nep-law New Economics Papers
on Law and Economics
Issue of 2017‒10‒29
ten papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Assessing Anticompetitive Practices in Two-Sided Markets: A Comparative Analysis of four Antitrust Proceedings against By Caccinelli, Chiara; Toledano, Joëlle
  2. Follow The Money: Piracy and Online Advertising By Batikas, Michail; Claussen, Jörg; Peukert, Christian
  3. How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree By Martin Watzinger; Thomas A. Fackler; Markus Nagler; Monika Schnitzer
  4. The Lasting Effects of Natural Disasters on Property Crime: Evidence from the 2010 Chilean Earthquake By Jorge García Hombrados
  5. Pushing Crime Around the Corner? Estimating Experimental Impacts of Large-Scale Security Interventions By Christopher Blattman; Donald Green; Daniel Ortega; Santiago Tobón
  6. Legal enforcement and Global Value Chains: micro-evidence from Italian manufacturing firms By Antonio Accetturo; Andrea Linarello; Andrea Petrella
  7. Patent Validity Challenges and The America Invents Act By Talia Bar; Brendan Costello
  8. Households Debt Restructuring: The Re-default Effect of a Debt Suspension By Fraisse, Henri
  9. Implausible Large Differences in the Sizes of Underground Economies in Highly Developed European Countries? A Comparison of Different Estimation Methods By Friedrich Schneider
  10. More than Words: A global analysis of the socio-economic impact of Rich Interaction Applications (RIAs) By Arnold, René; Hildebrandt, Christian; Tas, Serpil; Kroon, Peter

  1. By: Caccinelli, Chiara; Toledano, Joëlle
    Abstract: This paper aims to shed light on the economic tools, as well as the legal-economic reasoning, which are used by different European antitrust authorities to assess the allegedly anticompetitive practices of a platform operating in a two-sided market (2SM). First of all, we show that despite the flourishing literature on 2SM economics, antitrust authorities are still facing major challenges when taking decisions concerning two-sided platforms (2SPs). We suggest that in the lack of a sound economic theory on the effects of abusive behaviour in 2SMs, antitrust authorities have a discretionary power as to what to retain or ignore of a 2SP’s business model. Secondly, we perform a cross-country, comparative analysis of four recent competition proceedings against the 2SP and highlight conceptual and practical divergences among antitrust authorities which are bound by and applying a common European legislation towards the same transnational company. Finally, we review the effects of the different authorities’ decisions and draw some conclusions as to the effectiveness and appropriateness of the measures which are currently implemented towards 2SPs.
    Date: 2017
  2. By: Batikas, Michail; Claussen, Jörg; Peukert, Christian
    Abstract: Online copyright enforcement, in the form of either direct action against the supply- side (via website shutdowns) or the demand-side (via individual lawsuits against users), has not been very effective in reducing piracy. Regulators have therefore put forward the so called “follow the money" approach. Because the main source of revenue for infringing websites often comes from online advertising, the idea is that cutting access to advertisers could lower the financial incentives for website owners. In this paper, we aim to provide systematic evidence on the effectiveness of such a policy. We collect data on the advertising services associated with a large number of piracy websites and corresponding set of legitimate \placebo" websites before and after the _rst steps of a self-regulatory effort in the European Union went in place. Preliminary results suggest that advertising services indeed reduce their activities on piracy websites, however only those that are most likely to be directly affected by the regulation. We further provide evidence that some advertising services that did not cater to the piracy market before, start to do so { perhaps as a strategic response.
