education, compulsory schooling laws
    JEL: I2 K42
    Date: 2015–10
  4. By: Feess, Eberhard; Schildberg-Hörisch, Hannah; Schramm, Markus; Wohlschlegel, Ansgar
    Abstract: We develop a theoretical model to identify and compare partial and equilibrium effects of uncertainty and the magnitude of fines on punishment and deterrence. Partial effects are effects on potential violators' and punishers' decisions when the other side's behavior is exogenously given. Equilibrium effects account for the interdependency of these decisions. This interdependency is important since, in the case of legal uncertainty, higher fines may reduce the willingness to punish, which in turn reduces the deterrence effect of high fines. Using a laboratory experiment, we identify these effects empirically by means of a strategy-method design in which potential violators can condition their behavior on the behavior of potential punishers and vice versa. All our experimental findings on both partial and equilibrium effects are in line with the hypotheses derived from the theory.
    Keywords: Deterrence; Punishment; Uncertainty; Fines; Partial and Equilibrium Effects; Lab Experiment
    JEL: K12 K42 C91 D64
    Date: 2015–09
  5. By: Aslund, Olof (IFAU); Grönqvist, Hans (Uppsala University); Hall, Caroline (IFAU); Vlachos, Jonas (Stockholm University)
    Abstract: We study the impact on criminal activity from a large scale Swedish reform of vocational upper secondary education, extending programs from two to three years and adding more general theoretical content. The reform directly concerns age groups where criminal activity is high and students who are highly overrepresented among criminal offenders. The nature of the reform and the rich administrative data allow us to shed light on several behavioral mechanisms. Our results show that the prolonged and more general education lead to a reduction in property crime, but no significant decrease in violent crime. The effect is mainly concentrated to the third year after enrollment, which suggests that being in school reduces the opportunities and/or inclinations to commit crime.
    Keywords: education, delinquency
    JEL: K42
    Date: 2015–09
  6. By: Lawal Olawale (Lagos State University)
    Abstract: The International Criminal Court (ICC) has opened investigations into eight cases and all of them are in Africa, thus fuelling the view that the Court is established to prosecute serious crimes in weak and developing states. Academic explanations too seem to support the assertion that the Court is targeting Africa and Africans albeit, inappropriately. This work investigates the factors which make the Court more effective in Africa than elsewhere and most potent being that national judicial systems in African states have been compromised by the perpetrators of the crimes under the jurisdiction of the ICC. More critical is the fact that the Court does not trump a vibrant national judicial system. This study links the preponderance of the ICC in Africa directly to the political system which produces incidences of genocide, crime against humanity, war crimes and failure of the national judicial system to investigate and prosecute these crimes. The conclusion of this work is that the ICC is a failsafe justice mechanism which holds that states have primary responsibility to investigate and prosecute Rome Statute crimes. This failure in African states explains the presence of the ICC rather than the theoretical deflections. This study is also causal comparative relating to the views of African leaders and citizens of the ICC operations. It interrogates whose interest the ICC serves, western world or justice?
    Keywords: ICC, Justice, Crimes, Africa
    JEL: F53
  7. By: Giulia Dondoli (University of Waikato - Faculty of Law)
    Abstract: The paper studies the case of the Italian non-recognition of same sex marriages contracted abroad. Many Italian same sex couples marry in countries where that is allowed; then, they apply to have their status recognised in Italy; but because there is no law regulating same sex relationships, their applications are often rejected. The paper studies a pending recourse before the European Court of Human Rights – Orlandi and others v Italy – in highlighting Italian private and international law provisions. To facilitate the analysis, the paper compares the Orlandi case with Oliari and A, and Felicetti and others v Italy, and studies the third party communications submitted by a number on nongovernmental organisations.
    Keywords: Marriage equality, LGB rights, Italy, Private International Law, NGOs.
