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on Law and Economics |
| By: | Donaldson, Jason, Roderick; Micheler, Eva |
| Abstract: | Many debt claims, such as bonds, are resaleable, whereas others, such as repos, are not. There was a fivefold increase in repo borrowing before the 2008 crisis. Why? Did banks’ dependence on non-resaleable debt precipitate the crisis? In this paper, we develop a model of bank lending with credit frictions. The key feature of the model is that debt claims are heterogeneous in their resaleability. We find that decreasing credit market frictions leads to an increase in borrowing via non-resaleable debt. Borrowing via non-resaleable debt has a dark side: it causes credit chains to form, since if a bank makes a loan via non-resaleable debt and needs liquidity, it cannot sell the loan but must borrow via a new contract. These credit chains are a source of systemic risk, since one bank’s default harms not only its creditors but also its creditors’ creditors. Overall, our model suggests that reducing credit market frictions may have an adverse effect on the financial system and may even lead to the failures of financial institutions. |
| Keywords: | resaleable debt; systemic risk; bankruptcy; repos; securities law |
| JEL: | G21 G28 G33 K12 K22 |
| Date: | 2017–12–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:68068&r=all |
| By: | Vedran Recher (The Institute of Economics, Zagreb) |
| Abstract: | In this paper, the relationship between unemployment and crime is analysed. A panel of 20 Croatian counties over the years 1998-2013 is used to estimate the effect of unemployment on the rates of various groups of property and violent crimes. According to the theory of economics of crime, increase in unemployment leads to higher crime rates. A fixed-effects model, including time- and county-specific effects and several covariates, is estimated. The results show there is no impact of unemployment on aggregate property crimes. For all violent crimes bar rapes, the results oppose the theory and intuition. The unexpected results are discussed in the context of the Croatian-specific macro-environment. |
| Keywords: | smuggling, tobacco, logit, Western Balkans |
| JEL: | K42 I18 F19 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:iez:wpaper:1901&r=all |
| By: | Della Giusta, Marina (University of Reading); Di Tommaso, Maria Laura (University of Turin); Jewell, Sarah (University of Reading); Bettio, Francesca (University of Siena) |
| Abstract: | We discuss changes in the demand for paid sex accompanying the criminalization of prostitution in the United Kingdom, which moved from a relatively permissive regime under the Wolfenden Report of 1960, to a much harder line of aiming to crack down on prostitution with the Prostitution (Public Places) Scotland Act 2007 and the Policing and Crime Act of 2009 in England and Wales. We make use of two waves of a representative survey, the British National Survey of Sexual Attitudes and Lifestyles (Natsal2, conducted in 2000-2001 and Natsal3, conducted in 2010-2012) to illustrate the changes in demand that have taken place across the two waves. We do not find demand decreasing in our sample and find a shift in the composition of demand towards more risky clients, which we discuss in the context of the current trends towards criminalization of prostitution. |
| Keywords: | criminalization, prostitution, demand |
| JEL: | C35 J16 J22 K42 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp12405&r=all |
| By: | Herzfeld Olsson, Petra (Law Faculty, Stockholm university) |
| Abstract: | According to EU-law, third country national labour migrants shall be treated equally to local workers with regard to wages. The aim of this working paper is to clarify whether Swedish law meets this demand with regard to highly qualified labour migrants. The analysis reveals that the combined effect of entry conditions and the content of the collective agreements applicable in the sectors where highly qualified labour migrants work makes it difficult to safeguard that they are treated equally with comparable national workers. The study also demonstrates that Swedish law does not provide highly qualified labour migrants with any robust means to enforce equal treatment. Hence, it is not likely that Swedish law complies with EU law, at least not for those workers employed by an entity in Sweden. For labour migrants intra-corporate transferred or posted to Sweden in other ways the EU law demands are less clear. |
| Keywords: | Highly qualified labour migrants; pay; collective agreements; equal treatment |
| JEL: | J31 J61 J71 J83 K31 |
| Date: | 2019–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ifauwp:2019_014&r=all |
| By: | Bodnar, Olivia; Fremerey, Melinda; Normann, Hans-Theo; Schad, Jannika |
| Abstract: | Private damage claims against cartels may have negative effects on leniency: whereas whistleblowers obtain full immunity regarding the public cartel fines, they have no or only restricted protection against private third-party damage claims. This may stabilize cartels. We run an experiment to study this issue. Firms choose whether to join a cartel, may apply for leniency afterwards, and then potentially face private damages. We find that the implementation of private damage claims decreases cartel formation but makes cartels indeed more stable. The overall impact of private damage claims is positive: cartel prevalence declines. |
| Keywords: | private damage claims,cartel stability,laboratory experiment,leniency |
| JEL: | C90 L41 L44 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:dicedp:315&r=all |
| By: | Zachary Schaller (Department of Economics, University of California-Irvine); Stergios Skaperdas (Department of Economics, University of California-Irvine) |
| Abstract: | We examine settings—such as litigation, labor relations, or arming and war -- in which players first make non-contractible up-front investments to improve their bargaining position and gain advantage for possible future conflict. Bargaining is efficient ex post, but we show that a player may prefer Conflict ex ante if there are sufficient asymmetries in strength. There are two sources of this finding. First, up-front investments are more dissimilar between players under Con- flict, and they are lower than under Bargaining when one player is much stronger than the other. Second, the probability of the stronger player winning in Conflict is higher than the share received under Nash bargaining. We thus provide a rationale for conflict to occur under complete information that does not depend on long-term commitment problems. Greater balance in institutional support for different sides is more likely to maintain peace and settlements. |
