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on Law and Economics |
| By: | Klaus Abbink (Department of Economics, Monash University); Dmitry Ryvkin (Department of Economics, Florida State University); Danila Serra (Department of Economics, Southern Methodist University) |
| Abstract: | We employ laboratory experiments to examine the effects of corrupt law enforcement on crime within a society. We embed corruption in a social dilemma setting where citizens simultaneously choose whether to obey the law or to break the law and impose a negative externality on others. Police officers observe citizens' behavior and decide whether to impose fines on law-breakers or, in treatments with corruption, extort bribes from any citizen. In the first study, we find that the presence of police substantially reduces crime, as compared to a baseline setting without police. This is true also when police officers are corrupt. This result is driven by corrupt police officers using bribes in a targeted manner as a substitute for official fines to punish law-breakers. In the second study, we test the effectiveness of two reward mechanisms aimed at reducing police corruption, both of which are based on society-wide police performance measures and not on the observation/monitoring of individual officers. We find that both mechanisms make bribery more targeted toward law-breakers, and one of them leads to a moderate reduction in crime. |
| Keywords: | corruption, crime, police, experiment |
| JEL: | D73 K42 C92 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:fsu:wpaper:wp2018_09_01&r=law |
| By: | Jill Horwitz; Corey S. Davis; Lynn S. McClelland; Rebecca S. Fordon; Ellen Meara |
| Abstract: | States, which have the primary legal role in regulating the prescribing and dispensing of prescription medications, have created Prescription Drug Monitoring Programs (PDMP) to try to reduce inappropriate prescribing, dispensing, and related harm. Research assessing whether these interventions are effective has produced inconclusive and contradictory results. Here we examine whether different data sources may have contributed to the varying results. Specifically, we: 1) identify the decisions inherent in creating such a dataset; 2) discuss the public data sources used by researchers in previous work; 3) develop and apply a detailed research protocol to create a novel PDMP law dataset; and 4) to illustrate potential consequences of data choice, apply various data sources to analyze the relationship between PDMP laws and prescribing and dispensing of opioids among disabled Medicare beneficiaries. We find that our dates differ from those in existing datasets, sometimes by many years. The regression analyses generated a twofold difference in point estimates, as well as different signed estimates, depending on the data used. We conclude that the lack of transparency about data assembly in existing datasets, differences among dates by source, and the regression results raise concerns for PDMP researchers and policymakers. |
| JEL: | I1 I12 I18 K32 K42 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24947&r=law |
| By: | Lu Shen; Kwong Wing Chau |
| Abstract: | Informal housing are housing units without legal title. Despite the lack of legal title, there is a huge black market for informal housing in China. Though it is clearly stated in the law that such transactions are prohibited by the law, in reality, under the pressure of high formal housing prices, the transactions of informal housing have never stopped. Since the informal property rights transferred in those transactions are neither recognized nor protected by the legal institution, disputes arise from these transactions. Different from foreign countries such as the United States, each state of which has its own law and legal system, China practices a unified legislative system. Under the system, various administrative regions may work out local statutes as long as they do not violate the Constitution or the state law or the administrative law. Though the marketization and transactions of informal housing in China is illegal according to the law, there is no criminal conviction on illegal selling or buying. Different from illegal behaviour such as drug selling, disputes over illegal selling of informal housing can always seek legal decisions from courts. Nonetheless, among the disputes over contract validity, ownership, or even will validity where informal housing is involved, different court decisions have been given to similar disputes over the transactions of informal housing though one of the national administrative law has clearly stated the prohibitions of transactions of informal housing in China. Despite under the uniform legal system in China and referring to the same national laws including contract law and relevant administrative law, courts in different cities interpret and practice laws in various manners and even lead to opposite decisions, suggesting certain ambiguity in the legislations. This study aims to explore court decisions and local statutes if there is any, which are relevant to informal housing issues in various cities and provinces in China. Court decisions in a way can reflect where legal institutions stand in the cases of informal housing issues and the variety of decisions given by the courts based on almost the same statues and legislations also imply a certain degree of ambiguity and flexibility in interpretation, which may also contribute to the pricing and transaction volume of informal housing units in real life. |
