nep-law New Economics Papers
on Law and Economics
Issue of 2018‒03‒26
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. On the Role of Emotions in Experimental Litigation Contests By Gerald Eisenkopf; Tim Friehe; Ansgar Wohlschlegel
  2. The innovation theory of harm: an appraisal By Vincenzo Denicolò; Michele Polo
  3. Patent Protection and Threat of Litigation in Oligopoly By Carlo Capuano; Iacopo Grassi
  4. Effects of the joint custody law in Italy By Guido de Blasio; Daniela Vuri; Annalisa Luporini
  5. The Speed of Justice By Florence Kondylis; Mattea Stein
  6. How effective are remedies in merges cases? A European and national assessment By Polemis, Michael
  7. A Legal Lethal Education By Perry Spann
  8. Rethinking odious debt in the age of predatory lending: Old ideas for new problems By Penet, Pierre
  9. Allocation of Usufruct Rights in Informal Markets: Evidence form the Streets By Cid, Alejandro; Cabrera, José María
  10. Will Ukraine Be Able to Establish Real Property Rights? By Anders Aslund
  11. The refugee wave to Germany and its impact on crime By Dehos, Fabian T.
  12. The Hausmann-Gorky Effect By Mitu Gulati; Ugo Panizza;
  13. Auctions with Limited Liability through Default or Resale By Marco Pagnozzi; Krista J. Saral
  14. How Post-crisis Regulation Has Affected Bank CEO Compensation By Vittoria Cerasi; Sebastian M. Deininger; Leonardo Gambacorta; Tommaso Oliviero

  1. By: Gerald Eisenkopf (University of Vechta); Tim Friehe (University of Marburg); Ansgar Wohlschlegel (Portsmouth Business School)
    Abstract: We present experimental evidence on the influence of emotions on litigation. Our experiment compares the impact of an intentional taking of points, resulting in an unfair outcome, to that of an exogenous taking. The intentional taking induces negative emotions (e.g., anger), but this emotional arousal does not influence litigant behavior in terms of either filing a case or spending litigation effort. Our observation is independent of litigation being a one-staged or a (possibly) two-staged contest (i.e., one with an an appeal).
    Keywords: Litigation, Contest, Emotions, Experiment
    JEL: K41 D91 C91
    Date: 2018–03–17
  2. By: Vincenzo Denicolò; Michele Polo
    Abstract: In its recent decision on the Dow-DuPont case, the European Commission has adopted an innovation theory of harm (IToH), which holds that even horizontal mergers whose static effects are benign may be regarded as anticompetitive in a dynamic perspective, as mergers generally stifle innovation. This paper critically assesses the IToH, arguing that its theoretical foundations are too fragile to be the basis for radical policy changes. Antitrust authorities and the courts should continue to consider the impact of horizontal mergers on innovation, bearing in mind that the effect can go either way.
    Keywords: Mergers, Innovation
    JEL: L13 L40 K21 O31
    Date: 2018
  3. By: Carlo Capuano; Iacopo Grassi
    Abstract: In recent years, the increasing awarding of patents has captured the attention of scholars operating in di?erent fields. Economic literature has studied the causes of this proliferation; we propose an entry game focusing on one of the consequences, showing how an incumbent may create a patent portfolio in order to control market entry and to collude. The incumbent fixes the level of patent protection and the threat of denunciation reduces the entrant’s expected profits; moreover, if the entrant deviates from collusion, the incumbent can strengthen punishment suing the competitor for patent infringement, reducing her incentive to deviate. Our analysis suggests that antitrust authorities should pay attention to the level of patent protection implemented by the incumbent and note whether the holder of a patent reacts to entry by either suing or not suing the competitor. In the model, we use completely general functional forms in analyzing the is- sues, and this allows us to obtain general results not depending on the assumptions about the kind of oligopolistic competition.
    Keywords: Patents, patent portfolio, litigation, collusion, foreclosing, entry game.
    JEL: D43 K21 L13
    Date: 2018–03–03
  4. By: Guido de Blasio; Daniela Vuri; Annalisa Luporini
    Keywords: joint custody, separation, contested settlement, transfers, difference-in-differences
    Date: 2017
  5. By: Florence Kondylis (The World Bank - The World Bank - The World Bank); Mattea Stein (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: Can changing the rules of the game affect government performance? We study the impact of a simple procedural reform on efficiency and quality of adjudication in Senegal. The reform gave judges the duty and powers to conclude pre-trial proceedings within a four-month deadline. We combine a staggered rollout across the six civil and commercial chambers of the court of Dakar and three years of high-frequency caseload data to construct an event study. We find a reduction in procedural formalism, as the length of the pre-trial stage decreases by 42.9 days (0.29 SD) and the number of case-level pre-trial hearings is reduced, while judges are more likely to impose deadlines. The effect is similar for small and large cases, while fast and slow judges are equally likely to apply the reform. The evidence suggests that these efficiency gains have no adverse impact on quality, while we document positive firm-level effects.
