nep-law New Economics Papers
on Law and Economics
Issue of 2018‒12‒10
sixteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Effectiveness of Leniency Programs when Firms choose the Degree of Collusion By Winand Emons
  2. Wrongful Conviction, Persuasion and Loss Aversion By Robertson, Matthew J.
  3. The Right to Life: Global Evidence on the Role of Security Officers and the Police in Modulating the Effect of Insecurity on Homicide By Simplice A. Asongu; Jacinta C. Nwachukwu; Chris Pyke
  4. Political Discretion and Antitrust Policy: Evidence from the Assassination of President McKinley By Richard B. Baker; Carola Frydman; Eric Hilt
  5. Legal Reform of Asset Declaration system: A Strategy to prevent and combat corruption in Thailand By Bajrawan NUCHPRAYOOL
  6. M&A Advisory and the Merger Review Process By Michele Bisceglia; Salvatore Piccolo; Emanuele Tarantino
  7. Minority share acquisitions and collusion: evidence from the introduction of national leniency programs By Heim, Sven; Hueschelrath, Kai; Laitenberger, Ulrich; Spiegel, Yossi
  8. Cryptocurrency and its susceptibility to speculative bubbles, manipulation, scams and fraud By Barnes, Paul
  9. Child Access Prevention Laws and Juvenile Firearm-Related Homicides By Anderson, D. Mark; Sabia, Joseph J.; Tekin, Erdal
  10. Impulse Purchases, Gun Ownership and Homicides : Evidence from a Firearm Demand Shock By Koenig, Christoph; Schindler, David
  11. Competition policy issues in mobile network sharing: a European perspective By Zoltan Papai; Gergely Csorba; Peter Nagy; Aliz McLean
  12. Technology and persistence in global software piracy By Simplice A. Asongu; Christelle Meniago
  13. International Migration Intentions and Illegal Costs: Evidence Using Africa-to-Europe Smuggling Routes By Friebel, Guido; Manchin, Miriam; Mendola, Mariapia; Prarolo, Giovanni
  14. A Non-Technical Introduction to Economic Aspects of International Investment Agreements By Horn, Henrik; Norbäck, Pehr-Johan
  15. Joint ventures By Tita-Nicolescu Gabriel
  16. Does Guilt Affect Performance? Evidence from Penalty Kicks in Soccer By Caspi, Itamar; Mazar, Yuval; Michelson, Noam; Tsur, Shay

  1. By: Winand Emons
    Abstract: An antitrust authority deters collusion using nes and a leniency program. It chooses the probability of an investigation. Firms pick the degree of collusion: The more they collude, the higher are pro ts, but so is the probability of detection. Firms thus trade-o higher pro ts against higher expected nes. If rms are suciently patient, leniency is ine ective; it may even increase collusion. Increasing the probability of an investigation at low levels does not increase deterrence. Increasing the probability of an investigation at high levels reduces collusion, yet never completely.
    Keywords: antitrust, cartels, deterrence, leniency
    JEL: D43 K21 K42 L40
    Date: 2018–10
  2. By: Robertson, Matthew J. (Coventry University)
    Abstract: When can a prosecutor persuade a loss-averse judge to increase her rate of conviction? Motivated by empirical evidence, I study a model of persuasion in which the loss a judge incurs from wrongful conviction looms larger than the gain from a just verdict. I show that, surprisingly, the prosecutor benefits from persuasion even when the judge is extremely loss-averse. However, a necessary condition is that the prosecutor does not underestimate the judge’s loss aversion. I draw on experimental findings to quantify the effectiveness of persuasion under loss aversion. JEL classification numbers: D72 ; D82 ; D91 ; K40
    Keywords: information design ; loss aversion ; wrongful conviction
    Date: 2018
  3. By: Simplice A. Asongu (Yaoundé/Cameroon); Jacinta C. Nwachukwu (Preston,United Kingdom); Chris Pyke (Preston, United Kingdom)
    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
  4. By: Richard B. Baker; Carola Frydman; Eric Hilt
    Abstract: We study the importance of discretion in antitrust enforcement by analyzing the response of asset prices to the sudden accession of Theodore Roosevelt to the presidency. During McKinley’s term in office the largest wave of merger activity in American history occurred, and his administration did not attempt to use antitrust laws to restrain any of those mergers. His vice president, Theodore Roosevelt, was known to be a Progressive reformer and much more interested in controlling anticompetitive behavior. We find that firms with greater vulnerability to antitrust enforcement saw greater declines in their abnormal returns following McKinley’s assassination. The transition from McKinley to Roosevelt caused one of the most significant changes in antitrust enforcement of the Gilded Age—not from new legislation, but from a change in the approach taken to the enforcement of existing law. Our results highlight the importance of enforcement efforts in antitrust.
