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on Law and Economics |
| By: | Uriel Procaccia; Eyal Winter |
| Abstract: | Corporate entities enjoy legal subjectivity in a variety of forms, but they are not human beings, and hence their legal capacity to bear rights and obligations of their own is not universal. This paper explores, from a normative point of view, one of the limits that ought to be set on the capacity of corporations to act "as if" they had a human nature, their capacity to commit crime. Accepted wisdom has it that corporate criminal liability is justified as a measure to deter criminal behavior. Our analysis supports this intuition in one subset of cases, but also reveals that deterrence might in fact be undermined in another subset of cases, especially in an environment saturated with plea bargains involving serious violations of the law. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:huj:dispap:dp697&r=law |
| By: | Carsten J. Crede (University of East Anglia); Liang Lu (University of East Anglia) |
| Abstract: | This study experimentally investigates the impact of antitrust enforcement on cartel price decisions when fines and detection probabilities depend on them. We impose expected punishments that create two payoff–equivalent collusive price equilibria, of which one features a lower riskiness of collusion. Subjects are found to behave strategically in that they choose the equilibrium with a lower riskiness of collusion. This suggests that competition authorities can exploit the effects of such endogenous enforcement on strategic uncertainty between cartelists, i.e. a priori uncertainty about the actions of the other cartel members, to lower cartel prices. However, frequency deterrence might be reduced such that the overall welfare effects may be ambiguous. |
| Keywords: | antitrust, cartels, experiment, deterrence |
| JEL: | C92 D43 L13 L41 |
| Date: | 2016–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:uea:wcbess:16-08&r=law |
| By: | Bindler, Anna (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | In this paper, I study the relationship between unemployment benefits, labour market conditions and crime in the light of increasing unemployment durations and temporary benefit extensions in the US. First, I find a positive reduced form effect of the benefit extensions on property crime. Second, I explore the mechanisms of the reduced form in an IV model and find that higher unemployment and longer unemployment durations are linked to higher property crime rates. These findings can rationalise the reduced form effect: Longer benefit durations are linked to longer unemployment durations which in turn contribute to increased propensities for criminal activity. |
| Keywords: | Crime; unemployment; unemployment duration; unemployment insurance |
| JEL: | J64 J65 K42 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0660&r=law |
| By: | Siedlarek, Jan-Peter (Federal Reserve Bank of Cleveland); Carletti, Elena (Bocconi University, IGIER, and CEPR); Ongena, Steven (University of Zurich, the Swiss Finance Institute, and CEPR); Spagnolo, Giancarlo (Site-Stockholm School of Economics, the University of Rome Tor Vergata, EIEF, and CEPR) |
| Abstract: | We find that stricter merger control legislation increases abnormal announcement returns of targets in bank mergers by 7 percentage points. Analyzing potential explanations for this result, we document an increase in the pre-merger profitability of targets, a decrease in the size of acquirers, and a decreasing share of transactions in which banks are acquired by other banks. Other merger properties, including the size and risk profile of targets, the geographic overlap of merging banks, and the stock market response of rivals appear unaffected. The evidence suggests that the strengthening of merger control leads to more efficient and more competitive transactions. |
| Keywords: | banks; mergers and acquisitions; merger control; antitrust; |
| JEL: | G21 G34 K21 L40 |
| Date: | 2016–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1614&r=law |
| By: | Nicolas Lampach; Kene Boun My; Sandrine Spaeter |
| Abstract: | We conduct experiments to study the incentive effects of strict liability by comparing both regimes, unlimited and limited liability in the domain of risk and ambiguity. We assume that the firm’s activities cause a risk of technological disaster and can invest in prevention to reduce the likelihood of accident. We assess Lampach and Spaeter’s theoretical predictions. We find on average high levels of investment under limited liability in the domain of risk, consistent with the theory, but lower level of investment in prevention in the domain of ambiguity. We do not find that subjects’ degree of optimism affect the decision choice albeit we demonstrate strong evidence in favor of inequity aversion, fairness and risk preferences. |
| Keywords: | Strict liability; Technological disaster; Experiment; Risk; Ambiguity; Optimism. |
| JEL: | K13 C91 D81 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2016-30&r=law |
| By: | Löchel, Horst; Packham, Natalie; Hölzl, Eugen |
