nep-law New Economics Papers
on Law and Economics
Issue of 2016‒06‒04
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Organized Crime and the Bright Side of Subversion of Law By Astrid, Gamba; Giovanni, Immordino; Salvatore, Piccolo;
  2. An Axiomatic Analysis of Joint Liability Problems with Rooted -Tree Structure By Takayuki Oishi; Gerard van der Laan; René van den Brink
  3. Fiscal burden differentiation between European Union countries as a source of opportunism, moral hazard and unproductive entrepreneurship By Andrzej Pestkowski
  4. The Efficiency of (strict) Liability Rules revised in Risk and Ambiguity. By Nicolas Lampach; Sandrine Spaeter
  5. The Impact of Bankruptcy Reform on Insolvency Choice and Consumer Credit By Jason Allen; Kiana Basiri
  6. Debt structure when bankruptcy law offers incentives to restructure By Hasan, Iftekhar; Johnc, Kose; Kadiyalad, Padma
  7. Patent rights, product market reforms, and innovation By Philippe Aghion; Peter Howitt; Susanne Prantl
  8. Retail Alcohol Availability and Product Diversity By Ho, Shuay-Tsyr; Qu, Mingyang; Rickard, Bradley; Costanigro, Marco; McLaughlin, Edward

  1. By: Astrid, Gamba; Giovanni, Immordino; Salvatore, Piccolo;
    Abstract: When Legislators award amnesties to `low-rank' criminals cooperating with the justice, top criminals may capture public officials to avoid being sanctioned. Optimal policies should anticipate this danger and fight it back by granting amnesties not only to low-rank criminals, but also to officials who plea guilty and report bribe givers. Even if the threat of being betrayed by their fellows may induce top-criminals to bribe prosecutors, these policies increase the conviction risk not only for top-criminals but also for low-rank ones, whereby increasing the risk premium that the latter require to participate the crime: the bright side of subversion of law.
    Keywords: Criminal Organizations, Corruption, Leniency
    JEL: K14 K42 D73 D78
    Date: 2016–05–17
  2. By: Takayuki Oishi (Aomori Public University, Japan); Gerard van der Laan (VU University Amsterdam, the Netherlands); René van den Brink (VU University Amsterdam, the Netherlands)
    Abstract: For joint liability problems concerning tort law, a legal compensation scheme may be based on lower and upper bounds of compensation for injury and on case-system consistency. Introducing several properties inspired from this observation, we analyze compensation schemes axiomatically under the situation where causation of the cumulative injury appears in multiple sequences of wrongful acts. The situation underlying the model is described by a rooted-tree graph. We show that there is a unique compensation scheme that satifies three axioms, one about lower bounds of individual compensations, one about upper bounds of individual compensations, and one about case-system consistency. This unique compensation scheme is the nucleolus of an associated liability game.
    Keywords: Liability problems; Tort law; Rooted-tree graph; Axiomatization; Nucleolus
    JEL: D63 K13 K49
    Date: 2016–05–31
  3. By: Andrzej Pestkowski (Wroclaw University of Economics)
    Abstract: Free movement and freedom of establishment existing within the European Union institutions are the main factors which make European Union open for business activities. However, it should be noted that all EU countries have their own tax systems and fiscal policy. This, in turn, differentiates fiscal burden of government imposed onto its taxpayers in each Member State. These differences frequently distort the conditions of establishment. As every entrepreneur is willing to minimize costs, especially when their source are compulsory taxes, mass tax migration between Member States might be expected. Tax avoidance and tax evasion, being a form of tax migration, imply numerous economic, social and legal problems. The aim of this paper is to identify these problems along with their causes and effects in terms of fiscal burden differentiation between Member States. Descriptive, qualitative and quantitative analyses have been applied in order to explain the abovementioned phenomena. Additionally, the analyses have been accompanied by case studies.
