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on Law and Economics |
| By: | Tim Friehe (University of Marburg); Ansgar Wohlschlegel (Portsmouth Business School); ; |
| Abstract: | We analyze a litigation contest in which plaintiff and defendant seek to win in trial court, and the losing litigant may appeal. In our setup, the appeals court's judgment depends on the trial court's judgment, the merits of the litigants' arguments, and their efforts in the appeals stage. We find that the possibility of appeal increases the favorite's probability of winning as compared to that in a single-stage system, as the favorite has higher effort incentives in the first-instance authority than the underdog. Moreover, we show that the possibility of appeal may increase total rent-seeking efforts and make the case less likely to be tried, or that it surprisingly may have the opposite effects, and how the direction of these effects depends on the model parameters. |
| Keywords: | Appeals, Litigation, Justice, Contest, Effort |
| JEL: | D72 K41 |
| Date: | 2017–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:pbs:ecofin:2017-01&r=law |
| By: | Serge Garcia; Julien Jacob; Eve-Angéline Lambert |
| Abstract: | Civil liability is the legal requirement to compensate victims when damage is caused. When two firms jointly cause environmental damage, their liability depends on the applicable liability rule and on the solvency level of each firm. Under non-joint liability, each injurer is liable for part of the damage up to its financial capacity. Under joint and several liability, if damages cannot be recovered from one in jurer for insolvency reasons, they are borne by the other one to the extent that it is solvent. We theoretically and experimentally investigate the impact of these two liability rules in terms of incentives to care, varying according to the degree of (in)solvency of each firm. We show that when there is (at least) one insolvent firm, non-joint liability leads to higher social welfare than joint and several liability, whereas the latter should be preferred in the presence of solvent firms only. |
| Keywords: | Environmental damage; Liability Sharing; Multiple Tortfeasors; Abatement Efforts; Insolvency. |
| JEL: | K13 K32 Q53 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2017-12&r=law |
| By: | Pablo Bravo-Hurtado; Álvaro Bustos |
| Abstract: | While civil law supreme courts (e.g., Italy, France, Chile) hear up to 90% of the petitions for revisions, common law supreme courts (e.g., U.S., U.K, Canada) hear as low as 1% of the same type of cases. In this study we postulate that these different commitments towards revisions are each consistent with different approaches by which the legal system provides judicial uniformity. We formulate a theoretical model that shows that a given level of uniformity in lower (or appeal) court decisions can be achieved either by fixing a given probability of judicial revision or a given monetary/non-monetary disutility associated with a reversal. Hence, despite the fact that common law legal systems are characterized by a lower probability of case revision, we cannot state a priori that judicial uniformity is greater in civil law systems, as this will depend upon the magnitude of the disutility associated with a reversed decision. Indeed, with the exception of the impact upon career concerns (which net effect is not clear) in terms of ideology, reputation and legal standards, reversal disutility seems to be much higher in common law systems than in civil law systems. In addition, we demonstrate that in an efficient legal system the optimal number of revisions increases with the size of the reversal disutility, but decreases with the probability that the supreme court makes erroneous decisions; the total number of cases soliciting revision and the intrinsic utility obtained by a lower court which enforces its desired rule. We also show that in an efficient legal system it is the judicial law-making role of a common law supreme court that explains why that Court revises fewer cases than a civil law supreme court. |
| JEL: | K10 K30 K40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:doctra:485&r=law |
| By: | Álvaro Bustos; Tonja Jacobi |
| Abstract: | How does the Supreme Court choose among cases to grant cert? In the context of a model that considers a strategic Supreme Court, a continuum of rule-following lower courts, a set of cases available for revision, and a distribution of future lower court cases, we show that the Court grants cert to the case that will most significantly shape future lower court case outcomes in the direction that the Court prefers. That is, the Court grants cert to the case with maximum salience. If the Court is rather liberal (conservative) then the most salient case is the one that moves the discretionary range of the legal standard as far left (right) as possible. But if the Court is moderate, then the most salient case will be a function of the skewedness of the distribution of ideologies of the lower courts and the likelihood that future cases will fall within the part of the discretionary range that is adjusted if the case is granted cert. Variations take place when the ideology of the Court is moderately liberal, moderately conservative or fully moderate. Extensions of the model allow us to identify the sensitivity of the results to the number of petitions for revision; the variety of legal topics covered by the petitions; and anticipation of whether the Court will confirm or reverse. |
| JEL: | K10 K30 K40 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:ioe:doctra:484&r=law |
| By: | Jackson, Osborne (Federal Reserve Bank of Boston); Zhao, Bo (Federal Reserve Bank of Boston) |
