nep-law New Economics Papers
on Law and Economics
Issue of 2017‒02‒19
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Toward a coherent policy on cartel damages By Franck, Jens-Uwe; Peitz, Martin
  2. Do Open Borders Tempt a Saint? Evidence from Schengen on Crime Rates in German Border Regions By Wassmann, Pia
  3. Cleaning in the Shadow of the Law? Bargaining, Marital Investment, and the Impact of Divorce Law on Husbands' Intra-Household Work By Roff, Jennifer Louise
  4. Crime and the Legalization of Recreational Marijuana By Dragone, Davide; Prarolo, Giovanni; Vanin, Paolo; Zanella, Giulio
  5. Does the Burglar Also Disturb the Neighbor? Crime Spillovers on Individual Well-being By Bünnings, Christian; Avdic, Daniel
  6. The development of English company law before 1900 By Turner, John D.
  7. Digital design protection in Europe: Law, trends, and emerging issues By Filitz, Rainer; Henkel, Joachim; Ohnemus, Jörg
  8. Catch Me if You Can: Effectiveness and Consequences of Online Copyright Enforcement By Peukert, Christian; Aguiar, Luis; Claussen, Jörg
  9. Motivating Whistleblowers By Jeffrey V. Butler; Danila Serra; Giancarlo Spagnolo
  10. Women's Property Rights and Outreach of Microfinance Institutions Targeting Women By Bailey, Rachel; Hartarska, Valentina
  11. Transfer pricing as tax avoidance under different legislative schemes By Holzmann, Carolin Maria
  12. Managing a Conflict By Schneider, Johannes; Balzer, Benjamin
  13. Country-by-country reporting: Tension between transparency and tax planning By Evers, Maria Theresia; Meier, Ina; Spengel, Christoph
  14. The effect of statutory sick-pay on workers' labor supply and subsequent health By Martin Halla; Susanne Pech; Martina Zweimüller

  1. By: Franck, Jens-Uwe; Peitz, Martin
    Abstract: The focus of cartel damages law is on the recovery of the cartel overcharge. Parties other than purchasers are often neglected, not only as a matter of judicial practice, but also due to legal restrictions. We argue that a narrow concept of standing - which excludes parties that supply either the cartel or the firms that purchase from the cartel with complementary product components - falls short of achieving effective antitrust enforcement and corrective justice in the best possible way. We provide a framework with two complementary products and show that under neither competition nor cartelization do the allocation and the distribution of surpluses depend on the market organization in place. Thus, we argue that prima facie producers of complements should be treated alike, regardless of whether they purchase from the cartel or supply the cartel or the cartel's customers. Moreover, based on various factors that determine the enforcement effect of antitrust damage claims and their role as an instrument to achieve corrective justice, we show that a broad concept of standing is, indeed, the preferable legal solution. While its implementation required a change of the position by the U.S. federal courts, we submit that it would amount to a consistent completion of the legal framework within the EU.
    Keywords: cartel damages,antitrust standing,pass-on,suppliers,complementary goods
    Date: 2017
  2. By: Wassmann, Pia
    Abstract: The abolishment of passport and any other type of border controls at the German-Polish and German-Czech border in December 2007 provoked public concerns that open border would increase cross-border crime. Despite these widespread concerns, empirical research on whether the public fears were justified is still scarce. Based on data from the official German Police Crime Statistic, the paper evaluates whether the implementation of the Schengen Agreement in Poland and the Czech Republic in December 2007 affected crime rates in German regions bordering these two countries. Effects are identified by regression-adjusted difference-in-difference estimation on matched samples that allows evaluating the Schengen effects in a causal way. Preliminary results show that no significant Schengen effect can be observed for the most common types of criminal offenses. These findings suggest that in contrast to public concerns, German NUTS3 regions bordering Poland and the Czech Republic have not experienced an increase in crime as a result of the implementation of the Schengen Agreement of its Eastern neighbors. In light of the current discussion on the future of the Schengen zone and borderless Europe, this is quite an important result.
