nep-law New Economics Papers
on Law and Economics
Issue of 2016‒03‒17
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Coase and the departure from property By Benito Arruñada
  2. How Rome Enabled Impersonal Markets By Benito Arruñada
  4. The Wild West is Wild: The Homicide Resource Curse By Mathieu Couttenier; Pauline Grosjean; Marc Sangnier
  5. Reforming the Legal and Institutional Framework for the Enforcement of Civil and Commercial Claims in Portugal By Sebastiaan Pompe; Wolfgang Bergthaler
  6. Returns to Education in Criminal Organizations: Did Going to College Help Michael Corleone? By Campaniello, Nadia; Gray, Rowena; Mastrobuoni, Giovanni
  7. Multiple causation, apportionment and the Shapley value By Ferey, S.; Dehez, P.
  8. What makes Law to change Behavior? An experimental study By Romaniuc, Rustam
  9. The “Voracity” and “Craving” Effects of Export Booms and Busts on Firm Bribery: Evidence from a Multi-level Empirical Analysis By Joël CARIOLLE

  1. By: Benito Arruñada
    Abstract: In "The Problem of Social Cost", Coase (1960) used a simplified conception of property rights as the outcome of mere contracting in independent exchanges. This conception has been suitable for successfully analyzing many important issues, including that of externalities related to the use of assets and public goods. However, its implicit assumption that exchange in property rights does not affect future transaction costs provides an inadequate basis for understanding property institutions and has caused confusion on the efficacy of private ordering and the role of the state and legal institutions. It has thus limited the scope of most of the economics of so-called property rights to analyses of political interactions and contract rights in personal exchanges. In the real world, property is defined by interaction between multiple exchanges which cause exchange-related non-contractible externalities among market participants. When such exchange-related externalities are considered, property becomes inherently linked to public and legal interventions, which are indispensable to reach true property—that is, in rem—enforcement and truly impersonal—asset-based—exchange.
    Keywords: property rights, externalities, enforcement, transaction costs, public ordering, private ordering, impersonal exchange.
    JEL: D23 K11 K12 L85 G38 H41 O17 P48
    Date: 2016–01
  2. By: Benito Arruñada
    Abstract: Impersonal exchange increases trade and specialization opportunities, encouraging economic growth. However it requires the support of sophisticated public institutions. This paper explains how Classical Rome provided such support in the main areas of economic activity by relying on public possession as a titling device, enacting rules to protect innocent acquirers in agency contexts, enabling the extended family to act as a contractual entity, and diluting the enforcement of personal obligations which might collide with impersonal exchange. Focusing on the institutions of impersonal exchange, it reaches a clear positive conclusion on the market-facilitating role of the Roman state because such institutions have unambiguously positive effects on markets. Moreover, being impersonal, these beneficial effects are also widely distributed across society instead of accruing disproportionately to better-connected individuals.
    Keywords: Property rights, enforcement, transaction costs, Roman law, impersonal exchange, personal exchange, New Institutional Economics, Law and Economics
    JEL: D1 D23 G38 K11 K12 K14 K22 K36 L22 N13 O17 P48
    Date: 2016–02
  3. By: Vladimir Jilkine (Riga Stradins University)
    Abstract: The right to privacy of correspondence is enshrined in Article 8 of the European Convention and the jurisprudence of the ECHR. Violation of privacy is one of the crimes against the constitutional rights and freedoms of man. Within the framework of the problems in combating international terrorism and the legitimate interests of law enforcement or national security, restriction on the right of a citizen to privacy of correspondence is permitted only in accordance with the law, including international human rights law. Paragraph 2 of article 17 of the International Covenant on Civil and Political Rights explicitly states that everyone has the right to the protection of the law against unlawful or arbitrary interference with their privacy. This implies that any communications surveillance programme must be conducted on the basis of a publicly accessible law, which in turn must comply with the State’s own constitutional regime and international human rights law.
    Keywords: international law, national security and cyber-crime, ECHR case-law, coercive measures.
    JEL: K14 K33
  4. By: Mathieu Couttenier (University of Lausanne); Pauline Grosjean (School of Economics, University of New South Wales, Sydney); Marc Sangnier (Aix-Marseille University (Aix-Marseille School of Economics), CNRS & EHESS)
    Abstract: We document interpersonal violence as a dimension of the resource curse. We rely on a historical natural experiment in the United States, where mineral discoveries occurred sometimes before, sometimes after formal institutions were established in the county of discovery. In places where mineral discoveries occurred before formal institutions were established, there were more homicides per capita historically and the effect has persisted to this day. Today, the share of homicides and assaults explained by the historical circumstances of mineral discoveries is comparable to the effect of education or income. Our results imply that short-term and quasi-exogenous variations in the institutional environment can lead to large and persistent differences in cultural and institutional development.
