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on Law and Economics |
| By: | Benjamin Hansen; Keaton Miller; Caroline Weber |
| Abstract: | The median United States voter supports the legalization of marijuana, at least in part due to a desire to increase state tax revenues. However, states with legal markets have implemented wildly different regulatory schemes with tax rates ranging from 3.75 to 37 percent, indicating that policy makers have a range of beliefs about industry responses to taxes and regulation. We examine a policy reform in Washington: a switch from a 25 percent gross receipts tax collected at every step in the supply chain to a sole 37 percent excise tax at retail. Using novel, comprehensive administrative data, we assess responses to the reform throughout the supply and consumption chain. We find the previous tax regime provided strong incentives for vertical integration. Tax invariance did not hold, with some types of firms benefiting much more than predicted. Consumers bear 44 percent of the additional retail tax burden. Finally, we find evidence that consumer demand for marijuana is price-inelastic in the short-run, but becomes price-elastic within a few weeks of a price increase. |
| JEL: | H2 H20 H21 H22 H23 H25 H26 H32 H71 I1 I18 K4 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23632&r=law |
| By: | Rudi Bekkers; Christian Catalini; Arianna Martinelli; Cesare Righi; Timothy Simcoe |
| Abstract: | Many standard setting organizations (SSOs) require participants to disclose patents that might be infringed by implementing a proposed standard, and commit to license their “essential” patents on terms that are at least fair, reasonable and non-discriminatory (FRAND). Data from these SSO intellectual property disclosures have been used in academic studies to provide a window into the standard setting process, and in legal proceedings to assess parties’ relative contributions to a standard. We develop a simple model of the disclosure process to illustrate the link between SSO rules and patent-holder incentives, and examine some of the model’s predictions using a novel dataset constructed from the disclosure archives of thirteen major SSOs. The central message of the paper is that subtle differences in the rules used by different SSOs can influence which patents are disclosed, the terms of licensing commitments, and ultimately long-run citation and litigation rates for the underlying patents. |
| JEL: | D22 K2 K21 L15 L17 L24 L63 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23627&r=law |
| By: | Jason Fletcher (University of Wisconsin–Madison) |
| Abstract: | A maturing literature across the social sciences suggests important impacts of the intergenerational transmission of crime as well as peer effects that determine youth criminal activities. This paper explores these channels by examining gender-specific effects of maternal and paternal incarceration from both own-parents and classmate-parents. This paper also adds to the literature by exploiting across-cohort, within school exposure to peer parent incarceration to enhance causal inference. While the intergenerational correlations of criminal activities are similar by gender (father-son/mother-son), the results suggest that peer parent incarceration transmits effects largely along gender lines, which is suggestive of specific learning mechanisms. Peer maternal incarceration increases adolescent female criminal activities and reduces male crime and the reverse is true for peer paternal incarceration. These effects are strongest for youth reports of selling drugs and engaging in physical violence. In contrast, the effects of peer parental incarceration on other outcomes, such as GPA, do not vary by gender. |
| Keywords: | crime, social spillovers, intergenerational transmission, gender |
| JEL: | J24 Z13 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2017-058&r=law |
| By: | Apurva Dey (Indira Gandhi Institute of Development Research); Arun Kumar Kaushik (O.P. Jindal Global University); Rupayan Pal (Indira Gandhi Institute of Development Research) |
| Abstract: | This paper analyzes interdependencies between optimal trade policy and preferred' liability doctrine to assess infringement damages, when intellectual property rights are probabilistic, in a model of import competition between a foreign patentee and a domestic infringer. It shows two reversal results. First, a regime switch from protectionism to free trade reverses stakeholders' preferences over liability doctrines. In the free trade regime both the infringer and consumers prefer the `unjust enrichment' rule, while the patentee prefers the `lost profit' rule, over any convex combination of these two liability doctrines. In contrast, in the regime of trade policy intervention, the importing country's government prefers the `lost profit' rule, which best protects interests of the infringer at the expense of both consumers and the patentee. Second, the optimal trade policy changes from an import tariff under the `lost profit' rule to import subsidization under the `unjust enrichment' rule, unless the patent is weak. |
| Keywords: | Probabilistic intellectual property rights; Infringement; Damage rules; Import competition; Trade policy |
| JEL: | O34 L13 K40 F13 |
| Date: | 2017–05 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2017-004&r=law |
| By: | Marcelo L. Bérgolo; Rodrigo Ceni; Guillermo Cruces; Matias Giaccobasso; Ricardo Perez-Truglia |