    Keywords: Piracy,Copyright Enforcement,Online Advertising
    JEL: L82 M37 D83
    Date: 2017
  3. By: Martin Watzinger; Thomas A. Fackler; Markus Nagler; Monika Schnitzer
    Abstract: We study the 1956 consent decree against the Bell System to investigate whether patents held by a dominant firm are harmful for innovation and if so, whether compulsory licensing can provide an effective remedy. The consent decree settled an antitrust lawsuit that charged Bell with having foreclosed the market for telecommunications equipment. The decree forced Bell to license all its existing patents royalty-free. The compulsory licensing increased follow-on innovation building on Bell patents by 17%. This effect is driven mainly by young and small companies. Yet, innovation increased only outside the telecommunications equipment industry, suggesting that compulsory licensing without structural remedies is ineffective in ending market foreclosure.
    Keywords: innovation, antitrust, intellectual property, compulsory licensing
    JEL: O30 O33 O34 K21 L40
    Date: 2017
  4. By: Jorge García Hombrados (Department of Economics, University of Sussex)
    Abstract: Natural disasters cause human losses, destroy economic assets and are often followed by widespread looting and increases in altruistic behaviour; affecting ambiguously the long-term benefits and costs of crime. This study investigates whether the multiple consequences of natural disasters lead to lasting changes in property crime rates through assessing the effect on property crime dynamics of the 8.8 Richter Magnitude earthquake that struck Chile in February 2010. Using household data from victimization surveys and a difference in difference strategy, the analysis shows that exposure to a very strong earthquake intensity decreased by 1.1-2.2 percentage points the probability of home burglary the year of the earthquake. The effect remained stable over the 4 post-earthquake years studied. Similar effects of the earthquake are found for other property crimes including larceny and non-home burglary. The analysis of mechanisms reveals that the lasting drop in property crime rates in areas devastated by the earthquake seems to be linked to the positive effect of the earthquake on the strength of community life and on the adoption of community-based strategies to prevent crime in these municipalities.
    Keywords: natural disasters, crime, informal guardianship
    JEL: K42 Q54
    Date: 2017–10
  5. By: Christopher Blattman; Donald Green; Daniel Ortega; Santiago Tobón
    Abstract: Bogotá intensified state presence to make high-crime streets safer. We show that spillovers outweighed direct effects on security. We randomly assigned 1,919 “hot spot” streets to eight months of doubled policing, increased municipal services, both, or neither. Spillovers in dense networks cause “fuzzy clustering,” and we show valid hypothesis testing requires randomization inference. State presence improved security on hot spots. But data from all streets suggest that intensive policing pushed property crime around the corner, with ambiguous impacts on violent crime. Municipal services had positive but imprecise spillovers. These results contrast with prior studies concluding policing has positive spillovers.
    JEL: C93 K42 O10
    Date: 2017–10
  6. By: Antonio Accetturo (Bank of Italy); Andrea Linarello (Bank of Italy); Andrea Petrella (Bank of Italy)
    Abstract: In this paper we study the relationship between the quality of contract enforcement and firms' participation in Global Value Chains. Using new data on Italian manufacturing firms' supply of customized inputs to other firms and variations in law enforcement in courts across Italy, we find that firms located in courts with longer trial lengths are less likely to supply customized intermediate inputs to foreign firms. The effects are stronger for firms operating in contract-intensive industries. Our results are confirmed when we use a spatial regression discontinuity design that compares the probability of supplying customized inputs for firms that are located on different sides of a court border, and are therefore characterized by different trial lengths.
    Keywords: Global Value Chain, Judiciary Efficiency, Italy
    JEL: F10 F14 L14
    Date: 2017–10
  7. By: Talia Bar (University of Connecticut); Brendan Costello (Yale Law School)
    Abstract: Patent reexamination or patent review systems can lower the cost of challenging patent validity and help improve patent quality. We empirically investigate post-grant patent validity challenges at the U.S. Patent and Trademark Office, and how the 2011 America Invents Act affected them. We compare the inter partes reexamination procedure with the inter partes review procedure that replaced it after the reform. To identify the effect of the policy changes, we exploit the fact that patents filed before the act passed, but granted after the new inter partes review system took effect, are not eligible for reexamination in the old system. We find that more patent challenges end with a patentee win after the policy change. Still, at least one patent claim is canceled in more than 60% of the cases. Litigated patents issued to small entities more often had at least one claim canceled compared to other patents.
