nep-law New Economics Papers
on Law and Economics
Issue of 2019‒10‒07
ten papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Fraud Deterrence Institutions Reduce Intrinsic Honesty By Fabio Galeotti; Valeria Maggian; Marie Claire Villeval
  2. Homelessness, Property Rights and Institutional Logics By John M. Luiz; James Rycroft
  3. The Role Of The Court Of Justice Of The European Union In The Development Of The Common Foreign And Security Policy After The Treaty Of Lisbon By Kirill Entin; Yulia Belous
  4. Impulse Purchases, Gun Ownership and Homicides: Evidence from a Firearm Demand Shock By Christoph Koenig; David Schindler
  5. Holding Hospitals Accountable? Evidence on the Effectiveness of Minimum Charity Care Provision Laws By Michah W. Rothbart; Nara Yoon
  6. Law and practice on protecting whistle-blowers in the public and financial services sectors By Chalouat, Iheb.; Carrión-Crespo, Carlos.; Licata, Margherita.
  7. Exclusive Data, Price Manipulation and Market Leadership By Yiquan Gu; Leonardo Madio; Carlo Reggiani
  8. Optimal paid job-protected leave policy By Miyazaki, Koichi
  9. Mandated Financial Reporting and Corporate Innovation By Matthias Breuer; Christian Leuz; Steven Vanhaverbeke
  10. Law and Norms: Empirical Evidence By Tom Lane; Daniele Nosenzo

  1. By: Fabio Galeotti (Univ Lyon, CNRS, GATE, UMR 5824, F-69130 Ecully, France); Valeria Maggian (Department of Economics, University Of Venice Cà Foscari); Marie Claire Villeval (Univ Lyon, CNRS, GATE, UMR 5824, F-69130 Ecully, France; IZA, Schaumburg-Lippe-Strasse 5-9, 53113 Bonn, Germany)
    Abstract: Deterrence institutions are widely used in modern societies to discourage rule violations but whether they have an impact beyond their immediate scope of application is usually ignored. Using a natural field experiment, we show that they affect intrinsic honesty across contexts. We identified fraudsters and non-fraudsters in public transport who were or not exposed to ticket inspections by the transport company. We then measured the intrinsic honesty of the same persons in a new unrelated context where they could misappropriate money. Instead of having an educative effect, the exposure to deterrence practices increases unethical behavior of fraudsters but also of non-fraudsters.
    Keywords: Deterrence Institutions, Intrinsic Honesty, Spillovers, Field Experiment
    JEL: C93 K42 D02 D91
    Date: 2019
  2. By: John M. Luiz; James Rycroft
    Abstract: We explore whether there is evidence of property rights amongst the homeless, and if so, how these rights are governed. We show that although the homeless are able to derive some value from assets, and can exclude other members of their community, these rights are precarious and dependent upon state agents not seizing the “property†and overriding the community’s rules of the game. The transferring of assets are especially curtailed. We demonstrate the intersectionality of claims with respect to the same physical property from the varying perspectives of the claimants involved and how this differs depending on the property. Homeless people rely on a community logic to develop rules of the game which results in the appearance of a market logic. In the absence of formal institutions effectively operating in their spaces, they have constituted social norms which provide some semblance of property rights which are respected within the group.
    Keywords: Property rights, formal/informal institutions, transaction costs, homelessness, institutional logics, qualitative research
    JEL: K00 K11 Z13
    Date: 2018–06
  3. By: Kirill Entin (National Research University Higher School of Economics); Yulia Belous (National Research University Higher School of Economics)
    Abstract: This study investigates the involvement of the Court of Justice of the European Union (CJEU) in the development of the common foreign and security policy (CFSP) after the Treaty of Lisbon. The preliminary results reveal that the competence of the CJEU in CFSP is limited because EU member states (MS) avoid extending the principle of direct effect and other acquis of the CJEU in this field. On the basis of the integration through law concept it has been demonstrated that the CJEU (in the realm of rulings as provided by the Treaties) can rule in a way that would almost certainly have an impact on how CFSP is being implemented. This paper provides a reconstruction of the case law in the field and the prospects for integration through legal development
    Keywords: Court of Justice of the European Union, CJEU, common foreign and security policy, CFSP, Treaty of Lisbon, integration through law
    JEL: Z
    Date: 2019
  4. By: Christoph Koenig; David Schindler
    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 2% 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: 2019
  5. By: Michah W. Rothbart (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Nara Yoon (Maxwell School, Syracuse University, 215 Eggers Hall, Syracuse, NY 13244)
    Abstract: What can governments do to encourage nonprofit hospitals to provide greater benefits to their communities? Recent efforts by the federal and state governments seek to hold hospitals accountable for community health, in part by incentivizing charity care provision. Laws that set benchmarks for charity care spending are increasingly used, but their efficacy is uncertain. In this study, we examine the extent to which Illinois’ minimum charity care provision (MCCP) law increases nonprofit hospital charity care. Importantly, we differentiate between responses for hospitals required to provide minimal charitable spending (nonprofits) and those that are not (for-profit and public). We use detailed panel (2009-2015) data from Illinois' Annual Hospital Questionnaire and county-level data from the American Community Survey. We exploit a discrete change in charitable care requirements for nonprofit hospitals to identify the effect of the MCCP law on charity care, controlling for hospital characteristics, county demographics, and year and county (or hospital) fixed effects. Employing a differences-in-differences model, we find no evidence that the MCCP law increases charity care on average. Instead, we find some evidence that the law’s effects vary by how much charity care hospitals provided previously – charity care increases for those providing lower levels at baseline, narrowing the gap in charity care provision with those that provide high levels at baseline. The results suggest that setting low benchmarks does not create sufficient incentives for nonprofit hospitals to provide greater charity care on average, but instead may narrow the gap between high and low charity care hospitals.
