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on Law and Economics |
| By: | Steven Shavell |
| Abstract: | The conduct of adjudication is often influenced by motions––requests made by litigants to modify the course of adjudication. The question studied in this article is why adjudication is designed so as to permit the use of motions. The answer developed is that litigants will naturally know a great deal about their specific matter, whereas a court will ordinarily know little except to the degree that the court has already invested effort to appreciate it. By giving litigants the right to bring motions, the judicial system leads litigants to efficiently provide information to courts that is relevant to the adjudicative process. |
| JEL: | D02 D8 K40 K41 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24703&r=law |
| By: | Claudia Cerrone (Max Planck Institute for Research on Collective Goods); Author-Name: Yoan Hermstruwer (Max Planck Institute for Research on Collective Goods; Competition Authority, Lisboa, Portugal) |
| Abstract: | This paper explores the impact of debarment as a deterrent of collusion in first-price procurement auctions. We develop a procurement auction model where bidders can form bidding rings, and derive the bidding and collusive behavior under no sanction, debarment and fines. The model's predictions are tested through a lab experiment. We find that debarment and fines both reduce collusion and bids. The deterrent effect of debarment increases in its length. However, the debarment of colluding bidders reduces effciency and increases the bids of non-debarred bidders. The latter suggests that the market size reduction resulting from debarment may trigger tacit collusion. |
| Keywords: | debarment, collusion, procurement auctions, procurement law, sanctions |
| JEL: | C92 D03 D44 K21 K42 |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2018_05&r=law |
| By: | Gerhard Schnyder; Centre for Business Research |
| Abstract: | The study of decoupling – i.e. the discrepancies between formal policies and actual practices and outcomes – has seen a remarkable revival. Importantly, a distinction between policy-practice and means-ends decoupling has become widely-used. We argue that the decoupling literature still neglects a key feature of decoupling, namely that it is inherently a multi-level concept. Distinguishing explicitly the macro- (country) and the micro- (organisation) levels, we develop a more fine-grained typology of policy–practice and means–ends decoupling. We hypothesise that differences in the macro-environment may influence the type and extent of decoupling that prevails in a given country. We test our hypotheses in the context of the adoption of legal minority shareholder protection in four European countries. We go beyond previous studies that have investigated policy–practice and means-end decoupling in the same context by using a unique dataset for firm-level corporate governance practices that allows us to investigate the multi-level nature of decoupling more directly. Our findings suggest that that decoupling is context specific and the extent to which policy-practice decoupling occurs may depend on a country's legal style. |
| Keywords: | Decoupling, Corporate Governance, Minority Shareholder Protection |
| JEL: | G34 G38 K22 O16 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp502&r=law |
| By: | Zoe Adams; Louise Bishop; Simon Deakin; Colin Fenwick; Sara Martinsson Garzelli; Giudy Rusconi; Centre for Business Research |
| Abstract: | This paper presents findings from analysis of a dataset of labour laws, based on the Centre for Business Research Labour Regulation Index (CBR-LRI), which has recently been extended to cover 117 countries and the period from 1970 to 2013. The dataset shows that laws regulating different forms of employment (DFE), including part-time work, fixed-term employment and agency work, have become significantly more protective over time, in particular since the late 1990s. Employment protection laws (EPL), covering individual dismissal, collective consultation and codetermination rights, have become steadily more protective since the 1970s. Europe has seen a decline in the level of EPL since the onset of the sovereign debt crisis in 2008, but this trend is small, on average, by comparison to earlier increases in protection beginning in the 1970s, and has not been replicated in other regions. Time-series econometric analysis using non-stationary panel data methods suggests that strengthening worker protection in relation to DFE and EPL is associated with an increase in labour's share of national income, rising labour force participation, rising employment, and falling unemployment, although the observed magnitudes are small when set against wider economic trends. |
| Keywords: | labour regulation, employment protection, labour flexibility, employment, unemployment, productivity, labour share, leximetrics, time series analysis, pooled mean group regression |
| JEL: | C22 C23 K31 O15 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp500&r=law |
