nep-law New Economics Papers
on Law and Economics
Issue of 2016‒10‒09
fifteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Securing Property Rights By Glaeser, Edward L; Ponzetto, Giacomo AM; Shleifer, Andrei
  2. The Socioeconomic Determinants of Crime in Ireland from 2003-2012 By Brosnan, Stephen
  3. Immigrant Crime and Legal Status: Evidence from Repeated Amnesty Programs By Fasani, Francesco
  4. The Decision to Carry: The Effect of Crime on Concealed-Carry Applications By Depew, Briggs; Swensen, Isaac D.
  5. Statehood Experience, Legal Traditions and Climate Change Policies By James B. ANG; Per G. Fredriksson
  6. Legal compliance and litigation spending under the English and American rule: Experimental evidence By Baptiste Massenot; Maria Maraki; Christian Thoeni
  7. Law, Politics and the Quality of Government in Africa By Asongu, Simplice; Nwachukwu, Jacinta
  8. Mandatory Minimum Policy Reform and the Sentencing of Crack Cocaine Defendants: An Analysis of the Fair Sentencing Act By Bjerk, David J.
  9. Reducing crime and violence: Experimental evidence from cognitive behavioral therapy in Liberia By Christopher Blattman; Julian Jamison; Margaret Sheridan
  10. Protecting innovation through patents and trade secrets: Determinants and performance impacts for firms with a single innovation By Crass, Dirk; Garcia Valero, Francisco; Pitton, Francesco; Rammer, Christian
  11. The Third Worker: Assessing the Trade-off between Employees and Contractors By Martins, Pedro S.
  12. Competition and vested interests in taxis in Ireland: a tale of two statutory instruments By Gorecki, Paul
  13. Effects of Parental Leave Policies on Female Career and Fertility Choices By Shintaro Yamaguchi
  14. Optimal Completeness of Property Rights on Renewable Resources in Presence of Market Power By Alexandre CROUTZET; Pierre LASSERRE
  15. The Influence of the European Union Consumer Protection Policy on Croatian Consumers By Simon Stickelmann

  1. By: Glaeser, Edward L; Ponzetto, Giacomo AM; Shleifer, Andrei
    Abstract: A central challenge in securing property rights is the subversion of justice through legal skill, bribery, or physical force by the strong -the state or its powerful citizens- against the weak. We present evidence that the less educated and poorer citizens in many countries feel their property rights are least secure. We then present a model of a farmer and a mine which can pollute his farm in a jurisdiction where the mine can subvert law enforcement. We show that, in this model, injunctions or other forms of property rules work better than compensation for damage or liability rules. The equivalences of the Coase Theorem break down in realistic ways. The case for injunctions is even stronger when parties can invest in power. Our approach sheds light on several controversies in law and economics, but also applies to practical problems in developing countries, such as low demand for formality, law enforcement under uncertain property rights, and unresolved conflicts between environmental damage and development.
    Keywords: Injunction; Liability; Property rights; Subversion
    JEL: K11 O17 P14
    Date: 2016–09
  2. By: Brosnan, Stephen
    Abstract: This paper analyses the socioeconomic determinants of property crime and violent crime in Ireland between 2003 and 2012. The aim of the study is to determine whether individuals respond to incentives when deciding to engage in crime and whether this decision is dependent on the type of crime an individual engages in. The results of the paper support the economic theory of crime which indicates that criminals respond to incentives, particularly for property crimes. Higher rates of crime detection are associated with a fall in crime rates across all property crimes. Higher detection rates have been found to reduce crime rates for property crimes while the impact on violent crimes is found to be insignificant. The socioeconomic determinants of crime tend to be more ambiguous.
    Keywords: crime, crime rates, deterrence, unemployment, GMM
    JEL: Z00
    Date: 2016–05–07
  3. By: Fasani, Francesco (Queen Mary, University of London)
    Abstract: Do general amnesty programs lead to reductions in the crime rate among immigrants? We answer this question by exploiting both cross-sectional and time variation in the number of immigrants legalized generated by the enactment of repeated amnesty programs between 1990 and 2005 in Italy. We address the potential endogeneity of the "legalization treatment" by instrumenting the actual number of legalized immigrants with alternative predicted measures based on past amnesty applications patterns and residential choices of documented and undocumented immigrants. We find that, in the year following an amnesty, regions in which a higher share of immigrants obtained legal status experienced a greater decline in non-EU immigrant crime rates, relative to other regions. The effect is statistically significant but relatively small and not persistent. In further results, we fail to find any evidence of substitution in the criminal market from other population groups - namely, EU immigrants and Italian citizens - and we observe a small and not persistent reduction in total offenses.