| Keywords: | China; Court cases; Informal Housing; Law; Property Rights |
| JEL: | R3 |
| Date: | 2018–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:arz:wpaper:eres2018_218&r=law |
| By: | Simplice Asongu (Yaoundé/Cameroun); Jacinta C. Nwachukwu (University of Central Lancashire, UK); Chris Pyke (University of Central Lancashire, UK) |
| Abstract: | The study investigates the role of security officers and the police in dampening the effect of insecurity on homicides. Insecurity dynamics are measured in terms of access to weapons, violent crime, perception of criminality and political instability. The geographical and temporal scopes are respectively 163 countries and 2010-2015. The empirical evidence is based on Negative Binomial regressions. Three main findings are established. First, security officers and the police significantly lessen the effect of political instability and perception of criminality on homicides. Second, an extended analysis with thresholds suggest that a maximum deployment of security officers and the police is required in order to completely cancel out the impact of both insecurity dynamics on homicides. The concept of threshold represents the critical mass at which the negative conditional effect from the interaction between security officers and the police completely dampens the effect of insecurity dynamics on homicides. Third, the use of security officers and the police is a necessary but not a sufficient condition for the complete eradication of insecurity-related homicides. Policy implications are discussed. |
| Keywords: | Homicides; Global evidence; security |
| JEL: | K42 P50 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:18/033&r=law |
| By: | Díaz, Carlos; Patacchini, Eleonora; Verdier, Thierry; Zenou, Yves |
| Abstract: | This paper presents a new theory of crime where leaders transmit a crime technology and act as a role model for other criminals. We show that, in equilibrium, an individual's crime effort and crime decisions depend on the geodesic distance to the leader in his or her network of social contacts. By using data on friendship networks among U.S. high-school students, we structurally estimate the model and find evidence supporting its predictions. In particular, by using a definition of a criminal leader that is exogenous to the network formation of friendship links, we find that the longer is the distance to the leader, the lower is the criminal activity of the delinquents and the less likely they are to become criminals. This result highlights the importance of the closeness centrality of the leaders in explaining criminal behaviors. We finally perform a counterfactual experiment that reveals that a policy that removes all criminal leaders from a school can, on average, reduce criminal activity by about 20% and the individual probability of becoming a criminal by 10%. |
| Keywords: | closeness centrality; Crime leaders; criminal decision; social distance |
| JEL: | C31 D85 K42 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13120&r=law |
| By: | Dmitry Poldnikov (National Research University Higher School of Economics) |
| Abstract: | The place of Russian law in European legal history is debated both in the national and international literature. The advocates of the European character of Russian law have to face the particularity of its legal culture, the sources of law, and the tradition of sui generis national identity. Yet, national identities and legal traditions are not innate but man-made and changeable. In this paper the focus on the period of the 19th century when Russian law was essentially modernized to match the best coeval European standards. It began in the early 1860s with the judicial and university reforms of Alexander II which introduced modern principles of judicial dispute resolution and professional legal education and lasted until the October revolution of 1917. The rapid and profound transformation of Russian law is best illustrated by the legislation in the domain of civil law, the leading branch of codified law in 19th century Europe. The pre-reformed Svod Zakonov (Digest of Laws) of 1833 (its 10th volume) was notably