nep-law New Economics Papers
on Law and Economics
Issue of 2018‒11‒05
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Police reorganization and crime: Evidence from police station closures By Blesse, Sebastian; Diegmann, André
  2. The Right to Life: Global Evidence on the Role of Security Officers and the Police in Modulating the Effect of Insecurity on Homicide By Asongu, Simplice; Nwachukwu, Jacinta C.; Pyke, Chris
  3. Peers’ Income and Financial Distress: Evidence from Lottery Winners and Neighboring Bankruptcies By Agarwal, Sumit; Mikhed, Vyacheslav; Scholnick, Barry
  4. Why Does Education Reduce Crime? By Bell, Brian; Costa, Rui; Machin, Stephen
  5. Democracy and compliance in public goods games By Gallier, Carlo
  6. Mitigating externalities of terrorism on tourism: global evidence from police, security officers and armed service personnel By Asongu, Simplice; Nwachukwu, Jacinta
  7. Expropriations, Property Confiscations and New Offshore Entities: Evidence from the Panama Papers By Ralph-Christopher Bayer; Roland Hodler; Paul Raschky; Anthony Strittmatter
  8. Impulse Purchases, Gun Ownership and Homicides : Evidence from a Firearm Demand Shock By Koenig, Christoph; Schindler, David
  9. Fiscal Equalization as a Driver of Tax Increases: Empirical Evidence from Germany By Thiess Büttner; Manuela Krause
  10. The Effect of Medical Cannabis Dispensaries on Opioid and Heroin Overdose Mortality By Garin, Julio; Pohl, R. Vincent; Smith, Rhet A.
  11. Information and Bargaining through Agents: Experimental Evidence from Mexico’s Labor Courts By Joyce Sadka; Enrique Seira; Christopher Woodruff
  12. Modification of the Regulatory Impact Assessment (RIA) on Indonesia's trade, investment, and industrial incentive policies By Verico, Kiki
  13. Competitive Advantage in the Renewable Energy Industry: Evidence from a Gravity Model By Onno Kuik; FrŽdŽric Branger; Philippe Quirion
  14. Firm Scope and Spillovers from New Product Innovation: Evidence from Medical Devices By Matthew Grennan; Charu Gupta; Mara Lederman

  1. By: Blesse, Sebastian; Diegmann, André
    Abstract: Policy makers often try to optimize local law enforcement by reorganizing police forces. We study the effects of police reallocation via station closures on municipal crime by exploiting a quasi-experiment where a centrally administered reform substantially reduced the number of police stations. Combining a matching strategy with an event-study design, we do not find aggregate effects on crime. Instead, we find changes in the way theft is committed. We observe increases in car theft, apartment and basement burglary but less bicycle theft. We argue that station closures provide an opportunity for criminals to shift from low-value to high-value theft.
    Keywords: Crime,Deterrence,Police Centralization,Efficiency of Law Enforcement
    JEL: K42 R53
    Date: 2018
  2. By: Asongu, Simplice; Nwachukwu, Jacinta C.; Pyke, Chris
    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
  3. By: Agarwal, Sumit (National University of Singapore); Mikhed, Vyacheslav (Federal Reserve Bank of Philadelphia); Scholnick, Barry (University of Alberta)
    Abstract: We examine whether relative income differences among peers can generate financial distress. Using lottery winnings as plausibly exogenous variations in the relative income of peers, we find that the dollar magnitude of a lottery win of one neighbor increases subsequent borrowing and bankruptcies among other neighbors. We also examine which factors may mitigate lenders’ bankruptcy risk in these neighborhoods. We show that bankruptcy filers obtain more secured but not unsecured debt, and lenders provide additional credit to low-risk but not high-risk debtors. In addition, we find evidence consistent with local lenders taking advantage of soft information to mitigate credit risk.
    Keywords: financial distress; social comparisons among peers
    JEL: D14 D31 G02 K35
    Date: 2018–10–24
  4. By: Bell, Brian (King's College London); Costa, Rui (London School of Economics); Machin, Stephen (London School of Economics)
    Abstract: Prior research shows reduced criminality to be a beneficial consequence of education policies that raise the school leaving age. This paper studies how crime reductions occurred in a sequence of state-level dropout age reforms enacted between 1980 and 2010 in the United States. These reforms changed the shape of crime-age profiles, reflecting both a temporary incapacitation effect and a more sustained, longer run crime reducing effect. In contrast to the previous research looking at earlier US education reforms, crime reduction does not arise solely as a result of education improvements, and so the observed longer run effect is interpreted as dynamic incapacitation. Additional evidence based on longitudinal data combined with an education reform from a different setting in Australia corroborates the finding of dynamic incapacitation underpinning education policy-induced crime reduction.