| By: | Bell, Brian; Bindler, Anna; Machin, Stephen |
| Abstract: | Recessions lead to short-term job loss, lower happiness, and decreasing income levels. There is growing evidence that workers who first join the labor market during economic downturns suffer from poor job matches that can have sustained detrimental effects on wages and career progressions. This paper uses U.S. and U.K. data to document a more disturbing long-run effect of recessions: young people who leave school during recessions are significantly more likely to lead a life of crime than those entering a buoyant labor market. Thus, crime scars resulting from higher entry-level unemployment rates prove to be long lasting and substantial. |
| Keywords: | Crime; Recessions; Unemployment |
| JEL: | J64 K42 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:89715&r=law |
| By: | Johannes Buckenmaier; Eugen Dimant (Philosophy, Politics and Economics, University of Pennsylvania); Ann-Christin Posten; Ulrich Schmidt |
| Abstract: | This paper presents the first controlled economic experiment to study celerity, i.e. the effectiveness of swiftness of punishment in reducing illicit behavior. We consider two dimensions: timing of punishment and timing of the resolution of uncertainty regarding the punishment. We find a surprising u-shaped relation between deterrence and the delays of punishment and uncertainty resolution. Institutions that either reveal detection and impose punishment immediately or maintain uncertainty about the state of detection and impose punishment sufficiently late are equally effective at deterring illicit behavior. Our results yield strong implications for the design of institutional policies to mitigate misconduct and reduce recidivism. |
| Keywords: | Deterrence, Institutions, Punishment, Swiftness, Uncertainty |
| JEL: | C91 D02 D81 K42 |
| URL: | http://d.repec.org/n?u=RePEc:ppc:wpaper:0014&r=law |
| By: | Dur, Robert (Erasmus University Rotterdam); Vollaard, Ben (Tilburg University) |
| Abstract: | We conduct a field experiment to examine whether the deterrent effect of law enforcement depends on the salience of law enforcement activity. Our focus is on illegal disposal of household garbage in residential areas. At a random subset of 56 locations in a mid-sized city, law enforcement officers supplemented their regular enforcement activities by the practice of putting brightly-colored warning labels on illegally disposed garbage bags. This treatment made the existing enforcement activities suddenly much more apparent to residents. We find evidence for a substantial reduction in illegal disposal of garbage in response to the treatment. |
| Keywords: | law enforcement, deterrence, perception, salience, disorder |
| JEL: | C93 K42 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11644&r=law |
| By: | Currie, Janet (Princeton University); Mueller-Smith, Michael (University of Michigan); Rossin-Slater, Maya (Stanford University) |
| Abstract: | Causal evidence of the effects of violent crime on its victims is sparse. Yet such evidence is needed to determine the social cost of crime and to evaluate the cost-effectiveness of policy interventions in the justice system. This study presents new evidence on the effects of violent crime on pregnancy and infant health outcomes, using unique linked administrative data from New York City. We merge birth records with maternal residential addresses to the locations of reported crimes, and focus on mothers who lived in a home where an assault was reported during their pregnancies. We compare these mothers to women who lived in a home with an assault that took place shortly after the birth. We find that assaults in the 3rd trimester significantly increase rates of very low birth weight (less than 1,500 grams) and very pre-term (less than 34 weeks gestation) births, possibly through a higher likelihood of induced labor. We show that our results are robust to multiple choices of control groups and to using maternal fixed effects models. We calculate that these impacts translate into a social cost per assault during pregnancy of $41,771, and a total annual cost of over $4.25 billion when scaled by the national victimization rate. As infant health is a strong predictor of life-long well-being, and women of lower socioeconomic status are more likely to be victims of domestic abuse than their more advantaged counterparts, our results suggest that in utero subjection to violent crime is an important new channel for intergenerational transmission of inequality. |
| Keywords: | domestic violence, infant health, pregnancy, health inequality, social cost of crime |
| JEL: | I14 I31 J12 J13 K14 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11655&r=law |
| By: | Paskalev, Vesco; Alemanno, Alberto; Pech, Laurent |