    Keywords: Legal procedure, Civil law, Bureaucracy, Economic development,Firms
    Date: 2018–03
  6. By: Polemis, Michael
    Abstract: Remedies form an essential tool of any enforcement action and need to be devised with great caution from National Competition Authorities (NCAs). If the remedy is ineffective, the enforcement action does not reach the desired objective and resources will have been wasted. If the remedy is disproportionate, the decision is put at risk in a possible subsequent appeal. Remedies either behavioural or structural imposed by competition authorities seek to eliminate unilateral or/and coordinated effects as a result of the merger and restore competition on the relevant market(s) to the status quo ante. Moreover, remedy packages have typically included extensive structural divestments to remove competition concerns. The scope of this paper is to examine various issues relating to the imposition of remedies in merger cases focusing on the gas and electricity sectors (commodity and capacity release programmes, customer release schemes, network related remedies). This paper relies on the energy sector with a view to developing general principles for imposing effective remedies in other sectors as well. Given the nature of competition in energy markets, particularly effective remedies are those that involve gas release programmes, the sale of price-setting generation plants, network assets, and controlling stakes in merging parties’ competitors.
    Keywords: Merger remedies; competition; energy sector; Gas release programs; European Union
    JEL: G34 K21 L10 L40
    Date: 2018–01–02
  7. By: Perry Spann (The American Literary Society for Higher Education)
    Abstract: In the 1930s, the United States was a global leader in public education by having the largest student populations in the world attend high schools. In the 1980s, school shootings started escalating in the United States, as did profitable investing in the privatization of American prisons, which currently contain half of the world?s total prison population of 233 countries. In the 2000s, adversarial laws related constitutionality and impartiality but not resolve for why the United States is where the majority of the world?s prison population resides and massive school shootings. There has been debate of whether a correlation authentically or paradoxically exists. There has been debate of why random school shootings cannot be predetermined by traditional means of profiling or quasi-experimental research, which are two rudiments viably debated as predispositions contributing to high imprisonment in America. There has been debate that penal populations and school massacres may decrease if judicial practices are less politicized, popularized, and localized. While well intended, the decades of debates distract from definite resolve. The American dream of equal access to education in the pursuit of liberty and happiness is a civil right in a nation of exceptionally high imprisonment and indiscriminate school massacres. Resident and nonresident aliens in the United States are not the primary populations of prisoners because native-born citizens conduct the majority of crimes and school massacres in America. Disadvantaged individuals who are young, poor, minorities, and uneducated immensely compile prison populations in the United States. However, in American school massacres, disadvantaged or advantaged individuals can equally and effortlessly become defenseless instructors or deceased students. The contrast is alarming and a foundation to propose the United States Department of Education, which administrates legal regulations and policies for American schools, permit defensive mandatory practices to help foster educational excellence through safety in schools. The proposal merits substantial review due to administrative laws as a necessity in the governance of society, or due to the likely fact that from the time this content is written to the time this content is published and read, another deadly school shooting will occur in the United States.
    Keywords: Law; Education
    JEL: K39 I28 K23
    Date: 2017–10
  8. By: Penet, Pierre
    Abstract: This essay suggests that odious debt needs a restatement to stay relevant in the face of important changes affecting state (i.e. “sovereign”) debt. Today, a major issue affecting creditor-debtor relations in the sovereign sector is the predicament of over-lending. Examples abound of reckless creditors pressuring vulnerable states to borrow for projects they do not need and at conditions they do not fully understand. This development, which recalls the aggressive business tactics used by predatory lenders in consumer lending, has become a ubiquitous problem affecting both developing and developed nations. Yet, this problem remains largely unaccounted for in international law and in the odious debt doctrine in particular. The future of odious debt depends upon a collective endeavor to make the legal doctrine more sensitive to issues of predatory lending. This essay offers insights into the benefits that such efforts may yield on states and their creditors.
    Keywords: International Law, Odious debt, Greece, Predatory lending, Colonial history
    JEL: K33 K42 F34 F54 H63 H74
    Date: 2018
  9. By: Cid, Alejandro; Cabrera, José María
    Abstract: We analyze the results of a policy of massive allocation of usufruct rights to cuidacoches: persons performing surveillance of parked vehicles in the streets. Surprisingly, despite the low cost and the considerable benefits to legally acquiring the right of use on the block, half of the potential beneficiaries have rejected the subscription to the program. In order to understand this market and the mobility between being in the legal framework or outside the law, we built a unique database containing economic and sociodemographic information from cuidacoches in Montevideo. We highlight four findings: the heterogeneity in the reasons for accepting or rejecting the legal framework; the protection of the right of usufruct on the block as the main perceived benefit of complying with the legal framework; the desire to change jobs for the vast majority, and the low saving capacity.