| Abstract: | This paper examines how changes in employers’ access to job applicants’ criminal histories affect ex-offender recidivism. We use extensive state administrative data on individual criminal histories spanning the 2010–2012 Massachusetts Criminal Offender Record Information (CORI) Reform, widely regarded as landmark legislation governing access to individuals’ criminal information. The CORI Reform: i) banned inquiring about criminal history on initial job applications, and ii) broadened the list of groups eligible to use the state’s criminal records repository while simultaneously restricting the scope of record access. Using survival analysis and panel regressions, we generally find small reductions in recidivism resulting from each component of the CORI Reform. |
| Keywords: | recidivism; ex-offenders; Massachusetts; CORI |
| JEL: | K14 K40 K42 |
| Date: | 2017–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:16-31&r=law |
| By: | Tyrefors Hinnerich, Björn (Research Institute of Industrial Economics (IFN)); Palme, Mårten (Department of Economics); Priks, Mikael (Department of Economics) |
| Abstract: | According to Swedish penal code, there is a “rebate” on all prison sentences before the 21st birthday. We exploit this age discontinuity to investigate how individuals respond to harsher punishments. We use a large Swedish dataset, including dates for all crimes which led to convictions for cohorts born during the period 1973–1993. We find evidence of “bunching” in the sense that more crimes were committed during the week prior to a 21st birthday, followed by a reduction in crime during the week after this birthday. We do not, however, find that harsher punishment reduces the crime rate permanently. |
| Keywords: | General deterrence; Prison; Sorting; Age thresholds |
| JEL: | D90 K40 |
| Date: | 2017–04–03 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1163&r=law |
| By: | Gutmann, Jerg; Voigt, Stefan |
| Abstract: | This paper does three things. First, based on a limited number of theoretically established dimensions, it proposes a new de facto indicator for the rule of law. It is the first such indicator to take the quality of legal norms explicitly into account. Second, using this indicator we shed new light on the relationship between the rule of law and the political system of a country. Third, because political systems hardly predetermine the rule of law level of a country, we investigate the roots of the rule of law. As theory on this specific question is scarce and the rule of law is closely associated with income levels, we draw on a topical literature that deals with the fundamental causes of economic development. Our findings suggest that specific determinants of long-run development operate via the rule of law, whereas others are not related to the rule of law at all. |
| Keywords: | Rule of Law,Democracy,Dictatorship,Economic Development,Geography,Institutions |
| JEL: | B41 C81 C82 H11 K00 O17 O43 O57 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:1&r=law |
| By: | Gutmann, Jerg; Neuenkirch, Matthias; Neumeier, Florian |
| Abstract: | We use endogenous treatment-regression models to estimate the causal average treatment effect of US economic sanctions on four types of human rights. In contrast to previous studies, we find no support for adverse effects of sanctions on economic rights, political and civil rights, and basic human rights. With respect to women's rights, our findings even indicate a positive relationship. Emancipatory rights are, on average, strengthened when a country faces sanctions by the US. Our findings are robust when applying various changes to the empirical specification. Most importantly, this study provides strong evidence that the endogeneity of treatment assignment must be modelled when the consequences of sanctions are studied empirically. |
| Keywords: | Democratization,Discrimination,Economic Sanctions,Endogenous Treatment Model,Human Rights,Interventionism,Protectionism,Repression,United States |
| JEL: | F51 F52 F53 K10 K11 P14 P16 P26 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:2&r=law |
| By: | Jackson, Osborne (Federal Reserve Bank of Boston); Zhao, Bo (Federal Reserve Bank of Boston) |
| Abstract: | Many regard the 2010–2012 Massachusetts Criminal Offender Record Information (CORI)Reform as a national model to improve ex-offenders’ labor market outcomes. This reform prohibits most employers from inquiring about an individual’s criminal history on the initial job application (the “ban the box” reform), and reduces employers’ access to an applicant’s criminal record (the record-access reform). Using the CORI Reform as a natural experiment and a unique large confidential dataset linking individuals’ CORI records with their unemployment insurance quarterly wage records, we examine the impact of changing employers’ access to applicants' criminal histories on ex-offenders’ labor market outcomes. We find that contrary to the intended goal, the CORI Reform has a small negative effect on ex-offenders’ employment that grows over time, with mixed effects on earnings and industry composition. Suggestive evidence shows that the negative employment effect is more likely to result from a labor supply response rather than a labor demand response to the policy changes. |
| Keywords: | ex-offenders; criminal history; Massachusetts CORI Reform; ban the box |
| JEL: | K14 K40 K42 |
| Date: | 2017–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:16-30&r=law |
| By: | Krishna K Ladha (Indian Institute of Management Kozhikode) |