| Abstract: | This Memorandum to the European Commission presents our professional opinion on the legal and ethical issues arising from the appointment of the former President of the European Commission Jose Manuel Barroso as non-executive chairman and director of Goldman Sachs. We identify a number of flaws of the Opinion of the Ad Hoc Ethical Committee which considered the issue and offer our own analysis of applicable law and the action the Commission is required to take. In our view, the Opinion represents a case of maladministration, on the ground of which it should have been set aside by the Commission in unequivocal terms. On our own analysis, Mr. Barroso’s acceptance of his new appointment was ethically inappropriate and, therefore, a violation of TFEU. Further we argue that the Commission has powers to take remedial action and is legally obliged to act to enforce the EU law and to protect the interests of the EU and its reputation. We show that, contrary to most comments in the media, the expiry of the eighteen months ‘cooling-off’ period does not put Mr. Barroso on the right side of the law, and does not preclude the obligation of the Commission to take remedial action. |
| Keywords: | This Memorandum to the European Commission presents our professional opinion on the legal and ethical issues arising from the appointment of the former President of the European Commission Jose Manuel Barroso as non-executive chairman and director of Goldman Sachs. We identify a number of flaws of the Opinion of the Ad Hoc Ethical Committee which considered the issue and offer our own analysis of applicable law and the action the Commission is required to take. In our view; the Opinion represents a case of maladministration; on the ground of which it should have been set aside by the Commission in unequivocal terms. On our own analysis; Mr. Barroso’s acceptance of his new appointment was ethically inappropriate and; therefore; a violation of TFEU. Further we argue that the Commission has powers to take remedial action and is legally obliged to act to enforce the EU law and to protect the interests of the EU and its reputation. We show that; contrary to most comments in the media; the expiry of the eighteen months ‘cooling-off’ period does not put Mr. Barroso on the right side of the law; and does not preclude the obligation of the Commission to take remedial action. |
| JEL: | K33 |
| Date: | 2016–12–31 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1199&r=law |
| By: | Filippo Belloc; Centre for Business Research |
| Abstract: | We analyse how institutional complementarities between employee representation laws and dismissal restrictions influence aggregate innovation outcomes. We argue that greater employee voice, due to improved employee representation legislations, may spur innovative effort by employees only when shareholders cannot renegotiate ex-ante agreements with workers over revenue sharing, by threatening dismissal. We perform a panel regression analysis, exploiting country-sector panel data over the 1977-2005 period, and find that stronger employee representation laws in the presence of stricter firing restrictions are in fact associated with higher patenting activity. Consistently with our theoretical argument, the magnitude of this empirical relationship is seen to be relatively larger in those sectors where the human capital contribution to production is higher. Implications for the analysis of economic institutions and for legal policy-making are proposed. |
| Keywords: | labour laws, institutional complementarities, hold-up, innovation |
| JEL: | K31 O31 P51 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp506&r=law |
| By: | Simon Deakin; Christopher Markou; Centre for Business Research |
| Abstract: | Features of the 'fourth industrial revolution', such as platforms, AI and machine learning, pose challenges for the application of regulatory rules, in the area of labour law as elsewhere. However, today's digital technologies have their origins in earlier phases of industrialisation, and do not, in themselves, mark a step change in the evolution of capitalism, which was, and is, characterised by successive waves of creative destruction. The law does not simply respond to technological change; it also facilitates and mediates it. Digitalisation, by permitting the appropriation of collective knowledge, has the capacity to undermine existing forms of regulation, while creating the space for new ones. It may erode the position of some professions while enabling others, complementary to new technologies, to emerge. It is unlikely to bring about the redundancy of forms of labour law regulation centred on the employment relationship. We appear to reaching a point in the law-technology cycle where push-back against regulatory arbitrage can be expected. |
| Keywords: | gig economy, digitalisation, future of work, labour law, law and technology, Uber |
| JEL: | J41 J48 K31 L22 O33 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp504&r=law |
| By: | Zoe Adams; Centre for Business Research |
