nep-law New Economics Papers
on Law and Economics
Issue of 2017‒04‒30
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Securing Property Rights By Glaeser, Edward L.; Ponzetto, Giacomo A. M.; Shleifer, Andrei
  2. Crime, compulsory schooling laws and education By Brian Bell; Rui Costa; Stephen Machin
  3. Justice Delayed is Growth Denied: The Effect of Slow Courts on Relationship-Specific Industries in India By Amrit Amirapu
  4. Child abuse materials as digital goods: Why we should fear new commercial forms By Acar, Kemal Veli
  5. Interplay between patents and standards in the information and communication technology (ICT) sector and its relevance to the implementation of the WTO Agreements By Wu, Xiaoping
  6. Asset Allocation in Bankruptcy By Shai Bernstein; Emanuele Colonnelli; Ben Iverson
  7. Creditor Rights, Technology Adoption, and Productivity: Plant-Level Evidence By Nuri Ersahin
  8. A Welfare Economic Interpretation of FRAND By Jens Leth Hougaard; Chiu Yu Ko; Xuyao Zhang
  9. Smoking Ban and Health at Birth By Tamas Hajdu; Gabor Hajdu

  1. By: Glaeser, Edward L. (Harvard University); Ponzetto, Giacomo A. M. (University of Pompeu Fabra); Shleifer, Andrei (Harvard University)
    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.
    Date: 2016–09
  2. By: Brian Bell; Rui Costa; Stephen Machin
    Abstract: Do compulsory schooling laws reduce crime? Previous evidence for the US from the 1960s and 1970s suggests they do, primarily working through their effect on educational attainment to generate a causal impact on crime. In this paper, we consider whether more recent experience replicates this. There are two key findings. First, there is a strong and consistent negative effect on crime from stricter compulsory schooling laws. Second, there is a weaker and sometimes non-existent link between such laws and educational attainment. As a result, credible causal estimates of the education–crime relationship cannot in general be identified for the more recent period, though they can for some groups with lower education levels (in particular, for blacks).
    Keywords: Crime; Education; Compulsory schooling laws
    JEL: I2 K42
    Date: 2016
  3. By: Amrit Amirapu
    Abstract: Are well-functioning formal judicial institutions important for economic development, or can informal contracting arrangements provide adequate substitutes? This paper aims to answer this question using variation across industries in their reliance on contracts along with variation across Indian states in the average speed of courts. The identification strategy is motivated by theory from the incomplete contracting literature in which it is argued that transactions involving relationship-specific investments are more exposed to post-contractual opportunism and hence have greater need for efficient contract enforcement. The paper finds that the interaction between state level court efficiency and industry level relationship-specificity is highly predictive of future growth in India's formal manufacturing sector. The threat of omitted variable bias is minimized by the inclusion of state and industry fixed effects, while a number of robustness checks and placebo tests rule out competing explanations and provide additional confidence in the hypothesized mechanism.
    Keywords: Courts; Legal Institutions; Contract Enforcement; Firms and Development
    JEL: K40 O17 O43
    Date: 2017–02
  4. By: Acar, Kemal Veli
    Abstract: Psycho-sociological and legal aspects of online child sexual abuse such as criminalization, offender profiling, and rehabilitation have been thoroughly studied in the literature. The economics of the issue may appear relatively insignificant at first sight, considering the devastating effects on victims. However, understanding the child abuse materials' economic value better is crucial for developing more effective crime prevention strategies particularly for emerging threats, since the disruption of an illicit market is closely related to the perceived value of such materials. Even for relatively traditional methods like membership-only commercial websites, law enforcement responses do not appear to recognize the economic facts of child abuse materials as digital goods. Similar to the legal actions taken against conventional forms of crime, law enforcement agencies preferred to take down the markets of such materials. Thus, they diminished the demand and supply of child abuse materials by shutting down online platforms and apprehending the abusers. However, in line with technological advances, new ways of offending have emerged that make these measures almost useless. Specific characteristics and dangers of these emerging threats from an economic perspective seem underestimated or completely ignored. This paper aims to analyze the economic aspect of online child abuse materials as a type of digital goods, and it discusses how new forms of commercial sexual exploitation such as crowdfunding and webcam child prostitution challenge the widely accepted policies on the fight against online child sexual abuse.