    Keywords: Homicide, Resource Curse, Mineral Discoveries, US
    JEL: K42 N31 O14 Z13
    Date: 2016–02
  5. By: Sebastiaan Pompe; Wolfgang Bergthaler
    Abstract: This paper discusses the recent major reforms in the area of civil and commercial claims enforcement undertaken by the Portuguese authorities in the context of the IMF/EU-supported adjustment program. The economic literature has long recognized that slow claims enforcement affects economic growth, foreign direct investment, credit and labor markets, and firm size. The Portuguese authorities together with IMF/EU staff deployed a novel approach that has focused on incentives tackling weaknesses in the enforcement process with the aim of increasing the efficiency and effectiveness of claims enforcement and resolving court backlogs. The paper finds impressive quantifiable changes affecting, in particular, court backlog reduction, court processing speed, and private debt recovery. The economic literature suggests that this will impact positively on the payment culture and overall growth, even if such impact cannot be determined at this stage.
    Keywords: IMF;Europe;Portugal;judicial reform, civil and commercial claims enforcement, macro-criticality, courts, enforcement, claims, debt, credit, investment, General, General, General,
    Date: 2015–12–28
  6. By: Campaniello, Nadia; Gray, Rowena; Mastrobuoni, Giovanni
    Abstract: Is there any return to education in criminal activities? This paper is one of the first to investigate whether education has not only a positive impact on legitimate, but also on illegitimate activities. We use as a case study one of the longest running criminal corporations in history: the Italian-American mafia. Its most successful members were capable businessmen, orchestrating crimes that required abilities that might be learned at school: extracting the optimal rent when setting up a racket, weighting interests against default risk when starting a loan sharking business or organizing supply chains, logistics and distribution when setting up a drug dealing system. We address this question by comparing mobsters to a variety of samples drawn from the United States 1940 Population Census, including a sample of their closest (non-mobster) neighbors. We document that mobsters have one year less education than their neighbors on average. We find that mobsters have significant returns to education of 7.5-8.5 percent, which is only slightly smaller than their neighbors and 2-5 percentage points smaller than for U.S.-born men or male citizens. Mobster returns were consistently about twice as large as a sample of Italian immigrants or immigrants from all origin countries. Within that, those charged with complex crimes including embezzlement and bookmaking have the highest returns.We conclude that private returns to education exist even in the illegal activities characterized by a certain degree of complexity as in the case of organized crime in mid-twentieth century United States.
    Keywords: Returns to education; organized crime; mafia; Italian-American Immigration; Federal Bureau of Narcotics; 1940 Census
    JEL: L1
    Date: 2016
  7. By: Ferey, S. (University of Lorraine); Dehez, P. (Université catholique de Louvain, CORE, Belgium)
    Abstract: Multiple causation is one of the most intricate issues in contemporary tort law. Sharing a loss suffered by a victim among multiple tortfeasors is indeed difficult and Courts do not always follow clear and consistent principles. Here, we argue that the axiomatic approach provided by the theory of cooperative games can be used to clarify that issue. We have considered the question from a purely game theoretic point of view in Dehez and Ferey (2013). Here we propose to analyze it in a legal perspective. We consider in particular the difficult case of successive causation to which we associate a general class of games called "sequential liability games". We show that our model rationalizes the two-step process proposed by the Restatement Third of Torts, apportionment by causation and apportionment by responsibility. More precisely, we show that the weighted Shapley value associated to a sequential liability game is the legal counterpart of this two-step process.
    Date: 2015–11–01
  8. By: Romaniuc, Rustam
    Abstract: The use of mild laws to affect people’s behavior is pervasive – from environmental regulation to tort law – but little is known about how the law changes human behavior and social outcomes when it uses non-deterrent monetary incentives. We find that when low monetary incentives are used in tandem with an indication of what one should do (i.e., a norm), then the effect on behavior is positive but transitory. The effect is long lasting when we use low monetary incentives in isolation. This suggests that the indication of what one should do makes salient the conflict between people’s normative expectations and what others effectively do. This undermines conditional cooperators’ own motivation to contribute to public goods. Finally, we compare the effects of mild laws with how mere messages indicating what is moral behavior affect contributions to the public good. Contrary to the existing experimental evidence, we find that messages fail to improve cooperation. We spotlight the conditions under which this is the case.
    Date: 2015–12
  9. By: Joël CARIOLLE (Ferdi)
    Abstract: The evidence of a “voracity effect” of temporary windfalls on corruption in weak institutional contexts has been widely documented. However, the reverse hypothesis of a “craving effect” on corruption stimulated by resource shortages has theoretical foundations but less empirical support. This paper aims to reconcile these two seemingly competing hypotheses within a unified analytical and empirical framework. Exploiting data on 19,712 bribe reports and other characteristics of firms located in 36 developing countries, and addressing endogeneity biases caused by intra-class correlation, multi-level estimations of the effect of aggregate export booms and busts on firm-level bribery are conducted. A robust positive effect of both export booms and busts on firms’ bribery is found, when financial and democratic institutions are failing. Conversely, a robust negative effect of booms and busts is evidenced when institutions are better off. Therefore, this paper gives additional evidence on the importance of institutional safeguards against corrupt practices in times of abundance, and new evidence on their importance in times of shortage.
    Date: 2016–02

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