| Abstract: | The Supreme Court in Hartley v King Edwards VI College (2017) has confirmed that an employee who refuses to work in accordance with his contract forfeits his right to be paid for the duration of the breach. The decision extends to professional employees paid a periodic salary the principle established in Miles v Wakefield MDC (1987). The present article sheds new light on these decisions by situating them within a broader debate concerning the function of the wage and the proper relationship between work and payment. Drawing on insights from economic theory, and engaging in a genealogical analysis of legal concepts, the article shows how this debate has, over time, conditioned the use of concepts such as the 'wage', 'the salary' and 'remuneration' in legislation and case law concerning deductions. It shows that the legal concept of the 'wage' is closely related to the economic idea of the wage as the price of a commodity, while the legal concepts of 'salary' and 'remuneration' are more closely analogous to the economic idea of the wage as the cost of subsistence. The courts' tendency to confuse these concepts, and to analyse the employer's power to deduct as a right to withhold wages for non-performance of the contract, tells us much about the implicit assumptions underpinning cases such as Miles and Hartley, and how they have shaped the path of the law. |
| Keywords: | contract of employment, remuneration, wages, deductions, legal evolution, law and economics |
| JEL: | B13 B14 B15 B24 J40 J48 J83 K3 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp499&r=law |
| By: | Manudeep Bhuller; Gordon B. Dahl; Katrine V. Løken; Magne Mogstad |
| Abstract: | Using quasi-random assignment of criminal cases to judges, we estimate large incarceration spillovers in criminal and brother networks. When a defendant is sent to prison, there are 51 and 32 percentage point reductions in the probability his criminal network members and younger brothers will be charged with a crime, respectively, over the ensuing four years. Correlational evidence misleadingly finds small positive effects. These spillovers are of first order importance for policy, as the network reductions in future crimes committed are larger than the direct effect on the incarcerated defendant. |
| JEL: | K42 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24878&r=law |
| By: | Seppälä, Timo; Juhanko, Jari; Mattila, Juri |
| Abstract: | Abstract As a general rule, information and data cannot be owned. Information and data may belong to various actors, but they cannot be owned in the legislative sense. Information can, however, be managed. The most natural view of information and data management is that the actor is the one who owns the device and the service where the information and data are. The ownership of a device or service is the default situation of data management when no contractual arrangements or the like have been made. In this case, the owner of the device and service usually have a natural ability to prevent others from accessing the data by preventing access to the device or service. Within the freedom of contract, it can be specified who data belongs to, what kinds of access rights there are to the data, whether they are exclusive, parallel, etc. It is aimed at agreements between parties on the ownership of data and use restrictions even when no one owns the data and only restrictions on any contractual partner. The restriction of contract comes, however, from the fact that the contract cannot be binding on a third party. In the end, the contractual policies between the actors will define the relative strengths of information and data ownership between parties, for example how the ownership of information and data will be established in the autonomous smart device and service entities of the future. |
| Keywords: | Data ownership, data governance, Finnish law |
| JEL: | K1 K12 K2 L89 |
| Date: | 2018–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:rif:briefs:71&r=law |
| By: | Gerhard Schnyder; Mathias Siems; Ruth Aguilera; Centre for Business Research |
| Abstract: | The Law and Finance School (LFS) has become an important stream of re-search in management and socio-economic studies. This paper provides the first comprehensive discussion of the first 20 years of LFS literature. Draw-ing on legal theory, we show that, despite the centrality of law to the LFS, the LFS is based on a surprisingly 'thin' theory of law. It does not provide a coherent definition of what primary function law plays in the economy, what criterion makes law 'valid' law, and what mechanism links law to ac-tors' behaviours. Therefore, contrary to existing criticisms of the LFS, we argue that the main issue is not that the LFS overstates the importance of law, but rather that it does not take law seriously enough. We propose ways in which future research could develop a more solid conceptual framework to empirically investigate the impact of law on economic and social outcomes. |
| Keywords: | law, regulation, corporate governance, theory |
| JEL: | K0 L5 O1 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp501&r=law |
| By: | Doleac, Jennifer (Texas A&M University) |