| Abstract: | This paper looks at the current shadow-banking practices of Chinese SME's and the question if these practices have a positive impact on the development of those SME's. For this pur-pose, new primary data is examined: Four case studies and two supplementary sets of data. Although the data volume imposes limitations on the results, the two main findings are: First, shadow-banking does have such a positive effect. Second, interpersonal lending is by far the most important financing channel for this effect among all the shadow-banking types ob-served. |
| Keywords: | Shadow-banking,SME-funding,China's financial system |
| JEL: | D82 K42 O17 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:fsfmwp:220&r=law |
| By: | Baudy, Philipp; Cords, Dario |
| Abstract: | There have been continuous deregulation efforts concerning temporary agency employment in almost all European countries aiming at an increasing flexibility in the European labor markets. This paper theoretically investigates the effects of a legal deregulation of temporary agency employment on wage setting and the employment structure in a unionized economy with labor market frictions. Multiple-worker firms bargain simultaneously with temporary agencies and labor unions to determine the respective labor costs. It is shown that there is a hump-shaped relationship between the degree of legal deregulation of temporary agency employment and the rate of temporary employment used in the production process. Temporary agency employment may even decrease despite its deregulation. Furthermore, regular employment monotonically increases, while individual workers and labor unions suffer from deregulation due to declining wages and a reduction in labor union's utility. |
| Keywords: | Matching Theory,Labor Unions,Temporary Agency Work,Wage-Setting Process |
| JEL: | C78 J51 J21 J31 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hohdps:062016&r=law |
| By: | Sophie Robin-Olivier |
| Abstract: | This paper is part of the joint project between the Directorate General for Migration and Home Affairs of the European Commission and the OECD’s Directorate for Employment, Labour and Social Affairs on “Review of Labour Migration Policy in Europe”. This document has been produced with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union. Grant: HOME/2013/EIFX/CA/002 / 30-CE-0615920/00-38 (DI130895) A previous version of this paper was presented and discussed at the OECD Working Party on Migration in June 2015.The paper investigates the notion of the “community preference” which in filling job posts gives a priority to EU-nationals over third-country nationals. Analysing the impact of the principle on the European labour migration policy, the report presents a brief history of the notion, and discusses how it is referred to in EU labour migration policy documents. It also examines the challenges that the principle is facing as the EU immigration policy develops, tending to give increasing rights to third-country nationals. |
| JEL: | F22 K31 K37 N44 |
| Date: | 2016–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:elsaab:182-en&r=law |
| By: | Pandey, Ashish |
| Abstract: | In this perspective article, the author analyses the eventual efficacy of recently passed Insolvency and Bankruptcy Bill in India. The author ascertains that the Bill in its current form encourages liquidation at the cost of financial restructuring. An opinion is established based on secondary research that the Bill fails to provide adequate representation to certain key stakeholders. The author highlights a lack of clarity in the Bill regarding the appointment of executants. Certain lacunae in the Bill that may impede its overall effectiveness are explicitly identified. The issue of conflicts between various stakeholders is debated in the context of current Bill. The author draws upon cross-country experiences to suggest remedial measures that address current impediments in the successful implementation of the Bill. |
| Keywords: | Insolvency and Bankruptcy Bill, India, Insolvency Resolution Professionals |
| JEL: | K29 |
| Date: | 2016–06–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71698&r=law |
| By: | Konstantin A. Kholodilin; Andreas Mense; Claus Michelsen |
| Abstract: | Rising rents in German cities have led to an intense debate about the need for tighter rent controls in housing markets. In April 2015, the so-called rental brake was introduced, which imposes upper bounds for rents in new contracts, in order to immediately slow down the increase of rents in tight housing markets. Since then, 11 federal states made use of this instrument. We take advantage of this intra-country variation and test whether the regulation had a causal effect on rents and house prices in the short run. We apply a standard difference-in-differences setup that allows us to study the effects of the rental brake on the underlying price trend in neighboring treated and non-treated postal-code districts. We ground our analysis on a large sample of online advertised rental dwellings and find that, contrary to the expectations of the policy makers, the rental brake has, at best, no impact in the short run. At worst, it even accelerates rent increases both in municipalities subject to the rental brake and in neighboring areas. We further conclude, based on our estimates on the development of at prices, that investors expect on little impact on future rental income. |
| Keywords: | Housing policy, rental housing, Germany, rent controls, rental brake |
| JEL: | K23 N9 R30 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1584&r=law |