nep-law New Economics Papers
on Law and Economics
Issue of 2018‒02‒05
eleven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Amazon Monopoly: Is Amazon’s Private Label Business the Tipping Point? By Faherty, Emily; Huang, Kevin; Land, Robert
  2. Positive and negative effects analysis in abuse of dominance By Marginean, Mihai
  3. Optimal procurement of a credence good under limited liability By Bester, Helmut; Yaofu, Ouyang
  4. Fewer courts, less justice? Evidence from the 2008 French reform of labor courts By Romain Espinosa; Claudine Desrieux; Hengrui Wan
  5. Weak States: Causes and Consequences of the Sicilian Mafia By Acemoglu, Daron; De Feo, Giuseppe; De Luca, Giacomo
  6. How Bargaining in Marriage Drives Marriage Market Equilibrium By Robert A. Pollak
  7. Do speed cameras save lives? By Tang, Cheng Keat
  8. Crime, Human Capital, and the Impact of Different Taxation By King Yoong Lim; Pengfei Jia; Ali Raza
  9. Positional goods and legal orderings By Ugo Pagano; Massimiliano Vatiero
  10. The Introduction of Tasers and Police Use of Force: Evidence from the Chicago Police Department By Bocar Ba; Jeffrey Grogger
  11. The Intergenerational Effects of Parental Incarceration By Will Dobbie; Hans Grönqvist; Susan Niknami; Mårten Palme; Mikael Priks

  1. By: Faherty, Emily; Huang, Kevin; Land, Robert
    Abstract: The purpose of this paper is to consider if Amazon’s increase in private label brands is the tipping point for transforming the e-commerce giant into a monopoly. To lay the foundation, we initially explore the culture, leadership, and business practices which are unique to Amazon that enabled the company to become one of the U.S.’s largest and fastest growing e-commerce websites. Introduced in 2009, Amazon’s private label business has further propelled Amazon’s growth while creating a competitive advantage for the company by offering high quality products to their customers at low cost options. In considering whether private label brands affect Amazon’s status as a monopoly, we first examine exactly what a monopoly is and if Amazon can be classified as one in its current state. We then take a deep dive into Amazon’s private label strategy, analyzing past performance to make educated assumptions about the future. Our research provided evidence indicating that Amazon’s actions are threatening the cooperative nature of its Marketplace by creating substantial barriers to entry and increasing Amazon’s market share. With this knowledge we make predictions about Amazon’s future and whether it will ever be seen as a monopoly under the economic, legal, and/or social definitions. While Amazon’s case is unprecedented, this paper sources leading economists, journalists, and other academic research to support our theory.
    Keywords: amazon, monopoly, amazon marketplace, private label, store brand, jeff bezos, white label, consumer protection, sherman act, anti-trust, clayton act, hart-scott-rodino, federal trade commission
    JEL: D4 D40 D42 D43 D44 D5 K21 K23 Q55
    Date: 2017–12–03
  2. By: Marginean, Mihai
    Abstract: Abuse of a dominant position is a threat to the functioning of the free market. This is the reason why we have proposed to highlight the impact of this particular anti-competitive practice in the European Union area. The aim of this paper is to present, from a theoretical and practical approach, the implications and the effects of this type of behavior and also to highlight the main actors in this process. In order to achieve these goals, we will use the content analysis to compress the effects of the abuse of dominant position in two categories: positive and negative effects. The historical method to emphasize the historical origins of the concepts and institutions involved. The comparative method will be used to nominate specific features, concepts or institutions that we will analyze and also it will help us to analyze the evolution that have occurred over time in terms of their development and to highlight certain advantages or disadvantages in terms of choice of competition policy on the abuse of a dominant position. In this paper we will notice that both the companies and the market itself are facing with companies that use anti-competitive since 1900. These kind of practices are harmful both for competition and for consumers, so that should not be allowed to expand. In this context, the European Commission imposed a set of rules that all operators must comply in order to protect, maintain and stimulate competition in the Single Market and to promote fair competition.