| Abstract: | Two-thirds of those released from prison in the United States will be re-arrested within three years, creating an incarceration cycle that is detrimental to individuals, families, and communities. There is tremendous public interest in ending this cycle, and public policies can help or hinder the reintegration of those released from jail and prison. This review summarizes the rigorous evidence on the effectiveness of programs that aim to improve the reintegration and rehabilitation of the formerly-incarcerated. While there is a need for much more research on this topic, the existing evidence provides some useful guidance for decision-makers. The importance of evaluating existing and new strategies is also discussed. |
| Keywords: | prisoner reentry, employment, recidivism |
| JEL: | K42 J24 H76 I0 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11646&r=law |
| By: | Palmer, Michael; Williams, Jenny |
| Abstract: | This paper investigates the impact of a law protecting and promoting the employment rights of disabled people in a developing country setting. Using data from the Cambodian Socioeconomic Survey and a di�fference-in-diff�erence design, we �find that employment of the disabled fell by around 9 percentage points in the four years following the introduction of the disability law. The reduction in employment is greater for women than men and is concentrated amongst employees, with the self-employment rate unaff�ected by the policy change. Several mechanisms via which the introduction of the law reduced employment of the disabled are explored. We �find that the most plausible mechanism is that employers reduce their demand for disabled labor in order to avoid the cost of workplace accommodations for disabled workers. We also �find that families respond to the reduced employment of their disabled members by providing unpaid work and roles within the family home, and by providing income transfers to non-resident disabled family members. |
| Keywords: | disability law; employment; di�erence-indi�erence design; developing country |
| JEL: | C21 I18 J21 K31 |
| Date: | 2017–07–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87944&r=law |
| By: | Silvia Giacomelli (Bank of Italy); Tommaso Orlando (Bank of Italy); Giacomo Rodano (Bank of Italy) |
| Abstract: | Lengthy in-court debt recovery procedures may adversely affect the economic and financial system, for example in the management of non-performing loans. This paper analyses the characteristics of real estate foreclosures in Italy and the determinants of their length. A decomposition of procedures into phases shows that the phases preceding and following the actual sale also contribute significantly to the total length of the procedure. The length also turns out to be influenced by both observable and unobservable court characteristics. We also find a reduction in the length of the procedures following recent reforms: new regulations are helping to reduce the length of the ‘pre-sale’ phase and, above all, of the sale phase. |
| Keywords: | real estate foreclosures, debt recovery, civil justice |
| JEL: | G21 K10 K40 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_448_18&r=law |
| By: | Frederick S. Ahiabor; Gregory A. James; Frank O. Kwabi; Mathias M. Siems; Centre for Business Research |
| Abstract: | This paper is the first one that uses a panel data of different types of shareholder protection in order to examine (i) the effect of such laws on stock market development and (ii) the convergence of shareholder protection laws through cross-border mergers and acquisitions. We find significant results for enabling laws but less so for paternalistic ones. |
| Keywords: | Law and finance; shareholder protection; corporate governance; corporate finance |
| JEL: | G32 K22 N20 O16 P50 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp509&r=law |
| By: | Christoph Engel (Max Planck Institute for Research on Collective Goods) |
| Abstract: | Behavioral law and economics applies the conceptual tools of behavioral economics to the analysis of legal problems and legal intervention. These models, and the experiments to test them, assume an institution free state of nature. In modern societies, the law’s subjects never see this state of nature. However a rich arrangement of informal and formal institutions creates generalized trust. If individuals are sufficiently confident that nothing too bad will happen, they are freed up to interact with strangers as if they were in a state of nature. This willingness dramatically reduces transaction cost and enables division of labor. If generalized trust can be assumed, simple economic models are appropriate. But they must be behavioral, since otherwise individuals would not want to run the risk of interaction. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2018_02&r=law |
| By: | Makofske, Matthew |
