nep-law New Economics Papers
on Law and Economics
Issue of 2016‒12‒04
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Larrikin Youth: New Evidence on Crime and Schooling By Tony Beatton; Michael P. Kidd; Stephen Machin; Dipa Sarkar
  2. Shareholder wealth vs. stakeholder interests? Evidence from code compliance under the German corporate governance code By Haar, Brigitte
  3. Patents and cumulative innovation: causal evidence from the courts By Alberto Galasso; Mark Schankerman
  4. The International Court of Justice and the Judicial Politics of Identifying Customary International Law By Niels Petersen
  5. Job Protection, Housing Market Regulation and the Youth By Antoine Bonleu; Bruno Decreuse; Tanguy Van Ypersele
  6. On the Social Value of Disclosed Information and Environmental Regulation By Jihad Elnaboulsi; W Daher; Y Saglam
  7. Tolling on the River: Trade and Informal Taxation on the Congo By Olsson, Ola; Eriksson Baaz, Maria; Martinsson, Peter
  8. Effect of the Service Directive on Wholesale and Retail Companies: Diff in Diff in Diff Evidence By Vojtech Olbrecht

  1. By: Tony Beatton; Michael P. Kidd; Stephen Machin; Dipa Sarkar
    Abstract: This paper reports new evidence on the causal link between education and male youth crime using individual level state-wide administrative data for Queensland, Australia. Enactment of the Earning or Learning education reform of 2006, with a mandatory increase in minimum school leaving age, is used to identify a causal impact of schooling on male youth crime. The richness of the matched (across agency) individual level panel data enables the analysis to shed significant light on the extent to which the causal impact reflects incapacitation, or whether more schooling acts to reduce crime after youths have left compulsory schooling. The empirical analysis uncovers a significant incapacitation effect, as remaining in school for longer reduces crime whilst in school, but also a sizeable crime reducing impact of education for young men in their late teens and early twenties. We also carry out analysis by major crime type and differentiate between single and multiple offending behaviour. Crime reduction effects are concentrated in property crime and single crime incidence, rather than altering the behaviour of the recalcitrant persistent offender.
    Keywords: youth crime, schooling
    JEL: I2 K42
    Date: 2016–11
  2. By: Haar, Brigitte
    Abstract: In order to better differentiate the drivers of corporations' actions, in particular shareholder wealth and stakeholder interests, the paper explores the significance of the comply or explain-principle and its underlying enforcement mechanisms more generally. Against this background, compliance rates with specific provisions may shed a light on companies' reasons for following the code. An analysis of these rates at the example of distinct provisions of the German Corporate Governance Code is therefore entered into. In light of the current corporate governance debate and the legitimacy problems that are raised, among the code provisions that exemplify these questions very well are those regulating incentive pay, severance pay caps, and age limits for supervisory board members. Their analysis will lay a basis for an answer to the question about what motivates companies to comply with the code. The motivation then paves the way to arrive at a further specification of the determinants of the regulatory evolution of the Code and the range of stakeholders and their concerns that enter into it.
    Keywords: corporate governance codes,soft law,stakeholder,shareholder wealth,market enforcement,German corporate governance,supervisory board,incentive pay,severance pay caps,age limits
    JEL: G38 K20 M12 M14 M52
    Date: 2016
  3. By: Alberto Galasso; Mark Schankerman
    Abstract: Cumulative innovation is central to economic growth. Do patent rights facilitate or impede follow-on innovation? We study the causal effect of removing patent rights by court invalidation on subsequent research related to the focal patent, as measured by later citations. We exploit random allocation of judges at the U.S. Court of Appeals for the Federal Circuit to control for endogeneity of patent invalidation. Patent invalidation leads to a 50 percent increase in citations to the focal patent, on average, but the impact is heterogeneous and depends on characteristics of the bargaining environment. Patent rights block downstream innovation in computers, electronics and medical instruments, but not in drugs, chemicals or mechanical technologies. Moreover, the effect is entirely driven by invalidation of patents owned by large patentees that triggers more follow-on innovation by small firms.
