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on Law and Economics |
| By: | Carrieri, V.;; Madio, L.;; Principe, F.; |
| Abstract: | The effect of marijuana liberalization on crime is object of a large interest by social scientists and policy-makers. However, due to the scarcity of relevant data, the displacement effect of liberalization on the supply of illegal drugs remained substantially unexplored. This paper exploits the unintended liberalization of cannabis light (C-light, i.e. with low THC) occurred in Italy in December 2016 by means of a legislative gap, to assess its effect in a quasi-experimental setting. Although the liberalization interested all the Italian territory, the intensity of liberalization in the short-run varied according to the pre-liberalization market configuration of grow-shops, i.e. shops selling industrial canapa-related products that have been able to first place the canapa flowers (C-light) on the new market. We exploit this variation in a Differences-in-Differences design using a unique dataset on monthly confiscations of drugs at province level (NUTS-3 level) over the period 2016-2018 matched with data on the geographical location of shops and socio-demographic variables. We find that the legalization of C-light led to a reduction of 11-12% of confiscation of marijuana per each pre-existing grow-shop and a significant reduction of other canapa-derived drugs (plants of cannabis and hashish). Back-to-envelope calculations suggest that forgone revenues for criminal organizations amount to at least 160-200 million Euros per year. These results support the argument that, even in a short period of time and with an imperfect substitute, the organized crime’s supply of illegal drugs is displaced by the entry of official and legal retailers. |
| Keywords: | cannabis; marijuana light; crime; illegal market; diff-in-diff; |
| JEL: | K23 K42 H75 I18 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:yor:hectdg:18/15&r=law |
| By: | Rosario Crinò (Università Cattolica del Sacro Cuore; Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore); Giovanni Immordino; Salvatore Piccolo |
| Abstract: | We develop a model in which two countries choose their enforcement levels non- cooperatively, in order to deter native and foreign individuals from committing crime in their territory. We assume that crime is mobile, both ex ante (migration) and ex post (eeing), and that criminals who hide abroad after having committed a crime in a country must be extradited back. We show that, when extradition is not too costly, countries overinvest in enforcement compared to the cooperative outcome: insourcing foreign criminals is more costly than paying the extradition cost. By contrast, when extradition is sufficiently costly, a large enforcement may induce criminals to ee the country in which they have perpetrated a crime. Surprisingly, the fear of extraditing criminals enables countries to coordinate on the efficient (cooperative) outcome. |
| Keywords: | Crime, Enforcement, Extradition, Fleeing, Migration. |
| JEL: | K14 K42 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:ctc:serie1:def071&r=law |
| By: | Mikhail Drugov (New Economic School and CEPR); Marta Troya-Martinez (New Economic School and CEPR) |
| Abstract: | This paper analyses a persuasion game where a seller provides (un)biased and (im)precise advice and may be fined by an authority for misleading the buyers. In the equilibrium, biasing the advice and making it noisier are complements. The advice becomes both more biased and less precise with a stricter standard of proof employed by the authority, a larger share of credulous consumers, and a higher buyers' heterogeneity. The optimal policy of the authority is characterized in terms of a standard of proof and resources devoted to the investigation. |
| Keywords: | Advice, Persuasion, Legal Procedure, Consumer Protection |
| JEL: | D18 D8 K4 L1 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0246&r=law |
| By: | Gürtzgen, Nicole; Nolte, André; Pohlan, Laura; van den Berg, Gerard J. |
| Abstract: | This paper studies effects of the introduction of a new digital mass medium on reemployment of unemployed job seekers. We combine data on high-speed (broadband) internet availability at the local level with individual register data on the unemployed in Germany. We address endogeneity by exploiting technological peculiarities in the network that affected the roll-out of high-speed internet. The results show that high-speed internet improves reemployment rates after the first months of the unemployment spell. This is confirmed by complementary analysis with individual survey data suggesting that online job search leads to additional formal job interviews after a few months in unemployment. |
| Keywords: | unemployment,online job search,information frictions,matching technology,search channels |
| JEL: | J64 K42 H40 L96 C26 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:18030&r=law |
| By: | Douglas Hay |