| Abstract: | According to the canonical model of Allingham and Sandmo (1972), firms evade taxes by making a trade-off between a lower tax burden and higher expected penalties. However, there is still no consensus about whether real-world firms operate in this rational way. We conducted a large-scale field experiment, sending letters to over 20,000 firms that collectively pay over 200 million dollars in taxes per year. In our letters, we provided firms with exogenous but nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measure the effect of these signals on their subsequent perceptions about the auditing process, based on survey data, as well as on the actual taxes paid, according to administrative data. We find that firms do increase their tax compliance in response to information about audits. However, the patterns in these responses are inconsistent with utility maximization. The evidence suggests that, much like scarecrows frighten off birds, audits can be a significant deterrent for tax evaders even though they would be perceived as harmless by a rational optimizer. |
| JEL: | C93 H26 K42 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23631&r=law |
| By: | Christine Braun (University of California Santa Barbara) |
| Abstract: | How does the minimum wage affect crime rates? Empirical research suggests that increasing a worker's wage can deter him from committing crimes. On the other hand, if that worker becomes displaced as a result of the minimum wage, he may be more likely to commit a crime. In this paper, I describe a frictional world in which a worker's criminal actions are linked to his labor market outcomes. I calibrate the model to match the aggregate crime rate and the labor market faced by 16-24 year olds in 1998. Using the calibrated model, I show that the relationship between the aggregate crime rate and the minimum wage is non-monotonic. I test for this non-monotonicity using county level crime data and state level minimum wage changes from 1980 to 2012. The results from the empirical analysis as well as the model suggest that any increase in the federal minimum wage may increase the crime rate as the current wage floor is close the the crime minimizing value. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:359&r=law |
| By: | Samuel de Haas (Justus-Liebig-University Giessen); Jan Thomas Schaefer (Justus-Liebig-University Giessen) |
| Abstract: | We study effects on prices and quantities of a takeover in the rather concentrated German interurban bus industry. We empirically asses the effect of the takeover of Postbus by Flixbus on industry key features, using a route-level price data set containing prices for more than 6,000 routes in Germany for a period between September and December 2016. We find that average prices significantly increase and quantities decrease in the post-takeover phase. However, these results are mainly driven by the fact that Postbus was a low-cost supplier. The remaining providers do not seem to have increased their prices significantly in the post-takeover phase. This absence of a price increase despite the removal of a close competitor could be an indication of a strong impact of intermodal competition. This suggestion is confirmed by our empirical findings. |
| Keywords: | Competition, Takeover, Interurban Bus Services, Germany |
| JEL: | L11 L41 L92 K21 K23 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:mar:magkse:201731&r=law |
| By: | Hart, Oliver; Zingales, Luigi |
| Abstract: | What is the appropriate objective function for a firm? We analyze this question for the case where shareholders are prosocial and externalities are not perfectly separable from production decisions. We argue that maximization of shareholder welfare is not the same as maximization of market value. We propose that company and asset managers should pursue policies consistent with the preferences of their investors. Voting by shareholders on corporate policy is one way to achieve this. |
| Keywords: | firm objective; Friedman; prosocial; shareholder value |
| JEL: | G30 K22 L21 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12186&r=law |
| By: | Stacey, Brian |
| Abstract: | The labor market in the Dominican Republic is in disarray. There has been a high rate of unemployment and a very high rate of non-participation within the labor force for years. Output growth has been steady in manufacturing, telecommunication, and financial services, and new jobs have been added in the service sector consistently, however these gains have led to no real increase in available quality jobs and wage stagnation (Williams & Adedeji, 2004). Abdullaev and Marcello (2013) describe a dichotomous approach to solving the problem; through targeted education for the long term and through product market reforms in the near term. The energy sector in the Dominican Republic is a prime example of an area where reforms are needed to improve the operating environment to spur and sustain growth. At present the losses in transmission and distribution are significantly higher than in most places as a result of fraud (Smith 2004). Until recently it has not been against the law to steal electricity (Enerdata 2011). The rationale being that if electricity is a basic human right we cannot punish those who attempt to gain it. This lack of property law within the context of electricity underpins a significant failure by the government when viewed from the point of the electricity producers. Property ownership is a fundamental concept of free markets. Without ownership rights there is no (or limited) ability to charge for goods produced with that property. Electricity is a commodity property and without the ability to effectively charge for its consumption the producers have struggled. |
| Keywords: | Property Rights, Macroeconomic Forecast, Growth Models, Labor Force Participation |
| JEL: | E24 E66 K11 |
| Date: | 2016–10–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:80251&r=law |