    JEL: R10 K40 F60
    Date: 2016
  3. By: Roff, Jennifer Louise (CUNY Graduate Center)
    Abstract: Previous literature has established that unilateral divorce laws may reduce female household work. As shown by Stevenson (2007), unilateral divorce laws may affect overall marital investment. In addition, if unilateral divorce has differential costs by gender, then unilateral divorce may impact household work by gender through bargaining channels. However, little research has examined how divorce laws may affect males' household production and the gender distribution of household work. To examine this issue, I use data on matched couples from the PSID and exploit variation over time in state divorce laws. This research indicates that unilateral divorce laws lead to a decrease in marital investment, as measured by both males and females' household work. The evidence also supports a bargaining response to divorce laws, as fathers in states without joint custody laws show a significantly higher share of household work with unilateral divorce than those in states with joint custody laws, consistent with a relatively higher cost of marital dissolution among fathers who stand to lose custody of their children.
    Keywords: divorce law, household bargaining, marriage
    JEL: J12 J22
    Date: 2017–01
  4. By: Dragone, Davide (University of Bologna); Prarolo, Giovanni (University of Bologna); Vanin, Paolo (University of Bologna); Zanella, Giulio (University of Bologna)
    Abstract: We provide first-pass evidence that the legalization of the cannabis market across US states may be inducing a crime drop. Exploiting the recent staggered legalization enacted by the adjacent states of Washington (end of 2012) and Oregon (end of 2014) we find, combining county-level difference-in-differences and spatial regression discontinuity designs, that the legalization of recreational marijuana caused a significant reduction of rapes and thefts on the Washington side of the border in 2013-2014 relative to the Oregon side and relative to the pre-legalization years 2010-2012. We also find evidence that the legalization increased consumption of marijuana and reduced consumption of other drugs and both ordinary and binge alcohol.
    Keywords: cannabis, recreational marijuana, crime
    JEL: K23 K42
    Date: 2017–01
  5. By: Bünnings, Christian; Avdic, Daniel
    Abstract: Indirect psychological effects induced by crime are likely to contribute significantly to the total costs of crime beyond the financial costs of direct victimization. Using detailed crime statistics for the whole of Germany and linking them to individual-level mental health information from the German Socio-Economic Panel, we analyze whether local crime rates affect the mental health of residents. We estimate that a one standard deviation increase in local violent crime rates significantly decreases individual mental well-being among residents by, on average, one percent. Smaller effects are found for property and total crime rates. Results are insensitive to migration and not isolated to urban areas, but are rather driven by less densely populated regions. In contrast to previous literature on vulnerability to crime, we find that men, more educated and singles react more to variation in violent crime rates in their neighborhoods. One potential explanation could be that those who are more fearful of crime have developed better coping strategies and, hence, react less to changes in crime.
    JEL: C23 I18 K42
    Date: 2016
  6. By: Turner, John D.
    Abstract: This article outlines the development of English company law in the four centuries before 1900. The main focus is on the evolution of the corporate form and the five key legal characteristics of the corporation - separate legal personality, limited liability, transferable joint stock, delegated management, and investor ownership. The article outlines how these features developed in guilds, regulated companies, and the great mercantilist and moneyed companies. I then move on to examine the State's control of incorporation and the attempts by the founders and lawyers of unincorporated business enterprises to craft the legal characteristics of the corporation. Finally, the article analyses the forces behind the liberalisation of incorporation law in the middle of the nineteenth century.
