nep-law New Economics Papers
on Law and Economics
Issue of 2018‒04‒09
thirteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Thinking Justice Outside the Docket: A Critical Assessment of the Reform of the EU's Court System By Alemanno, Alberto; Pech, Laurent
  2. Recent developments in investment fraud and scams: Contracts for Difference (‘CFD’) spread betting and binary options and foreign exchange (‘Forex’) sometimes collectively known as ‘forbin’ – the UK experience. By BARNES, PAUL
  3. The Economic Determinants of Crime: an Approach through Responsiveness Scores By Giovanni Cerulli; Maria Ventura; Christopher F Baum
  4. Criminal Policy on Hidden Defects in Marriage in Indonesia By Anny Retnowati
  5. How Much Does Others' Protection Matter? Employment Protection, Future Labour Market Prospects and Well-Being By Christine Lücke; Andreas Knabe
  6. Sovereign Defaults in Court By Julian Schumacher; Christoph Trebesch; Henrik Enderlein
  7. Drugs, Showrooms and Financial Products: Competition and Regulation When Sellers Provide Expert Advice By Bardey, David; Martimort, David; Pouyet, Jérôme
  8. Machine Learning with Screens for Detecting Bid-Rigging Cartels By Huber, Martin; Imhof, David
  9. Legal empowerment and group-based inequality By Rachel M. Gisselquist
  10. Why Dismiss a Good Case? Dual-Purpose Judicial Institutions In Constitutional Courts Under Autocracy: Evidence from Russia By Ivan Grigoriev
  11. HRMI Civil and Political Rights Metrics: 2018 Technical Note By K Chad Clay; Ryan Bakker; Anne-Marie Brook; Daniel W Hill; Amanda Murdie
  12. The Costs of Corporate Tax Complexity By Eric Zwick
  13. The Court’s Opinion on the EU-Singapore FTA: Throwing off the shackles of mixity? By Van der Loo, Guillaume

  1. By: Alemanno, Alberto; Pech, Laurent
    Abstract: The 2015 reform of the EU’s court system will go down in history as the most radical transformation of the EU judicial architecture since the establishment of the General Court in 1989. It doubles the number of General Court judges but also dissolves the Civil Service Tribunal. This article offers a critical assessment of these two major, structural changes, addressing both the process by which they were adopted and their overall merits. After providing a detailed examination of the reform’s tortuous legislative history and highlighting its unique underlying procedural feature – with the Court itself initiating the process – this article identifies and systematizes its major shortcomings. It criticizes the underlying diagnosis and the cure administered. It concludes by presenting this reform process as a missed opportunity to address, in a more holistic manner, the pressing non-docket related challenges facing the EU judicial system, in particular, to reform a governance structure which is no longer fit for purpose considering the massive transformation of the EU judicial branch since 1951.
    Keywords: Judicial Governance; Openness; Transparency; Legitimacy; Accountability; European Union; Good Governance
    JEL: K19 K33
    Date: 2017–01–01
    Abstract: This paper discusses investor trading schemes for CFDs, spread betting, binary options and forex, what are effectively financial derivatives, designed for investors to speculate on market movements. It is argued that it is not possible for investors to consistently ‘beat the market’ unless they have inside information and frequent trading will result in losses. It is also shown how these derivatives are used in scams and frauds designed to dupe naïve investors. The final section of the paper examines how the UK regulators, principally the Financial Services Authority (later the Financial Conduct Authority) have attempted to combat fraud and abuse and their prosecuting and preventative efforts.
    Keywords: Stocks, shares, securities, contracts for difference, CFD, spread betting, binary options, forex, forbin, scam, fraud.
    JEL: G3 K22 K42
    Date: 2018–03–06
  3. By: Giovanni Cerulli (CNR-IRCrES); Maria Ventura (STICERD, London School of Economics); Christopher F Baum (Boston College; DIW Berlin)
    Abstract: Criminality has always been part of human social interactions, shaping the way peoples have constructed states and legislation. As social order became a greater concern for the public authorities, interest in investigating incentives pushing individuals towards engaging in illegal activities has become a central issue of the political agenda. Building on the existing literature, this paper proposes to focus on a few primary determinants of crime, whose e ect is in- vestigated using a Responsiveness Scores (RS) approach performed over 50 US states during the period 2000-2012. The RS approach allows us to account for unit heterogeneous response to each single determinant, thus paving the way to a more in-depth analysis of the relation between crime and its drivers. We attempt to overcome the limitations posed by standard regression methods, which assume a single coecient for all determinants, thus contributing to the literature in the field with stronger evidence on determinants' e ects and the geographical patterns of responsiveness scores.