    JEL: K33
    Abstract: The International Criminal Court (ICC), was established with the enactment in 1 July 2002 which adopted in 17 July 1998 Rome Statue by votes of 120 countries. Nuremberg and Tokyo Far East International Military Criminal Courts which were established before and are suitable to Ad Hoc Courts, the International Criminal Courts which are established in 90's for Ruanda and Old Yugoslavia, according to the decision of the UN Charter established under Section 7 and they have been important steps in the process of establishing the International Criminal Court, by UN Security Council.Crimes falling within the court's jurisdiction; genocide, crimes against humanity, war crimes and assaults are crimes. As the main purpose of the rome statute as it noticed in foreword, find out by whom are the most serious crimes made against humanity, to investigate no matter where its made, to punish them, so it is play a deterrent role in the processing of new ones. Continuously independent organs of ICC’s courts are: the presidency, appeal division, trial division, department of pre-trial, prosecutor's office and the office of the registrar. In the ICC which is facing 15 trial at the same time, investigation of the 7 different countries are ongoing. Member countries Democratic Republic of Congo, Uganda and Central African Republic are applied to ICC within its jurisdiction and with crimes occurring in their countries. The case related to Sudan and Libya, the United Nations Security Council has moved the Court. And Prosecution started investigation about Kenya and Ivory Coast by itself.When the attitude of the uUSA was big obstacle in front of court's effectiveness, the EU has been a great supporter. Turkey contains provisions that could create problems in terms of the Non-International conflicts and prolonged armed conflict. And in opinion of that high standards of International Law with improving quality of National Jurisdiction will provide much benefit than loss.
    Keywords: The International Criminal Court, Rome Statue, UN Security Council
    JEL: K33 K33 K33
  9. By: Jihad C. Elnaboulsi (CRESE, Univ. Bourgogne Franche-Comté); W. Daher (Gulf University for Science and Technology, Department of Mathematics and Natural Science); Yigit Saglam (Victoria University of Wellington, School of Economics and Finance)
    Abstract: This paper presents an analysis of environmental policy in imperfectly competitive market with private information. We examine how environmental taxes should be optimally levied when the regulator faces asymmetric information about production and abatement costs in an irreversible observable policy commitment game. Under our setting, the paper investigates how information disclosure can improve the efficiency of the tax setting process and may o¤er an e¢ cient complement to conventional regulatory approaches. From a policy perspective, our ?ndings suggest that access to publicly disclosed information improves the ability of the regulator to levy ?rms? speci?c environmental taxes. Despite its advantages, however, informational disclosure may harm the environmental policy it purports to enhance since it facilitates collusive behavior. We show that information sharing may occur and thus leads to a superior outcome in terms of industry output and emissions. Disclosure may undermine market performance and environmental policy.
    Keywords: Environmental Regulation, Emissions Taxes, Collusion, Disclosed Information, Private Information, Information Sharing.
    JEL: D81 D82 H23 L51 Q58
    Date: 2015–10
    Abstract: The lack of effective judiciary in post-socialist countries has been a pervasive concern and successful judicial reform an elusive goal. Yet to date, little empirical research exists on the functioning of courts in the post-socialist world. We draw on a new court-level panel dataset from Bulgaria to study the determinants of court case disposition and to evaluate whether judicial decision-making is subject to a quantity-quality tradeoff. Addressing endogeneity concerns, we find that case disposition in Bulgarian courts is largely driven by demand for court services. The number of serving judges, a key court resource, matters to a limited extent only in a subsample of courts, a result suggesting that judges adjust their productivity based on the number of judges serving at a court. We do not find evidence implying that increasing court productivity would decrease adjudicatory quality. We discuss the policy implications of our findings.
    Keywords: courts, post-socialist countries, case disposition, quantity-quality tradeoff
    JEL: P37 K40 D02
    Date: 2015–02–02
  11. By: Nicoleta-Elena Buzatu (University of Bucharest, Faculty of Law)
    Abstract: Etnobotany is a branch of etnobiology which studies the interrelations between man and his environment, including the hallucinogenic effects of plants. Consumption is particularly widespread through adolescents. Even if they are considered to be "light drugs", ethnobotanical plants have disastrous and unpredictable effects and can damage/ affect the body in various ways. These effects are divided into three categories: immediate, chronic and overdose. In the short term, the person who used these products may experience different physical and psychic effects. Etnobotanical consumption is more dangerous than drug usage because the effects these products may have in the long term are not exactly known and therefore the doctors don't know what treatment can be administered. In Romania, according to the law, some of these drugs are prohibited but some producers and distributors sell them under the pretext of their use in agriculture or veterinary medicine.