    Keywords: competition, anticompetitive policy, abuse of dominance
    JEL: G3 G39
    Date: 2017–11–08
  3. By: Bester, Helmut; Yaofu, Ouyang
    Abstract: This paper analyzes the optimal contract for a consumer to procure a credence good from an expert when (i) the expert might misrepresent his private information about the consumer's need, (ii) the expert might not choose the requested service since his choice of treatment is non-observable, and (iii) limited liability of the expert precludes imposing penalty payments on him. We characterize payments under the optimal contract and show that, compared with the first-best, these induce inefficient undertreatment. We further show that separating diagnosis and treatment increases consumer surplus. Whether it decreases or increases the likelihood of undertreatment, however, depends on the accuracy of the expert's information.
    Keywords: credence goods,non-observable treatments,hidden information,moral hazard,limited liability
    JEL: D82 D83 D86 I11
    Date: 2017
  4. By: Romain Espinosa (CRED - Centre de Recherches en Economie et Droit - UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche); Claudine Desrieux (CRED - Centre de Recherches en Economie et Droit - UP2 - Université Panthéon-Assas - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche); Hengrui Wan (ENSAE ParisTech - École Nationale de la Statistique et de l'Administration Économique)
    Abstract: The need to provide a high-quality justice at reasonable cost represents a current challenge for many public authorities. Many reform projects propose to remove some courts in order to rationalize the judiciary. This paper explores the 2008 French reform of labor courts (removing 20% of the courts) to empirically investigate the determinants of the removal decision, and its consequences on caseload and case duration in the remaining courts. This represents -to our knowledge- the first attempt to evaluate the impacts of courts’ removal. Using panel data, our empirical strategy is based on probit estimations, counterfactuals, as well as 3SLS estimations. Our results show that the reform targeted small and concentrated courts. At the aggregated national level, it appears that duration did not increase, but the demand for litigation decreased. Locally, we find that courts were affected in different ways according to the relative burden they took on.
    Keywords: caseload,judiciary reform,courts’ removal,judicial map,case duration
    Date: 2017
  5. By: Acemoglu, Daron; De Feo, Giuseppe; De Luca, Giacomo
    Abstract: We document that the spread of the Mafia in Sicily at the end of the 19th century was in part shaped by the rise of socialist Peasant Fasci organizations. In an environment with weak state presence, this socialist threat triggered landholders, estate managers and local politicians to turn to the Mafia to resist and combat peasant demands. We show that the location of the Peasant Fasci is significantly affected by an exceptionally severe drought in 1893, and using information on rainfall, we establish the causal effect of the Peasant Fasci on the location of the Mafia in 1900. We provide extensive evidence that rainfall before and after this critical period has no effect on the spread of the Mafia or various economic and political outcomes. In the second part of the paper, we use the source of variation in the location of the Mafia in 1900 to estimate its medium-term and long-term effects. We find significant and quantitatively large negative impacts of the Mafia on literacy and various public goods in the 1910s and 20s. We also show a sizable impact of the Mafia on political competition, which could be one of the channels via which it affected local economic outcomes. We document negative effects of the Mafia on longer-term outcomes (in the 1960s, 70s and 80s) as well, but these are in general weaker and often only marginally significant. One exception is its persistent and strong impact on political competition.
    Keywords: criminal organizations; economic development; Mafia; Political Competition; weak states
    JEL: H11 H75 K42 P16
    Date: 2017–12
  6. By: Robert A. Pollak (Washington University in St. Louis)
    Abstract: This paper investigates marriage market equilibrium under the assumption that Bargaining In Marriage (BIM) determines allocation within marriage. Prospective spouses, when they meet in the marriage market, are assumed to foresee the outcome of BIM and rank prospective spouses on the basis of the utilities they foresee emerging from BIM. Under these assumptions, the marriage market is the first stage of a multi-stage game -- in the simplest case, a two-stage game -- that must be solved by backwards induction. The marriage market determines both who marries and, among those who marry, who marries whom. Bargaining in the second and any subsequent stages determines allocation within each marriage. When BIM determines allocation within marriage, the appropriate framework for analyzing marriage market equilibrium is the Gale-Shapley matching model. In contrast, the standard model of marriage market equilibrium assumes that prospective spouses make Binding Agreements in the Marriage Market (BAMM) that determine allocation within marriage. If we assume BAMM and transferable utility, then the appropriate framework for analyzing marriage market equilibrium is the Koopmans-Beckmann-Shapley-Shubik assignment model. BIM and BAMM have different implications not only for allocation within marriage but also for who marries, who marries whom, the number of marriages, and the Pareto efficiency of marriage market equilibrium.