    Keywords: Minimum Charity Provision Laws, Nonprofit Hospitals, Charity Care
    JEL: I18 I11 H71
    Date: 2019–09
  6. By: Chalouat, Iheb.; Carrión-Crespo, Carlos.; Licata, Margherita.
    Abstract: The paper examines the specific tasks carried out by public and financial sector workers which are labelled as whistle-blowing, and which trigger the legal protection that attaches to such a label. The paper does not cover other private sector activities even if they could be covered by the laws examined.
    Date: 2019
  7. By: Yiquan Gu; Leonardo Madio; Carlo Reggiani
    Abstract: The unprecedented access of firms to consumer level data not only facilitates more precisely targeted individual pricing but also alters firms’ strategic incentives. We show that exclusive access to a list of consumers can provide incentives for a firm to endogenously assume the price leader’s role, and so to strategically manipulate its rival’s price. Prices and profits are non-monotonic in the length of the consumer list. For an intermediate size, price leadership entails a semi-collusive outcome, characterized by supra-competitive prices and low consumer surplus. In contrast, for short or long lists of consumers, exclusive data availability intensifies market competition.
    Keywords: exclusive data, price leadership, personalized pricing, price discrimination
    JEL: D43 K21 L11 L13 L41 L86 M21 M31
    Date: 2019
  8. By: Miyazaki, Koichi
    Abstract: Although many countries give workers the right to return to their previous workplace after a temporary leave period ends, little is known about the details of such policies. This study characterizes the optimal paid job-protected leave policy using a model in which a worker has to leave his or her job with a certain probability and chooses whether to return to work after the leave period ends. An optimal policy, consisting of the consumption of a worker, that of a worker on leave, and the length of the leave, maximizes social welfare subject to the resource feasibility constraint and incentive constraint under which a worker on leave voluntarily chooses to return to work after the leave period ends. The present study finds that when the incentive constraint does not bind, the income risk caused by the leave should be perfectly shared among workers and workers on leave and that the leave period balances the marginal welfare gain and loss from a slight increase in the leave period. When the incentive constraint binds, the income risk caused by the leave is not perfectly shared among workers and workers on leave and that workers consume more than workers on leave because the constrained-optimal allocation has to give an incentive to workers on leave to return to work. By lengthening the leave period, another feasible allocation improves social welfare, which implies that the length of the leave period at the constrained-optimal allocation is too short. In addition, the study compares two economies, one that experiences a high discount factor and the other that experiences a low discount factor. In the former economy, the incentive constraint does not bind, whereas it does bind in the latter economy. Comparing the constrained-optimal allocations in these two economies, I find that workers consume more in the latter economy than in the former economy and that {¥it total} consumption during the leave period in the former economy is larger than that in the latter economy. Moreover, as an application of the theory, the study focuses on the paid parental leave policies adopted by most OECD countries. Using a numerical simulation, I conclude that the negative relationship between the replacement rate, namely the ratio of cash benefits during the leave to wages while working, and length of the leave period could result from constrained-optimal allocations.
    Keywords: Paid job-protected leave policy; lack of commitment; incentive constraint; constrained-optimal allocation; paid parental leave policy
    JEL: E24 H21 J18
    Date: 2019–09–28
  9. By: Matthias Breuer; Christian Leuz; Steven Vanhaverbeke
    Abstract: We investigate the impact of reporting regulation on corporate innovation activity. Exploiting thresholds in Europe’s regulation and a major enforcement reform in Germany, we find that forcing a greater share of firms to publicly disclose their financial statements reduces firms’ innovative activities at the industry level. At the same time, it increases firms’ reliance on patenting to protect their innovations, to the extent they continue innovating. Our evidence is consistent with reporting mandates having significant real effects by imposing proprietary costs on innovative firms, which diminishes their incentives to engage in innovative activities. Importantly, we examine and find that this decline in innovative activity is not fully compensated by positive information spillovers (e.g., to competitors, suppliers, and customers) within industries. Thus, our evidence implies that proprietary costs induced by reporting mandates are important consideration for regulators and policy makers.
    JEL: K22 L51 M41 M48 O43 O47
    Date: 2019–09
  10. By: Tom Lane (University of Nottingham Ningbo China); Daniele Nosenzo (University of Nottingham and Luxembourg Institute of Socio-Economic Research (LISER))
    Abstract: A large theoretical literature argues laws exert a causal effect on norms. This paper is the first to provide a clean empirical test of the proposition. Using an incentivized vignette experiment, we directly measure social norms relating to actions subject to legal thresholds. Results from three samples with around 800 subjects drawn from universities in the UK and China, and the UK general population, show laws often, but not always, influence norms. The strength of the effect varies across different scenarios, with some evidence that it is more powerful when law-breaking is more likely to be intentional and accurately measurable.
    Keywords: Social Norms; Law; Expressive Function of Law
    Date: 2019–08

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