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on Law and Economics |
| By: | Julien Jacob; Bruno Lovat |
| Abstract: | We develop a model in which two firms contribute to a risk of accident, each firm being financially unable to compensate for the entire damage. One firm directly operates the risky activity (and can make an effort in care to reduce the probability of an accident occurring), while the other firm provides an input technology whose quality has an impact on the likelihood an of accident occurring. We define a second-best rule of apportionment of liability between these two firms, and we show that this optimal sharing rule is sensitive to the market relationship on the technological market; thus calling for a collaboration between agencies in charge of risk regulation and those in charge of competition issues. |
| Keywords: | multiple tortfeasors, sharing liability, insolvency, innovation, technical diffusion, market power. |
| JEL: | K13 H23 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2016-35&r=law |
| By: | Pinheiro, Roberto (Federal Reserve Bank of Cleveland); Black, Jonathan (Perdue University); Nilsson, Mattias (US Securities and Exchange Commission); da Silva, Maximiliano (Fundação Escola de Comércio Álvares Penteado and Escola Superior de Administração e Gestão) |
| Abstract: | We develop and test a model linking the duration of financial fraud to information produced by auditors and analysts and efforts by managers to conceal the fraud. Our empirical results suggest fraud termination is more likely in the quarter following the release of audited financial statements, especially when reports contain explanatory language, indicating auditors’ observable signals reduce fraud duration. Analyst attention increases the likelihood of fraud termination, but the marginal effect beyond the first analyst is negative, possibly due to free riding and herding behavior impairing analysts’ ability to illuminate misconduct. Finally, evidence suggests managerial concealment significantly increases fraud duration. |
| Keywords: | Fraud duration; Information production; Fraud effort; Auditor reports; Hazard models; |
| JEL: | G34 G38 K22 K42 L51 M41 |
| Date: | 2016–06–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwp:1613&r=law |
| By: | Dafano, Alessandro |
| Abstract: | This paper aims to highlight a newsworthy initiative built up by the Italian Industrial Association which tried to give the Italian economy a forerunner “competition law”; however, in the Seventies Italy proved incapable of tying itself with rules of conduct, which were substituted, empowering an “external constraint”. We will firstly provide an economic and historical-institutional framework of that period; we will then describe the making and the contents of the “Statute of the Firm”, together with a critical analysis on it; finally, we will report some critics around the debate on this proposal, and why the Statute was rejected by entrepreneurs themselves. |
| Keywords: | competition, Guido Carli, Confindustria, role of the firm, pluralism, innovation, regulation, economic planning. |
| JEL: | B21 N44 N84 P11 P12 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71689&r=law |
| By: | R. Ferretti; P. Pattitoni; R. Patuelli |
| Abstract: | This study analyzes the effectiveness of the Market Abuse Directive (MAD) in reducing possible profits from insider trading during voluntary tender offers with the purpose of delisting initiated by controlling shareholders. Exploiting the quasi-experimental setting provided by the introduction of the MAD, our event-study analysis on the Italian market suggests that the new regulation did not produce appreciable effects on the magnitude of abnormal returns and volumes noted before the announcement of a tender offer. Multivariate econometric analyses based on regression and matching methods confirm this result. However, poolability tests reveal that the MAD has changed the manner in which corporate characteristics influence the capacity of insiders to make profit. We interpret our results considering the choice problem of the optimal amount of insider trading, when comparing the marginal costs and benefits of the illegal activity. |
| JEL: | K2 K4 G34 G14 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1071&r=law |
| By: | Ross Astoria |
| Abstract: | The United States. greenhouse gas mitigation strategy decentralizes mitigation responsibility to the states and states have primary regulatory jurisdiction over electrical power utilities. Using the biophysical approach, this paper introduces the notion of hydrocarbon infrastructure. Focusing on a utility rate case from the state of Wisconsin, I argue that the law and the electrical markets which it organizes presuppose hydrocarbon infrastructure. A necessary aspect of greenhouse gas mitigation and transition to renewable energy is a state-level reconfiguration of law and legal institutions around renewable energy generation. Length: 17 pages |
| Keywords: | Keywords: electric utilities, energy returned on energy invested, law |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp2016-051&r=law |
| By: | Krylov, Vadim (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Kurazhov, A.V. (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Romanov, Aleksander Konstantinovich (Russian Presidential Academy of National Economy and Public Administration (RANEPA)); Radchenko, Vera (Russian Presidential Academy of National Economy and Public Administration (RANEPA)) |
| Abstract: | At the heart of the work lies the idea of ??considering the complex scientific and theoretical problems relating to tort obligations and tort liability in the light of comparative studies. The analysis of the tort liability system and general concepts of tort Institute in English, German and French law. However, the work has a practical nature: it examines the legal problems of tort liability for certain types of offenses and methods Misdemeanour specific legal remedies in accordance with English, German and French law. |