casuistic, inconsistent, and voluminous to the extent that it may not qualify as a modern code. The Draft Civil Code of 1905 could stand comparison with any European codification to date in terms of the systematic and coherent arrangement of general provisions on material civil law. Another important change was the progressive use of the best European legal experience: from the masked, fragmentary and unskilled borrowings in Svod Zakonov to a fully-fledged comparative legislation in the Draft Civil Code. A comprehensive comparison of all major European codes allowed the draft of a better piece of legislation but this has not been yet been researched by legal historians. The main question – how did this comparative approach came about – remains largely unanswered. In this paper attention is drawn to the decisive role of Russian legal scholarship in developing a comparative approach using an original synthesis of several streams of European legal thought (Savigny's historical school, German Pandectistics, French ecole de l'exegese, and Jhering's sociological approach) which it managed to develop in the second half of the 19th century. It is argued that such legal scholars as Meyer, Pobedonostsev, Pakhman, Shershenevich, Annenkov succeeded in overcoming the limits of the pre-reformed, literal knowledge of Svod Zakonov and began to study Russian civil law as part of a larger phenomenon (the law of the 'civilized nations') through dogmatic comparison which resembled the comparative legislation in western Europe. The evidence for this claim is taken from the main doctrinal works between 1840 and 1910 which represent both streams of comparison and it is analysed in the framework of comparative legal history. Special attention is paid to the contribution of dogmatic comparison in developing the general part of contract law as a recognizable hallmark of civil law in continental Europe which came to be adopted in the doctrinal writings and the draft legislation of the late Russian empire |
| Keywords: | history of private law (19th century), comparative legislation, Russian civil law, legal modernization |
| JEL: | Z |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:85/law/2018&r=law |
| By: | Bhuller, Manudeep (University of Oslo); Dahl, Gordon B (UC San Diego); Løken, Katrine V. (Dept. of Economics, Norwegian School of Economics and Business Administration); Mogstad, Magne (Dept. of Economics, Norwegian School of Economics and Business Administration) |
| 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. |
| Keywords: | Incarceration; peer effects; criminal networks |
| JEL: | K42 |
| Date: | 2018–07–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:nhheco:2018_015&r=law |
| By: | Dhaval Dave; Monica Deza; Brady P. Horn |
| Abstract: | The past two decades have witnessed a substantial increase in opioid use and abuse in the United States. In response to this opioid epidemic, prescription drug monitoring programs (PDMPs) have been implemented in virtually all states. These programs collect, monitor, and analyze prescription opioid data with the goal of preventing the abuse and diversion of controlled substances. A growing literature has found that voluntary PDMPs, which do not require doctors to access PDMPs before prescribing controlled substances, have had little effect on opioid use and misuse. However, PDMPs that do mandate access have been found to be effective in reducing opioid misuse and other related health outcomes. In this paper we study the broader impact of voluntary and mandatory-access PDMPs on crime, and in the process inform the causal link between prescription opioid abuse and crime. Using information on offenses known to law enforcement and arrests from the Uniform Crime Reports (UCR), combined with a difference-in-differences empirical strategy, we find that voluntary PDMPs did not significantly affect crime whereas mandatory-access PDMPs have reduced crime by approximately 3.5%. Reductions in crime are largely associated with violent crimes, particularly homicide and assault. Also, we find evidence that young adults experienced the largest decrease in crime, which is consistent with prior work that also finds relatively larger declines in prescription opioid abuse for this group. Overall, these results provide additional evidence that prescription drug monitoring programs are an effective social policy tool to mitigate the negative consequences of opioid misuse, and more broadly indicate that opioid policies can have important spillover effects into other non-health related domains such as crime. |
| JEL: | H0 I1 K0 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24975&r=law |
| By: | Gonzalez Lira, Andres; Mobarak, Ahmed Mushfiq |
