nep-law New Economics Papers
on Law and Economics
Issue of 2018‒12‒17
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Do Laws Shape Attitudes? Evidence from Same-Sex Relationship Recognition Policies in Europe By Cevat G. Aksoy; Christopher S. Carpenter; Ralph de Haas; Kevin Tran
  2. To Settle or to Fight to the end? Case-level Determinants of Early Settlement of Investor-State Disputes By Duy Vu
  3. Licensing with Free Entry By Johannes Muthers; Toker Doganoglu; Firat Inceoglu
  4. Is transparency spatially determined? An empirical test for the Italian Municipalities. By Emma Galli; Ilde Rizzo; Carla Scaglioni
  5. How Much of Barrier to Entry is Occupational Licensing? By Peter Q. Blair; Bobby W. Chung
  6. Is it the Gums, Teeth or the Bite? Effectiveness of Dimensions of Enforcement in Curbing Corruption By Salvatore Capasso; Rajeev K. Goel; James W. Saunoris
  7. Reasons not to Exit? A Survey of the Effectiveness and Spillover Effects of International Investment Arbitration By Duy Vu
  8. Addressing tensions and avoiding disputes: Specific trade concerns in the TBT Committee By Holzer, Kateryna
  9. Benchmark Regulation of Multiproduct Firms: An Application to the Rail Industry By Wesley W. Wilson; Frank A. Wolak
  10. Electoral cycles in perceived corruption: International empirical evidence By Niklas Potrafke
  11. Are Emission Performance Standards Effective in Pollution Control? Evidence from the EU's Large Combustion Plant Directive By Puja Singhal
  12. The Evolution of Retirement Incentives in the U.S. By Courtney Coile
  13. What Matters for Whistleblowing on Tax Evaders? Survey and Experimental Evidence By Armenak Antinyan; Luca Corazzini; Filippo Pavesi
  14. Freeze! Financial sanctions and bank responses By Efing, Matthias; Goldbach, Stefan; Nitsch, Volker

  1. By: Cevat G. Aksoy; Christopher S. Carpenter; Ralph de Haas; Kevin Tran
    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 towards 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 a statistically significant increase in favourable attitudes towards 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 on societal attitudes.
    Keywords: Public opinion, same-sex relationship recognition policies, LGBT attitudes
    JEL: F5 K36
    Date: 2018
  2. By: Duy Vu (Université Côte d'Azur; GREDEG CNRS, France)
    Abstract: International investment arbitration is a third-party dispute resolution mechanism, for the purpose mainly of depoliticizing investment disputes and maintaining efficient investment flows among countries. Almost one third of treaty-based investor-State disputes brought before this system are settled before the final ruling. Given the classical debate about "Against Settlement" in the legal literature, we build an original database of treaty-based arbitrations from 1996 to 2016 in order to empirically test the determinants of early settlement. We find that the probability of settlement will increase if the host State has no experience in resolving this kind of dispute but decrease if it anticipates a favorable outcome. In addition, the nature of regulatory measures applied by the host State and the identity of foreign investors are also important determinants of settlement. Interestingly, we find strong evidence of a Dutch effect in dispute resolution.
    Keywords: Investor-State dispute settlement, international investment treaties, law and economics, applied econometrics
    JEL: F21 F23 K41
    Date: 2018–12
  3. By: Johannes Muthers; Toker Doganoglu (University Würzburg); Firat Inceoglu (University Würzburg)
    Abstract: We introduce a fairly general licensing model with an endogenous industry structure – in terms of number of active firms – and general licensing contracts. We show that when the patentee can employ contracts that can condition on market entry or price, it can implement an outcome that yields monopoly profits by awarding the license to a single firm. Furthermore, when the patentee can only use contracts based on the quantities of the licensees, it still captures the entire market via a single licensee, albeit not at the monopoly price. Commonly assumed two-part tariff contracts cannot duplicate this last outcome and yield lower profits. We discuss the welfare implications of various contractual schemes.
    Keywords: Patent licensing, free entry, quantity competition.
    JEL: D45 K11 L11 L13 L21 L41
    Date: 2018–09
  4. By: Emma Galli (Department of Social and Economic Sciences, Sapienza University of Rome (IT).); Ilde Rizzo (Department of Economics and Business, University of Catania (IT).); Carla Scaglioni (DiGiES, Mediterranean University of Reggio Calabria (IT).)
