nep-law New Economics Papers
on Law and Economics
Issue of 2018‒04‒16
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Optimal Law Enforcement with Ordered Leniency By Landeo, Claudia; Spier, Kathryn
  2. Bargaining tools for the resolution of distressed firms: judicial composition with creditors By Alesssandro Danovi; Silvia Giacomelli; Patrizia Riva; Giacomo Rodano
  3. The US Opidemic: Prescription Opioids, Labour Market Conditions and Crime By Deiana, Claudio; Giua, Ludovica
  4. Group Size Effect and Over-Punishment in the Case of Third Party Enforcement of Social Norms By Kamei, Kenju
  5. Peculiarities of cyber security management in the process of internet voting implementation By Tadas Limba; Konstantin Agafonov; Linas Paukštė; Martynas Damkus; Tomas Plėta
  6. Suspended in legal limbo: Protecting investment in renewable energy in the EU By Alessi, Monica; Núñez Ferrer,Jorge; Egenhofer, Christian
  7. Does State Aid for Broadband Deployment in Rural Areas Close the Digital and Economic Divide? By Wolfgang Briglauer; Niklas S. Dürr; Oliver Falck; Kai Hüschelrath
  8. Ethics, algorithms and self-driving cars – a CSI of the ‘trolley problem’ By Renda, Andrea

  1. By: Landeo, Claudia (University of Alberta, Department of Economics); Spier, Kathryn (Harvard Law School)
    Abstract: This paper studies the design of enforcement policies to detect and deter harmful short-term activities committed by groups of injurers. With an ordered-leniency policy, the degree of leniency granted to an injurer who self reports depends on his or her position in the self-reporting queue. By creating a "race to the courthouse," ordered-leniency policies lead to faster detection and stronger deterrence of illegal activities. The socially optimal level of deterrence can be obtained at zero cost when the externalities associated with the harmful activities are not too high. Without leniency for self reporting, the enforcement cost is strictly positive and there is underdeterrence of harmful activities relative to the first-best level. Hence, ordered-leniency policies are welfare improving. Our findings for environments with groups of injurers complement Kaplow and Shavell's (1994) results for single-injurer environments. Experimental evidence provides support for our theory.
    Keywords: Law Enforcement; Leniency; Self-Reporting; Ordered Leniency; Harmful Externalities; White-Collar Crime; Securities Fraud; Insider Trading; Market Manipulation; Whistle-blowers; Non-Cooperative Games; Prisoners Dilemma; Coordination Games; Risk Dominance; Pareto Dominance; Experiments
    JEL: C72 C90 D86 K10 L23
    Date: 2018–04–11
  2. By: Alesssandro Danovi (University of Bergamo); Silvia Giacomelli (Bank of Italy); Patrizia Riva (University of Piemonte Orientale); Giacomo Rodano (Bank of Italy)
    Abstract: The paper provides a large set of new evidence about the workings of judicial composition with creditors (concordato preventivo) procedures based on a new dataset, specifically compiled, which constitutes the richest source of information currently available on the functioning of these procedures. Judicial composition with creditors is mainly used for the piecemeal liquidation of firms (about 70 per cent of the cases). Less than a quarter of judicial compositions with creditors fulfill the provisions of the plans. The recovery rate for secured loans is almost 100 per cent for all types of compositions, while for unsecured loans, recovery rates vary considerably: from 18 per cent in the case of piecemeal liquidation to 37 per cent in the case of restructuring (23 per cent for judicial composition with creditors that provides for the sale of the entire firm or of a branch). Regression analysis shows that better performance of judicial compositions with creditors is associated with a less chronic crisis at the time the judicial composition with creditors is initiated, measured as the time that passes between the earliest persistent difficulties faced by the firm in fulfilling its obligations to bank creditors and the initiation of the procedure.
    Keywords: bankruptcy law, firm restructuring, judicial composition with creditors
    JEL: G28 G33 K20
    Date: 2018–03
  3. By: Deiana, Claudio; Giua, Ludovica
    Abstract: In response to the recent opioid crisis, US states have implemented several policies to reduce the dispensing of opioids and contain drug mortality. We analyse the effectiveness of these laws and their unintended fallouts on labour participation and crime at the local level. Using multiple data sources and a difference-in-difference set-up, we show that the laws targeting the supply for opioids yield larger reductions in prescribed drugs compared to the demand-side policies, particularly in the absence of cross-bordering effects. We observe an improvement in labour market participation and higher crime rates following the enforcement of some of the policies considered.
    Keywords: Prescription Opioids, Drugs, Labour Market, Crime.
    JEL: E24 I18 K14
    Date: 2018–03
  4. By: Kamei, Kenju
    Abstract: One of the important topics in public choice is how people’s free-riding behavior could differ by group size in collective action dilemmas. This paper experimentally studies how the strength of third party punishment in a prisoner’s dilemma could differ by the number of third parties in a group. Our data indicate that as the number of third party punishers increases in a group, the average punishment intensity per third party punisher decreases. However, the decrease rate is very mild and therefore the size of total punishment in a group substantially increases with an increase in group size. As a result, third party punishment becomes a sufficient deterrent against a player selecting defection in the prisoner’s dilemma when the number of third party punishers is sufficiently large. Nevertheless, when there are too many third party punishers in a group, a defector’s expected payoff is far lower than that of a cooperator due to strong aggregate punishment, while some cooperators are even hurt through punishment. Therefore, the group incurs a huge efficiency loss. Such over-punishment results from third party punishers’ conditional punishment behaviors: their punishment intensity is positively correlated with their beliefs on the peers’ punitive actions. Some possible ways to coordinate punishment among peers even when group size is very large, thus enabling the efficiency loss to be mitigated, are also discussed in the paper.