| Keywords: | tort liability, tort obligations, delict, English law, German law, French law |
| Date: | 2016–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:rnp:wpaper:454&r=law |
| By: | Bogdan Genchev; Julie Holland Mortimer |
| Abstract: | Conditional pricing practices allow the terms of sale between a producer and a downstream distributor to vary based on the ability of the downstream firm to meet a set of conditions put forward by the producer. The conditions may require a downstream firm to accept minimum quantities or multiple products, to adhere to minimum market-share requirements, or even to deal exclusively with one producer. The form of payment from the producer to the downstream firm may take the form of a rebate, marketing support, or simply the willingness to supply inventory. The use of conditional pricing practices is widespread throughout many industries, and the variety of contractual forms used in these arrangements is nearly as extensive as the number of contracts. This paper reviews empirical evidence on these arrangements. |
| JEL: | K0 K2 K20 K21 L0 L4 L42 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22313&r=law |
| By: | Solomon Hsiang; Nitin Sekar |
| Abstract: | Black markets are estimated to represent a fifth of global economic activity, but their response to policy is poorly understood because participants systematically hide their actions. It is widely hypothesized that relaxing trade bans in illegal goods allows legal supplies to competitively displace illegal supplies, but a richer economic theory provides more ambiguous predictions. Here we evaluate the first major global legalization experiment in an internationally banned market, where a monitoring system established before the experiment enables us to observe the behavior of illegal suppliers before and after. International trade of ivory was banned in 1989, with global elephant poaching data collected by field researchers since 2003. A one-time legal sale of ivory stocks in 2008 was designed as an experiment, but its global impact has not been evaluated. We find that international announcement of the legal ivory sale corresponds with an abrupt ~66% increase in illegal ivory production across two continents, and a possible ten-fold increase in its trend. An estimated ~71% increase in ivory smuggling out of Africa corroborates this finding, while corresponding patterns are absent from natural mortality and alternative explanatory variables. These data suggest the widely documented recent increase in elephant poaching likely originated with the legal sale. More generally, these results suggest that changes to producer costs and/or consumer demand induced by legal sales can have larger effects than displacement of illegal production in some global black markets, implying that partial legalization of banned goods does not necessarily reduce black market activity. |
| JEL: | F18 F55 K42 O13 O17 Q2 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22314&r=law |
| By: | Roberto Burguet; Juan José Ganuza; José Garcia Montalvo |
| Abstract: | We review microeconomic research on corruption from the last thirty years. We start by analyzing the seminal models of corruption built on three-tier, delegation models. Then, go into more details of the context of corrupt deals, and discuss the main economic factors that a¤ect corruption. We discuss incentives and compensation in bureaucracies, and the interplay of market and bureaucratic structure. Competition and contract design will also be reviewed in relation to procurement under corruptible agents. After reviewing the theoretical contributions, we turn to the empirical evidence. We begin discussing measurement issues, and then move to the analysis of the empirical evidence relative to the theoretical models discussed in previous sections. Finally, we cover several anti-corruption mechanisms proposed in the literature and discuss their relative merits as devices to control or eliminate illegal activities. |
| Keywords: | Corruption, Bribes, Deterrence, Bureaucracy, Competition, Game Theory, and Mechanism Design. |
| JEL: | C73 D72 D73 K42 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1525&r=law |
| By: | Finley, Theresa; Koyama, Mark |
| Abstract: | This paper explores the institutional determinants of persecution by studying the intensity of the Black Death pogroms in the Holy Roman Empire. Political fragmentation exacerbated competition for the rents generated by Jewish moneylending. This competition made Jewish communities vulnerable during periods of crisis. We test this hypothesis using data on the intensity of pogroms. In line with our model, we find that communities governed by Archbishoprics, Bishoprics, and Imperial Free Cities experienced more intense and violent persecutions than did those governed by the emperor or by secular princes. We discuss the implications that this has for the enforcement of the rule of law in weak states. |
| Keywords: | Black Death, Political Fragmentation, Legal Fragmentation, State Capacity, Jewish History, Persecution |
| JEL: | K00 N13 N43 |
| Date: | 2016–06–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:72110&r=law |
| By: | Robert A. Pollak |
