nep-law New Economics Papers
on Law and Economics
Issue of 2015‒12‒28
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Decision-Making Process in Punishment Imposition: Four Factors of Public Perception in Russia By Zinaida M. Pogosova; M Nizhnik; Henry Penikas
  2. Air Pollution and Criminal Activity: Evidence from Chicago Microdata By Evan Herrnstadt; Erich Muehlegger
  3. Illegal Migration and Consumption Behavior of Immigrant Households By Christian Dustmann; Francesco Fasani; Biagio Speciale
  4. Patent Rights and Innovation by Small and Large Firms By Alberto Galasso; Mark Schankerman
  5. Democratic Rulemaking By John M. de Figueiredo; Edward H. Stiglitz
  6. Immigrants, Natives and Crime: A Cross-sectional and Longitudinal Analysis. By Luigi Maria Solivetti
  7. The passing-on of price overcharges in European competition damages actions: A matter of causation and an issue of policy By Lombardi, Claudio
  8. Tax Morale and Trust in Public Institutions By Wilfried Anicet Kouamé
  9. How Do Right-To-Carry Laws Affect Crime Rates? Coping With Ambiguity Using Bounded-Variation Assumptions By Charles F. Manski; John V. Pepper

  1. By: Zinaida M. Pogosova (National Research University Higher School of Economics); M Nizhnik (National Research University Higher School of Economics); Henry Penikas (National Research University Higher School of Economics)
    Abstract: The “ignorance of law” defense is often used as an argument to decrease the degree of punishment assigned to a convicted criminal. Previous research has identified that the degree of punishment is, inter alia, impacted by the perceived morality of the action and the convicted criminal’s knowledge of the law. Compared to previous findings, the current paper contributes to the field of study in three principal ways. First, it analyzes Russian respondents and their perceptions of morality of action (previous studies have dealt with American respondents). Second, the present paper traces the distinction between lawyers’ perceptions and those of laypeople. Third, the quantitative impact of the ignorance of law defense on a trial group is traced by considering the interrelationship of factors determining the ultimate degree of punishment a hypothetical criminal would be sentenced to.
    Keywords: public opinion, policy-making, penal policy, punishment theory, just deserts, deterrence, consequentialism, utilitarianism, ignorance of law defense, morality perception, probit.
    JEL: K42
    Date: 2015
  2. By: Evan Herrnstadt; Erich Muehlegger
    Abstract: A large and growing literature documents the adverse impacts of pollution on health, productivity, educational attainment and socioeconomic outcomes. This paper provides the first quasi-experimental evidence that air pollution causally affects criminal activity. We exploit detailed location data on over two million serious crimes reported to the Chicago police department over a twelve-year period. We identify the causal effect of pollution on criminal activity by comparing crime on opposite sides of major interstates on days when the wind blows orthogonally the direction of the interstate and find that violent crime is 2.2 percent higher on the downwind side. Consistent with evidence from psychology on the relationship between pollution and aggression, the effect is unique to violent crimes – we find no effect of pollution on the commission of property crime.
    JEL: K42 Q53
    Date: 2015–12
  3. By: Christian Dustmann (University College London, Centre for Research and Analysis of Migration (CReAM) and Centre for Economic Policy Research (CEPR)); Francesco Fasani (Queen Mary University of London, CReAM and CEPR); Biagio Speciale (Paris School of Economics, Université Paris 1 Panthéon-Sorbonne)
    Abstract: We analyze the effect of immigrants' legal status on their consumption behavior using unique survey data that samples both documented and undocumented immigrants. To address the problem of sorting into legal status, we propose two alternative identification strategies as exogenous source of variation for current legal status: First, transitory income shocks in the home country, measured as rainfall shocks at the time of emigration. Second, amnesty quotas that grant legal residence status to undocumented immigrants. Both sources of variation create a strong first stage, and - although very different in nature - lead to similar estimates of the effects of illegal status on consumption, with undocumented immigrants consuming about 40 percent less than documented immigrants, conditional on background characteristics. Roughly one quarter of this decrease is explained by undocumented immigrants having lower incomes than documented immigrants. Our findings imply that legalization programs may have a potentially important effect on immigrants' consumption behavior, with consequences for both the source and host countries.
    Keywords: Legal status, Weather shocks, Consumption behavior
    JEL: F22 D12 K42
    Date: 2015–12
  4. By: Alberto Galasso; Mark Schankerman
    Abstract: This paper studies the causal impact of patents on subsequent innovation by the patent holder. The analysis is based on court invalidation of patents by the U.S. Court of Appeals for the Federal Circuit, and exploits the random allocation of judges to control for the endogeneity of the judicial decision. Patent invalidation leads to a 50 percent decrease in patenting by the patent holder, on average, but the impact depends critically on characteristics of the patentee and the competitive environment. The effect is entirely driven by small innovative firms in technology fields where they face many large incumbents. Invalidation of patents held by large firms does not change the intensity of their innovation but shifts the technological direction of their subsequent patenting.