| Abstract: | Attempts to curb illegal activity by enforcing regulations gets complicated when agents react to the new regulatory regime in unanticipated ways to circumvent enforcement. We present a research strategy that uncovers such reactions, and permits program evaluation net of such adaptive behaviors. Our interventions were designed to reduce over-fishing of the critically endangered Pacific hake by either (a) monitoring and penalizing vendors that sell illegal fish or (b) discouraging consumers from purchasing using an information campaign. Vendors attempt to circumvent the ban through hidden sales and other means, which we track using mystery shoppers. Instituting random monitoring visits are much more effective in reducing true hake availability by limiting such cheating, compared to visits that occur on a predictable schedule. Monitoring at higher frequency (designed to limit temporal displacement of illegal sales) backfires, because targeted agents learn faster, and cheat more effectively. Sophisticated policy design is therefore crucial for determining the sustained, longer-term effects of enforcement. Data collected from fishermen, vendors, and consumers allow us to document the upstream, downstream, spillover, and equilibrium effects of enforcement on the entire supply chain. The consumer information campaign generates two-thirds of the gains compared to random monitoring, but is simpler for the government to implement and almost as cost-effective. |
| Keywords: | enforcement; law and economics; Over-fishing; regulation |
| JEL: | K42 L51 O1 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13114&r=law |
| By: | Aksoy, Cevat G.; Carpenter, Christopher S.; de Haas, Ralph (Tilburg University, Center For Economic Research); Tran, Kevin |
| Abstract: | Understanding whether laws shape or simply reflect citizens’ attitudes is important but empirically difficult. We provide new evidence on this question by studying the relationship between legal same-sex relationship recognition policies (SSRRPs) and attitudes toward sexual minorities in Europe. Using data from the European Social Surveys covering 2002-2016 and exploiting variation in the timing of SSRRPs across countries, we show that legal relationship recognition is associated with statistically significant improvements in attitudes toward sexual minorities. These effects are widespread across demographic groups, emerge only after the policies are adopted, and are not observed for views on other social issues. Our results suggest that laws can exert a powerful influence in shaping societal attitudes. |
| Keywords: | Public Opinion; same-sex relationship recognition policies; LGBT attitudes |
| JEL: | F5 K36 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiucen:50ed62f2-360d-42f9-85c1-04e43cdf0976&r=law |
| By: | Elias Tsakas; Nikolas Tsakas |
| Abstract: | We study the effect of noise due to exogenous information distortions in the context of Bayesian persuasion. In particular, we ask whether more noise is always harmful for the information designer (viz., the sender). We show that in general this is not the case. That is, more noise is often beneficial for the sender. However, when we compare noisy channels with “similar basic structures”, more noise cannot be beneficial for the sender. We apply our theory to applications from the literatures on voting and cognitive biases. |
| Keywords: | Bayesian persuasion; data distortions; optimal signal; garbling |
| JEL: | C72 D72 D82 D83 K40 M31 |
| Date: | 2018–09 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:11-2018&r=law |
| By: | Lema, D.; Egolf, P. |
| Abstract: | This paper evaluates the potential impact of the recently enacted forest protection laws on the number of forest fires in Argentina. The forest protection laws (at a federal and provincial level) restricts the use of forestry land in several ways, and limit the expansion of the agricultural frontier. This restriction can make forest arson potentially profitable to clear land and to expand the agricultural frontier circumventing the laws. We present a conceptual model based in the economic theory of crime to analyze forest arson decisions, and to predict individual behavior. Using panel data from 2002 to 2014 at a provincial level we present empirical evidence of systematic effects in the occurrence of forest fire as a function of the new regulation and its sequential implementation. Fixed effects and difference-in-differences estimates show that the number of fires increased transitory some 100% -200% in the main crop producer provinces during the law implementation process (2009-2011). |
| Keywords: | Community/Rural/Urban Development, International Development, Land Economics/Use |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iaae18:275984&r=law |
| By: | Brettschneider, Jörg |
| Abstract: | The German federal government presented a legislative proposal on tax- and especially VAT law with the focus to combat VAT fraud in (international) ecommerce on July 31st 2018. This draft legislation is explained and discussed. |