| Abstract: | Regulatory compliance is often promoted via unannounced inspections where firms found to be in violation of environmental, health, or safety regulations face punishments. When compliance is costly to firms, a key aspect of this approach is that the timing of inspections is unannounced and difficult to anticipate, lest firms comply only when they believe an inspection is likely. With data from Los Angeles (LA) County food-service health inspections, I estimate how the (in)ability to anticipate inspection timing affects compliance using a novel approach. Many facilities such as hotels, grocery stores, or food courts, consist of multiple food-service establishments sharing a single physical location. Multiple establishments within a single facility are commonly, though not always, inspected on the same day, meaning all but one of the establishments involved likely anticipate the timing of their next inspection to a considerable extent. Within such facilities, I show that establishments perform significantly worse on days in which they receive the sole inspection conducted at their facility. These "surprise" inspections detect 7.75% more violations, 9.1% more inspection score point deductions, and 16.3% more major critical violations (the most severe violations of the county health code). |
| Keywords: | regulatory inspection, health and safety regulation, monitoring, restaurant hygiene |
| JEL: | K32 L51 Q18 |
| Date: | 2018–08–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88318&r=law |
| By: | Ewan McGaughey; Centre for Business Research |
| Abstract: | The language of "human resource management" treats people as a means to an end. Three core tenets of human resource literature are that it is desirable to have (1) labour "flexibility" and "mobility" in a peripheral workforce, (2) individual (not social) responsibility for employment searching, and (3) a manager’s right to manage, without collective accountability. This article explores the cutting edge evidence, which show human resource theory harms productivity and human development. It explores the effects of "HR" in the UK, EU and international regulation on atypical work, full employment, and union voice. Where human resource beliefs have pervaded the most, the outcomes are the worst: lower productivity, higher unemployment, more inequality, less growth. To advance prosperity, economic risks must be distributed to the organisations best placed to bear them, people must have security to plan for the future, and people must have real votes at work through collective bargaining and corporate governance. Many people who themselves work in "HR" strongly disagree with the essential elements of their discipline. They support equality, security and democracy at work. Just as international law once affirmed that "labour is not a commodity", for social justice in the 21st century there must be a conviction that a human is not a resource. "HR" must change in name and substance, to advance human development and human rights. |
| Keywords: | Human Resource Management, Labour Is Not a Commodity, Social Justice, Job Security, Full Employment, Trade Unions, Votes at Work, Productivity, Human Rights |
| JEL: | J01 K31 L21 L22 L52 P1 P16 F16 |
| Date: | 2018–03 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp497&r=law |
| By: | Sabrina T. Howell; Marina Niessner; David Yermack |
| Abstract: | Initial coin offerings (ICOs) are sales of blockchain-based digital tokens associated with specific platforms or assets. Since 2014 ICOs have emerged as a new financing instrument, with some parallels to IPOs, venture capital, and pre-sale crowdfunding. We examine the relationship between issuer characteristics and measures of success, with a focus on liquidity, using 453 ICOs that collectively raise $5.7 billion. We also employ propriety transaction data in a case study of Filecoin, one of the most successful ICOs. We find that liquidity and trading volume are higher when issuers offer voluntary disclosure, credibly commit to the project, and signal quality. |
| JEL: | G24 G32 K22 L26 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24774&r=law |
| By: | Natalia Vasilenok (National Research University Higher School of Economics) |
| Abstract: | This paper studies the influence of institutional quality and income inequality on the private provision of security. It is argued that the effects of both factors are far from straightforward and should be thoroughly examined when variation in institutional quality and income inequality is high. To conduct empirical analysis, data on the regions of Russia between 2009 and 2016 are used. It is hypothesized and empirically supported that institutional quality affects the relationship between the private and public provision of security. Weak institutions make the private provision of security a substitute for the public provision of security, whereas strong institutions promote complementarity between the two. It is also shown that income inequality increases the private provision of security when inequality is low and decreases it when inequality is high. This result can be attributed to economies of scale. |
| Keywords: | public goods, security, quality of institutions, income inequality. |
| JEL: | D60 H44 K42 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:197/ec/2018&r=law |