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on Law and Economics |
| By: | Dari-Mattiacci, Giuseppe; Gelderblom, Oscar; Jonker, Joost; Perotti, Enrico C |
| Abstract: | We describe how the business corporation gradually emerged in the 17th century in response to the need to lock in long-term capital to profit from trade opportunities with Asia. Since contractual commitments to lock in capital were not fully enforceable in partnerships, this evolution required a legal innovation, essentially granting the corporation a property right over capital. Locked-in capital exposed investors to a significant loss of control, and could only emerge where and when political institutions limited the risk of expropriation. The Dutch East India Company (VOC, chartered in 1602) benefited from the restrained executive power of the Dutch Republic and was the first business corporation with permanent capital. The English East India Company (EIC, chartered in 1600) kept the traditional cycle of liquidation and refinancing until, in 1657, the English Civil War put the crown under strong parliamentary control. We show how the time advantage in the organizational form had a profound effect on the ability of the two companies to make long-term investments and consequently on their relative performance, ensuring a Dutch head start in Asian trade that persisted for two centuries. We also show how other features of the corporate form emerged progressively once the capital became permanent. |
| Keywords: | capital lock in; corporate form; institutional development; legal innovation; limited liability |
| JEL: | G30 K22 N24 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:11062&r=law |
| By: | Zhixin Dai (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Fabio Galeotti (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Marie Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France) |
| Abstract: | We conduct an artefactual field experiment using a diversified sample of passengers of public transportations to study attitudes towards dishonesty. We find that the diversity of behavior in terms of dis/honesty in laboratory tasks and in the field correlate. Moreover, individuals who have just been fined in the field behave more honestly in the lab than the other fare-dodgers, except when context is introduced. Overall, we show that simple tests of dishonesty in the lab can predict moral firmness in life, although frauders who care about social image cheat less when behavior can be verified ex post by the experimenter. |
| Keywords: | Dishonesty, fare-dodging, field experiment, external validity, public transportations |
| JEL: | B41 C91 C93 K42 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:gat:wpaper:1605&r=law |
| By: | David Gaukrodger |
| Abstract: | Governments have been examining the potential role of joint government interpretations of investment treaties at OECD-hosted intergovernmental investment roundtables. Now well-established in the model BITs and treaty practice of the NAFTA governments, express provisions for such joint interpretations have recently been included in an increasing range of treaties and investment policies around the world. But while a significant number of major recent treaties contain such express provisions, most investment treaties do not expressly address joint interpretations and thus leave the issue to more general rules. This paper addresses the general legal framework applicable to joint agreements by treaty parties about the interpretation of treaties. It outlines some key concepts and distinctions in treaty interpretation, and then considers the effects of treaty interpretations and amendments on third parties and in particular on investors covered by a treaty. Joint government interpretation can be binding or non-binding on investment arbitration tribunals. The paper concludes with brief consideration of possible criteria that could affect the persuasiveness of non-binding guidance. |
| Keywords: | international investment law, international investment, international investment agreements, foreign investment, investment treaties |
| JEL: | F02 F13 F21 F5 F53 G28 K23 K33 K41 |
| Date: | 2016–02–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dafaaa:2016/1-en&r=law |
| By: | Yannis Katsoulacos (Athens University of Economics and Business, Athens, Greece); Evgenia Motchenkova (VU University Amsterdam, the Netherlands); David Ulph (University of St Andrews, St Andrews, Fife, Great Britain) |
| Abstract: | This paper develops a model of the birth and death of cartels in the presence of enforcement activities by a Competition Authority (CA). We distinguish three sets of interventions: (a) detecting, prosecuting and penalizing cartels; (b) actions that aim to stop cartel activity in the short-term, immediately following successful prosecution; (c) actions that aim to prevent the re-emergence of prosecuted cartels in the longer term. The last two intervention activities have not been analyzed in the existing literature. In addition we take account of the structure and toughness of penalties. In this framework the enforcement activity of a CA causes industries in which cartels form to oscillate between periods of competitive pricing and periods of cartel pricing. We determine the impact of CA activity on deterred, impeded, and suffered harm. We derive measures of both the total and the marginal effects on welfare resulting from competition authority interventions and show how these break down into measures of the Direct Effect of interventions (i.e. the effect due to cartel activity being impeded) and two Indirect/Behavioral Effects – on Deterrence and Pricing. Finally, we calibrate the model and estimate the fraction of the harm that CAs remove as well as the magnitude of total and marginal welfare effects of anti-cartel interventions. |