    JEL: N11 N21 N31 N41 N81
    Date: 2018–11
  5. By: Bajrawan NUCHPRAYOOL (National Institute of Development Administration)
    Abstract: Declaration of assets and liabilities by politicians and public officials can be a powerful tool to prevent and fight corruption. Politicians and public officials are obliged by the Organic Act on Counter Corruption B.E. 2542 to submit an account showing particulars of their assets and liabilities and to disclose such account to the public. It has been acknowledged that a number of the assets declaration reports have been left unverified by the National Anti-Corruption Commission (NACC), thus making the system ineffective. The purpose of this study is to examine, analyze, and compare the asset declaration systems in Thailand and in other countries, as well as the problems and obstacles in practice. This study found that in order to improve the efficiency and effectiveness of the asset declaration system, NACC should make it compulsory for all types of public officials to submit an account showing particulars of their assets and liabilities but verify an account only when there are doubts about a submitted account or only for positions with high risk of conflict of interest. The deployment of information technology in the asset declaration system especially for the filing process and the verification process as well as linking the information from other government agencies and private organizations shall increase the efficacy of the system. The disclosure of account showing particulars of assets and liabilities should be required from everyone who is holding a political position and from every public official so that the general public will be able to examine the disclosed information. Finally improving the organizational structure of NACC to be in line with the asset verification system can increase the effectiveness of the system.
    Keywords: Declaration of assets and liabilities, National Anti-Corruption Commission, assets and liabilities
    JEL: K49 K10 K42
    Date: 2018–10
  6. By: Michele Bisceglia (Università di Bergamo); Salvatore Piccolo (Università di Bergamo and CSEF); Emanuele Tarantino (University of Mannheim, MaCCI and CEPR)
    Abstract: Two firms propose a merger to the antitrust authority. They are uninformed about the efficiencies generated by the merger, but can hire an expert to gather information on their behalf. The authority is also uninformed about the merger's efficiencies, but can run a costly internal investigation to learn them. We analyze the effect of the disclosure of the expert's contract on consumer welfare, and show that consumers are not necessarily better off with disclosure. This negative effect hinges on a free-riding problem between expert and authority in the information acquisition game, and is more relevant in highly competitive industries.
    Keywords: Advice, Competition Policy, Mergers, Advisory Contract, Disclosure.
    JEL: D43 L11 L42 L81
    Date: 2018–11–26
  7. By: Heim, Sven; Hueschelrath, Kai; Laitenberger, Ulrich; Spiegel, Yossi
    Abstract: There is a growing concern that minority shareholding (MS) in rival firms may facilitate collusion. To examine this concern, we exploit the fact that leniency programs (LPs) are generally recognized as a shock that destabilizes collusive agreements and study the effect that the introduction of an LP has on horizontal MS acquisitions. Using data from 63 countries over the period 1990-2013, we find a large increase in horizontal MS acquisitions in the year in which an LP is introduced, especially in large rivals. The effect is present however only in countries with an effective antitrust enforcement and low levels of corruption and only when the acquisitions involve stakes of 10% - 20%. These results suggest that MS acquisitions may stabilize collusive agreements that were destabilized by the introduction of the LP.