| Abstract: | The standard Beckerian analysis of marriage market equilibrium assumes that allocation within marriage implements agreements made in the marriage market. This paper investigates marriage market equilibrium when allocation within marriage is determined by bargaining in marriage and compares that model with the standard model. When bargaining in marriage determines allocation within marriage, the marriage market is the first stage of a two-stage game. The second stage, bargaining in marriage, determines allocation within each marriage. This analysis is consistent with any bargaining model with a unique equilibrium as well as with Becker's "altruist model," the model that underlies the Rotten Kid Theorem. Marriage-market participants are assumed to rank prospective spouses on the basis of the allocations they foresee emerging from bargaining in marriage. The first stage game, the marriage market, determines both who marries and, among those who marry, who marries whom (assortative marriage). When bargaining in marriage determines allocation within marriage, the appropriate framework for analyzing marriage market equilibrium is the Gale-Shapley matching model, not the Koopmans-Beckmann assignment model. These models have different implications for who marries, for who marries whom, and for the Pareto efficiency of marriage market equilibrium. |
| JEL: | D1 J12 K36 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22309&r=law |
| By: | Feige, Edgar L. |
| Abstract: | Abstract: Professor Schneider’s “Comment” on my “Reflections” paper does not adequately address the key issues concerning the veracity of his findings, namely issues of documentation, normalization, calibration and replication. Further findings of inadequate documentation, suspicious normalization procedures, unexplained calibration errors and the inability to replicate the results; reinforces the conclusions of my original “Reflections” paper. Schneider’s Shadow Economy results suffer from conceptual flaws, arbitrary data manipulations and insufficient documentation for replication, questioning their place in the academic, policy and popular literature. |
| Keywords: | Shadow Economy, tax evasion, non-observed economy, unobserved economy, Friedrich Schneider, MIMIC models |
| JEL: | C51 C82 E41 E6 H26 K42 O17 |
| Date: | 2016–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:71903&r=law |
| By: | Alemanno , Alberto |
| Abstract: | Emboldened by the Spitzenkandidaten process, the new European Commission emerges as the most political yet. The Commission asks EU citizens to judge its operation by its ability ‘to deliver solutions to the big issues that cannot be addressed by the Member States alone’. The Better Regulation Package translates this political commitment into an actionable approach assuring EU citizens that the Commission will remain ‘big on big things, small on small things’. To deliver on this promise, the Commission extends the Impact Assessment system, renews its consultation procedures and adds a few institutional mechanisms so as to enhance its ‘ability to deliver’ throughout the policy cycle. But in order to do so the Commission needs to bind – and somehow control – the European Parliament and the Council, on the one hand, and the Member States, on the other, in relation to their commitment to openness, participation and evidence-based policymaking. While legitimate, this attempt raises serious doubts about the compatibility of this reform with the principle of separation of powers and, in particular, that of institutional balance. |
| Keywords: | Regulatory reform; Better Regulation; Regulatory Scrutiny Board; Impact Assessment; REFIT; CBA; comparative institutional analysis; trilogues; trialogues; TTIP |
| JEL: | K30 K32 |
| Date: | 2015–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1119&r=law |
| By: | Jean-Philippe BONARDI (FERDI); Olivier CADOT (Faculté des hautes études commerciales - Université de Lausanne); Lionel COTTIER (FERDI) |
| Abstract: | We set up a model of costly information production between two lobbies, a firm and a consumer group, competing for influence over an imperfectly informed but benevolent government. The government is endowed with a parametric amount of information and chooses the best policy from a finite, countable feasible set given the information available (its own and that forwarded by lobbies). Lobbies have asymmetric preferences, the firm being a “high-stakes” player with relatively extreme preferences and the consumer group a “low-stakes” player with preferences more aligned with the government’s. We show that lobbies spend too much on information production in any Nash equilibrium despite a timing-game structure in which the lobbies are free to choose the order of play. We also show that in some parameter configurations, the firm insures against a consumer win by forwarding unbiased information to the government, in spite of its own extreme preferences and high stakes. The resulting informational rent enables the government to adopt moderate policies aligned with its own (i.e. societal) preferences, suggesting a new way in which lobby competition can produce good policies even when the government is imperfectly informed. |
| Keywords: | Game theory, lobbying model, imperfect information, timing game |
| JEL: | H4 K0 P1 D72 F13 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:fdi:wpaper:2810&r=law |
| By: | Casey B. Mulligan; Kevin K. Tsui |
| Abstract: | A version of the Becker-Lancaster characteristics model featuring quality-quantity tradeoffs reveals a number of surprising market behaviors that can result from price regulations that are imposed on competitive markets for products that have adjustable non-price attributes. Quality need not clear a competitive market in the same way that prices do, because quality can reduce the willingness to pay for quantity. Producers can benefit from price ceilings, at the expense of consumers. Price ceilings can result in quality-degradation “death spirals” that would not occur under quality regulation or excise taxation. The features of tastes and technology that lead to such outcomes are summarized with pairwise comparisons of (not necessarily constant) elasticities. |
| JEL: | K2 L15 L51 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22305&r=law |