nep-law New Economics Papers
on Law and Economics
Issue of 2016‒11‒27
seventeen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Mediation in criminal cases By Nicoleta-Elena Buzatu
  2. The Role of Lawyers in Social Changes in Developing Countries: Evidence from Russia By Andrei Yakovlev; Anton Kazun; Daniil Sitkevich
  3. Do Doctors Prescribe Antibiotics Out of Fear of Malpractice? By Sebastian Panthöfer
  4. Green licenses and environmental corruption: a random matching model By Angelo Antoci; Simone Borghesi; Gianluca Iannucci
  5. ‘High’ Achievers? Cannabis Access and Academic Performance By Olivier Marie; Ulf Zoelitz
  6. Organized Crime, Violence, and Politics By Alesina, Alberto; Piccolo, Salvatore; Pinotti, Paolo
  7. Scholarship, the Law and Immigration Policy By DeVoretz, Don J.
  8. The "Flock" Phenomenon of the Sydney Lockout Laws: Dual Effects on Rental Prices By Georgia Perks; Shiko Maruyama
  9. Does Corruption Attenuate the Effect of Red Tape "Abstract: In this paper I show that corruption can attenuate the adverse effects of customs-related red tape on firm exports. I first develop a model where exporters use bribes to encourage customs officials to process their documents in an expedited manner. This lowers the delay that they face at customs. The model shows that if the value of the reduced delays is greater than the bribe payment itself, then corruption can attenuate the adverse effects of customs-related red tape. I then use firm-level data to confirm that this attenuating effect exists. I find that the negative effect of greater red tape on firm exports is lower for firms in industries and countries where corruption at customs is more prevalent. This result suggest that, conditional on there being customs-related red tape, an exporter is better off if it can use bribes to lower the delay that it faces." By Reshad N. Ahsan; ;
  10. Bringing War Home: Violent Crime, Police Killings and the Overmilitarization of the US Police By Federico Masera
  11. Truth-telling and the regulator: Evidence from a field experiment with commercial fishermen By Drupp, Moritz A.; Khadjavi, Menusch; Quaas, Martin F.
  12. The Competitive Effects of Information Sharing By John Asker; Chaim Fershtman; Jihye Jeon; Ariel Pakes
  13. Non-governmental organisations in European Union and its role in consumer protection By Mira Malczynska-Bialy
  14. Criminals and the Price System: Evidence from Czech Metal Thieves By Tomas Brabenec; Josef Montag
  15. Divergent Paths: Structural Change, Economic Rank, and the Evolution of Black-White Earnings Differences, 1940-2014 By Patrick Bayer; Kerwin Kofi Charles
  16. High Bids and Low Recovery: A Possible Case for Non-Performing Loan Auctions in India By Pandey, Ashish
  17. The Costs and Benefits of Migration into the European Union: Debunking Contemporary Myths with Facts By Asongu, Simplice; Leke, Ivo

  1. By: Nicoleta-Elena Buzatu (†Dimitrie Cantemir†Christian University of Bucharest)
    Abstract: Mediation can solve conflicts arising from crimes which, under the Romanian law, the withdrawal of the preliminary complaint or the reconciliation of the parties removes criminal liability. Also, mediation can solve any civil side of the criminal file or of any type of crime. If, after the mediation agreement, the defendant covers the damages, he benefits from attenuating circumstances. The parties may resort to mediation in criminal prosecution stage and during the trial. If mediation is accepted by the parties, they will be ensured their right to legal assistance or to an interpreter, if required. To solve criminal cases, under the agreement concluded as a result of mediation in criminal cases, the parties are obliged to submit to the judicial the mediation agreement authenticated by a notary public or to appear before the judicial body to take note of their will, under the mediation agreement.
    Keywords: mediation, mediation agreement, criminal cases, criminal liability, preliminary complaint, reconciliation of the parties
    JEL: K14 K41
  2. By: Andrei Yakovlev (National Research University Higher School of Economics); Anton Kazun (National Research University Higher School of Economics); Daniil Sitkevich (National Research University Higher School of Economics)
    Abstract: This paper reviews the activity of professional legal organizations as factors in the transfer from limited access order (LAO) to open access order (OAO) according to the theory of North, Wallis and Weingast. By analyzing the experience of lawyers’ collective action in developing countries, this paper proposes a decision tree explaining the process of the mobilization of the legal community to counter violations of the law by the ruling elite. It shows that this collective action plays a significant role in implementing the rule of law. However, the efficiency of such collective action in a particular country depends on the institutional capacity of its legal association and on the position of the professional elite leading it. The history of the development of Russian legal advocacy shows that exogenous shocks actually stimulate the collective action of lawyers, which in turn compels the government to respond
    Keywords: lawyer, professional elite, collective action, limited access orders, open access orders, professional mobilization.
