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on Law and Economics |
| By: | Gregor Langus (CET, European Commission); Vilen Lipatovz (Compass Lexecon Brussels); Damien Neven (Graduate Institute of International and Development Studies) |
| Abstract: | We model merger control procedures as a process of sequential acquisition of information in which mergers can be cleared after a ?first phase of investigation. We fi?nd that the enforceability of clearance decisions at the end of the fi?rst phase is unattractive to the extent that it prevents the authorities to use their expectations as to whether evidence gathered in the fi?rst phase will be confi?rmed in the second phase. This deprives the ?first phase of its potential as an effective screening mechanism. We also fi?nd that when clearance decisions in the fi?rst phase are enforceable, a different (higher) standard in the fi?rst phase is only desirable when Phase I decisions are captured by merging parties (as opposed to complainants). |
| Keywords: | merger procedure, competition policy |
| JEL: | K21 K40 L40 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:gii:giihei:heidwp05-2018&r=law |
| By: | Benjamin Monnery; Maxime Le Bihan |
| Abstract: | This paper investigates the effects of sanctions on the behavior of deputies in the French National Assembly. In 2009, the Assembly introduced small monetary sanctions to prevent absenteeism in weekly standing committee meetings (held on wednesday mornings). Using a rich monthly panel dataset of parliamentary activity for the full 2007-2012 legislature, we study the reactions of deputies to (i) the mere eligibility to new sanctions, (ii) the actual experience of a salary cut, and (iii) the public exposure of sanctioned deputies in the media. First, our diff-in-diff estimates show very large disciplining effects of the policy in terms of committee attendance, and positive or null effects on other dimensions of parliamentary work. Second, exploiting the timing of exposure to actual sanctions (monthly salary cuts versus staggered media exposure), we find that deputies strongly increase their committee attendance both after the private experience of sanctions and after their public exposure. These results suggest that monetary and reputational incentives can effectively discipline politicians without crowding out intrinsic motivation. |
| Keywords: | political economy; political accoutability; sanctions; reputation; motivation |
| JEL: | D72 D78 J45 K42 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2018-21&r=law |
| By: | Svetlana Chekhovskaya (National Research University Higher School of Economics) |
| Abstract: | This paper continues to investigate legal corporate governance issues. Over the last decade few topics in corporate law have proven as alluring and as elusive as the connection between information technologies (IT), corporate governance (CG) and corporate law. The dynamics of the development of modern law are determined by many factors, one of which is the rapid involvement of IT in all spheres of life. Everything in physical life can become a digital sign. We are in the era of successful "small" firms whose business models are built on a combination of software platforms, telecommunications technology and commercial transactions conducted "outside the firm". IT allows them to remotely carry out various business transactions, including corporate actions, providing participation in the governance of the corporation. The term IT covers a large array of electronic vehicles from software to artificial intelligence. Due to technological development, IT has quickly entered corporate governance structures in a large number of corporations. Some scholars argue that artificial intelligence will also be the new reality of corporate life in the very near future. Several questions are raised in connection with this. For example, do current laws need any changes? What are the prerequisites for modern corporate law. There has been a progressive revision of the fundamentals of corporate law over the last few decades, considering that key provisions of corporate law were created during and after the industrial revolution. I explore two paths of legal research in CG and corporate law: using IT for CG procedures, and an adjustment of CG rules for e-corporations. In addition the question is raised whether a virtual corporation has to have a corporate structure similar to the structure of a modern corporation. This new outline of corporate law is a new understanding of current corporate law. |
| Keywords: | corporate law, corporate governance, corporate e-governance, blockchain, decentralized autonomous organization (DAO) |
| JEL: | K29 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:82/law/2018&r=law |
| By: | Ying Chen (Department of Economics, Johns Hopkins University); Hulya Eraslan (Rice University, Department of Economics) |