    JEL: K41 L24 O31 O32 O34
    Date: 2015–12
  5. By: John M. de Figueiredo; Edward H. Stiglitz
    Abstract: This paper examines to what extent agency rulemaking is democratic. It reviews theories of administrative rulemaking in light of two normative benchmarks: a “democratic” benchmark based on voter preferences, and a “republican” benchmark based on the preferences of elected representatives. It then evaluates how the empirical evidence lines up in light of these two approaches. The paper concludes with a discussion of avenues for future research.
    JEL: K0 K23
    Date: 2015–11
  6. By: Luigi Maria Solivetti
    Abstract: This study purpose is to verify if there is an association between foreign immigration and crime. In doing this, the study investigates also some satellite questions revolving around this possible association: the range of offences affected by immigration, the relationship between immigrant and native crime, and whether the immigration impact on crime is direct or indirect. These issues have been addressed through both a cross-sectional and a cross-sectional/time analysis. This double approach intends to find out whether variations over time in immigration and in crime confirm the synchronic analysis results, which could be biased by non-observed factors. The research is based on data of the Italian provinces. Italy represents a critical case for studying the migration-crime relationship, because in this country the rise in foreign immigration has been sudden and its pace feverish. The cross-sectional analysis findings show that crime rates are related to time-invariant factors and only marginally to immigration. On the contrary, the cross-sectional/time analysis shows that variations in immigration have had a positive impact on both the most serious and the most common offences. There is no evidence of indirect effects of immigration on crime or of a link with native crime. In contrast to previous literature regarding the U.S., Canada, and Australia, these results suggest that a tumultuous rise in immigration can affect crime rates.
    Keywords: Immigration; natives; crime; crime determinants; longitudinal analysis.
    JEL: I25
    Date: 2015–12
  7. By: Lombardi, Claudio
    Abstract: This paper analyses the functioning of the passing-on of price overcharges in damages actions for breaches of EU competition law and aims to give a critical appraisal of the present regulatory framework in Europe. In particular, this paper maintains that the European Directive 2014/104, in order to facilitate the claims of damages caused by the infringement of European competition rules and to provide full compensation for those damages, has adopted a complex set of rules placing the burden of proof on the party that has, assumedly, the best access to evidence on the relevant issue. Moreover, it is noted that these rules give a strict definition of the overcharge harm and of its diffusion through the market chain. In this connection, it is argued that the objectives of the Directive are partly compromised by the fact that this restrictive approach fails to take into consideration a number of other subjects who may potentially be damaged by the passing-on of the overcharge harm. Secondly, this paper maintains that the set of rules laid down by the Directive 2014/104 creates a system of presumptions, which, contrary to its intended purpose, is likely to discourage damages actions. Finally, this paper argues that actions by indirect purchasers based on the passing-on of the overcharge will still need to heavily rely on domestic civil law rules in particular on local principles of causation and evidence.
    Keywords: European competition law,damages actions,private enforcement,passing-on,indirect purchaser,passing-on defence,Directive 2014/104,causation,civil liability
    Date: 2015
  8. By: Wilfried Anicet Kouamé (GREDI, Universite de Sherbrooke)
    Abstract:  One significant puzzle in economics is to explain why people pay their taxes and why there are so many differences in tax compliance across countries. Tax morale literature try to tackle this puzzle with a sparse evidence from the relationship between taxpayers and public authorities (vertical relationship). As a novelty, this paper highlights both theoretically and empirically trust in public institutions as a new explanation to taxpayer’ willingness to comply. The theoretical framework goes beyond the standard model of tax evasion by allowing social norms and interactions with public institutions. For empirical evidence, I use the World Values Survey 2010-2014 to estimate the causal impact of trust in public institutions on tax morale. The findings suggest that in emerging and developing countries, social norms play a great role on tax morale, whereas in advanced countries institutional environment seems to be one of the most important factors. The results remain robust after exploiting and conducting several sensitivity analysis.
    Keywords: public institutions, signal effects, tax morale, tax evasion, trust
    JEL: D70 H26 H31 K42
    Date: 2015–12
  9. By: Charles F. Manski; John V. Pepper
    Abstract: Despite dozens of studies, research on crime in the United States has struggled to reach consensus about the impact of right-to-carry (RTC) gun laws. Empirical results are highly sensitive to seemingly minor variations in the data and model. How then should research proceed? We think that policy analysis is most useful if researchers perform inference under a spectrum of assumptions of varying identifying power, recognizing the tension between the strength of assumptions and their credibility. With this in mind, we formalize and apply a class of assumptions that flexibly restrict the degree to which policy outcomes may vary across time and space. Our bounded variation assumptions weaken in various respects the invariance assumptions commonly made by researchers who assume that certain features of treatment response are constant across space or time. Using bounded variation assumptions, we present empirical analysis of the effect of RTC laws on violent and property crimes. We allow the effects to vary across crimes, years and states. To keep the analysis manageable, we focus on drawing inferences for three states –Virginia, Maryland, and Illinois. We find there are no simple answers; empirical findings are sensitive to assumptions, and vary over crimes, years, and states. With some assumptions, the data do not reveal whether RTC laws increase or decrease the crime rate. With others, RTC laws are found to increase some crimes, decrease other crimes, and have effects that vary over time for others.
    JEL: K14 K42 Z18
    Date: 2015–11

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