| Abstract: | Abstract Many economic historians agree that increased labour inputs contributed to Britain’s primary industrialisation. Voluntary self-exploitation by workers to purchase new consumer goods is one common explanation, but it sits uneasily with evidence of poverty, child labour, popular protest, and criminal punishments explored by social historians. A critical and neglected legal dimension may be the evolution of contracts of employment. The law of master and servant, to use the technical term, shifted markedly between 1750 and 1850 to advantage capital and disadvantage labour. Medieval in origin, it had always been adjudicated in summary hearings before lay magistrates, and provided penal sanctions to employers (imprisonment, wage abatement, and later fines), while giving workers a summary remedy for unpaid wages. The law always enforced obedience to employers’ commands, suppressed strikes, and tried to keep wages low. Between 1750 and 1850 it became more hostile to workers through legislation and judicial redefinition; its enforcement became harsher through expansion of imprisonment, capture of the local bench by industrial employers, and employer abuse of written contracts. More work in manuscript sources is needed to test the argument, but it seems likely that intensification of labour inputs during industrialisation was closely tied to these legal changes. |
| Keywords: | coercion, contract of employment, labour law, industriousness, punishment, work time |
| Date: | 2018–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:oxf:esohwp:_164&r=law |
| By: | Chen, Yongmin; Li, Jianpei; Zhang, Jin |
| Abstract: | We study the design of efficient liability in expert markets. An expert may misbehave in two ways: prescribing the "wrong" treatment for a consumer's problem, or failing to exert proper effort to diagnose the problem. We show that under a range of liabilities, the expert will choose the efficient treatment based on his information if the price margins for alternative treatments are close enough. Moreover, a well-designed liability rule motivates the expert to also exert diagnosis effort efficiently. The efficient liability is facilitated by certain restriction on equilibrium prices; unfettered competition between experts, while maximizing consumer surplus, may undermine efficiency. |
| Keywords: | Credence goods, experts, liability, diagnosis effort, undertreatment, overtreatment |
| JEL: | D82 I18 K13 L23 |
| Date: | 2018–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87317&r=law |
| By: | Subramanian, Krishnamurthy V. (Asian Development Bank Institute) |
| Abstract: | We show theoretically and empirically that dismissal laws—laws that impose hurdles on firing of employees—spur innovation and thereby economic growth. Theoretically, dismissal laws make it costly for firms to arbitrarily discharge employees. This enables firms to commit to not punish short-run failures of employees. Because innovation is inherently risky and employment contracts are incomplete, dismissal laws enable such commitment. Specifically, absent such laws, firms cannot contractually commit so ex ante. The commitment provided by dismissal laws encourages employees to exert greater effort in risky, but path-breaking, projects thereby fostering firm-level innovation. We provide empirical evidence supporting this thesis using the discontinuity provided by the passage of the federal Worker Adjustment and Retraining Notification Act. Using the fact that this Act only applied to firms with 100 or more employees, I undertake difference-in-difference and regression discontinuity tests to provide this evidence. Building on endogenous growth theory, which posits that economic growth stems from innovation, I also show that dismissal laws correlate positively with economic growth. However, other forms of labor laws correlate negatively with economic growth and swamp the positive effect of dismissal laws. |
| Keywords: | labor laws; R&D; technological change; law and finance; entrepreneurship; growth |
| JEL: | F30 G31 J08 J50 K31 |
| Date: | 2018–05–25 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0846&r=law |
| By: | McDaniels, Devin; Molina, Ana Cristina; Wijkström, Erik |
| Abstract: | This paper illustrates how the work of the WTO's standing committees is fuelling regulatory cooperation between WTO members, and inspiring RTA negotiators. We explore, as a case study, how the WTO TBT Committee has shaped provisions on international standards in RTAs, and focus on the extent to which RTAs have assimilated the WTO TBT principles for development of international standards (the Six Principles), arguably the most important decision taken by the TBT Committee over last 20-plus years. Our analysis covers 260 RTAs, and shows that while most RTAs are silent on the matter, one quarter have provisions where the Parties commit to implement WTO TBT principles, and, among these, a few go further still - for example by naming specific international standardizing bodies which are relevant in certain sectors. In addition, the RTAs sharpen and harden the Six Principles by making them directly applicable to the parties. |
| Keywords: | regional Trade Agreements,international standards,international cooperation,coherence,non-tariff barriers,technical barriers to trade,regulation |
| JEL: | F13 F15 F53 F55 K33 L15 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wtowps:ersd201806&r=law |