    Abstract: In this paper, we aim at assessing whether transparency is spatially determined at local level. To this end we use a new composite indicator (CTI) built by Galli et al. (2017) for a large sample of Italian Municipalities and control for several factors (socio-economic, fiscal and politico-institutional), which according to the literature affect transparency. Our preliminary results suggest that there is a statistically significant transparency clustering across the Italian municipalities, which follows a dichotomic pattern, i.e. either very low or very high. The empirical analysis shows that spatial dependence matters and similarities in transparency behaviour mainly occur among small Municipalities where citizens’ political participation is likely to be greater and the single ballot electoral system strengthens the incentives for government accountability.
    Keywords: Transparency, local governments, spatial dimension, determinants.
    JEL: K2 K4 H3 H7
    Date: 2018–12
  5. By: Peter Q. Blair; Bobby W. Chung
    Abstract: We exploit state variation in licensing laws to study the effect of licensing on occupational choice using a boundary discontinuity design. We find that licensing reduces equilibrium labor supply by an average of 17%-27%. The negative labor supply effects of licensing appear to be strongest for white workers and comparatively weaker for black workers.
    JEL: J21 K23 L51
    Date: 2018–11
  6. By: Salvatore Capasso; Rajeev K. Goel; James W. Saunoris
    Abstract: Adding a new dimension to determinants of corruption, this paper examines the effectiveness of enforcement in reducing corruption. We compare the influences of latent enforcement (police, judicial, and prosecutorial employment) versus actual enforcement (conviction rates) and enforcing institutions. Results based on data for more than 80 countries show that piecemeal enforcement to combat corruption by increasing enforcement employment is ineffective, rather comprehensive improvements in institutions by strengthening the rule of law or regulatory quality bear greater results. Thus, when it comes to corruption control, strong gums (institutions) are more effective than showing teeth (enforcement employment) or the bite (conviction rates).
    Keywords: corruption, enforcement, conviction rate, police, judges, prosecutors, institutions, regulatory quality, rule of law
    JEL: K42 F50
    Date: 2018
  7. By: Duy Vu (Université Côte d'Azur; GREDEG CNRS, France)
    Abstract: One of the most important characteristics of an investment treaty is that often it grants aggrieved investors access to international arbitration. This arbitration system does not require a foreign investor to petition his home state in order to bring claims against a host state, and provides an alternative to resolving disputes in the host state’s local court. Although international investment arbitration is beneficial for countries in terms of foreign direct investment, it has been accused of not being transparent or effective especially in relation to environment or public health cases. Some countries expressed their discomfort with the current international investment law regime by radical exit solutions such as denunciation of the Convention on the settlement of investment disputes between states and nationals of other states, rejection of investor-state dispute settlement provisions and unilateral denunciation of investment treaties. Based on a vast law, economics and political science literature, this paper proposes arguments to examine these criticisms. First, it is argued that investor-state arbitration is currently a concern in both developing and developed countries. Second, although assessing the spillover effects of arbitration outcomes on some dimensions of public interests such as the environment or public health is not straightforward, the uncertainty that leads to arbitrariness and sometimes inconsistencies in arbitral decision-making exists and needs to be properly identified. Finally, this article argues that exit is not efficient at either the national or international levels, and that it is possible for countries to adapt the current regime to new situations without wholesale exit.
    Keywords: International investment, investor-state dispute settlement, interdisciplinary studies, public interest
    JEL: K41 F21 F53
    Date: 2018–12
  8. By: Holzer, Kateryna
    Abstract: Most specific trade concerns (STCs), which are raised before the WTO Committee on Technical Barriers to Trade (TBT Committee), disappear from the TBT Committee's meeting agendas without escalating into formal disputes. At the same time, a relatively small number of TBT-related disputes have been subject to the WTO dispute settlement procedures. By examining the practice of raising STCs and the relationship between STCs and disputes, the paper emphasises the role of STCs as a trade tension resolution mechanism. It argues that the STC mechanism is a viable alternative to the currently overburdened WTO dispute settlement system. The paper also suggests ways to strengthen the STC mechanism of the TBT Committee through dividing TBT Committee meetings into thematic sessions, adopting mediation procedures and reporting on STC resolutions. Further, it underscores the importance of increasing transparency and promoting good regulatory practice in avoiding disputes.