| Keywords: | Power asymmetries; War; Litigation; Contests |
| JEL: | C70 D74 J53 K41 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:irv:wpaper:181909&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | This study examines how income-driven governance affects inclusive human development in Sub-Saharan Africa with data for the period 2000-2012. The empirical evidence is based on the Generalised Method of Moments (GMM) and Tobit regressions. Nine bundled and unbundled concepts of governance are used: political (voice & accountability and political stability/no violence), economic (government effectiveness and regulation quality) and institutional (corruption-control and the rule of law) governances. The main finding is that ‘middle income’-driven governance has a higher effect on inclusive human development than ‘low income’-driven governance. Policy implications are discussed in the light of: (i) the contemporary relevance of findings; (ii) the pivotal role of a higher income level in the post-2015 sustainable development agenda; and (iii) inconsistent strands in the literature and in foreign aid policies. |
| Keywords: | Inclusive development; Income levels; Governance; Africa |
| JEL: | D31 I10 I32 K40 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:19/036&r=all |
| By: | Slade, Margaret E. |
| Abstract: | This article assesses recent empirical evidence on efficiencies and competitive harm that are associated with vertical mergers. It evaluates both ex post or retrospective empirical studies that rely on post merger data and ex ante or forecasting techniques that use premerger data. It develops the idea that, although there is a need for vertical merger screening tools, there are a number of problems that are associated with attempts to adapt horizontal screens to the vertical context. Mergers in the technology, media, and telecom sectors are emphasized because they tend to dominate contested vertical mergers. |
| JEL: | D22 K21 L11 |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:ubc:pmicro:margaret_e._slade-2019-10&r=all |
| By: | Kessel, Dany (Södertörn University); Lif Hardardottir, Hulda (Stockholm University); Tyrefors, Björn (Research Institute of Industrial Economics (IFN)) |
| Abstract: | Recently, policy makers worldwide have suggested and passed legislation to ban mobile phone use in schools. The influential and only quantitative evaluation by Beland and Murphy (2016), suggests that this is a very low-cost but effective policy to improve student performance. In particular, it suggests that the lowest-achieving students have the most to gain. Using a similar empirical setup but with data from Sweden, we partly replicate their study and thereby add external validity to this policy question. Furthermore, we increase the survey response rate of schools to approximately 75 % compared to 21 % in B&M, although at the expense of the amount of information collected in the survey. In Sweden, we find no impact of mobile phone bans on student performance and can reject even small-sized gains. |
| Keywords: | Mobile phone ban; Student performance |
| JEL: | I21 I28 J24 O33 |
| Date: | 2019–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:iuiwop:1288&r=all |
| By: | Alexander, Diane (Federal Reserve Bank of Chicago); Schwandt, Hannes (Northwestern University) |
| Abstract: | Car exhaust is a major source of air pollution, but little is known about its impacts on population health. We exploit the dispersion of emissions-cheating diesel cars—which secretly polluted up to 150 times as much as gasoline cars—across the United States from 2008-2015 as a natural experiment to measure the health impact of car pollution. Using the universe of vehicle registrations, we demonstrate that a 10 percent cheating-induced increase in car exhaust increases rates of low birth weight and acute asthma attacks among children by 1.9 and 8.0 percent, respectively. These health impacts occur at all pollution levels and across the entire socioeconomic spectrum. |
| Keywords: | Car pollution; health emissions-cheating; health; pollution |
| JEL: | I10 I14 J13 K32 |
| Date: | 2019–06–13 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedhwp:wp-2019-04&r=all |
| By: | Joseph E. Stiglitz |
| Abstract: | Recognizing the importance of the second-best nature of economies, the Stern-Stiglitz report on carbon pricing departed from the recommendation of a single carbon price for all uses at all places and times. This paper provides some of the analytics behind these recommendations. First, I analyze the circumstances in which distributional concerns make desirable a tax or regulation inducing significant reductions in carbon usage in a carbon-intensive sector for which consumers are disproportionately rich. Such policies allow lower carbon prices elsewhere without exceeding carbon emission targets. The cost of the resulting production inefficiency may, under the identified circumstances, be less than the distributional benefits. The paper considers the circumstances in which such differential policies may be best implemented through regulation vs. differential pricing, as well as differential effects on political economy and norm setting. Second, I consider the effect of carbon price trajectories on induced innovation, providing general conditions under which the optimal carbon path should, at least eventually, be falling over time. Finally, I revisit the price-versus-quantity debate and highlight important aspects of the dynamic nature of the problem. |
| JEL: | A1 H23 K32 Q52 Q54 Q55 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:25939&r=all |
| By: | Casaburi, Lorenzo; Macchiavello, Rocco |
| Abstract: | Despite extensive evidence that preferences are often time-inconsistent, there is only scarce evidence of willingness to pay for commitment. Infrequent payments for frequently provided goods and services are a common feature of many markets and they may naturally provide commitment to save for lumpy expenses. Multiple experiments in the Kenyan dairy sector show that: (i) farmers are willing to incur sizable costs to receive infrequent payments as a commitment device, (ii) poor contract enforcement, however, limits competition among buyers in the supply of infrequent payments. We then present a model of demand and supply of infrequent payments and test its additional predictions. |
| JEL: | K12 L66 O13 O17 Q12 Q13 |
| Date: | 2019–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100180&r=all |