    Keywords: Bubble Act,Company,Corporate Law,Legal Personality,Limited Liability,Transferable Shares,Unincorporated Company
    JEL: G10 G18 G30 K10 K20 N23
    Date: 2017
  7. By: Filitz, Rainer; Henkel, Joachim; Ohnemus, Jörg
    Abstract: Digital designs - that is, designs for display on electronic screens - have recently burst onto the intellectual property (IP) stage. While in the U.S. a smattering of legal studies have recently addressed the question of digital design as a copyright-, trademark- and patent-eligible subject matter, a European perspective is still lacking in the literature. This study provides an overview of basic legal background to the protection of digital designs in Europe, explores firms'actual digital design protection behaviors, and highlights some important practical and doctrinal issues that warrant further study
    Keywords: digital designs,intellectual property,RCD,interviews,survey
    JEL: K11 O31 O34
    Date: 2017
  8. By: Peukert, Christian; Aguiar, Luis; Claussen, Jörg
    Abstract: Taking down copyright-infringing websites is a way to reduce consumption of pirated media content and increase licensed consumption. We analyze the consequences of the shutdown of the most popular German video streaming website - - in June 2011. Using individual-level clickstream data, we find that the shutdown led to significant but short-lived declines in piracy levels. The existence of alternative sources of unlicensed consumption, coupled with the rapid emergence of new platforms, led the streaming piracy market to quickly recover from the intervention and to limited substitution into licensed consumption. Our results therefore present evidence of a high elasticity of supply in the online movie piracy market, together with relatively low switching costs for users of copyright infringing platforms. The fact that the post-shutdown market structure was much more fragmented - and therefore more resistant to future interventions - further questions the effectiveness of the intervention.
    JEL: L82 K42 L11
    Date: 2016
  9. By: Jeffrey V. Butler (Louisiana State University); Danila Serra (Southern Methodist University); Giancarlo Spagnolo (SITE, Stockholm School of Economics, EIEF, and CEPR)
    Abstract: We experimentally investigate employees’ decisions to blow the whistle on a manager whose law-breaking benefits the firm but harms society. We investigate the effects of both financial rewards and non-monetary incentives, in the form of public scrutiny, on whistleblowing as well as their interaction with the visibility of harm, i.e., whether the harm to society stemming from the manager’s malfeasance is known to the general public. Our results suggest that: i) financial rewards substantially increase the likelihood of whistleblowing; ii) public scrutiny and social judgment increase (decrease) whistleblowing when the negative externalities generated by fraud are visible (invisible) to the public. Ancillary results suggest an intriguing relationship between political orientation and responsiveness to public scrutiny.
    Keywords: Whistleblowing, fraud, financial rewards, public scrutiny.
    JEL: K42 C92 D04
    Date: 2017–02
  10. By: Bailey, Rachel; Hartarska, Valentina
    Abstract: The right to legally own and control property is vital to the ability of an individual to receive credit. Women in developing countries often lack property rights and are therefore at a disadvantage when applying for loans. In addition, even where women have been granted equal or near-equal rights as men, there is often a disconnect between what is codified as law and what occurs in practice. Therefore, I seek to examine how women’s property rights, both as codified and in enforcement, affect outreach activities of Microfinance Institutions (MFIs) serving women. I initially hypothesized that in MFIs targeting women, the breadth of outreach to women would be positively affected by both the legal strength and enforcement of women’s property rights. Results of a Heckman selection model and a Seemingly Unrelated Regression model both contradict that initial hypothesis, instead showing that MFIs give a far greater portion of their loan funds to women clients in countries with more discriminatory women’s property rights, and that enforcement of property rights does not show any significant effect on the ability of MFIs to reach women borrowers.
    Keywords: Microfinance, Microcredit, Financial Inclusions, Access to Credit, Property Rights, Land Rights, Customary Law, Gender, Women, Agricultural Finance, Financial Economics, International Development, Land Economics/Use, Political Economy, G21, J12, J16, K11, K36, K38, Q15,
    Date: 2017
  11. By: Holzmann, Carolin Maria
    Abstract: This paper investigates transfer pricing as tax avoidance before and after reforms of anti-avoidance legislation. The reforms introduced and tightened obligatory documentation requirements for transfer prices to enforce that multinational enterprises (MNEs) set internal transfer prices at an arm’s-length. Linking data from the Microdatabase Statistics on International Trade in Services that comprehends prices of MNEs’ international service transactions to the Microdatabase Direct Investment, I create a unique, novel data set to obtain information on whether MNEs’ transaction partners are affiliated companies or not. The results provide empirical evidence for tax-motivated transfer pricing during the entire first decade of the 2000s. Interestingly, MNEs target different types of service transactions for profit shifting via transfer pricing depending on the at the time applicable anti-shifting legislation. The findings show transfer pricing legislation to be effective in case of service transactions with observable market values. In contrast, the results clearly reveal the short-comings of transfer pricing legislation in case of intellectual property (IP) where an effective enforcement of the arm’s-length principle is very limited as market values are unobservable. Here, the findings suggest the need for a change in tax policy in order to effectively prevent base erosion in case of IP-related transfer pricing.