    Keywords: crime age profiles, school dropout, compulsory schooling laws
    JEL: I2 K42
    Date: 2018–09
  5. By: Gallier, Carlo
    Abstract: I investigate if, how, and why the effect of a contribution rule in a public goods game depends on how it is implemented: endogenously chosen or externally imposed. The rule prescribes full contributions to the public good backed by a nondeterrent sanction for those who do not comply. My experimental design allows me to disentangle to what extent the effect of the contribution rule under democracy is driven by self-selection of treatments, information transmitted via the outcome of the referendum, and democracy per se. In case treatments are endogenously chosen via a democratic decision-making process, the contribution rule significantly increases contributions to the public good. However, democratic participation does not affect participants’ contribution behavior directly, after controlling for self-selection of treatments and the information transmitted by voting.
    Keywords: Laboratory experiment,public good,democracy,endogenous institutions,voting,contribution rule,compliance
    JEL: C91 D02 D72 K42
    Date: 2018
  6. By: Asongu, Simplice; Nwachukwu, Jacinta
    Abstract: In this paper, we investigate the role of security officers, the police and armed service personnel in dampening the effect of terrorism externalities on tourist arrivals. The temporal and geographic scopes are respectively 2010-2015 and 163 countries. Four terrorism measurements are used. They include the number of: incidents, injuries, fatalities and property damages. The main findings indicate that armed service personnel can effectively be used to modulate the damaging influence of all four terrorism externalities in order to achieve a positive net effect on tourist arrivals. Conversely, the corresponding moderating role of security officers and the police is not statistically significant. Moreover, violent demonstrations and homicides have a harmful effect on tourist arrivals while the number of incarcerations displays the opposite effect. Policy implications are discussed.
    Keywords: Terrorism; Peace; Tourism
    JEL: D74 Z00
    Date: 2018–01
  7. By: Ralph-Christopher Bayer; Roland Hodler; Paul Raschky; Anthony Strittmatter
    Abstract: Using the Panama Papers, we show that the beginning of media reporting on expropriations and property confiscations in a country increases the probability that offshore entities are incorporated by agents from the same country in the same month. This result is robust to the use of country-year fixed effects and the exclusion of tax havens. Further analysis shows that the effect is driven by countries with non-corrupt and effective governments, which supports the notion that offshore entities are incorporated when reasonably well-intended and well-functioning governments become more serious about fighting organized crime by confiscating proceeds of crime.
    Date: 2018–10
  8. By: Koenig, Christoph; Schindler, David (Tilburg University, Center For Economic Research)
    Abstract: Do firearm purchase delay laws reduce aggregate homicide levels? Using quasi-experimental evidence from a 6-month countrywide gun demand shock starting in late 2012, we show that U.S. states with legislation preventing immediate handgun purchases experienced smaller increases in handgun sales. Our findings are hard to reconcile with entirely rational consumers, but suggest that gun buyers behave time-inconsistently. In a second step, we demonstrate that states with purchase delays also witnessed 3% lower homicide rates during the same period compared to states allowing instant handgun access. We report suggestive evidence that lower handgun sales primarily reduced impulsive assaults and domestic violence.
    Keywords: guns; murder; Sandy Hook; gun control; impulsiveness
    JEL: K42 H76 H10 K14
    Date: 2018
  9. By: Thiess Büttner; Manuela Krause
    Abstract: This paper exploits a recent devolution of tax setting powers in the German federation to study the effects of fiscal equalization on subnational governments’ tax policy. Based on an analysis of the system of fiscal equalization transfers, we argue that the redistribution of revenues provides incentives for states to raise rather than to lower their tax rates. The empirical analysis exploits differences in fiscal redistribution among the states and over time. Using a comprehensive simulation model, the paper computes the tax-policy incentives faced by each state over the years and explores their empirical effects on tax policy. The results support significant and substantial effects. Facing full equalization a state is predicted to set the tax rate from the real estate transfer tax about 1.3 percentage points higher than without. Our analysis also shows that the incentive to raise tax rates is proliferated by the equalization system because the states’ decisions to raise their tax rates have intensified fiscal redistribution over time.
    Keywords: fiscal equalization, tax autonomy, real estate transfer tax
    JEL: H77 H24 R38
    Date: 2018
  10. By: Garin, Julio; Pohl, R. Vincent; Smith, Rhet A.
    Abstract: Opioid overdose is the most common cause of accidental death in the United States and no policy response has been able to contain this epidemic to date. We examine whether local access to medical cannabis can reduce opioid-related mortality. Using a unique data set of medical cannabis dispensaries combined with county-level mortality data, we estimate the effect of dispensaries operating in a county on the number of overdose deaths. We find that counties with dispensaries experience 6% to 8% fewer opioid-related deaths among non-Hispanic white men. Mortality involving heroin declines by approximately 10% following the opening of a dispensary.