| Keywords: | Antitrust Enforcement, Antitrust Law, Cartel, Oligopoly, Repeated Games |
| JEL: | L4 K21 D43 C73 |
| Date: | 2016–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20160002&r=law |
| By: | Eraslan, Hulya (Rice University); Koşar, Gizem (Federal Reserve Bank of New York); Li, Wenli (Federal Reserve Bank of Philadelphia); Sarte, Pierre-Daniel G. (Federal Reserve Bank of Richmond) |
| Abstract: | We build a structural model of Chapter 13 bankruptcy that captures salient features of personal bankruptcy under Chapter 13. We estimate our model using a novel data set that we construct from bankruptcy court dockets recorded in Delaware in 2001 and 2002. Our estimation results highlight the importance of debtor’s choice of repayment plan length for Chapter 13 outcomes under the restrictions imposed by the bankruptcy law. We use the estimated model to conduct policy experiments to evaluate the impact of more stringent provisions of Chapter 13 that impose additional restrictions on the length of repayment plans. We find that these provisions would not materially affect creditor recovery rates and would not necessarily make discharge more likely for debtors with income above the state median. |
| Keywords: | Chapter 13 bankruptcy; discharge; recovery rate |
| JEL: | C61 D12 K35 |
| Date: | 2016–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:764&r=law |
| By: | Katrin Cremers; Max Ernicke; Fabian Gaessler; Dietmar Harhoff; Christian Helmers; Luke Mc Donagh; Paula Schliessler; Nicolas van Zeebroeck |
| Abstract: | We compare patent litigation cases across four European jurisdictions – Germany, France, the Netherlands, and the UK – covering cases filed during the period 2000-2008. For our analysis, we assemble a new dataset that contains detailed information at the case, litigant, and patent level for patent cases filed at the major courts in the four jurisdictions. We find substantial differences across jurisdictions in terms of case loads. Courts in Germany hear by far the largest number of cases in absolute terms, but also when taking country size into account. We also find important between-country differences in terms of outcomes, the share of cases that is appealed, as well as the characteristics of litigants and litigated patents. A considerable number of patents are litigated in multiple jurisdictions, but the majority of patents are subject to litigation only in one of the four jurisdictions. |
| JEL: | O34 K11 K41 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/226239&r=law |
| By: | Konstantin Yu. Totyev (National Research University Higher School of Economics) |
| Abstract: | This paper explores business transactions in the context of the principle of legality. It will be argued that Article 168 of the Russian Civil Code, as a meta-rule, contains three types of rules: 1) rules dealing with the priority of special rule and exceptions (exclusive rules); 2) rules dealing with the interpretation of general, special and exclusive rules as well as with the requirements of statutes or other legal acts violated by a transaction and established outside Article 168 of the Civil Code; 3) rules dealing with the admissibility of special rule and exceptions, as well as with the conditions of admissibility of these rules. With regard to the first group of the rules, the legislature and commercial courts consider Article 168 of the Civil Code a common base with respect to other grounds in the Civil Code and in certain other statutes for declaring transactions invalid. According to the second group of rules, the subject-matter (object) of legal interpretation consists of two elements: à) the text of Article 168 of the Civil Code; and b) the texts of legal acts, described by the generic term “statute or other legal act.” Article 168 of the Civil Code provides instructions not only for rules as objects of application of the article, but also for the methods of interpreting violated requirements. The rules of admissibility for special rule and exceptions, as well as the conditions of admissibility for these standards, are aimed at the numerous cases in which the legislature, in the Civil Code or in other legal acts, expressly establishes nullity (voidness), voidability and other legal consequences for illegal transactions. The paper also answers questions regarding the impact of recent amendments to the Russian Civil Code on using rules for business transaction invalidity in commercial courts |
| Keywords: | business transactions; entrepreneurial activities; general, special and exclusive rules; invalidity (nullity or voidness, voidability) and other legal consequences of illegal transactions; principle of legality; sanctions; statute or other legal act |
| JEL: | K12 K20 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:63/law/2016&r=law |
| By: | Elisabeth Schulte (University of Marburg); Mike Felgenhauer (Plymouth University) |
| Abstract: | We study the effects of preselection on an expert’s incentive to give truthful advice in a decision environment in which certain decisions yield more precise estimates about the expert’s expertise. The introduction of a preselection stage, in which the decision maker can study the case before asking for advice, alters the expert’s perception of the problem. We identify conditions under which preselection occurs in equilibrium. We show that if the expert adjusts his behavior, the option to preselect may reduce the expected utility of the decision maker. |
| Keywords: | Reputation, cheap talk, safe haven |
| JEL: | D82 D83 |
| Date: | 2015 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201524&r=law |