    Keywords: Consumption, drugs, ethnobotanical drugs, forbidden substances, effects
    JEL: K14 K39
  12. By: CHOI, Jay Pil; GERLACH, Heiko
    Abstract: This paper develops a model of patent trolls to understand various litigation strategies employed by nonpracticing entities (NPE). We show that when a NPE faces multiple potential infringers who use related technologies, it can gain a credible threat to litigate even when it has no such credibility vis-à-vis any single potential infringer in isolation. This is due to an information externality generated by an early litigation outcome for subsequent litigation. Successful litigation creates an option value against future potential infringers through Bayesian updating. This renders a credible litigation threat against the initial defendant and allows the NPE to extract more rents. We discuss policy implications including the adoption of the British system of “loser-pays” fee shifting and the use of injunctive relief.
    Keywords: patent portfolios, patent litigation, non-practicing entities, patent troll
    JEL: D43 L13 O3
    Date: 2015–09
  13. By: Ruslan Nurullaev (National Research University Higher School of Economics)
    Abstract: On 14 July, 2015 the Russian President signed Law No. 264-FZ which grants Russian citizens the right to request the delisting of search results which link to inaccurate or irrelevant information about them (“the right to be forgotten”).This paper discusses the decision of the Court of Justice of the EU in Google Spain v. Agencia Espanola de Proteccion de Datos (AEPD) and Mario Costeja Gonzalez, the case which inspired Law No. 264-FZ, and compares implementation of the right to be forgotten in the EU and Russia. It is found that the Russian law was created as a sui generis right, and fails to account for the right of the general public to find and access information online. Other discrepancies include a wider scope of the right to be forgotten, rigid requirements for processing removal requests and the prohibition to disclose any information about such requests.
    Keywords: Costeja, European Union, Google Spain, information intermediaries, internet, internet service provider liability, internet service providers, personal data, the right to be forgotten.
    JEL: K39
    Date: 2015
  14. By: Serge Gijrath (Universiteit Leiden)
    Abstract: The paper assesses the scope of current regulation in the electronic communications sector in a period of rapid technological changes. It explores the network operator’s dilemma how to deal with investments in innovation in a time where fundamental innovation comes from outside; and the regulator’s dilemma how to improve the conditions for access to financial resources for research and innovation. The contention is to look whether different regulatory tools, such as proactively enhancing interoperability levels, subsidies and standardization measures could complement or supplement existing measures to safeguard competition. In terms of interoperability, two cases are discussed: IP connectivity and broadband access. The focus will be on measures proposed by the Commission in 2015 for the achievement of the Digital Single Market: what is the right track: does yardstick regulation imposing price-caps still work. The road to achieving more incentive regulation appears to be bumpy as well and reorganizing the level playing field does not appear to be a viable regulatory option. Some thought is given to how infrastructure sharing and other long-term contracts could form an alternative for regulation. A mix of regulation is proposed to move towards smarter electronic communications networks.
    Keywords: Interoperability, innovation; standardization; connected continent; IP connectivity; broadband access; incentive regulation; deregulation
    JEL: K00 K23 K33
  15. By: Alain Cohn; Michel André Maréchal
    Abstract: We study the external validity of a standard laboratory measure of cheating. The results show that cheating in the lab significantly predicts classroom misbehavior in middle and high school students.
    Keywords: Cheating, honesty, experiment, external validity, misbehavior
    JEL: C93 K42
    Date: 2015–09
  16. By: Régis BLAZY (LaRGE Research Center, Université de Strasbourg); Aziza LETAIEF
    Abstract: Bankruptcy is an essential screening mechanism for developing economies. This paper focuses on the way bankruptcy is managed in Tunisia, a country characterized by the importance of its banking sector. We hand collected data on a set of Tunisian firms that went bankrupt between 1995-2009. We gathered original and unique information on the firms’ characteristics, the causes of default, the values of assets, the structure of claims, the recovery rates, and the bankruptcy costs. We use this information to answer several questions (those questions being investigated both directly, and by controlling for any risk of selection bias): 1) are the Tunisian bankruptcy procedures able to generate high total recoveries? 2) Are the secured creditors (mostly banks) well-enough protected under bankruptcy? 3) Do the secured creditors influence the choice between liquidation and reorganization? 4) To what extent the recoveries of the secured creditors compete (or not) with the ones of the other classes of creditors? We find that the Tunisian reorganization procedures are able to generate substantial recoveries, but those are mainly captured by the preferential claims (employees and public claims). This is coherent with the authorities’ willingness to improve social protection, but this raises concerns as the Tunisian firms are mainly financed by bankers. Our analysis shows that the secured creditors are poorly protected under bankruptcy: they rank almost last in the priority order of repayment, and their recovery rate is similar to one of the unsecured creditors. We also find that the rather high level of recovery rate is mainly attributable to the reorganization procedures. We finally find that the court’s choice between reorganization and liquidation is not influenced by the structure of claims. Thus, in Tunisia, the creditors are losing hand once bankruptcy is triggered. The likely consequences on development are twofold: first, higher risks of capital misallocation and of credit rationing; second, stronger incentives for the banks to prioritize informal workouts.