    Keywords: specific trade concerns,technical barriers to trade,TBT Agreement,TBT Committee,trade disputes
    JEL: F13 F53 F55 K33 L15
    Date: 2018
  9. By: Wesley W. Wilson; Frank A. Wolak
    Abstract: A number of formerly regulated multiproduct industries have a transitional or permanent residual regulatory mandate to protect consumers from "excessive" prices. The legislation that deregulated most rail rates contains a statutory mandate for the regulator to protect shippers from "excessive" prices. Fulfilling this mandate has been challenging because of the cost and administrative burden to shippers in obtaining regulatory relief. Moreover, as argued by Wilson and Wolak (2016), the existing rate relief mechanism is based on a cost concept that does not reflect the actual incremental cost of a shipment and it does not adequately address the question of what constitutes an "excessive" rate for a multiproduct firm with significant common costs. This paper analyzes a benchmark price approach to identifying "excessive" prices in multiproduct industries subject to residual price regulation. Our empirical analyses demonstrate how the mechanism can be used to fulfill the statutory mandate to protect shippers from "excessive" prices at substantially lower cost, with less administrative burden, and without significant adverse consequences for the long-term financial viability of the railroads.
    JEL: L5 L9 L92
    Date: 2018–11
  10. By: Niklas Potrafke
    Abstract: Perceived corruption in the public sector is measured by the reversed Transparency International’s Perception of Corruption Index (CPI). The dataset includes around 100 democracies over the period 2012–2016, a sample for which the CPI is comparable across countries and over time. The results show that the reversed CPI was about 0.4 points higher in election years than in other years, indicating that perceived corruption in the public sector increased before elections. The effect is especially pronounced before early elections (1.0 points) compared to regular elections (0.4 points). Future research needs to investigate why perceived corruption in the public sector increased before elections.
    Keywords: Perceived corruption, elections, political manipulation, panel data, democracies
    JEL: C23 D72 H11 K40
    Date: 2018
  11. By: Puja Singhal
    Abstract: This paper explores the extent to which the Large Combustion Plant (LCP) Directive succeeded in mitigating local air pollutants from thermal electricity generating plants in the European Union. Using yearly data on plant-level operations from the EEA, we investigate whether emissions limits on stack concentrations were effective in cleaning emissions from existing combustion plants and a catalyst for improved environmental performance of new installations. We take advantage of the discontinuities in regulation status to show that the emission performance standards led to sizeable declines in SO2, NOx, and particle dust concentrations at the stack level from older combustion plants. We also find suggestive evidence of anticipation effects from newer plants in response to tighter emission standards.
    Keywords: Air pollution, emission standards, large combustion plant, EU
    JEL: Q53 Q58 K32
    Date: 2018
  12. By: Courtney Coile
    Abstract: Employment rates of older men and women in the U.S. have been rising for the past several decades. Over the same period, there have been significant changes in Social Security and private pensions, which may have contributed to this trend. In this study, we examine how the financial incentive to work at older ages has evolved since 1980 as a result of changes in Social Security and private pensions. We find that the implicit tax on work after age 65 has dropped by about 15 percentage points for a typical worker as a result of Social Security reforms; incorporating the change in private pensions, the decline is larger. We provide suggestive evidence that the evolution of retirement incentives has affected retirement behavior.
    JEL: J14 J26
    Date: 2018–11
  13. By: Armenak Antinyan (International Academy of Business and Economics, Tianjin University of Finance and Economics); Luca Corazzini (Department of Economics, University of Venice \"Ca’ Foscari\"); Filippo Pavesi (Department of Economics (University of Verona))
    Abstract: Whistleblowing is a powerful tool that the tax authorities of various countries use to curb tax evasion. Nonetheless, the determinants shaping one’s positive attitude toward whistleblowing on tax evaders are rather understudied. We investigate the relationship between trust in the government and the attitude toward whistleblowing on tax evaders. We use data from two survey experiments conducted in Italy and the US, as well as from a unique national household survey administered in the Republic of Armenia. Our findings indicate that the level of trust in the government positively influences individuals’ attitude toward whistleblowing, with this effect being robust across countries and data sources.
    Keywords: Government Trust, Whistleblowing, Tax Evasion
    JEL: H26 G28
    Date: 2018–12
  14. By: Efing, Matthias; Goldbach, Stefan; Nitsch, Volker
    Abstract: We study the effects of financial sanctions on cross-border credit supply. Using a differences-in-differences approach to analyze eleven sanctions episodes between 2002 and 2015, we find that banks located in Germany reduce their positions in countries with sanctioned entities by 38%. The average German branch or subsidiary located outside Germany does not adjust its positions after the imposition of sanctions. For affiliated banks located in countries with low financial standards, we even observe a relative increase in credit supply. These effects are stronger if sanctions are only imposed by EU member states and not by the entire UN.
    Keywords: financial sanctions,law and finance,cross-border lending,international banking
    JEL: F51 G18 G28 G38 K33
    Date: 2018

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