    Keywords: Binding Agreements in the Marriage Market, BAMM, bargaining in marriage, marital bargaining, marriage market
    JEL: D10 J12 K36
    Date: 2018
  7. By: Tang, Cheng Keat
    Abstract: I evaluate whether speed enforcement cameras reduce the number and severity of traffic accidents by penalizing drivers for exceeding speed limits. Relying on micro data on accidents and speed cameras across Great Britain, I find that installing these devices significantly enhance road safety. Putting another 1,000 cameras reduce around 1130 collisions, 330 serious injuries, and save 190 lives annually, generating net benefits of around £21 million. However, these effects are highly localised around the camera and dissipate over distance, and there is suggestive evidence of more collisions away from the camera, illustrating the possible limitations associated with fixed speed cameras
    Keywords: accidents; injuries; fatalities; speed camera; speeding
    JEL: H23 I18 R41
    Date: 2017–09–01
  8. By: King Yoong Lim; Pengfei Jia; Ali Raza
    Abstract: This paper presents a macroeconomic model with crime, human capital, and three taxation policies (consumption, labour, and capital income taxes). In an extension, we endogenize the probability of escaping punishment to depend on government expenditure on public security/police. The model is solved analytically and numerically to derive propositions, which are then verified empirically using cross-country data. Compared to the literature, we find a much higher threshold probability. Above the threshold, the equilibrium crime rate is positively related to the escape probability. In addition, above this threshold level, a rise in capital income tax or a decline in labour income tax would lead to a higher equilibrium crime rate, if the taxes are modelled using marginal tax rates. There also appears to be empirical supports where the equilibrium human capital level depends positively on consumption tax. Lastly, when the probability is endogenized, there also exists a threshold level for the spending on public security/police, above which consumption tax and capital income tax have positive e¤ects on the equilibrium level of human capital.
    Keywords: Apprehension risk, Crime, Human Capital, Police Spending, Taxation
    JEL: H20 H59 K42 O41
    Date: 2018
  9. By: Ugo Pagano; Massimiliano Vatiero
    Abstract: People consume because others consume, maintained Veblen in 1899. More recently, theoretical, empirical and experimental articles have argued that people constantly compare themselves to their environments and care greatly about their relative positions. Given that competition for positions may produce social costs, we adopt a Law and Economics approach (i) to suggest legal remedies for positional competition, and (ii) to argue that, because legal relations are characterized in turn by positional characteristics, such legal remedies do not represent ‘free lunches’
    JEL: B41 D01 D62 K00
    Date: 2017–01
  10. By: Bocar Ba; Jeffrey Grogger
    Abstract: In March 2010, the Chicago Police Department changed its Taser policy, issuing the weapons to patrol officers instead of largely restricting their use to sergeants. We used that policy change to obtain difference-in-difference estimates of how the availability of Tasers affected the types of force employed by police, the total number of use-of-force incidents, injury rates per incident, the total number of injuries, and the race distribution of civilians involved in use-of-force incidents. The policy change initially led to a large increase in the use of Tasers, with limited substitution from other types of force. After a period of re-training, substitution between Tasers and other types of force, both greater and lesser, increased. Police injuries fell, but neither injury rates nor the number of injuries to civilians were affected. There is no evidence that Tasers led to a reduction in police use of firearms.
    JEL: K4
    Date: 2018–01
  11. By: Will Dobbie; Hans Grönqvist; Susan Niknami; Mårten Palme; Mikael Priks
    Abstract: We estimate the causal effect of parental incarceration on children’s medium-run outcomes using administrative data from Sweden. Our empirical strategy exploits exogenous variation in parental incarceration from the random assignment of criminal defendants to judges with different incarceration tendencies. We find that the incarceration of a parent in childhood leads to significant increases in teen crime and pregnancy and a significant decrease in early-life employment. The effects are concentrated among children from the most disadvantaged families, where teen crime increases by 18 percentage points, teen pregnancy increases by 8 percentage points, and employment at age 20 decreases by 28 percentage points. In contrast, there are no detectable effects among children from more advantaged families. These results imply that the incarceration of parents with young children may increase the intergenerational persistence of poverty and criminal behavior, even in affluent countries with extensive social safety nets.
    JEL: J13 J24 J62 K14 K42
    Date: 2018–01

This nep-law issue is ©2018 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.