    Keywords: Cannabis Dispensaries; Medical Cannabis Laws; Marijuana; Opioid Overdoses; Heroin Overdoses; Opioid Epidemic
    JEL: I12 I18 K32
    Date: 2018–10–20
  11. By: Joyce Sadka; Enrique Seira; Christopher Woodruff
    Abstract: While observers agree that courts function poorly in developing countries, a lack of data has limited our understanding of the causes of malfunction. We combine data from administrative records on severance cases filed in the Mexico City Labor Court with interventions that provide information to parties in randomly selected cases on predicted case outcomes and conciliation services. We first use the data to document a set of stylized facts about the functioning of the court. The interventions nearly double the overall settlement rate, but only when the plaintiff herself is present to receive the information directly. Administrative records from six months after the treatment indicate that the treatment effects remain unchanged over that period, even though an additional one in three cases in the control group settle in that period. The post-treatment results indicate that lawyers do not convey the information provided in the intervention to their clients. A simple analytic framework rationalizes the experimental results. Analysis of settlements induced by the interventions suggests that the provision of information is welfare-improving for the plaintiffs. The experimental results replicate over two phases conducted in different sub-courts, showing robustness.
    JEL: K31 K41 O43
    Date: 2018–10
  12. By: Verico, Kiki
    Abstract: This paper modifies the Regulatory Impact Assessment (RIA) method and applies it on Indonesia's trade, investment, and industrial incentive policies. First, it analyses the Indonesian Bilateral Trade Agreements (BTAs) utilizing trade and investment agreement. Indonesia currently has two BTAs in force. One, Indonesia – Japan Economic Partnership Agreement (IJEPA) and two, Indonesia – Pakistan Preferential Trade Agreement (IP-PTA). This paper found that the outcome expectation for trading partner depends on its GNI per capita. If the trading partner has GNI per capita higher than Indonesia’s then the highest expected outcome would be on the increasing FDI inflows from the trading partner. If its GNI per capita is lower than Indonesia's, then the highest foreseeable result would be on the rising net trade balance of Indonesia. Second, industrial sector incentive analysis by comparing RIA scores on all possible incentive policies. In this paper, the modified RIA found that firms prefer supply-side incentives such as government support on the Research and Development, patent and copyright protection than fiscal incentives such as the import duty-free or tariff rate protection.
    Keywords: Regulatory Impact Assessment; Public economics; Bilateral Trade Agreements; trade & investment; industrial incentive; RND & Innovation, Legal Institution, Indonesia
    JEL: F14 K23 O24 O30 P35 P45 P48
    Date: 2018–06–01
  13. By: Onno Kuik (IVM, VU Amsterdam); FrŽdŽric Branger (CIRED); Philippe Quirion (CIRED, CNRS)
    Abstract: Pioneering domestic environmental regulation may foster the creation of new eco-industries. These industries could benefit from a competitive advantage in the global market place. This article examines empirical evidence of the impact of domestic renewable energy policies on the export performance of renewable energy products (wind and solar PV). We use a gravity model of international trade with a balanced dataset of 49 (for wind) and 40 (for PV) countries covering the period 1995-2013. The stringency of renewable energy policies are proxied by installed capacities. Our econometric model shows evidence of competitive advantage positively correlated with domestic renewable energy policies, sustained in the wind industry but brief in the solar PV industry. We suggest that the reason for the dynamic difference lies in the underlying technologies involved in the two industries.
    Keywords: Competitive Advantage, Gravity Model, Wind Industry, Solar PV Industry, Green Growth
    JEL: F14 K32 Q42
    Date: 2018–10
  14. By: Matthew Grennan; Charu Gupta; Mara Lederman
    Abstract: When firms span related product categories, spillovers across categories become central to firm strategy and industrial policy, due to their potential to foreclose competition and affect innovation incentives. We exploit major new product innovations in one medical device category, and detailed sales data across related categories, to develop a causal research design for spillovers at the customer level. We find evidence of spillovers, primarily associated with complementarities in usage. These spillovers imply large benefits to multi- vs. single-category firms, accounting for nearly one quarter of sales in the complimentary category (equivalent to four percent of revenue in the focal category).
    JEL: D22 D4 D43 D62 I11 K21 L1 L13 L25 L38 L4 L5 M2 M21 O25 O31 O32 O33
    Date: 2018–10

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