nep-law New Economics Papers
on Law and Economics
Issue of 2016‒02‒23
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. A Jury of Her Peers: The Impact of the First Female Jurors on Criminal Convictions By Anwar, Shamena; Bayer, Patrick; Hjalmarsson, Randi
  2. Sequential decision making in merger control By Damien Neven; Vilen Lipatov; Gregor Langus
  3. What is the Value of the Court System for Firms By Stefano Colonnello; C. Herpfer
  4. Fighting Terrorism: Empirics on Policy Harmonization By Simplice Asongu; Jacinta C. Nwachukwu
  5. A Good Turn Deserves Another: Political Stability, Corruption and Corruption-Control By Asongu, Simplice; Nwachukwu, Jacinta
  6. The Efficiency of Crackdowns: A Lab-in-the-Field Experiment in Public Transportations By Zhixin Dai; Fabio Galeotti; Marie Claire Villeval
  7. The Cost of Binge Drinking By Francesconi, Marco; James, Jonathan
  8. Crime and Unemployment in Greece: Evidence Before and During the Crisis By Laliotis, Ioannis
  9. How Collateral Laws Shape Lending and Sectoral Activity By Calomiris, Charles W.; Larrain, Mauricio; Liberti, José; Sturgess, Jason
  10. Structural remedies as a signalling device By Dertwinkel-Kalt, Markus; Wey, Christian
  11. Settlements and appeals in the European Commission's cartel cases: An empirical assessment By Hellwig, Michael; Hüschelrath, Kai; Laitenberger, Ulrich
  12. Stock Option Taxation and Venture Capital Activity: A Cross-Country Comparison By Henrekson, Magnus; Sanandaji, Tino

  1. By: Anwar, Shamena (RAND Corporation); Bayer, Patrick (Duke University and NBER); Hjalmarsson, Randi (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper uses an original data set of more than 3000 cases from 1918 to 1926 in the Central Criminal Courts of London to study the effect of the Sex Disqualification (Removal) Act of 1919. Implemented in 1921, this Act made females eligible to serve on English juries, providing a novel setting for studying the impact of female representation on jury verdicts. Results based on a pre-post research design imply that the inclusion of females had little effect on overall conviction rates but resulted in a large and significant increase in convictions for sex offenses and on the conviction rate differential between violent crime cases with female versus male victims. The inclusion of women also increased the likelihood of juries being discharged without reaching a verdict on all charges and the average time taken to reach a verdict. A complementary analysis of cases in which the jury was carried over from a previous trial also implies that the inclusion of female jurors on the seated jury sharply increased conviction rates for violent crimes against women versus men.
    Keywords: jury; gender; crime; convictions; deliberations; verdict; female; court; historical; victim
    JEL: J10 K14 K40 N00
    Date: 2016–02
  2. By: Damien Neven (IHEID, The Graduate Institute of International and Development Studies, Geneva); Vilen Lipatov; Gregor Langus
    Abstract: We model merger control procedures as a process of sequential acquisition of information and compare US and EU procedures. In the US, the authorities do not have to justify their decision to require further information (issue a second request), whereas in the EU, the authorities face a di_erent (enforceable) standard of proof in phase I relative to phase II. We _nd that in the absence of remedies, the US procedure is always superior in terms of expected consumer welfare. When we allow for remedies, we _nd that, compared to the US, merging parties in the EU have more scope to propose remedies in phase I that will preempt the authorities from uncovering unfavorable information in phase II, and this might reduce expected consumer welfare. However, the higher standard of proof in phase I can also in some circumstances act as a commitment not to accept remedies below some threshold and yield a higher expected consumer welfare in the EU. Our model also shows that for global mergers that have the same effect in the two jurisdictions, a decision to trigger a Phase II in the EU yields the same expected consumer welfare as a clearance in Phase I with remedies in the US. However, the converse is not true.
    Keywords: merger procedure, competition policy
    JEL: K21 K40 L40
    Date: 2014–11
  3. By: Stefano Colonnello; C. Herpfer
    Abstract: We exploit a U.S. Supreme Court ruling on diversity of citizenship in legal disputes to estimate the contribution of the court system to firm value. In an event study, we find that an increase in state court quality from bottom to top tercile is associated with an average increase in equity value of 0.45%, or about $8.7 million on the event day. This effect appears to be driven by courts‘ attitude towards businesses more than by their competency and is more pronounced for firms in industries with high litigation risk. We also test whether firms benefit from the ability to steer lawsuits into friendly courts, so called forum shopping. We provide evidence that a reduction in firms‘ ability to forum shop decreases firm value, whereas a reduction in plaintiffs‘ ability to forum shop increases firm value. We further document that the ruling had significant real effects. Firms which previously stayed out of regions with potentially problematic courts subsequently increased their operations in those regions. Throughout our analysis we exploit a previously unused source of geographic heterogeneity in treatment for U.S. Supreme Court rulings, namely varying interpretations of the same laws across different federal circuits, so called “circuit splits“.