    Keywords: illegal migration, legalization, migration policy
    JEL: F22 J61 K37
    Date: 2016–09
  4. By: Depew, Briggs (Louisiana State University); Swensen, Isaac D. (Montana State University)
    Abstract: Despite contentious debate on the role of concealed-carry legislation in the U.S., little is known about individual decisions to legally carry concealed handguns in public. Using data on concealed-carry permit applications from 1998 to 2012, we explore the degree to which individuals respond to crime by applying for permits to legally carry concealed firearms. We find that recent homicide incidents increase concealed-carry applications in areas relatively near to the event. Our main results suggest that an additional homicide in relatively small cities increases applications by 26 percent over the following two months. We also find effects in larger cities when using neighborhood-level data. Our data allow us to explore specific circumstances of crime incidents and the characteristics of responsive applicants. Our results show that gun-related homicides are particularly relevant and that whites and males are most responsive to homicide incidents. We also find evidence that individuals are more responsive to homicide incidents when they share a common characteristic with the victim, particularly for female applicants.
    Keywords: concealed carry, right to carry, crime, precautionary behavior, gun control, demand for guns
    JEL: K42 I18
    Date: 2016–09
  5. By: James B. ANG (Division of Economics, Nanyang Technological University, 14 Nanyang Drive, Singapore 637332.); Per G. Fredriksson (Department of Economics, University of Louisville, Louisville, KY 40292, USA.)
    Abstract: This paper investigates how the implementation of modern climate change policies is related to former colonies' length of state history and their legal heritage. We argue that countries with longer statehood experience around the time of colonization were better equipped to implement the legal philosophies transplanted by their colonial powers. Therefore, the implications of receiving British common law versus French civil law should be particularly important in countries with a greater accumulated history of statehood. Using a cross section of up to 78 former colonies, our results provide support for this hypothesis. In particular, our estimates demonstrate that common law countries have weaker modern climate change policies than civil law countries and the difference is in ated by a longer statehood experience, measured by the length of state history from 1-1800 AD. Legal origin has no e ect in areas which, by the time of colonization, had no statehood experience.
    Keywords: Environmental policy; climate change; state antiquity; history; state capacity;legal origins; colonization.
    JEL: Q58 K23 O44
    Date: 2016–09
  6. By: Baptiste Massenot; Maria Maraki; Christian Thoeni
    Abstract: We investigate fee-shifting rules in litigation with regard to their impact on legal compliance, settlement, and litigation spending. We develop a model to compare the English rule, according to which the winning party is compensated by the losing party, to the American rule, according to which parties pay their own expenses independent of the outcome of the trial. We conduct an experiment to put the predictions to an empirical test. In accordance with the model, we find that litigants spend substantially more under the English rule than under the American rule. Defendants are significantly more compliant under the English rule when out-of-court settlement is not possible, but not when settlement is possible. Settlement rates do not significantly differ between the two rules, nor do they differ within the subsets of strong or weak cases.
    Keywords: litigation, experiment, American rule, English rule, fee-shifting, loser-pays, legal compliance, settlement, litigation spending
    JEL: K13 K41 C91 C72 D44
    Date: 2016–10
  7. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: This paper examines interconnections between law, politics and the quality of government in Africa. We investigate whether African democracies enjoy relatively better government quality compared to their counterparts with more autocratic inclinations. The empirical evidence is based on Instrumental variable Two-Stage-Least Squares and Fixed Effects with data from 38 African countries for the period 1994-2010. Political regimes of democracy, polity and autocracy are instrumented with income-levels, legal-origins, religious-dominations and press-freedom to account for government quality dynamics, of corruption-control, government-effectiveness, voice and accountability, political-stability, regulation quality and the rule of law. Findings show that democracy has an edge over autocracy while the latter and polity overlap. As a policy implication, democracy once initiated should be accelerated to edge the appeals of authoritarian regimes.