    Keywords: online child sexual abuse,commercial sexual exploitation,child abuse materials,crime prevention,policy making,crowdfunding,webcam child prostitution
    JEL: A10 K42
    Date: 2017
  5. By: Wu, Xiaoping
    Abstract: The interplay between patents and standards in the information and communication technology (ICT) sector has been intensively debated at international, regional and national levels over the past decades. In essence, the debate is firstly about the extent and impact of patent holdup and holdout in the ICT sector, and then about how to eliminate or reduce these practices. While standard setting organizations (SSOs), industry bodies, as well as judicial and administrative authorities have made great efforts to solve the issue of patent holdup and holdout, there is still an ongoing struggle among divergent stakeholders. Patent holdup and holdout directly impacts the innovation and dissemination of patented technology, the harmonization and implementation of standards, and international trade, which are promoted by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement). This working paper provides an overview of the current debate on patent holdup and holdout in the ICT sector, analyses existing policy measures and their limitations, and then highlights the relevance of the WTO to this debate.
    Keywords: patent,patent holdup,patent holdout,standards,standard setting organizations,FRAND,competition,injunctions,royalties,WTO TRIPS,WTO TBT
    JEL: K11 K13 K30 O34
    Date: 2017
  6. By: Shai Bernstein; Emanuele Colonnelli; Ben Iverson
    Abstract: This paper investigates the consequences of liquidation and reorganization on the allocation and subsequent utilization of assets in bankruptcy. Using the random assignment of judges to bankruptcy cases as a natural experiment that forces some firms into liquidation, we find that the long-run utilization of assets of liquidated firms is lower relative to assets of reorganized firms. These effects are concentrated in thin markets with few potential users, and in areas with low access to finance. The results highlight the importance of local search frictions and financial frictions in affecting the allocation of assets in bankruptcy.
    JEL: G3 G33
    Date: 2017–03
  7. By: Nuri Ersahin
    Abstract: I analyze the impact of strengthening of creditor rights on productivity using plant-level data from the U.S. Census Bureau. Following the adoption of anti-recharacterization laws that improve the ability of lenders to access the collateral of the firm, total factor productivity of treated plants increases by 2.6 percent. This effect is mainly observed among plants belonging to financially constrained firms. Furthermore, treated plants invest in capital of younger vintage and newer technology, and become more capital-intensive. My results suggest that strengthening of creditor rights leads to a relaxation in borrowing constraints, and helps firms adopt a more efficient production technology.
    Keywords: Creditor Rights; Productivity; Anti-Recharacterization Laws; Bankruptcy
    JEL: D24 G32 G33 K22
    Date: 2017–01
  8. By: Jens Leth Hougaard (Department of Food and Resource Economics, University of Copenhagen); Chiu Yu Ko (Department of Economics, National University Singapore); Xuyao Zhang (Lee Kuan Yew School of Public Policy, National University Singapore)
    Abstract: Setting an industry-wide standard is crucial for information and communication technologies for interoperability, compatibility and efficiency. To minimize holdup problems, patent holders are often required to ex-ante commit to licensing their technologies under Fair, Reasonable and Non-Discriminatory (FRAND) terms. Yet, there is little consensus, in both courtrooms and industries, on the exact meaning of FRAND. We propose a welfare economic framework that enables a precise distinction: fairness in the distribution of royalty payments among patent users, and reasonableness in setting the size of the compensation to the patent holder, where both the size and the distribution of payments are determined in a non-discriminatory way making sure that similar firms are treated similarly. We illustrate our approach in various classic models from industrial organization, and discuss further potential applications.
    Keywords: FRAND-licensing, Fair royalties, Standard setting, Patent, Shapley value
    JEL: D63 K2 L3 L44
    Date: 2017–04
  9. By: Tamas Hajdu (Institute of Economics, Research Centre for Economic and Regional Studies, Hungarian Academy of Sciences); Gabor Hajdu (Institute for Sociology, Centre for Social Sciences, Hungarian Academy of Sciences and MTA-ELTE Peripato Comparative Social Dynamics Research Group, Hungary)
    Abstract: In 2012, smoking restrictions were extended to hospitality venues in Hungary. Women working in bars and restaurants were primarily affected by the intervention. In this research, we analyze the effect of this smoking ban on the outcomes of their intended pregnancies. Using complete individual live birth, fetal loss (miscarriage, stillbirth), and infant mortality registry data, we examine the probability of live birth, indicators of health at birth, and the probability of death in the first year of life. We perform a difference-in-differences estimation and show that the smoking ban has improved health at birth of the newborns of mothers working in bars and restaurants and has reduced infant mortality among them. Performing a series of robustness tests, we provide evidence that strongly supports the causal interpretation of our results. We also show that the ban was more beneficial for newborns of parents with low educational attainment and with lower fetal health endowments.
    Keywords: smoking ban, policy evaluation, health at birth
    JEL: I18 J13
    Date: 2017–02

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