nep-law New Economics Papers
on Law and Economics
Issue of 2016‒10‒16
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. A comparative study on the law of remedy system for patent infringement in US and Korea By Jae-Sik Choi
  2. Cartel cases and the cartel enforcement process in the European Union 2001-2015: A quantitative assessment By Hellwig, Michael; Hüschelrath, Kai
  3. Securing Property Rights By Edward L. Glaeser; Giacomo A.M. Ponzetto; Andrei Shleifer
  4. Collusion, Firm Numbers and Asymmetries Revisited By Garrod, Luke; Olczak, Matthew
  5. Political Connections and Insider Trading By Thomas Bourveau; Renaud Coulomb; Marc Sangnier
  6. Does say on pay matter? Evidence from the German natural experiment By Troeger, Tobias H.; Walz, Uwe
  7. The Fall of Capital Punishment and the Rise of Prisons: How Punishment Severity Affects Jury Verdicts By Bindler, Anna; Hjalmarsson, Randi
  8. Remembering rest periods in law : another tool to limit excessive working hours By Ghosheh, Najati.
  9. Labour market regulations and capital labour substitution. By G. Cette; J. Lopez; J. Mairesse
  10. Loan Product Steering in Mortgage Markets By Sumit Agarwal; Gene Amromin; Itzhak Ben-David; Douglas D. Evanoff
  11. Job Protection, Housing Market Regulation and the Youth By Antoine Bonleu; Bruno Decreuse; Tanguy Van Ypersele
  12. Legal improvement on Public-Private Partnership for sustainable development of basic infrastructures in CLMV countries By Bajrawan NUCHPRAYOOL

  1. By: Jae-Sik Choi (Korea Institute of Intellectual Property)
    Abstract: The purpose of this presentation is to review the right of patentee put in a statutory form in Korea patent law compared with that of USA and Japan patent law. The focus is a regular patent protect system, especially in criminal suit regarding patent infringement. The IP (“Intellectual Property†) protection should be strengthened as much as possible, rather than impeded, if economies seek to move up the global innovation value chain. And the most effective remedy for damages of patent infringement is the criminal penalties and sanctions for IP rights infringement. That is the reason why the U.S. Chamber International IP Index includes the indicators of “Criminal standards including minimum imprisonment and minimum fines.†Therefore, comparative analysis of remedy system of US and Korea for the patent infringement is performed. In US, as you see in the statement of "Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States, or imports into the United States any patented invention during the term of the patent therefore infringes the patent", the definition of the patent infringement is only stated comprehensively and there is no criminal punishment for patent infringement. When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. On contrast, in the case of Korean patent infringement claims, both civil and criminal remedies are available. Patent Law enacted in 1961 for patent infringement when penalties are explicitly stipulated increasingly so criminal remedies have been strengthened. In the Patent Act of Korea, Any person who infringes a patent right or exclusive license shall be punished by imprisonment not exceeding seven years or by a fine not exceeding 100 million won. Furthermore, If a representative of a juristic person, or an agent, an employee or any other employed person of a juristic person or individual has committed an offense under Articles 225 (1), 228 or 229 with respect to the duties of the juristic person or individual, not only shall the offender be punished, but also the juristic person shall be punished by a fine under any of the individual shall be punished by a fine referred to in the relevant provisions in Korea, which is named as “Joint Penal Provisions.â€
    Keywords: comparative study, remedy system for patent infringement, criminal penalties
    JEL: K11 K14 K00
  2. By: Hellwig, Michael; Hüschelrath, Kai
    Abstract: We provide a comprehensive quantitative assessment of cartels and the related cartel enforcement process in the European Union (EU) from 2001 to 2015. In a first step, we present a detailed characterization of all cartel cases decided by the European Commission (EC) with respect to various criteria such as the number of involved firm groups, cartel market shares and market share asymmetries, involved industries, affected countries, types of infringement, types of cartel breakdown as well as cartel duration. In a second step, we complement this cartel-based analysis with a quantitative assessment of the public cartel enforcement process in the European Union - subdivided further into its duration, types of cartel detection, the leniency program, the settlement procedure, overall fines imposed, and the conclusive appeals process with the General Court (GC) and the European Court of Justice (ECJ).
    Keywords: Competition Policy,Cartels,Collusion,Enforcement,European Union
    JEL: K21 L41
    Date: 2016
  3. By: Edward L. Glaeser; Giacomo A.M. Ponzetto; Andrei Shleifer
    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.