| Abstract: | A decision maker (DM) must address a series of problems over time. Each period, a random case arises and the DM must make a yes-or-no decision, which we call a ruling. She is uncertain about the correct ruling until she conducts a costly investigation. A ruling establishes a precedent, which may be costly to violate in the future. We compare the DM's incentive to acquire information, the evolution of standards and the social welfare under two institutions: nonbinding precedent and binding precedent. Under nonbinding precedent, the DM is not required to follow previous rulings, but under binding precedent, she must follow previous rulings where applicable. We find that, compared to nonbinding precedent, the incentive for information acquisition is stronger under binding precedent in earlier periods when few precedents exist, but as more precedents are established over time, the incentive for information acquisition becomes weaker under binding precedent. Even though erroneous rulings may be perpetuated under binding precedent, social welfare can be higher because of the more intensive investigation conducted early on. |
| Keywords: | Precedent; binding precedent; information acquisition; transparency. |
| JEL: | D02 D23 D83 K4 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:koc:wpaper:1810&r=law |
| By: | Alessandro Tampieri; Elena Parilina |
| Abstract: | We investigate divorce choice when the population distribution is non stationary and divorce entails an explicit cost. We consider a nontransferable utility, three period model where heterogeneous individuals may divorce the partner and re-enter the marriage market. Individuals choices are based on the change in the distribution of singles, the cost of waiting and divorcing, and take into account the individual own's eligibility in the marriage market. We show the existence of "divorce" and "no divorce" equilibria. Divorce emerges in the presence of asymmetry among spouses's types or in case of symmetry among medium-types spouses. Interestingly, lower divorce costs do not necessarily increase the probability of divorce. We provide some supporting evidence of our results and we discuss how this framework can help interpreting the effects of divorce reforms on divorce rates. |
| Keywords: | non-stationary distribution, divorce cost, waiting cost. |
| JEL: | J12 C78 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2018_07.rdf&r=law |
| By: | Colin Green; John Spencer Heywood; Maria Navarro Paniagua |
| Abstract: | We examine the London congestion charge introduced in 2003 and demonstrate significant reductions in a number of pollutants relative to controls. We even find evidence of reductions per mile driven suggesting amelioration of a congestion externality. Yet, we find a robust countervailing increase in harmful NO2 likely reflecting the disproportionate share of diesel vehicles exempt from the congestion charge. This unintended consequence informs on-going concern about pollution from diesel based vehicles and provides a cautionary note regarding substitution effects implicit in congestion charging schemes. |
| Keywords: | Pollution, Traffic, Congestion Charging |
| JEL: | I18 R48 H27 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:lan:wpaper:237385060&r=law |
| By: | Jan Fredrik Qvigstad (Norges Bank (Central Bank of Norway)); Tore Schei (Norges Bank (Central Bank of Norway)) |
| Abstract: | Many institutions in a democratic society wield important power by virtue of the decisions they make. These decisions may concern individuals or have a more general impact on society. It goes without saying today that this exercise of power must be accounted for. A supreme court's reasoning is given in its judgements. A central bank's reasoning is given in the decision-making body's minutes. In this paper, we develop criteria for what constitute good written justifications for a decision, not what makes a good decision per se. We look at the two institutions we know best: supreme courts and central banks. Of course, these are not the only institutions that exercise power on behalf of the state, and we also ask whether our criteria could be applied more generally. We assess a selection of supreme court judgements and monetary policy decisions in various countries qualitatively against our criteria, and find that practice largely conforms to the criteria. There are some common features between supreme courts and central banks. In recent years there has been a development in the way the judgments are written in the UK Supreme Court. Earlier, each judge wrote his votum. Now they are writing a common text. With individual writing, there were many different formulations of the normative text. It is easier for the public to relate to one legislative text. The UK Supreme Court, under the presidency of Lord Neuberger, has therefore gradually moved towards writing a joint text. John Roberts, the US Chief Justice, thought that judges should be worried when they are writing separately about the effect on the court as an institution. What about the minutes of the central banks? Professor Alan Blinder at Princeton argues that a central bank that speaks with a cacophony of voices has no voice at all. Professor Otmar Issing, the former Chief Economist and Member of the Board of the ECB, believes that there is a danger that individual minutes provide an incentive for individual members to put themselves ahead of the institution We also test empirically whether the