    Keywords: corporate governance, court system, forum shopping, circuit splits
    JEL: G32 G34 G38 K40
    Date: 2016–02
  4. By: Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (Huddersfield, HD1 3DH, UK)
    Abstract: This paper models the feasibility of common policy initiatives against global terrorism, as well as timelines for their enforcement. The empirical evidence is based on 78 developing countries for the period 1984-2008. Employed terrorism dynamics are domestic, transnational, unclear and total terrorism. Absolute (or unconditional) and conditional catch-ups are modelled using Generalised Methods of Moments. We establish consistently that, the rate of catch-up is higher in domestic terrorism relative to transnational terrorism. The time to full catch-up required for the implementation of common policies without distinction of nationality is found to be in a horizon of 13.34-19.92 years for domestic terrorism and 24.67-27.88 years for transnational terrorism. Hence, from a projection date of 2009, in spite of decreasing cross-country differences in terrorists’ attacks, there is still a long way to go before feasible common policy initiatives can be fully implemented without distinction of nationality. The paper is original by its contribution to the empirics of conflict resolution through decreasing cross-country differences in terrorism tendencies. Policy implications are discussed.
    Keywords: Terrorism; Common policies; Development
    JEL: C52 D74 F42 K42 O38
    Date: 2015–06
  5. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: We build on existing literature and contemporary challenges to African development to assess the role of political stability in fighting corruption and boosting corruption-control in 53 African countries for the period 1996-2010. We postulate that on the one hand, an atmosphere of political instability should increase the confidence of impunity owing to less corruption-control. On the other hand, in the absence such impunity from corruption, political instability further fuels corruption. Our findings validate both hypotheses. Hence, contrary to a stream of the literature, we establish causal evidence of a positive (negative) nexus between political stability/no violence and corruption-control (corruption). The empirical evidence is based on Generalized Methods of Moments. The findings are robust to contemporary and non-contemporary quantile regressions. The political stability estimates are consistently significant with decreasing (increasing) magnitudes throughout the conditional distributions of corruption (corruption-control). In other words, the positive responsiveness of corruption-control to political stability is an increasing function of corruption-control while the negative responsiveness of corruption to political stability is a decreasing function of corruption. Simply put: a good turn deserves another.
    Keywords: Fragility; Corruption; Conflicts; Africa
    JEL: F52 K42 O17 O55 P16
    Date: 2015–09
  6. 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: The concentration of high frequency controls in a limited period of time (“crackdowns”) constitutes an important feature of many law-enforcement policies around the world. In this paper, we offer a comprehensive investigation on the relative efficiency and effectiveness of various crackdown policies using a lab-in-the-field experiment with real passengers of a public transport service. We introduce a novel game, the daily public transportation game, where subjects have to decide, over many periods, whether to buy or not a ticket knowing that there might be a control. Our results show that (a) concentrated crackdowns are less effective and efficient than random controls; (b) prolonged crackdowns reduce fare-dodging during the period of intense monitoring but induces a burst of fraud as soon as they are withdrawn; (c) pre-announced controls induces more fraud in the periods without control. Overall, we also observe that real fare-dodgers fraud more in the experiment than non-faredodgers.
    Keywords: Crackdowns, fraud, risk, monitoring, transportation, field experiment
    JEL: C91 D83 K42
    Date: 2016
  7. By: Francesconi, Marco; James, Jonathan
    Abstract: We estimate the effect of binge drinking on accident and emergency attendances, road accidents, arrests, and the number of police officers on duty using a variety of unique data from Britain and a two-sample minimum distance estimation procedure. Our estimates, which reveal sizeable effects of bingeing on all outcomes, are then used to monetize the short-term externalities of binge drinking. We find that these externalities are on average £4.9 billion per year ($7 billion), about £80 for each man, woman, and child living in the UK. The price that internalizes this externality is equivalent to an additional 9p per alcoholic unit, implying a 20% increase with respect to the current average price.