    Keywords: cartel stability; Collusion; Leniency Programs; minority shareholdings
    JEL: G34 K21 L4
    Date: 2018–11
  8. By: Barnes, Paul
    Abstract: It is argued here that because a cryptocurrency has no intrinsic value, problems relating to day-to-day valuation and pricing arise. It is shown how these lead to the reversal of the conventional relationship between supply and demand and the susceptibility of the cryptocurrency markets to irrationality and speculative bubbles arising from the herding instinct. Also, as the cryptocurrency markets are largely free of regulation and the desire for privacy by founders, owners and developers is so great, accountability and disclosure requirements are either minimal or non-existent, leading to the manipulation of cryptocurrency prices, volume and market capitalisation information. Another consequence of their freedom from regulation, particularly surprising given the importance placed on their security through the use of blockchain, is the magnitude of thefts of cryptocurrency (both in terms of frequency and size) levels of which would neither be expected nor tolerated in regulated financial markets.
    Keywords: cryptocurrency, bitcoin, scam, fraud, Minsky, biggest fool, bubble.
    JEL: G14 K22
    Date: 2018–11–26
  9. By: Anderson, D. Mark (Montana State University); Sabia, Joseph J. (San Diego State University); Tekin, Erdal (American University)
    Abstract: Debate over safe-storage gun regulations has captured public attention in the aftermath of several high-profile shootings committed by minors. Whether these laws actually decrease youth gun violence, however, is an unanswered question. Using data from the FBI's Supplementary Homicide Reports for the period 1985-2013, this study is the first to estimate the relationship between child access prevention (CAP) laws and firearm-related homicides committed by juveniles. Our results suggest that CAP laws are associated with a 19 percent reduction in juvenile firearm-related homicides. The estimated effect is stronger among whites than blacks and is driven by states enforcing the strictest safe-storage standard. We find no evidence that CAP laws are associated with firearm-related homicides committed by adults or with non-firearm-related homicides committed by juveniles, suggesting that the observed relationship between CAP laws and juvenile firearm-related homicides is causal.
    Keywords: gun control, child access prevention laws, homicides, crime
    JEL: K4 H7
    Date: 2018–10
  10. By: Koenig, Christoph; Schindler, David (Tilburg University, TILEC)
    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
  11. By: Zoltan Papai (Infrapont Economic Consulting, Hungary); Gergely Csorba (Center of Economics and Regional Sciences – Institute of Economics Hungarian Academy of Sciences and Infrapont Economic Consulting); Peter Nagy (Infrapont Economic Consulting); Aliz McLean (Infrapont Economic Consulting)
    Abstract: Network sharing agreements have become increasingly widespread in mobile telecommunications markets. They carry undeniable advantages to operators and consumers alike, but also the potential for consumer harm. We emphasize that not all NSAs are created equal: the assessment of harms and counterweighing benefits to customers due to an NSA is a complex endeavour. In this paper, we present a framework for the competitive assessment of NSAs, detailing the possible concerns that may arise, the main factors that influence their seriousness, ways to mitigate the concerns and the principles of assessing efficiency benefits.
    Keywords: mobile markets, network sharing, competition, competition assessment
    JEL: K21 L13 L41
    Date: 2018–10
  12. By: Simplice A. Asongu (Yaoundé/Cameroon); Christelle Meniago (Sol Plaatje University, South Africa)
    Abstract: This study examines the persistence of software piracy with internet penetration vis-Ã -vis of PC users, conditional on Intellectual Property Rights (IPRs) institutions. The empirical evidence is based on a panel of 99 countries for the period 1994-2010 and the Generalised Method of Moments. The main finding is that, compared to internet penetration, PC usage is more responsible for the persistence of global software piracy. Knowing how technology affects the persistence of piracy is important because it enables more targeted policy initiatives. We show that the sensitivity of software piracy to IPRs mechanisms is contingent on the specific technology channels through which the pirated software is consumed.
    Keywords: Piracy; Business Software; Software piracy; Intellectual Property Rights
    JEL: F42 K42 O34 O38 O57
    Date: 2018–01
  13. By: Friebel, Guido; Manchin, Miriam; Mendola, Mariapia; Prarolo, Giovanni
    Abstract: Irregular migrants from Africa and the Middle East flow into Europe along land and sea routes under the control of human smugglers. The demise of the Gaddafi regime in 2011 marked the opening of the Central Mediterranean Route for irregular border crossing between Libya and Italy. This resulted in the immediate expansion of the global smuggling network, which produced an asymmetric reduction in bilateral distance between country pairs across the Mediterranean sea. We exploit this source of spatial and time variation in irregular migration routes to estimate the elasticity of migration intentions to illegal moving costs proxied by distance. We build a novel dataset of geolocalized time-varying migration routes, combined with cross-country survey data on individual intentions to move from Africa (and the Middle East) into Europe. Netting out any country-by-time and pair-level confounders we find a large negative effect of distance along smuggling routes on individual migration intentions. Shorter distances increase the willingness to migrate especially for youth, (medium) skilled individuals and those with a network abroad. The effect is stronger in countries closer to Libya and with weak rule of law.