institutions' decisions and the justifications for these decisions are communicated in clear language. Our analysis is inspired by Bank of England chief economist Andrew Haldane's speech "A little more conversation, a little less action", and by the report "Bankspeak: The Language of World Bank Reports 1946-2012" by Franco Moretti and Dominique Pestre at Stanford Literary Lab. We analyse more than 6,000 central bank and supreme court decisions from the past decade and find considerable differences in length and readability across countries and institutions. The grand chamber decisions of the European Court of Human Rights are by far the longest, while the European Court of Justice employs the most complex language. The Danish central bank keeps things briefest and uses the clearest language, but also has the simplest regime to explain. The Swedish central bank's minutes stand out as both long and complex, while the Norwegian central bank is unusually concise. Moretti and Pestre analysed the text of all World Bank reports and found quantitative indications that the language of the reports had moved in the wrong direction in terms of readability. We perform the same tests on central banks and supreme courts and find that these institutions' language has not moved in the same negative direction. Former Bank of England governor Mervyn King argued that the design of an institution "must reflect history and experience", and there is no doubt that each institution's way of writing is influenced by its own history. This is what economists refer to as "path dependence". We wonder, however, whether there is rather too much path dependence in many cases, and whether the institutions in question might benefit from looking at trends and learning from other institutions both at home and abroad. In our work on this paper, we have been particularly wary of phrases along the lines of "based on a general assessment". Alarm bells sound whenever we see them, especially with any frequency, as they are liable to conceal rather than illuminate the true rationale. |
| Keywords: | Central Bank Organization, Constitutional Court, Constitutional Law, Constitutional Rights, Supreme Court |
| JEL: | E58 K10 |
| Date: | 2018–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:bno:worpap:2018_06&r=law |
| By: | Kozyrin N. Aleksandr (National Research University Higher School of Economics) |
| Abstract: | This article examines one of the topical issues of Russian tax law, namely, the issue regarding the definition of a forfeit under the current Russian legislation on taxes and charges. The paper analyses the changes in the legal nature of forfeits under the Russian tax legislation—from the measure of responsibility for violation of tax legislation (in the 1990s) to the means of securing the performance of tax duty (with the entry into force of the Russian Tax Code in 1999). The research identifies the reasons for the alteration of the definition of a forfeit under Russian tax law and assesses the consequences for maintaining the balance of public and private interests in the tax law. The research formulates proposals on improving the legislation regulating tax relations for the computation and payment of forfeits |
| Keywords: | tax law; fiscal principle; balance of public and private interests; tax duty; securing the performance of tax duty; measure of responsibility for a violation of tax rules. |
| JEL: | Z |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:81/law/2018&r=law |
| By: | Miguel Cantillo Simon (Universidad de Costa Rica) |
| Abstract: | This paper analyzes and measures the value that American private banks added as directors of non financial companies. Using data between 1874 and 1913, and an event study from 1906, I find that bank directors added about 20% of a firm’s market capitalization. Collusive practices encouraged by private banks accounted for 65% of this value, and were the equivalent of creating a three player market among railroads. About 35% of the value added by banks came from better governance. I argue that although policymakers were partly right in sidelining private banks as activist investors, this helped entrench managers. |
| Keywords: | Antitrust, Collusion, Corporate Governance, Financial History |
| Date: | 2017–01 |
| URL: | http://d.repec.org/n?u=RePEc:fcr:wpaper:201701&r=law |
| By: | Ndebugri, Haruna; Senzu, Emmanuel Tweneboah |
| Abstract: | The Study, sort to deeply investigate the structural dynamics of corporate crimes in public Institutions, which are recognized and recorded in the criminal records of Ghana and the effectiveness of the whistle blowing “Act”, which was passed in 2006 by the Parliament of the Republic of Ghana to curb the menace. |
| Keywords: | Corporate crime, Whistle blowing, Public Institution, Public servants |
| JEL: | K4 |
| Date: | 2018–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:85602&r=law |
| By: | Addison, John T. (University of South Carolina); Teixeira, Paulino (University of Coimbra); Grunau, Philipp (Institut für Arbeitsmarkt- und Berufsforschung); Bellmann, Lutz (Institute for Employment Research (IAB), Nuremberg) |