    Keywords: Law; Politics; Democracy; Government Policy; Development
    JEL: K00 O10 P16 P43 P50
    Date: 2016–01
  8. By: Bjerk, David J. (Claremont McKenna College)
    Abstract: The Fair Sentencing Act of 2010 (FSA) affected the U.S. federal mandatory minimum sentencing laws for to crack cocaine offenders, and represented the first Congressional reform of sentencing laws in over 20 years. A primary goal of this legislation was to lessen the harshness of sentences for crack cocaine offenders and decrease the sentencing gap between crack defendants and powder cocaine defendants. While both the mean sentence length for crack offenders fell following the implementation of the FSA, these changes appear to primarily reflect the continuation of on-going sentencing trends that were initiated by a variety of non- Congressional reforms to federal sentencing policy that commenced around 2007. However, the FSA appears to have been helpful in allowing these trends to continue past 2010.
    Keywords: mandatory minimums, fair sentencing act, crack cocaine, powder cocaine, sentencing guidelines
    JEL: K40
    Date: 2016–09
  9. By: Christopher Blattman; Julian Jamison; Margaret Sheridan
    Abstract: We show that a number of "non cognitive" skills and preferences, including patience and identity, are malleable in adults, and that investments in them reduce crime and violence. We recruited criminally-engaged men and randomized half to eight weeks of cognitive behavioral therapy designed to foster self-regulation, patience, and a noncriminal identity and lifestyle. We also randomized $200 grants. Cash alone and therapy alone initially reduced crime and violence, but effects dissipated over time. When cash followed therapy, crime and violence decreased dramatically for at least a year. We hypothesize that cash reinforced therapy's impacts by prolonging learning-by-doing, lifestyle changes, and self-investment.
    Date: 2016
  10. By: Crass, Dirk; Garcia Valero, Francisco; Pitton, Francesco; Rammer, Christian
    Abstract: This paper tests a number of hypotheses on the use and effectiveness of patents and trade secrets designed to protect innovation. While previous studies have often considered patents and trade secrets as substitutes for one another, we investigate the complementary role of the two protection methods. We identify protection strategies for single innovation firms and hence overcome the assignment problem of existing empirical studies, i.e. whether firms using both protection methods do so for the same innovation or for different innovations. Employing firm panel data from Germany, we find fairly few differences between the determinants for choosing secrecy and patenting. Single innovators that combine both strategies, 39% of the group, tend to aim at a higher level of innovation and act in a more uncertain technological environment. Firms combining both protection methods yield significantly higher sales with new-to-market innovations. Using only secrecy has slightly stronger positive impacts on firm profitability.
    Keywords: Patents,Trade Secrets,Performance Impacts,Single Innovation
    JEL: O31 O32 O34
    Date: 2016
  11. By: Martins, Pedro S. (Queen Mary, University of London)
    Abstract: Firms make labour demand decisions not only between permanent and non-permanent employees but also increasingly more between employees and contractors. Indeed, this third work format can be attractive, also when employment protection law is restrictive. This paper examines empirically this scarcely researched trade-off drawing on a recent reform in Portugal that cut the severance pay of new employee hires while leaving unchanged the regulations affecting contractors. Our analysis draws on difference-in-differences methods and original high-frequency firm-level panel data on both employees and contractors. We find that the reduction in severance pay had a large relative positive effect on the wage bills and worker counts of employees compared to contractors. This result, robust to a number of checks, highlights the role of labour regulations as an additional driver of more flexible labour formats.