    Keywords: Bankruptcy; Development; Secured creditors; Heckman selection model; Tunisia.
    JEL: G33 K22 O16
    Date: 2015
  17. By: Christoph Engel (Max Planck Institute for Research on Collective Goods, Bonn); Werner Güth (Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: Judges and juries frequently must decide, knowing that they do not know everything that would be relevant for deciding the case. The law uses two related institutions for enabling courts to nonetheless decide the case: the standard of proof, and the burden of proof. In this paper, we contrast a standard rational choice approach with a satisficing approach. Standard theory would want judges to rationally deal with the limitations of the evidence. We posit that this is not only descriptively implausible, but also normatively undesirable. We propose a theoretical framework for a judge who only considers scenarios that "she does not dare to neglect", and aims at decisions that are "good enough", given the undissolvable limitations of the evidence. We extend this approach to parties who strategically exploit the limited factual basis, and to judges who have to allocate limited resources for fact finding to more than one case.
    JEL: D82 C72 D81 K41 D03
    Date: 2015–10
  18. By: Régis BLAZY (LaRGE Research Center, Université de Strasbourg); Nicolae STEF
    Abstract: For post-socialist countries that have undertaken long phases of economic and judicial transitions, an important aspect of attractiveness is based on the performances of their bankruptcy systems. Those performances are all the more essential in a context of non-mature capital markets. Precisely, bankruptcy procedures should, first generate substantial recoveries for the whole set of investors, and second share those recoveries in an adequate way – e.g. in a way that improves the investors’ individual incentives (in terms of monitoring, control, support, etc.). This article uses an original hand-collected database of 554 closed bankruptcy cases in three Eastern European countries (Hungary, Poland, and Romania) to evaluate the determinants of bankruptcy systems’ performances during the post-transition era (from year 2003 to 2010/11). In particular, we investigate whether the specificities of these local bankruptcy environments are significant enough to influence the creditors’ total recoveries. We also wonder whether those recoveries are impacted by the presence of private/public creditors and/or the concentration of their claims. This paper goes beyond a mere analysis of the creditors’ overall repayment, by focusing on the competition effects between them. Implementing competition is actually a core issue for post-transition economies, which have to mimic rivalry effects that usually prevail in more mature market economies. Precisely, we measure the priority order of repayment among competing classes of creditors (public, social, and private claims) and investigate the nature of competition (rivalry vs. ripple effects) among these classes. (1) We first confirm that the design of bankruptcy law “matters”: the creditors’ repayment is not independent from the type of bankruptcy procedure, and depends on the national environment in which such procedure is engaged. (2) On all three countries, the total recoveries do not benefit from the presence of public claimholders, even when those are in position of being residual claimants. Following Satjer (2010), this result suggests some passivity from the state, which has lost bargaining power under bankruptcy. On the contrary, the private claimholders exert a contrasting influence on total recoveries: positive for the junior ones (more involved under bankruptcy, to compensate their lack of protection), and negative for the secured ones (confirming the “lazy argument” attached to collaterals). (3) We also find that repayments are lower when the claims are concentrated: despite easier coordination, concentration may generate excessive influence from the largest creditors, willing to run bankruptcy adjudicat ion in their sole interests. (4) We show that the Eastern European bankruptcy systems provide stronger protection for private secured claims than for public claims. From that angle, the post-socialist economies mimic the prioritization of secured creditors that characterizes most Western European bankruptcy systems. (5) Last, we confirm that Eastern European bankruptcy systems have successfully implemented competition among the classes of creditors, which we interpret as a sign of maturity.
    Keywords: bankruptcy;attractiveness;recoveries;transition economies.
    JEL: G33 K22 P34
    Date: 2015

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