    Keywords: Patent; Inter Partes Reexamination; Inter Partes Review; The America Invents Act; Post Grant Challenge, Patent Validity
    JEL: O34 K10 K23
    Date: 2017–10
  8. By: Fraisse, Henri (Bank of France)
    Abstract: When facing financial distress, French households can file a case to a "households' over-indebtedness commission" (HDC). The HDC can order an immediate repayment or grant a debt suspension. Exploiting the random assignment of bankruptcy filings to managers, we show that a debt suspension has a very significant and negative effect on the likelihood to re-default but that this impact is only short-lived. The effect depends not only on the characteristics of the households but also on the nature of their indebtedness. Our results imply that rather than focusing on a specific debt profile, above all a deeper restructuring of the expenditure side is necessary to make the plan sustainable. They also single out specific banks lending to particular fragile households. They indicate the importance of policy actions on budget counseling, as well as the importance of regulation of credit distribution to avoid both entering into bankruptcy and re-filing for bankruptcy.
    Keywords: bankruptcy, household finance, default, debt restructuring
    JEL: D G2 K35
    Date: 2017–09
  9. By: Friedrich Schneider
    Abstract: In this paper, first, the MIMIC estimation method is described and criticized and due to a double counting problem a correction is suggested. Second, the measurement methods used for National Accounts Statistics – the discrepancy method and two new micro survey methods – are described and a third, a micro method, using a combination of company manager surveys and their knowledge to calibrate the size of the shadow economy in firms, is presented, too. Third, a detailed comparison of the four micro estimation methods with the MIMIC and the corrected MIMIC method are presented. One major result is that the corrected MIMIC method, especially, comes quite close to various types of lately developed micro survey methods.
    Keywords: MIMIC estimation methods, macro and adjusted, micro survey method asking company managers, micro survey method using households’ data, using the consumption-income-gap, comparison of results of size of shadow economy of European countries, shadow economies
    JEL: E26 E01 H26 H32 K42 P24 O17
    Date: 2017
  10. By: Arnold, René; Hildebrandt, Christian; Tas, Serpil; Kroon, Peter
    Abstract: Applications such as iMessage, KakaoTalk, LINE, Signal, Skype, Snapchat, Threema, Viber, WhatsApp and WeChat have become an increasingly popular means of personal and business interaction. Surprisingly little academic effort has gone into understanding the nature and origin of these applications, yet. Policy makers and regulators on the other hand have developed pragmatic definitions of a group of applications that mimic functions of traditional Electronic Communications Services (ECS). Our paper explores whether this approach gives proper consideration to these applications’ nature. Based on our indicative framework for delineating them from other OTT services, we use econometric modelling to approximate their global economic impact. We find that any static definition of these applications is bound to fall short of reality within a few months due their rapid innovation cycle. Nonetheless, we are able to identify functions that enable rich interactions among consumers and businesses as the common thread of 139 applications that we analysed. Thus, we sum them under the banner of Rich Interaction Applications (RIAs). Their constant innovation implies that they develop from baseline communications channels to applications that offer an increasingly large part of a ‘full internet experience’. With this in mind, our analysis places their economic impact between baseline telecommunications services’ and the internet’ impact. For a 10% increase in RIAs usage GDP for the 164 countries in our panel rises by 0.33% based on the years 2000 to 2015. In sum, policy makers and regulators ought to strive for framework conditions that enable or even better facilitate innovation as well as dynamic competition. Ultimately, these are the ingredients for realizing the largest benefits for consumers and the economy.
    Keywords: Competition,Regulation,Consumer Behavior,Telecommunications,Internet,ICT,OTT,Internet Services,Technological Change,Technology Adoption,Regulated Industries
    JEL: L51 L86 O33 K23
    Date: 2017

This nep-law issue is ©2017 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.