    JEL: K49 D71 L84
    Date: 2016
  3. By: Sebastian Panthöfer
    Abstract: This paper investigates whether doctors prescribe antibiotics to protect themselves against potential malpractice claims. Using data from the National Ambulatory Medical Care Survey on more than half a million outpatient visits between 1993 and 2011, I find that doctors are 6% less likely to prescribe antibiotics after the introduction of a cap on noneconomic damages. Over 140 million discharge records from the Nationwide Inpatient Sample do not reveal a corresponding change in hospital stays for conditions that can potentially be avoided through antibiotic use in the outpatient setting. These findings, as well as a stylized model of antibiotic prescribing under the threat of malpractice, suggest that liability-reducing tort reforms can decrease the amount of antibiotics that are inappropriately prescribed for defensive reasons.
    JEL: I11 I18 K13
    Date: 2016–11–21
  4. By: Angelo Antoci (University of Sassari, Italy); Simone Borghesi (University of Siena, Italy); Gianluca Iannucci (University of Florence, Italy)
    Abstract: This paper studies environmental corruption via a random matching evolutionary game between a population of firms and a population of bureaucrats who have to decide whether to release a “green” license to the firms. A firm obtains the license if the bureaucrat checks that it complies with environmental regulations, otherwise it is sanctioned. The model assumes that there are two types of bureaucrats (honest and dishonest), two types of firms (compliant and non-compliant), and two possible crimes (corruption and extortion). Corruption occurs when a dishonest bureaucrat accepts a bribe from a non-compliant firm, while extortion occurs when a dishonest bureaucrat claims a bribe from a compliant firm. When there is no dominance of strategies, we show that there exist two bistable regimes, in which two attractive stationary states exist, and two regimes with an internal stable equilibrium, corresponding to the mixed strategy Nash equilibrium of the one-shot static game, surrounded by closed trajectories. From comparative statics analysis performed on the latter two dynamic regimes, it emerges that policy instruments may help the Public Administration reduce both corruption and extortion, although increasing sanctions and detection probability do not always get the desired results.
    Keywords: Bureaucratic corruption, Evolutionary games, Environmental regulations, Economics of crime
    JEL: C73 D21 D73 K42 Q52
    Date: 2016–11
  5. By: Olivier Marie (Erasmus University Rotterdam, and Maastricht University, The Netherlands); Ulf Zoelitz (Maastricht University, The Netherlands)
    Abstract: This paper investigates how legal cannabis access affects student performance. Identification comes from an exceptional policy introduced in the city of Maastricht in the Netherlands that discriminated access via licensed cannabis shops based on an individual’s nationality. We apply a difference-in-difference approach using administrative panel data on course grades of local students enrolled at Maastricht University before and during the partial cannabis prohibition. We find that the academic performance of students who are no longer legally permitted to buy cannabis substantially increases. Grade improvements are driven by younger students and the effects are stronger for women and low performers. In line with how cannabis consumption affects cognitive functioning, we find that performance gains are larger for courses that require more numerical/mathematical skills. Our investigation of underlying channels using course evaluations suggests that performance gains are driven by an improved understanding of the material rather than changes in students’ study effort.
    Keywords: marijuana; legalization; student performance
    JEL: I18 I20 K42
    Date: 2016–11–17
  6. By: Alesina, Alberto; Piccolo, Salvatore; Pinotti, Paolo
    Abstract: We show that in Sicily Mafia killings of politicians increase before elections and have negative effects on the vote received by parties not captured by the Mafia. Then, using a very large data set of electoral speeches, we find strong evidence that anti-mafia activities by politicians elected in Sicily are, in fact, negatively correlated with the levels of pre-electoral violence. Using data on homicides in all regions of Italy starting from the end of the nineteenth century, we identify a political cycle of homicides only in regions with organized crime. We also show how this electoral cycle changes as a function of different electoral rules and the relative strength of captured and non-captured parties. All these empirical findings are rationalized by a simple signaling model in which criminal organizations exert pre-electoral violence to inform adverse politicians about their military strength.
    Keywords: electoral violence; organized crime; political discourse; voting
    JEL: D72 K42
    Date: 2016–11
  7. By: DeVoretz, Don J. (Simon Fraser University)
    Abstract: The legal system has entered the immigration policy framework via class action suits which force immigrant receiving countries to address shortfalls in their immigration and citizenship ascension policies. This paper addresses the role of class action lawsuits in the Canadian context.