| Keywords: | VAT,Umsatzsteuer,Mehrwertsteuer,Value Added Tax,China,Germany,Deutschland,ecommerce,e-commerce,Steuerhinterziehung,tax evasion,tax,Amazon,FBA,Fulfillment,liability rule,UK,Asia,Chinese sellers,chinesische Händler,Alibaba,online platform,electronic marketplace,Onlinehandel,UStG,Umsatzsteuergesetz,legislation,Finanzamt Neukölln,Fulfillment by Amazon,Umsatzsteuerbetrug,Steueroase,Entwurf eines Gesetzes zur Vermeidung von Umsatzsteuerausfällen beim Handel mit Waren im Internet und zur Änderung weiterer steuerlicher Vorschriften,Finanzministerkonferenz,Thomas Schäfer,Jörg Brettschneider,Brettschneider,Shenzhen,Marktplatzhaftung,HMRC,Steuernummer |
| JEL: | K1 F10 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:181934&r=law |
| By: | Kenneth W. Abbott (Arizona State University); Céline Kauffmann (OECD); Jeong-Rim Lee (Asian Harmonization Working Party) |
| Abstract: | This study takes stock of the membership, governance structure, operational mode and regulatory power of trans-governmental networks of regulators (TGNs). It contributes to a greater OECD project aimed at building greater understanding of the benefits and pitfalls of various approaches to international regulatory co-operation (IRC) as identified in OECD (2013), International Regulatory Co-operation: Addressing Global Challenges.In order to fill the knowledge gap, this study provides a working definition of TGNs, maps existing cases, and analyses their key features. It relies on information gathered for this study on 144 TGNs. It analyses the substantive fields in which TGNs operate as well as differences in membership and other structural features. It discusses the range of regulatory activities in which TGNs engage and analyses the advantages and the disadvantages of TGNs as mechanisms for IRC, based on a review of the large and growing scholarly literature. It provides a new database on the topic, as well short case studies of three significant but structurally dissimilar TGNs: the Asian Harmonization Working Party (AHWP) on medical devices, the International Association of Insurance Supervisors (IAIS), and the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (ICH). |
| JEL: | F5 F53 F55 F59 H7 K2 K33 |
| Date: | 2018–09–14 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaah:10-en&r=law |
| By: | Cromwell, Erich (U.S. Equal Employment Opportunity Commission); Goerg, Sebastian J. (Technische Universität München); Leszczynska, Monika (New York University School of Law) |
| Abstract: | We investigate how payoff-irrelevant terms can negatively impact relational contracts. In a lab experiment we compare two economically equivalent contracts – a fixed-term renewable and an open-ended at-will contract. Each contract provides partners with full flexibility regarding the length and termination of their interaction. When only one contract type is available, principals and agents in our experiment manage to form long-term profitable relationships irrespective of the contract type. However, when both contracts are available offering a fixed-term instead of an open-ended contract is perceived as unkind and results in lower effort provided by the agents. We show that this observed difference is not a matter of sorting, but a direct response to the contract type. Our results demonstrate that a relational contract might be affected by payoff-irrelevant terms and their perceived kindness. |
| Keywords: | contract design, relational contracts, reciprocity, trust |
| JEL: | C92 K12 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11712&r=law |
| By: | Raúl Bajo-Buenestado |
| Abstract: | In his seminal paper, (2007) finds that countries with good contract enforcement have a comparative advantage and, therefore, specialize in exporting goods for which relationship- specific investments are most important. We argue that this result cannot be extrapolated to all industries: there is substantial heterogeneity regarding the effect of contract enforcement on exports. In particular, we empirically demonstrate that there is a disconnection between judicial quality and exporting in relationship-specific natural resource related industries. Due to the lack of input factor mobility, for such industries, the quality of contract enforcement cannot explain the pattern of trade, but rather other factors that are widely discussed in the literature. We discuss some relevant implications of this disconnection between judicial quality and relationship-specific industries in terms of the natural resource curse and the impact of natural resources trade on economic development. |
| Keywords: | Natural resources; International trade; Contract enforcement; Resource curse; Replication study |
| JEL: | C21 F14 K12 O13 Q00 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:nva:unnvaa:wp01-2018&r=law |