    JEL: H13 K11 O43
    Date: 2016–09
  4. By: Garrod, Luke; Olczak, Matthew
    Abstract: Despite the fact that competition law prohibits explicit cartels but not tacit collusion, theories of collusion often do not distinguish between the two. In this paper, we address this issue and ask: under which types of market structures are cartels likely to arise when firms can alternatively collude tacitly? To answer this question, we analyse an infinitely repeated game where firms with (possibly asymmetric) capacity constraints can make secret price cuts. Tacit collusion can involve price wars on the equilibrium path. Explicit collusion involves firms secretly sharing their private information in an illegal cartel to avoid such price wars. However, this runs the risk of sanctions. We find that, in contrast to the conventional wisdom but consistent with the available empirical evidence, cartels are least likely to arise in markets with a few symmetric firms, because tacit collusion is relatively more appealing in such markets. We discuss the implications for anti-cartel enforcement policy.
    Keywords: cartel, tacit collusion, imperfect monitoring, capacity constraints
    JEL: D43 D82 K21 L44
    Date: 2016–09–30
  5. By: Thomas Bourveau (Hong Kong University of Science and Technology); Renaud Coulomb (University of Melbourne); Marc Sangnier (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS)
    Abstract: This paper investigates whether political connections affect individuals’ propensity to engage in illegal activities in financial markets. We use the 2007 French presidential election as marker of change in the value of political connections, in a difference-in-differences research design. We examine the behavior of directors of publicly listed companies who are connected to the future president through campaign donations or direct friendships, relative to that of other non-connected directors, before and after the election. We uncover indirect evidence that connected directors do more illegal insider trading after the election. More precisely, we find that purchases by connected directors trigger larger abnormal returns, and that connected directors are more likely not to comply with trading disclosure requirements and to trade closer to major corporate events.
    Keywords: political connections, white-collar crime, insider trading
    JEL: D72 G14 G18 G38 K22 K42
    Date: 2016–10
  6. By: Troeger, Tobias H.; Walz, Uwe
    Abstract: We analyze a hand-collected dataset of 1669 executive compensation packages at 34 firms included in the main German stock market index (DAX) for the years 2006- 2014 in order to investigate the impact of the 2009 say on pay legislation. First, we observe that the compensation packages of management board members of Germany's DAX30-firms are closely linked to key performance measures such as return-onassets and EBIT. Second, our analysis indicates that ownership concentration has no significant effect on compensation, which can be read as support of the view that managerial self-serving by usurping the payroll is largely absent even where companies exhibit dispersed share ownership. Third, and most important for our topic, our findings suggest that it pays a lot to take a closer look to the contractual set-up of the compensation schemes. When considering only the overall board members' compensation, the hypothesis of lower remuneration in case of low shareholder support for compensation packages in say on pay-votes can be rejected. Our findings do not support this view, which is not at all surprising given the rather rigid contractual framework for the compensation of management board members. However, we find that the supervisory board seems to be responsive to say on pay-votes when it comes to the design of newly entering candidates.
    Keywords: executive compensation,say on pay,Germany
    JEL: D23 G30 G34 J33 K22
    Date: 2016
  7. By: Bindler, Anna (Department of Economics, School of Business, Economics and Law, Göteborg University); Hjalmarsson, Randi (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: This paper studies the effect of punishment severity on jury decision-making using a large archival data set from the Old Bailey Criminal Court in London from 1715 to 1900. We take advantage of three natural experiments in English history, which result in sharp decreases in punishment severity: The offense specific abolition of capital punishment in the 1800s, the temporary halt of penal transportation during the American Revolution, and the abolition of transportation in 1853. Using a difference-in-differences design to study the abolition of the death penalty and pre-post designs to study the temporary and permanent halts to transportation, we find that decreasing expected punishment (especially via the end of the death penalty), had a large and significant impact on jury behavior, generally leading to the jury being ‘harsher’. Moreover, we find that the size of the effect differs with defendants’ gender and criminal history. These results raise concerns about the impartiality of juries as well as the implicit assumption often made when designing and evaluating criminal justice policies today – that the chance of conviction is independent of the harshness of the penalty.
    Keywords: jury; verdict; conviction; punishment severity; expected punishment; crime; death penalty; English history
    JEL: H00 K14 K40 N00 N43 N93
    Date: 2016–10
  8. By: Ghosheh, Najati.
    Abstract: Research on working time legislation exists, but little has been done to examine the specific provisions about rest periods in and how they can supplement national working time legislation.1 This paper seeks to fill this lacuna. First, it will examine national legislation on weekly working hour limits and identify some key issues that affect a worker’s ability to get rest. Subsequently, it will examine the specific provisions on rest periods in international standards and national legislation, focusing on four key areas: rest periods during the work day, daily rest, weekly rest, and annual leave. It will then conclude with some final observations.