    Keywords: Human Smuggling; illegal migration; International Migration; Libyan Civil War
    JEL: K23 K42
    Date: 2018–11
  14. By: Horn, Henrik (Research Institute of Industrial Economics (IFN)); Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN))
    Abstract: International investment agreements have become increasingly controversial. The agreements are alleged to be beset with a large number of deficiencies that harm host countries in particular. For instance, they are said to cause “regulatory chill”, to distorts investment patterns, and to lead to excessive litigation due to the Investor-State Dispute Settlement (ISDS) mechanisms they almost invariably contain. Many of the issues brought up in this debate have evident economic aspects. But until recently there has been very little economic literature on the driving forces behind these agreements, on their appropriate design, and on their effects. There is a nascent theoretical literature on investment agreements and regulatory expropriations, however. This literature is still very much in its infancy. The purpose of this note is to explain in non-technical terms some observations that emerge from this early literature.
    Keywords: International investment agreements; Regulatory chill; Expropriation; ISDS
    JEL: F21 F23 F53 K33
    Date: 2018–11–22
  15. By: Tita-Nicolescu Gabriel (Trasilvania University of Brasov)
    Abstract: When the new Romanian Civil Code entered into force (in 2011), both legal regulations on partnerships and joint ventured were expressly abolished, as the two regulatory documents (meaning the Civil Code of 1864 and the Business Code of 1887) were repealed in full (express repealing according to art. 230 of Law no. 71/2011 for the application of the new Civil Code).However, by means of a similar regulation, the new Civil Code took over the two types of companies without legal personality in Chapter VII (Company Contracts) of Book V (On Obligations), Title IX (Various Special Contracts). The chapter concerning company contracts consists of three distinct sections of which we will hereby approach the 2nd Section (Partnerships) and the 3rd Section (Joint ventures).In fact, in the chapter on company contracts, the new Civil Code includes special provisions referring only to the two types of companies without legal personality. Therefore, the two sections of Chapter VII (the 2nd and the 3rd Section) are the legal framework for the companies without legal personality in Romania and, at the same time, they are a special legal regulation in the matter, that is no other law may govern in this field. As we have previously shown, the Tax Code may rule on various aspects concerning the organization of this type of companies, as a special legal regulation (which applies with preference against the provisions of the Civil Code); nevertheless, we believe that, in legal terms, the tax regulations should not be allowed to change significantly the legal requirements set by the Civil Code for the establishment and operation of the companies without legal personality. Unfortunately, the regulatory contradictions between the two legal instruments (the Civil Code and the Tax Code) are obvious and of essence in some cases, therefore they cannot be overlooked; this is why we have thought it appropriate to approach such matter, namely the interference of civil and tax regulations, as this interesting topic may give rise to many debates in practice.
    Keywords: Contract, joint venture, company contract, partnership, companies
    JEL: K00 K12 K20
    Date: 2018–10
  16. By: Caspi, Itamar; Mazar, Yuval; Michelson, Noam; Tsur, Shay
    Abstract: Does guilt affect performance? Exploiting a novel measure of the justification of penalty calls, we find that unjustified penalty calls negatively affect penalty conversion rates, and that this effect increases with social norms of trust. Exploiting the variance arising from players who do not play in their countries of origin by including the norms of both the league and the kickers’ countries of origin, we separate the constraints on egoism into two categories: internal sanctions, such as guilt, and external sanctions, such as shame. We find that both guilt and shame affect the performance of penalty kickers.
    Keywords: Guilt, performance, soccer, football, penalty kicks, Europe.
    JEL: D81 L83
    Date: 2018–11–19

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