    Keywords: immigration policy, class action lawsuits, Canada
    JEL: K37
    Date: 2016–11
  8. By: Georgia Perks (Economics Discipline Group, University of Technology, Sydney); Shiko Maruyama (Economics Discipline Group, University of Technology, Sydney)
    Abstract: Geographically targeted crime control is a controversial attempt to alleviate crime by targeting “hot spots”, which risks the potential displacement of crime into bordering areas. The 2014 Sydney lockout laws have severely decreased the nightlife economy in the once bustling entertainment district of the CBD, and there have been reports of increased violence in displacement, or “flock”, areas. These laws have also displaced attractive nightlife entertainment hubs into neighbouring suburbs, which may contribute to the land value of the displacement areas. To address the paucity of empirical evidence for the displacement effect of geographical alcohol regulations, this paper investigates the effect of the Sydney lockout laws on rental prices in the displacement areas. We find differential “flock effects”: a negative effect on small dwellings and a positive effect on large dwellings. The former effect is relatively weak and short-lived, while the latter is persistent, indicating that the positive effect dominates in the long run. We speculate that the differential effect arises because of difference in the locations of small and large dwellings. Our results suggest that well-designed geographically targeted alcohol control can enhance social welfare not only in targeted areas but also in surrounding areas.
    Keywords: Alcohol law; Geographically targeted crime control; Displacement; Housing markets; Difference-in-difference, Sydney
    JEL: K32 R2 R3
    Date: 2016–08–11
  9. By: Reshad N. Ahsan (Department of Economics, The University of Melbourne); ;
    Keywords: Exports, Customs, Corruption
    JEL: F10 F14 K42
    Date: 2015–08
  10. By: Federico Masera
    Abstract: The withdrawal from the Afghan and Iraqi wars has led to the arrival of vast quantities of military equipment to the US. Much of this equipment, now unused by the military, has been redistributed to police departments via a program called 1033. In this paper, I study the causal effect on criminal activity and police behavior of the militarization of the police through this program. I do so by taking into account that military equipment is stored in various disposition centers. Police departments do not pay for the cost of these items but must cover all transportation costs. I then use the distance to a disposition center and the timing of the US withdrawal from the wars in an instrumental variable setting. Estimates show that military equipment reduces violent crime and is responsible for 60% of the rapid drop observed since 2007. More than one third of this effect is caused by the displacement of violent crime to neighboring areas. Because police departments do not consider this externality when making militarization decisions, they overmilitarize. Finally, I show that police militarization increases the number of people killed by the police. Estimates imply that all the recent increases in police killings are due to police militarization.
    JEL: H10 H72 K42
    Date: 2016–11–22
  11. By: Drupp, Moritz A.; Khadjavi, Menusch; Quaas, Martin F.
    Abstract: Understanding what determines the extent to which economic agents tell the truth to their regulating authority is of major economic importance, from banking to environmental protection. To this end, we examine truth-telling of German commercial fishermen in an artefactual field experiment. Their regulator, the European Union (EU), has recently enacted a ban on discarding unwanted fish catches to the sea, without yet increasing monitoring activities. The regulator thus depends on fishermen's truth-telling, while standard economic theory predicts substantial self-serving dishonesty. Using a coin- tossing task, we test whether truth-telling in a baseline setting differs from behavior in two treatments that exploit fishermen's widespread ill-regard of the EU. We find that fishermen misreport coin tosses to their advantage, albeit to a lesser extent than standard theory predicts. Misreporting is stronger among fishermen in a treatment where they are faced with the EU flag, suggesting that lying towards their ill-regarded regulator is more substantial. Yet, some fishermen are more honest in a control treatment where the source of EU research funding is revealed additionally. Our findings imply that regulators can influence truth-telling behavior by means of their regulatory approaches and communication strategies.
    Keywords: truth-telling,lying,field experiment,regulation,fishermen
    JEL: C93 D63 Q22 K32 K42 L51
    Date: 2016
  12. By: John Asker; Chaim Fershtman; Jihye Jeon; Ariel Pakes
    Abstract: We investigate the impact of information sharing between rivals in a dynamic auction with asymmetric information. Firms bid in sequential auctions to obtain inputs. Their inventory of inputs, determined by the results of past auctions, are privately known state variables that determine bidding incentives. The model is analyzed numerically under different information sharing rules. The analysis uses the restricted experience based equilibrium concept of Fershtman and Pakes (2012) which we refine to mitigate multiplicity issues. We find that increased information about competitors’ states increases participation and inventories, as the firms are more able to avoid the intense competition in low inventory states. While average bids are lower, social welfare is unchanged and output is increased. Implications for the posture of antitrust regulation toward information sharing agreements are discussed.