    JEL: J1
    Date: 2015
  4. By: Niels Petersen (University of Münster and Max Planck Institute for Research on Collective Goods, Bonn)
    Abstract: It is often observed in the literature on customary international law that the identification practice of the International Court of Justice for customary norms deviates from the traditional definition of customary law in Art. 38 (1) lit. b of the ICJ Statute. However, while there are many normative and descriptive accounts on customary law and the Court’s practice, few studies try to explain the jurisprudence of the ICJ. This study aims at closing this gap. I argue that the ICJ’s argumentation pattern is due to the institutional constraints that the Court faces. In order for its decisions to be accepted, it has to signal impartiality through its reasoning. However, the analysis of state practice necessarily entails the selection of particular instances of practice, which could tarnish the image of an impartial court. In contrast, if the Court resorts to the consent of the parties or widely accepted international documents, it signals impartiality.
    Date: 2016–11
  5. By: Antoine Bonleu (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales); Bruno Decreuse (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales); Tanguy Van Ypersele (AMSE - Aix-Marseille School of Economics - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université - ECM - Ecole Centrale de Marseille - EHESS - École des hautes études en sciences sociales)
    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
    Date: 2016–10
  6. By: Jihad Elnaboulsi (CRESE - Centre de REcherches sur les Stratégies Economiques - UFC - UFC - Université de Franche-Comté, UBFC - Université Bourgogne Franche-Comté); W Daher (Gulf University for Science and Technology (GUST) - Department of Mathematics and Natural Sciences); Y Saglam (Victoria University of Wellington - Victoria University of Wellington)
    Abstract: This paper presents an analysis of environmental policy in imperfectly competitive market with private information. We examine how environmental taxes should be optimally levied when the regulator faces asymmetric information about production and abatement costs in an irreversible observable policy commitment game. Under our setting, the paper investigates how information disclosure can improve the efficiency of the tax setting process and may offer an efficient complement to conventional regulatory approaches. From a policy perspective, our findings suggest that access to publicly disclosed information improves the ability of the regulator to levy Örmsí specific environmental taxes. Despite its advantages, however, informational disclosure may harm the environmental policy it purports to enhance since it facilitates collusive behavior. We show that information sharing may occur and thus leads to a superior outcome in terms of industry output and emissions. Disclosure may undermine market performance and environmental policy.
    Keywords: Environmental Regulation, Emissions Taxes, Collusion, Disclosed Information, Private Information, Information Sharing
    Date: 2015–10–01
  7. By: Olsson, Ola (Department of Economics, School of Business, Economics and Law, Göteborg University); Eriksson Baaz, Maria (School of Global Studies, University of Gothenburg); Martinsson, Peter (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: It is by now generally agreed that government corruption is a serious impediment to economic growth. An intensive use of informal tolls and bribes on roads and waterways still prevail in several developing countries, hampering trade and economic development. On the basis of a general model of a trader travelling downstream past multiple stations and taxing authorities, we study the extent and magnitude of informal taxation on traders in Democratic Republic of Congo. River Congo is arguably one of the most important transportation routes in Africa in one of the world’s poorest countries. We show that informal tax payments per individual journey still make up about 14 percent of the variable costs and 9 times the monthly salary of a public official. Price discrimination in taxing is present in the sense that the value of the cargo is the main determinant of informal taxes paid whereas personal or other characteristics do not seem to have a strong impact. In line with hold-up theory, the average level of informal taxation tends to increase downstream closer to Kinshasa, but authorities that were explicitly banned from taxing instead extract more payments upstream.
    Keywords: Informal taxes; Congo; trade; corruption; river transport
    JEL: D60 D73 D80 H20 K42 O55 R48
    Date: 2016–11
  8. By: Vojtech Olbrecht (Department of Business Economics, Faculty of Business and Economics, Mendel university in Brno, Zemedelska 1, 613 00 Brno, Czech Republic)
    Abstract: The Service Directive puts into motion the free movement of service, one of the milestones of the Single Market of the European Union. Though very ambitious at its draft, several adjustments have been made and it is argued whether the final Directive is helpful at all. This article aims to answer the question by focusing on productivity of affected companies with use of two distinct control groups and employing Difference-in-difference-in-difference design on firm-level data. The article finds that the Service Directive significantly increased productivity of companies though the results cannot be labelled as profoundly causal as is further discussed in the article.
    Keywords: Service Directive, European Union, Difference-in-Difference-in-Difference, Law and Economics
    JEL: K20 K33 O12 O24
    Date: 2016–11

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