    Keywords: rest period, hours of work, international labour standards, labour legislation, comment
    Date: 2016
  9. By: G. Cette; J. Lopez; J. Mairesse
    Abstract: On the basis of a country*industry unbalanced panel data sample for 14 OECD countries and 18 industries covering the years 1988 to 2007, this study proposes an econometric investigation of the effects of the OECD Employment Protection Legislation (EPL) indicator on four components of total capital and for two skill components of total labor. Relying on a difference-in-difference econometric approach, we find that an increase in EPL has (i) positive and significant effects on the non-ICT capital - labor ratio and the share of high-skill labor; (ii) non-significant effects on the ICT capital – labor ratio; (iii) negative and significant effects for R&D capital – labor ratio and the share of low-skilled labor. These results suggest that firms consider that the strengthening of Employment Protection Legislation is equivalent to a rise in the cost of labour, resulting in capital-to-labour substitution in favour of non-ICT capital and working at the disadvantage of low-skill relatively to high-skill workers. They indicate to the contrary that structural reforms for more labour flexibility weakening this legislation could have a favourable impact on firms’ R&D investment and their hiring of low-skill workers.
    Keywords: Capital intensity, labour market regulations, factor substitution, R&D capital.
    JEL: E22 E24 O30 L50 O43 O47 C23
    Date: 2016
  10. By: Sumit Agarwal; Gene Amromin; Itzhak Ben-David; Douglas D. Evanoff
    Abstract: We present evidence of a particular type of loan steering in which lenders lead borrowers to take out high margin mortgage products. We identify this activity by comparing borrowers who were rejected by lenders but were subsequently approved by their affiliates (steered borrowers) to other initially rejected borrowers who obtained loans elsewhere. Although steered borrowers default less, they pay significantly higher interest rates and are more likely to borrow through contracts with unconventional features, such as negative amortization or prepayment penalties. Female borrowers, single borrowers with no co-signers, and borrowers in low-income locations are more likely to be steered.
    JEL: D12 D18 G18 G21 K2
    Date: 2016–09
  11. By: Antoine Bonleu (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS); Bruno Decreuse (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS); Tanguy Van Ypersele (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS)
    Abstract: Young Europeans experience high unemployment rates, job instability and late emancipation. Meanwhile they do not support reforms weakening protection on long-term contracts. In this paper, we suggest a possible rationale for such reform distaste. When the rental market is very regulated, landlords screen applicants with regard to their ability to pay the rent. Protecting regular jobs offers a second-best technology to sort workers, thereby increasing the rental market size. We provide a model where non-employed workers demand protected jobs despite unemployment and the share of short-term jobs increase, whereas rents, wages and the individual risk of dismissal are unaffected.
    Keywords: labor market dualism, rent default, screening
    JEL: R2 K31
    Date: 2016–10
  12. By: Bajrawan NUCHPRAYOOL (Graduate School of Law, National Institute of Development Administration)
    Abstract: According to Master Plan on ASEAN Connectivity, the cooperation among the member countries leads ASEAN to Highly Competitive Economic Region. Therefore, development of basic infrastructures is one of the key factors for closing the gap and connecting the member countries together. In order to enhance people's quality of life, governments of member countries have a mission to improve basic infrastructures. Especially, the governments in CLMV region (Cambodia, Laos, Myanmar and Vietnam), wherein the population of the member countries is almost 170 million people and economic growth rate is 6-8%. Nowadays, investment policies are focusing more on the foreign investors to develop the basic infrastructure, which has resulted in a significant increase in the number of foreign investors in the period of the economic crisis in Asia.The results revealed that to promote a policy significantly, private entities must be encouraged to invest in the government projects. Furthermore, promoting Public-Private Partnership can spur economic growth, resulting in a strong commitment between public and private sectors that will lead to the development in the country. However, the investment laws in the government projects and granting processes are different and constantly amended. Especially, investment patterns and requirements for each member state are vague and there is a lack of the laws for controlling investments of private entities. These problems as stated, thus, affect investors’ confidence and incoming of investment funds from local and foreign investors.
    Keywords: Public Service, Infrastructure, Private Investment, Foreign Investment Law, Public-Private Partnership (PPP), ASEAN community, CLMV countries
    JEL: K23 K40 K00

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