    Keywords: fiscal burden; tax systems; opportunism; moral hazard; unproductive entrepreneurship
    JEL: E26 H26 K34 K42
    Date: 2016–05
  4. By: Nicolas Lampach; Sandrine Spaeter
    Abstract: In this paper we revise the results about the efficiency of (strict) unlimited, then limited liability in inducing optimal investment in prevention by injurers. Risk and ambiguity are considered. We assume that the potential injurer whose activities cause a risk of environmental accident can reduce the probability of accident by investing in prevention. In the risky model, we recover that limited liability does not always induce low prevention. Contrary to the arguments enhanced by Beard (1990) and Lipowski-Posey (1993), outside lending, absent from our model, does not explain this result. In the ambiguous context, we implement the Non-Extreme Outcome (NEO) expected utility model (Chateauneuf et al., 2007) to represent the injurer’s beliefs and decisions. When ambiguity matters and prevention also affects the injurer’s subjective beliefs, none of the results with risk hold. In particular, the injurer can overinvest in prevention under both unlimited and limited liability.
    Keywords: Strict liability; Ambiguity; Optimal Care; Optimism; Subjective Beliefs.
    JEL: K0 K32 D81 D29
    Date: 2016
  5. By: Jason Allen; Kiana Basiri
    Abstract: We examine the impact of the 2009 amendments to the Canadian Bankruptcy and Insolvency Act on insolvency decisions. Rule changes steered debtors out of division I proposals and into the more cost-effective division II proposals. This also led to a significant substitution out of bankruptcies and into proposals. Using credit bureau data on credit card limits we test, but do not find, any evidence that this substitution into more creditor-friendly insolvencies had any impact on average lending behavior, either immediately following the amendments or up to six years removed.
    Keywords: Credit and credit aggregates, Financial Institutions, Financial system regulation and policies
    JEL: D14 G2 K35
    Date: 2016
  6. By: Hasan, Iftekhar; Johnc, Kose; Kadiyalad, Padma
    Abstract: We augment the LLSV creditor rights index with a new “restructuring index” that measures the incentives provided to creditors to grant concessions outside formal bankruptcy. We study the joint impact of the two indexes on a firm’s leverage policy. We show that the two indexes have at most a statistically weak effect on the level of long-term debt. Instead, the two indexes affect the distribution of long-term debt into bank debt, public debt and private placements. Bank debt increases when the values of both indexes are high. Public debt increases when the creditor rights index is high, but the restructuring index is low, and private placements increase when the restructuring index is high, but the creditor rights index is low. Smaller firms with fewer tangible assets borrow more from banks when both the creditor rights and restructuring indexes are high. When aggregated at the country level, these firm-level results suggest that bankruptcy law can influence the relative importance of credit and equity markets as sources of financing GDP growth.
    Keywords: bankruptcy law, debt structure, restructuring, bank debt, creditor right
    JEL: G32 G33 G38
    Date: 2016–05–17
  7. By: Philippe Aghion; Peter Howitt; Susanne Prantl
    Keywords: intellectual property rights; competition; innovation
    JEL: L1 L5 O3 O4
    Date: 2015–09
  8. By: Ho, Shuay-Tsyr; Qu, Mingyang; Rickard, Bradley; Costanigro, Marco; McLaughlin, Edward
    Abstract: The repeal of the Prohibition Act in 1933 introduced many state-specific regulations in alcohol markets. As one example of this, several states currently have laws that restrict specific alcoholic beverages in grocery stores, and some states have recently considered lifting these restrictions. Some opponents of such legislative changes claim that allowing alcohol to be more widely distributed would put smaller liquor stores out of business and eventually lead to a narrower set of product choices available to consumers. Here we use the Nielsen Homescan dataset that describes alcoholic beverage purchasing patterns for approximately 70,000 households between 2004 and 2012 to examine this issue empirically. Our results show that, even when controlling for preferences for variety, consumers in states that allow beer and wine sales in grocery stores have greater diversity in their purchases of beer and wine. Overall, the findings suggest that expanding the retail availability of beer and wine may actually increase the diversity of alcoholic beverage products purchased by consumers in those states.
    Keywords: Entropy Index, Grocery stores, Product diversity, Regulation, Wine, Agricultural and Food Policy, Consumer/Household Economics, D12, K23, Q18,
    Date: 2016–05–25

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