    Keywords: Alcohol; Arrests; Externalities; Health; Road accidents
    JEL: I12 I18 K42
    Date: 2015–02
  8. By: Laliotis, Ioannis
    Abstract: This paper explores the relationship between unemployment and crime in Greece before and during the crisis using panel data at the regional level for the period 1999-2013. The results indicate the operation of a positive relationship between specific crime categories and male unemployment only during the crisis, a weaker effect of long term unemployment only on the total criminal activity and they reveal the existence of significant dynamics.
    Keywords: Crime; Unemployment; Crisis; Greece
    JEL: J60 K40
    Date: 2015–12
  9. By: Calomiris, Charles W.; Larrain, Mauricio; Liberti, José; Sturgess, Jason
    Abstract: This paper investigates the effect of cross-country differences in collateral laws regarding movable assets on lending and sectoral allocation of resources. Using micro-level loan data for a sample of emerging market countries we show that loan-to-values of loans collateralized with movable assets are on average 21 percentage points higher in countries with strong-collateral laws relative to immovable assets. Further, stronger collateral laws tilt collateral composition away from immovable to movable assets. We also provide evidence of a collateral class, including bank guarantees, for which enforcement is independent of collateral law. To examine the effect of collateral laws on real activity we map the relationship of collateral laws and collateral composition to asset-composition and sectoral resource allocation using industry-level output and employment data. Weak collateralization laws that discourage the use of movables assets as collateral create distortions in the allocation of resources that favor immovable-based production. The results shed light on an important channel – collateral laws – through which legal institutions affect lending and real economic activity.
    Date: 2015–06
  10. By: Dertwinkel-Kalt, Markus; Wey, Christian
    Abstract: We analyze the effects of structural remedies on merger activity in a Cournot oligopoly when the Antitrust Agency (AA) cannot observe a proposed merger's efficiency type. Provided the AA follows a consumer surplus standard, an efficient merger type is doomed to over-fix with its divestiture proposal in a pooling equilibrium, which is also possible under separation.
    Keywords: Remedies,Divestiture,Merger Control,Signalling
    JEL: L13 L41 K21
    Date: 2016
  11. By: Hellwig, Michael; Hüschelrath, Kai; Laitenberger, Ulrich
    Abstract: The introduction of the European Union (EU) Settlement Procedure in 2008 aimed at promoting the procedural efficiency of cartel investigations by the European Commission (EC). We use a data set consisting of 579 firms groups convicted by the EC for cartelization from 2000 to 2015 to investigate the impact of the settlement procedure on the probability to file an appeal. Based on the estimation of a model of the firm's decision to appeal in the presettlement era, we subsequently run out-of-sample predictions to estimate the number of hypothetical appeals cases in the settlement era absent the settlement procedure. Our findings of a settlement-induced reduction in the number of appeals of up to 55 percent allow the conclusion that the introduction of the settlement procedure generated substantial additional benefits to society beyond its undisputed key contribution of a faster and more efficient handling of cartel investigations by the EC.
    Keywords: antitrust policy,cartels,settlements,appeals,ex-post evaluation,European Union
    JEL: K21 L41
    Date: 2016
  12. By: Henrekson, Magnus (Research Institute of Industrial Economics (IFN)); Sanandaji, Tino (Institute for Economic and Business History Research (EHFF), Stockholm School of Economics)
    Abstract: One response to uncertainty and transactions costs in VC-finance is to compensate founders (and other key personnel) with stock options under complex contracts. Entrepreneurs are granted stock options contingent on firm performance, vesting and other criteria. While most countries tax stock options as labor earnings, the United States allow them to be taxed at a low capital gains tax rate. The interaction of favorable tax treatment and inherent advantages has led to near universal use of stock options in American venture capital deals, while this remains less common in Europe. The effective tax treatment of stock options depends on tax practices and is not readily observed using statutory tax rates. We asked the local offices of the tax consultancy firm PwC to calculate the effective tax rate for a standardized entrepreneurial case in 22 countries, finding that countries with favorable tax treatment have more VC activity. One advantage of this tax policy is that it narrowly targets entrepreneurial startups without requiring broad tax cuts.
    Keywords: Business taxation; Corporate governance; Entrepreneurship; Innovation; Institutions; Tax policy; Venture capital
    JEL: H25 H30 K34 L26
    Date: 2016–01–11

This nep-law issue is ©2016 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.
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