| Abstract: | Aristotle's Politics can be divided into two inquiries, each amenable to mathematical representation. The first inquiry assumes, probably idealistically, that individuals act in the collective interest and leads to the following theorem: polity (a rule of many good men) is better than aristocracy (few good men), and aristocracy is better than monarchy (one good man). The second inquiry assumes, more realistically, that individuals act in self-interest and leads to the following theorem as a justification for democracy: Among various systems of government, democracy (a mixed constitution with a rule of law sustained by competing factions) offers the best prospect to deliver two things at once: justice (pursuit of the common interest) and stability (obedience of the rule of law). The latter theorem implies that institutionalization of competing factions governed by good laws is likely to be just and stable. It applies to nations, corporations and towns facing the tragedy of the commons, externalities and reneging. |
| URL: | http://d.repec.org/n?u=RePEc:iik:wpaper:104&r=law |
| By: | Jackson, Osborne (Federal Reserve Bank of Boston); Sullivan, Riley (Federal Reserve Bank of Boston); Zhao, Bo (Federal Reserve Bank of Boston) |
| Abstract: | Policymakers have proposed and enacted policies that seek to limit the negative consequences that a criminal record imposes on ex-offenders, their families, and society at large. Some states have changed how criminal records are accessed and governed in the interest of removing unduly burdensome barriers to employment for some ex-offenders. Between 2010 and 2012, Massachusetts enacted the Criminal Offender Record Information (CORI) Reform, changing access guidelines for criminal records and preventing employers from inquiring about criminal history on an initial application for employment. This report empirically analyzes the impact of the two components of Massachusetts CORI Reform and finds that, contrary to expectations, the CORI Reform caused a small reduction in average employment for ex-offenders. Another finding of the report is that the reform also caused a small reduction in ex-offender recidivism, seemingly indicating a modest increase in ex-offender reintegration. The report concludes by noting that further policy measures and programs are needed to better support the reintegration of ex-offenders into civil society. |
| Date: | 2017–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbcr:17-1&r=law |
| By: | Danilo Liberati (Bank of Italy); Michele Loberto (Bank of Italy) |
| Abstract: | Housing taxation is an important policy instrument that shapes households’ choices about homeownership and renting as well as the evolution of the housing market. We study the effects of housing taxation in a model with search and matching frictions in the property market and a competitive rental market. We show a new transmission channel for a housing tax reform that works through a ‘shifting’ effect from landlords to tenants. We calibrate the model in order to estimate the long-run effects of the recent Italian housing market taxation reforms and the extent of property tax capitalization on house prices. We show that property taxation on owner-occupied dwellings has a negative effect on property and rental prices, whereas taxes on second homes have opposite qualitative effects. The simultaneous increase in both these instruments may mitigate the dynamics of prices and rents as well as the change in the ratio between the share of owners and renters, leading to a partial capitalization taxation on prices. |
| Keywords: | housing market, matching, property taxation |
| JEL: | R21 R31 E62 |
| Date: | 2017–03 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1105_17&r=law |
| By: | David O. Fadiran; Mare Sarr; Johannes W. Fedderke |
| Abstract: | “Institutions matter†has become a generally accepted premise in development economics. The growth and development problems in Nigeria are also common knowledge. To better understand these problems a proper characterization of institutions in Nigeria is essential. Conducting empirical test of the role of institutions in Nigeria’s growth and development can prove challenging due to lack of institutional data set that span over a long time. In the event that short span data set is available, Glaeser et al. (2004) highlight the many flaws implicit in such measures constructed by political scientists in literature. In this paper, we construct an index of institution quality for the period 1862 through to 2011 for Nigeria, in doing so, we adopt a new method of measuring institutions, which makes use of pre-existing (de jure) legislations, ordinances and constitutions in constructing three institutional indicators; civil and political liberties, freehold property rights, and non-freehold (customary) property rights. These constructed indicators provide a platform for characterization and comprehensive analysis of how institutions haveevolved in Nigeria. |
| Keywords: | institutions, Legislations, Persistence, Economic Growth and Development |
| JEL: | K00 K11 N00 N1 N47 O1 O11 |
| Date: | 2017–02 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:665&r=law |
| By: | Gassebner, Martin; Gutmann, Jerg; Voigt, Stefan |
| Abstract: | Over the last several decades, both economists and political scientists have shown interest in coups d’état. Numerous studies have been dedicated to understanding the causes of coups. However, model uncertainty still looms large. About one hundred potential determinants of coups have been proposed, but no consensus has emerged on an established baseline model for analyzing coups. We address this problem by testing the sensitivity of inferences to over three million model permutations in an extreme bounds analysis. Overall, we test the robustness of 66 factors proposed in the empirical literature based on a monthly sample of 164 countries that covers the years 1952 to 2011. We find that slow economic growth rates, previous coup experiences, and other forms of political violence to be particularly conducive to inciting coups. |
| Keywords: | Coups d’état,Military coups,Coup-proofing,Extreme bounds analysis |
| JEL: | D74 F52 H56 K10 |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ilewps:3&r=law |