    Keywords: employment law, segmentation, duality, future of work
    JEL: J23 J41 J63
    Date: 2016–09
  12. By: Gorecki, Paul
    Abstract: This paper addresses, for the taxi market in Ireland, whether judicial, legislative and regulatory processes promote taxi users’ welfare or taxi license holders’ welfare. It is argued that the 2000 decision to remove quantitative restrictions on taxi numbers favoured taxi users; the 2010 decision to re impose such restrictions, with the exception of wheelchair accessible taxis) had the effect of favouring taxi license holders, while doing little to meet its declared object to increase the number of wheelchair accessible taxis and the ready availability of such vehicles for wheelchair customers. Whether the late 2000s/early 2020s will be a rerun of the late 1990s, with increasing waiting times for taxi users, is a moot point. An applicant refused a taxi license might, as in 2000, successfully bring a High Court case contesting the legal basis for the present quantitative restrictions. The Competition and Consumer Protection Commission might spark debate on taxi regulatory policy, while the Minister for Transport, Tourism and Sport might issue a policy direction to the National Transport Authority, the taxi regulator, requiring it to clarify the objectives and benchmarks for success of its existing prohibition on taxi licenses and to consider how best to create incentives for those with wheelchair accessible taxis to use them to service wheelchair users.
    Keywords: regulation; taxi; wheelchair accessible
    JEL: L5
    Date: 2016–10–01
  13. By: Shintaro Yamaguchi
    Abstract: This paper constructs and estimates a dynamic discrete choice structural model of female employment and fertility decisions that incorporates job protection and cash benefits of parental leave legislation. The estimated structural model is used for ex ante evaluation of policy reforms that change the duration of job protection and/or the arrangement for cash benefits. Counterfactual simulations indicate that introducing an initial one-year job protection policy increases maternal employment significantly, but extending the existing job protection period from one to three years has little effect. The employment effects of cash benefits also seem modest. Overall, parental leave policies have little effect on fertility.
    Keywords: parental leave, female labor supply, discrete choice model, structural estimation
    JEL: J13 J22 J24
    Date: 2016–10
  14. By: Alexandre CROUTZET; Pierre LASSERRE
    Abstract: There are many instances where property rights are imperfectly defined, incomplete, or imperfectly enforced. The purpose of this normative paper is to address the following question:are there conditions under which partial property rights are economically efficient in a renewable resource economy? To address this question, we treat the level of completeness of property rights as a continuous variable in a renewable resource economy. By design, property rights restrict access to the resource, so that they may allow a limited number of firms to exercise market power. We show that there exists a level of property rights completeness that leads to first-best resource exploitation; this level is different from either absent or complete property rights. Complete rights are neither necessary nor sufficient for efficiency in presence of market power. We derive an analytic expression for the optimal level of property rights completeness and discuss its policy relevance and information requirements. The optimal level depends on i) the number of firms; ii) the elasticity of input productivity and iii) the price elasticity of market demand. We also find that a greater difference between the respective values of input and output requires stronger property rights. In fact, high profits both imply a severe potential commons problem and may be the expression of market power; strong property rights limit the commons problem; their incompleteness offsets market power. Biology also impacts the optimal quality of property rights: when the stock of resource is more sensitive to harvesting efforts, optimal property rights need to be more complete.
    Keywords: institutions, property rights, entry, market power oligopoly, common access
    JEL: K L1 Q2 Q3
    Date: 2016
  15. By: Simon Stickelmann (Visiting Scholar)
    Abstract: The European Union Consumer Protection Policy (EU CPP) focuses on the awareness and active participation of consumers in the internal market and therefore counts on consumers’ knowledge of their own conferred rights. Since it is not yet clear what Croatian consumers’ attitudes towards the EU Consumer Protection Policy are, this paper attempts to analyze the impact of the EU Consumer Protection Policy on Croatian consumers’ interest, knowledge, their source of information and their perceived security as consumers. Quantitative (survey) data collection among consumers within the entire Croatia has been used for the analysis. The collected data has been analyzed by using descriptive statistics, correlation and regression analysis, and the analysis of variance (ANOVA). The paper eventually finds significant correlations between Croatian consumers’ degrees of interest, actual knowledge, preferred information sources and perceived security. It furthermore shows that the attitude of Croatian consumers towards the European Union’s system of consumer protection currently shows a significant lack of interest and knowledge. The paper concludes with a premise which states that the attempts to increase interest and knowledge among Croatian consumers require the use of information provided via visible Internet sources.
    Keywords: European Union, Croatia, Europeanisation, consumer protection, consumer awareness
    JEL: D18 K20
    Date: 2016–09

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.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.