    Keywords: Usufruct rights; property rights; social mobility; aspirations; labor market
    JEL: I3 J4 O12
    Date: 2017–10
  10. By: Anders Aslund
    Abstract: Over time, the necessary economic reforms have become so obvious that they have become politically possible in most places. The great problem has become the establishment of real property rights. By and large, Central and Eastern Europe have managed to accomplish that not least thanks to support from the European Union. In the former Soviet Union, however, only Georgia succeeded in that endeavor. The big question today is whether Ukraine will manage to do so, or whether it will be caught in a low-economic-growth trap. The three main elements that are needed are independent courts, autonomous prosecutors, and a law-abiding law enforcement, while no old secret police structures should be allowed to sabotage them.
    Keywords: Ukraine, economic reforms, judicial reforms, democratic reforms, corruption, property rights, election law
    JEL: E02 E26 K11 K12 K42 P14 P26
    Date: 2018–01
  11. By: Dehos, Fabian T.
    Abstract: Does refugee migration cause crime? I address this question drawing on recent refugee migration to Germany during the years 2010 to 2015. Based on administrative data records, I add to the literature by disentangling the direct crime impact of asylum seekers and recognized refugees separately. For the group of asylum seekers, I exploit dispersal policies and locational restrictions and find no impact on crime except for migrationspecific offenses. For the group of recognized refugees, who may endogenously move, I use a shift-share instrument and find a positive association between the share of recognized refugees and the overall crime rate, which is driven by non-violent property crimes and frauds. The empirical results prove robust along several robustness checks and are consistent with predictions of the Becker model.
    Keywords: refugee migration,crime
    JEL: F22 K42 J15
    Date: 2017
  12. By: Mitu Gulati (Duke University School of Law); Ugo Panizza (IHEID, Graduate Institute of International and Development Studies, Geneva and CEPR);
    Abstract: For over a century, legal scholars have debated the question of what to do about the debts incurred by despotic governments; asking whether successor non-despotic governments should have to pay them. That debate has gone nowhere. This paper examines whether an Op Ed written by Harvard economist, Ricardo Hausmann, in May 2017, may have shown an alternative path to the goal of increasing the cost of borrowing for despotic governments. Hausmann, in his Op Ed, had sought to produce a pricing penalty on the entire Venezuelan debt stock by trying to shame JPMorgan into removing Venezuelan bonds from its emerging market index. JPMorgan did not comply, but there was a pricing penalty. Intriguingly, the penalty hit only one bond; an issue by Venezuela’s state-owned oil company that went on the market two days prior to the Hausmann’s piece. That bond then began to carry the name in the market of “Hunger Bond.” Using quantitative data and interviews with investors, we try to understand the causes of the Hunger Bond penalty and ask whether there are lessons for policy makers.
    Keywords: Venezuela; Odious Debt; Sovereign Default
    JEL: G15 H63 K34 O54
    Date: 2018–03
  13. By: Marco Pagnozzi (Università di Napoli Federico II and CSEF); Krista J. Saral (Webster University Geneva and CNRS, GATE Lyon St Etienne)
    Abstract: If bidders are uncertain about their value when they participate in an auction, they may overbid and suffer ex-post losses. Limited liability mitigates these losses, and may result in more aggressive bidding and higher seller revenue, but also in an inefficient allocation. Using a combination of theory and experiment, we analyze three different forms of liability in second-price auctions: full liability, limited liability by default with varying penalties, and resale-based limited liability. With a default penalty, bids are higher than under full liability, but final revenue and efficiency are lower due to the frequency of default. Auctions with resale result in the highest revenue and allocative efficiency, and are as effective as a low default penalty in alleviating bidders’ losses. Hence, allowing resale as a form of limited liability may be preferred by both bidders and sellers over other liability rules.
    Keywords: Auctions, Limited Liability, Default, Resale, Experimental Economics
    JEL: D44 C90
    Date: 2018–03–10
  14. By: Vittoria Cerasi (Bicocca University); Sebastian M. Deininger (Basel Chamber of Commerce); Leonardo Gambacorta (BIS and CEPR); Tommaso Oliviero (CSEF, Università di Napoli Federico II)
    Abstract: This paper assesses whether compensation practices for bank Chief Executive Officers (CEOs) changed after the Financial Stability Board (FSB) issued post-crisis guidelines on sound compensation. Banks in jurisdictions which implemented the FSB’s Principles and Standards of Sound Compensation in national legislation changed their compensation policies more than other banks. Compensation in those jurisdictions is less linked to short-termprofits and more linked to risks, with CEOs at riskier banks receiving less, by way of variable compensation, than those at less-risky peers. This was particularly true of investment banks and of banks which previously had weaker risk management, for example those that previously lacked a Chief Risk Officer.
    Keywords: Banks; Managerial compensation; Prudential regulation; Risk-taking
    JEL: G21 G28 G32
    Date: 2018–03–07

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