    JEL: F23 H25 H32
    Date: 2016
  12. By: Schneider, Johannes; Balzer, Benjamin
    Abstract: We study the optimal design of alternative dispute resolution (ADR) mechanisms by a third-party mediator. ADR takes place before two litigants face each other in court. Litigation is a legal contest with players who are privately informed about the cost of collecting admissible evidence. Players update their beliefs after the mediation process, but before they decide on evidence collection. Different from standard mechanism design problems, the belief-system post-ADR is important for the outcome of the continuation game: within litigation, choice variables are strategic complements and the evidence supplied is driven by the belief system. There is an incentive for parties to misreport in ADR to profit from this deviation in litigation should ADR fail to resolve the conflict. We show that optimal ADR has to break down on-path in some cases to screen the players with respect to their costs. Furthermore, ADR induces truthful reporting by creating post-breakdown beliefs which are independent of own type-reports during ADR. To reduce inefficiency vis-à-vis symmetric litigation, optimal ADR induces asymmetric breakdown beliefs even for ex-ante symmetric types to increase the settlement rate compared to symmetric mechanisms. Independent of the set of parameters, ADR achieves settlement for the majority of cases.
    JEL: D82 D74 K41
    Date: 2016
  13. By: Evers, Maria Theresia; Meier, Ina; Spengel, Christoph
    Abstract: Aggressive tax planning efforts of highly profitable multinational companies (Base Erosion and Profit Shifting (BEPS)) have become the subject of intense public debate in recent years. As a response, several international initiatives and parties have called for more transparency in financial reporting, especially by means of a Country-by-Country Reporting (CbCR). In line with that, the OECD and the European Commission have recently presented proposals for a comprehensive disclosure of country-specific tax-related information for companies in all industry sectors. In our paper, we demonstrate that neither consolidated or individual financial statements nor other existing data sources seem to be an appropriate basis for providing such country-specific information. Instead, it would be necessary to define detailed and harmonized definitions and regulations to ensure comparability. The discussion on benefits and costs of a CbCR reveals that benefits (at least partially) lack a theoretical foundation and, overall, do not seem to outweigh associated costs. This holds true, in particular, since current tax planning activities are mainly based on the legal exploitation of gaps and loopholes in national and international tax law. Instead, we argue that tax legislators should limit profit shifting by enforcing tax rules and by closing gaps in tax law. In particular, we call for more tightened and standardized transfer pricing regulations and thin-cap rules to be adopted at an international level.
    Keywords: tax avoidance,profit shifting,multinational firms,tax reform,tax reporting,country-by-country reporting,international transfer pricing
    JEL: H20 H26 F23 K34 M41
    Date: 2017
  14. By: Martin Halla; Susanne Pech; Martina Zweimüller
    Abstract: Social insurance programs typically comprise sick-leave insurance. An important policy parameter is how the costs of lost productivity due to sick leave are shared between workers, firms, and the social security system. We show that this sharing rule affects not only absence behavior but also workers' subsequent health. To inform our empirical analysis, we propose a model in which workers' absence decisions are conditional on the sharing rule, health, and a dismissal probability. Our empirical analysis is based on high-quality administrative data sources from Austria. Identification is based on idiosyncratic variation in the sharing rule caused by different policy reforms and sharp discontinuities at certain job tenure levels and firm sizes. An increase in either the workers' or the firms' cost share, both at public expense, decreases the number of sick-leave days. Policy-induced variation in sick leave has a significant effect on subsequent healthcare costs. The average worker in our sample is in the domain of presenteeism, that is, an increase in sick leave due to reductions in workers' or firms' cost share would reduce healthcare costs and the incidence of workplace accidents.
    Keywords: statutory sick-pay, sick leave, presenteeism, absenteeism, moral hazard, healthcare cost
    JEL: I18 J22 J38
    Date: 2017–02

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