    Keywords: Crime, Incentives, Responsiveness Scores
    JEL: K42 J24 P46
    Date: 2018–03–31
  4. By: Anny Retnowati (Universiti Sains Malaysia, 11800, Georgetown, Malaysia Author-2-Name: MG. Endang Suminarni Author-2-Workplace-Name: Universiti Sains Malaysia, 11800, Georgetown, Malaysia)
    Abstract: Objective – Articles 28A-28J of The Second Amendment of the 1945 Constitution provide specific and detailed arrangements for the protection of human rights. These include the protection of the right to live and the right to have a family. Methodology/Technique – The purpose of marriage is for couples to obtain material and spiritual happiness. Many previous studies have indicated that divorce is caused by various factors related to non-fulfilment of rights and obligations between husband and wife. One of those factors is the existence of hidden defects occurring after marriage. Findings – This study uses normative legal research based on legal facts regarding hidden defects in marriage. The research results are used to develop arguments based on legal and normative facts that may be used to inform the development of new legal policy for the solution of disputes between husband and wife caused by hidden defects in marriage. Novelty – The research problems can be formulated as follows: (1) what is the understanding and purpose of marriage between husband and wife? and (2) how is criminal law policy in the case of hidden defects in accordance with happy and eternal marriage based on the Only God?
    Keywords: Service Quality; Servqual; Distance Education; Higher Learning Institutions
    JEL: J12 K41 K36
  5. By: Christine Lücke; Andreas Knabe
    Abstract: Employment protection legislation (EPL) is an important determinant of workers’ perceived future labour market prospects as well as their subjective well-being. Recent studies indicate that it is not only a worker’s own level of protection, but also the employment protection of other workers that matters for individual prospects and well-being. We contribute to this literature by examining how such cross-effects on well-being are mediated by a workers’ perceived risk of job loss and future employability. We apply a structural model to data from the Third Wave of the European Quality of Life Survey, combined with summary indices from the OECD Employment Protection Database. Our results are indicative of cross-effects. Stricter protection for permanent workers (stricter regulation on the length and number of renewals of fixed-term contracts) is associated with lower (higher) perceived employability for both permanent workers and fixed-term workers. In addition, stricter protection for permanent workers is positively related to fixed-term workers’ perceived risk of job loss. We do find some evidence that EPL has significant indirect (cross-)effects on life satisfaction via the mediators. There are no indications for direct, non-mediated effects.
    Keywords: employment protection, employability, risk of job loss, life satisfaction
    JEL: J28 J68
    Date: 2018
  6. By: Julian Schumacher; Christoph Trebesch; Henrik Enderlein
    Abstract: For centuries, defaulting governments were immune from legal action by foreign creditors. This paper shows that this is no longer the case. Building a dataset covering four decades, we find that creditor lawsuits have become an increasingly common feature of sovereign debt markets. The legal developments have strengthened the hands of creditors and raised the cost of default for debtors. We show that legal disputes in the US and the UK disrupt government access to international capital markets, as foreign courts can impose a financial embargo on sovereigns. The findings are consistent with theoretical models with creditor sanctions and suggest that sovereign debt is becoming more enforceable. We discuss how the threat of litigation affects debt management, government willingness to pay, and the resolution of debt crises.
    Keywords: sovereign default, enforcement, government financing, debt restructuring
    JEL: F34 G15 H63 K22
    Date: 2018
  7. By: Bardey, David; Martimort, David; Pouyet, Jérôme
    Abstract: This paper examines the evolution of drug use in Colombia over the past years. Our analysis, based on surveys from the Dirección Nacional de Estupefacientes, shows that drug consumption grew substantially between 1996 and 2013. The growth occurred for both genders, all ages, socioeconomic strata and types of occupation. The results also suggest that men of high socioeconomic strata who regularly consume alcohol and cigarettes and who are between 18 and 24 years of age are more likely to use drugs. Finally, the paper presents some indirect evidence that contradicts the alleged effects of the judgment of the Constitutional Court (Sentencia C-221 of May 1994) that decriminalized the personal dose on the consumption of drugs in Colombia.
    Keywords: Drugs; decriminalization
    JEL: D12 I18
    Date: 2016–11–01
  8. By: Huber, Martin; Imhof, David
    Abstract: We combine machine learning techniques with statistical screens computed from the distribution of bids in tenders within the Swiss construction sector to predict collusion through bid-rigging cartels. We assess the out of sample performance of this approach and find it to correctly classify more than 80% of the total of bidding processes as collusive or non-collusive. As the correct classification rate, however, differs across truly non-collusive and collusive processes, we also investigate tradeoffs in reducing false positive vs. false negative predictions. Finally, we discuss policy implications of our method for competition agencies aiming at detecting bid-rigging cartels.