    Keywords: experiment, cooperation, third party punishment, dilemma, group size effect
    JEL: C92 D72 H41
    Date: 2018–02–17
  5. By: Tadas Limba (Mykolas Romeris University); Konstantin Agafonov (Mykolas Romeris University); Linas Paukštė (Cognit consult JSC); Martynas Damkus (Mykolas Romeris University); Tomas Plėta (NATO Energy Security Center of Excellence)
    Abstract: The modern world could not be imagined without the information and communications technology. Today's society, its life and social relations are deeply influenced by the virtual space, and that stands as a reason why the world's Information Technology specialists and representatives of various branches of science have been focusing on solving the problems in the sphere of cyber security. Software and technological solutions used in reorganization of the activity of private sector nowadays are widely used in the public sector as well. By using technologies, countries put their effort into involving their citizens into the process of governance and direct participation in various political processes inside the state itself, and one of the most widespread tools to motivate the citizen-to-state political participation and resident's direct interaction in political processes is internet voting. Authors of scientific literature investigate how cybersecurity management is being comprehended and analyzed in technological, legal, management, economical, human resource management and other aspects; how cyber security is analyzed in the context of services provided by institutions of public administration; which means of cyber security management are essential, in order to speed up the processes of establishing e-voting systems. In this article the authors investigate the theoretical aspects of cyber security management in internet voting, analyze the global experience in the sphere of cyber security management implementation with the help of already established e-voting systems, evaluate the properties of cyber security management in the process of implementation of internet voting in Lithuania, as well as present audience with an in-depth analysis of the opinion of the local population, cyber security and voting system specialists, concerning the matters and possibilities of establishing internet voting in Lithuania. The authors also propose a cyber security management model, which could be used in the process of implementation (both preparation and establishment) of the internet voting system in Lithuania.
    Keywords: cyber security model,cyber security management,cyber security,e-voting,internet voting
    Date: 2017–12–29
  6. By: Alessi, Monica; Núñez Ferrer,Jorge; Egenhofer, Christian
    Abstract: This paper focuses on the damage – and the potential for inflicting further damage – to investor confidence arising from legal uncertainties surrounding renewable energy support in some EU member states. A higher-than-expected expansion of the renewables sector, resulting in higher costs of the support, combined with the financial crisis, has driven some member states to radically curtail renewable energy support schemes. Loss-making investors unsuccessfully challenged these EU governments in national courts, arguing that their rights had been violated and denounced reforms that they considered to be retroactively punitive in nature. A number of EU-based international investors turned to international arbitration courts under the provisions of the Energy Charter Treaty (ECT), which protects cross-border investment in the energy sector. This move, however, has called into question the legal framework of the single market and EU state aid rules. A dispute on the jurisdiction of the ECT within the single market has ensued, which highlights a complex and unresolved situation. While the legal disputes accumulate, the concern is that investors may shy away from the EU as a result of the regulatory and legal uncertainties. The main aim of the paper is to provide some clarity for non-specialists on a complex situation, and to highlight the need to find workable solutions that de facto restore investor confidence.
    Keywords: Energy Charter Treaty, ECT, retroactive changes, RES, renewables, renewable energy Directive, investors, single market, arbitration, state aids
    Date: 2018–01
  7. By: Wolfgang Briglauer; Niklas S. Dürr; Oliver Falck; Kai Hüschelrath
    Abstract: We evaluate the impact of a major European state aid programme for broadband deployment applied to rural areas in the German state of Bavaria in the years 2010 and 2011. Using matched difference-in-differences estimation strategies, we find that aided municipalities have – depending on broadband quality – between 18.4 and 25.4 percentage points higher broadband coverage than non-aided municipalities. This increase in broadband coverage, closing the digital divide, results in an average increase of six employed individuals living in the respective aid-receiving municipalities while leaving the number of employed (measured at the place of work) or self-employed individuals and wages unaffected. We therefore conclude that an increase in broadband coverage through state aid protects rural areas from depopulation, but does not contribute to a further closing of the economic divide in the form of creating new jobs.
    Keywords: : government policy, state aid, ex-post evaluation, broadband, employment, rural areas, European Union, Germany, Bavaria
    JEL: D62 D73 G38 H23 J23 K23 L52 L96 L98 R23
    Date: 2018
  8. By: Renda, Andrea
    Abstract: Many experts argue that focusing on how automated cars will solve the dilemma known as the ‘trolley problem’ isn’t going to get us very far in the debate about the ethics of artificial intelligence (AI). But it’s hard to resist if you are a philosopher, an ethicist, a futurist, or simply a geek – and it’s fun. Still, this dilemma can reveal a number of outstanding policy issues that are often neglected in the public debate. This paper performs a ‘crime scene investigation’ to find some of the missing parts in the ethics/AI quandary. These include the need to preserve human control over machines; the need to take data governance and ownership seriously; algorithmic accountability and transparency; various forms of user empowerment and their tension in relation to overall system control; the need for modernised tort rules; and more generally, a discussion about whether algorithms should reflect, exacerbate or mitigate the biases existing in our society. The investigation concludes that current legal systems are insufficiently equipped to cope with most of these issues, and that a mapping of outstanding ethical and policy dilemmas is a useful starting point for a thorough overhaul of public policies in this complex and ever-expanding domain.
    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.
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