    JEL: C63 C73 D43 K21 L41
    Date: 2016–11
  13. By: Mira Malczynska-Bialy (University of Rzeszów)
    Abstract: The article is based on an analysis of the subject literature, the legal acts and information from the official web sites of European non-governmental organisations (NGO’s), the main purpose of which is to present the idea and the primary role of NGO’s, whose priority is to propagate and popularize consumer protection in the European Union.In addition an analysis is conducted of the systematics of Consumer non-governmental sector in European Union. Also the relation between non-governmental organisations and European Commission are indicated. The article includes a characterisation of the specific role of the European Economic and Social Committee, which consists of representatives of the various economic and social components of organised civil society, such as consumers in the development of consumer protection in the European market. Generally consumer protection policy was established after the year 1992. At that time, on 7 February 1992 in Maastricht, the Treaty on the European Union undertaken to integrate Europe was signed by the members of the European Community. The Treaty devoted to consumer protection is under a separate title, XI. From that time, the Community shall contribute to the attainment of a high level of consumer protection. One of the ways to achieve this aim is the development of NGO’s within the consumer sectors, which can be called the dedicated voice of the consumer at national and Community level.In the next section of the article the chosen European Union non-government organization and its role in consumer protection is analyzed. In particular the specific actions undertaken on that matter by the European Community of Consumer Co-operatives (Euro Coop), the European Farmers Organisation, the European Association for the co-ordination of Consumer Representation in Standardisation (ANEC) and the Bureau Européen des Unions de Consommateurs ( BEUC ) are analysed.The final section of the article is the conclusion of the real role of consumer NGO’s both now and in the future in European Union policy. Those considerations are based on real European Union regulations such as Regulation (EU) No 254/2014 of the European Parliament and of the Council of 26 February 2014 on a multiannual consumer programme for the years 2014-20, and the Opinion of the European Economic and Social Committee on the Proposal for the Regulation of the European Parliament and of the Council on the Consumer Programme 2014-2020.
    Keywords: non-governmental organisations, consumer protection, European Union.
    JEL: D18 L31 K33
  14. By: Tomas Brabenec; Josef Montag
    Abstract: People steal copper and other nonferrous metals to sell them to scrap yard. Simultaneously, prices at scrap yards are set by the world market. We argue that shocks in metal prices represent a quasi-experimental variation in gains from crime. This allows us to estimate the behavioral parameters of supply of offenses and test the economic theory of criminal behavior. Our estimates suggest that the long-term elasticity of supply of metal thefts with respect to the re-sale value of stolen metal is between unity and 1.5. Moreover, the system tends to equilibriate quickly—between 30 and 60 percent of a disequilibrium is corrected the following month and the monthly price elasticity estimates are around unity.
    Keywords: economics of crime; gains from crime; metal theft; rational model;
    JEL: K42 Q31 Q32
    Date: 2016–02
  15. By: Patrick Bayer; Kerwin Kofi Charles
    Abstract: Studying working and non-working men, we find that, after closing substantially from 1940 to the mid-1970s, the median black-white earnings gap has since returned to its 1950 level, while the positional rank the median black man would hold in the white distribution has remained little changed since 1940. By contrast, higher quantile black men have experienced substantial gains in both relative earnings levels and their positional rank in the white earnings distribution. Using a new decomposition method that extends existing approaches to account for non-participation, we show that the gains of black men at higher quantiles have been driven primarily by positional gains within education level due to forces like improved access to quality schools and declining occupational exclusion. At the median and below, strong racial convergence in educational attainment has been counteracted by the rising returns to education in the labor market, which have disproportionately disadvantaged the shrinking but still substantial share of blacks with lower education.
    JEL: J15 J31 J71 K42 N32 N92
    Date: 2016–11
  16. By: Pandey, Ashish
    Abstract: This paper considers the possibility that the prices bid by asset reconstruction companies in India under a security receipt mechanism may not reflect the ultimate recoverable value of nonperforming loans. The paper establishes, using a model and simulations, that the price bid by asset reconstruction companies will reveal their own rational interest and can significantly exceed the recoverable value. The conclusions arrived in this paper raise concerns regarding the use of bids as an indicator of fair value on bank’s financial statements. The paper offers certain recommendations to mitigate the impact of an erroneous auction design.
    Keywords: Nonperforming Loans; Asset Reconstruction Companies, Auctions with contingent payments, Fair Value Accounting, Principal Agency Conflict, Indian NPA Crises
    JEL: D5 G12 G13 G21 K2
    Date: 2016–11–12
  17. By: Asongu, Simplice; Leke, Ivo
    Abstract: The purpose of this study is to dispel some myths associated with migrants in order to improve socio-economic appraisal of the consequences of the recent surge of migrants into Europe. We argue that: (i) the concern about loss of Christian cultural values is lacking in substance because compared to a relatively near historical epoch or era, very few European citizens do go to Church in contemporary Europe; (ii) the threat to European liberal institutions is falsifiable and statistically fragile because it is not substantiated with significant evidence; (iii) the insignificant proportion of the Moslem population that is aligned with Islamic fundamentalism invalidates the hypothesis on importation of radical Islamic fundamentalism and (iv) the concern about social security burden is relevant only in the short-term because of Europe’s ageing population.
    Keywords: Migration; the European Union; Development
    JEL: F20 J61 J83 K31 O15
    Date: 2016–11

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