    Keywords: Bid rigging detection; screening methods; variance screen; cover bidding screen; structural and behavioural screens; machine learning; lasso; ensemble methods
    JEL: C21 C45 C52 D22 D40 K40
    Date: 2018–03–29
  9. By: Rachel M. Gisselquist
    Abstract: Legal empowerment has become widely accepted in development policy circles as an approach to addressing poverty and exclusion. At the same time, it has received relatively little attention from political scientists and sociologists working on overlapping and closely related topics. Research on legal empowerment has been largely applied, with its clearest grounding in the fields of law and economics. This is an introductory/framing paper for a collection of studies on legal empowerment and group-based inequality to be published in a special issue of the Journal of Development Studies. It provides a brief introduction to legal empowerment and advances two broad arguments. First, that an ethnic group-focused approach is a useful starting point in considering the impact of legal empowerment and other development interventions. Second, that the state, via the law, contributes to ethnic inequalities in four broad ways—via its written laws, via their implementation and actual practice, through historical legacies of law and practice, and through the ethnic hegemony embedded in the system. Thinking about legal empowerment initiatives within this framework provides understanding of both their potential and their limitations.
    Date: 2018
  10. By: Ivan Grigoriev (National Research University Higher School of Economics)
    Abstract: The Russian Constitutional Court (RCC) has over time developed a practice of adopting so-called “positive dismissals” (Pozitivnoe Opredelenie) which complements (but also undermines) the existent formal procedure of only delivering decisions on merits with Rulings (Postanovlenie). The paper explores the uses of this peculiar practice. I show that Positive Dismissals are used by the Court to overcome the rigidity of the formal procedure where this is necessary for reasons of intraorganizational or political expediency. To do that I construct and analyze quantitatively a unique comprehensive dataset of all decisions handed down by the RCC roughly in the first two decades of its existence (1995-2015, N=22334). I show that “positive dismissals” are used whenever the case is deemed too important to be simply dismissed (for example, if it is submitted by a powerful petitioner), or when the Court cannot dismiss a case but wants to keep low profile to avoid political risks (for example, with the politically salient cases during election years).
    Keywords: Russian Constitutional Court; authoritarianism; constitutional review.
    JEL: K41 D73
    Date: 2018
  11. By: K Chad Clay (University of Georgia); Ryan Bakker (University of Georgia); Anne-Marie Brook (Motu Economic and Public Policy Research); Daniel W Hill (University of Georgia); Amanda Murdie (University of Georgia)
    Abstract: This paper details a new methodology developed to measure civil and political rights violations in a pilot sample of 13 diverse countries. In doing so, we discuss the problems present in previous attempts to measure civil and political rights cross-nationally and argue that our approach overcomes many of those problems. Using an expert survey that draws on the knowledge of human rights researchers, advocates, lawyers, journalists, and others responsible for directly monitoring the human rights situation in countries worldwide, we present new measures of the intensity and distribution of respect for seven separate areas of civil and political rights and compare those data with existing work. The results demonstrate that our technique for producing data on civil and political rights produces outcomes with strong face validity vis-à-vis existing measures, while providing more and better information than any previous cross-national data collection effort. We aim to extend this approach to most other countries in the world over the coming years.
    Keywords: Human rights, measurement, international comparisons, data visualisation
    JEL: J10 K33 K40 N30 N40
    Date: 2018–03
  12. By: Eric Zwick
    Abstract: Does tax code complexity alter corporate behavior? This paper investigates this question by focusing on the decision to claim refunds for tax losses. In a sample of 1.2M observations from the population of corporate tax returns, only 37% of eligible firms claim their refund. A simple cost-benefit analysis of the tax loss choice cannot explain low take-up, which motivates an investigation of how tax complexity alters this calculation. A research design exploiting tax preparer switches, deaths, and relocations shows that sophisticated preparers increase the claiming behavior of small and mid-market firms. Tax complexity decreases take-up among large firms through interactions of refund claims with other tax code provisions and with the audit process.
    JEL: D22 D92 E62 H2 H25 H3
    Date: 2018–03
  13. By: Van der Loo, Guillaume
    Abstract: In its landmark Opinion 2/15 the Court of Justice of the European Union concluded that the entire EU-Singapore FTA falls under the exclusive competences of the EU, with the notable exception of portfolio investment and the Investor-State Dispute Settlement (ISDS) mechanism. Although the result is that the trade agreement with Singapore is ‘mixed’, and therefore also needs to be ratified by all the 28 member states, this Opinion may actually contribute to the credibility and effectiveness of the EU’s trade policy. In line with the EU’s broadened trade competences, brought about by the Treaty of Lisbon, the Court confirmed that the EU has the exclusive competences to realise almost all its broad trade-related objectives in ‘EU-only’ FTAs, covering trade in goods, services, intellectual property rights, public procurement and sustainable development. If investor-state dispute settlement and portfolio investment are excluded, such future EU FTAs will not be jeopardised by 28 additional – and sometimes unpredictable – ratification procedures in the member states. The Commission should therefore pursue ‘EU-only’ FTAs and cover portfolio investment and investor-state dispute settlement, such as the new Investment Court System, in separate agreements, or not at all. Member states on the other hand should to refrain from deliberately making EU FTAs mixed, as this would contradict the spirit of the Lisbon Treaty and the Court’s case law.
    Date: 2017–05

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.
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