| Abstract: | This study examines the potential impact of works councils and unions on the deployment of fixed-term contracts and agency temps. We report inter al. that works councils are associated with a higher number of temporary agency workers when demand volatility is high while the opposite holds for fixed-term contracts. These disparities likely reflect differences in function, with agency work being more directed toward the protection of a shrinking core and fixed-term contacts being as much a port of entry as a buffer stock. We are also able to identify the number of new hires with a fixed-term contract as well as the number of FTC conversions (into regular employment) and renewals, the correlates of which flows are broadly consistent with the stock data. |
| Keywords: | agency temps, fixed-term contracts, stepping stones, buffer stocks, labor market duality, extensive/intensive margins, works councils, unions, collective bargaining, demand volatility, complementarity, Germany |
| JEL: | J21 J23 J41 J J51 J63 K31 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11378&r=law |
| By: | Daniel W. Elfenbein; Raymond Fisman; Brian McManus |
| Abstract: | We study the use of and response to cheap talk by firms and their consumers, focusing on unverifiable promises of charitable donations on eBay. For transactions during March 2005 – May 2006, cheap talk listings have lower sales probabilities but sell at higher prices when they are successful. The negative relationship between cheap talk and sales is concentrated in the months following Hurricane Katrina, a time when both verifiable and unverifiable charity-related listings increased dramatically. Finally, we show that cheap talk sellers have significantly lower quality ratings than sellers who make verifiable donations. Collectively, our results suggest that most buyers (justifiably) avoid cheap talk listings when credible quality signals are available, thus limiting the extent of cheap talk under these conditions. |
| JEL: | D83 K2 L15 M37 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24437&r=law |
| By: | Dmitry Poldnikov (National Research University Higher School of Economics) |
| Abstract: | Comparative legal history is a fashionable new discipline which aims at a better understanding of the law's past by comparing similarities and differences of legal phenomena in two or more jurisdictions beyond the limits of national legal histories. Despite its popularity in Europe, it still lacks comparative projects that cover both Western and Eastern areas of the Continent, not least because the methodology of such comparison requires proper consideration and cannot be simply copied from comparative law or national legal histories. The present article evaluates the applicability of the dominant method of today's comparative law (the functional one) in the domain of the general contract law of the first codifications in the major jurisdictions of Continental Europe (Austria, France, Germany, Russia) during the 'long 19th century'. This subject matter is chosen by way of example as a 'legal cross-road' of legal concepts and models, more susceptible to changes, innovations, borrowings, and closely l inked to social needs. In the main part of the article, it is argued that the adaptation of the functional method to the needs of comparison in legal history becomes plausible due to at least two factors. First, comparatists mitigated the rigid assumptions of the 'classical' functionalism of the 20th century (rejecting its privileged status and purely functional perception of law, irrebuttable presumptions of similarity and unification of compared legal systems etc.). Second, many legal historians, like the drafters of the first civil codes in Western and Eastern Europe, also believe that law is more than minimally connected to social problems and manifests itself primarily through its actual application. On the basis of such premises, the author of this article discusses potential benefits and limitations of researching general contract law in the selected jurisdictions with the functional method. At the preparatory (descriptive) stage, it can be useful to assure comparability of contract law in the selected civil codes, to identify omissions in the codified general rules on contracts, and to arrange legal provisions around practically relevant issues. At the stage of analysis, functionalism can be coupled with teleological interpretation of legal norms to enable us to understand better the link between the application of the legal rules, their legal purposes, and the practical social problems serving as tertium comparationis for all the compared jurisdictions. A sketch of such an analysis in the final part of the article allows to conclude that a research with the help of the functional method narrows our perception of law as a cultural phenomenon and breaks the inner doctrinal logic, but in return, it offers a starting point for a much needed dialogue of legal historians with a wider legal community. |
| Keywords: | comparative legal history, contract law in Europe, functional method, tertium comparationis, codification of civil law |
| JEL: | K10 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:80/law/2018&r=law |