nep-law New Economics Papers
on Law and Economics
Issue of 2020‒04‒20
thirteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Uncertain Penalties and Compliance By Marcelo Caffera; Carlos Chávez; Carol Luengo
  2. The Economic Consequences of Data Privacy Regulation: Empirical Evidence from GDPR By Guy Aridor; Yeon-Koo Che; Tobias Salz
  3. Incentive to squeal: an experiment on leniency programs for antitrust violators By Benjamin Radoc; Philip Amadeus Libre; Shanti Aubren Prado
  4. Review of contractual obligations in the Civil Code of Ukraine By Anatoliy Kostruba
  5. Quitting in Protest: Presidential Policymaking and Civil Service Response By Charles Cameron; John M. de Figueiredo
  6. Copyright and Creativity. Evidence from Italian Opera During the Napoleonic Age By Michela Giorcelli; Petra Moser
  7. The Effects of State Scope of Practice Laws on the Labor Supply of Advanced Practice Registered Nurses By Sara Markowitz; E. Kathleen Adams
  8. Zero Pricing Platform Competition By Shekhar, Shiva
  9. The legal nature of the state in the modern legal dimension By Anatoliy Kostruba
  10. Same-Sex Couples and the Marital Surplus: The Importance of the Legal Environment By Daniel S. Hamermesh; Scott Delhommer
  11. Redrawing hot spots of crime in Dallas, Texas By Wheeler, Andrew Palmer; Reuter, Sydney
  12. Defence Against Dark Artefacts: An Analysis of the Assumptions Underpinning Smart Home Cybersecurity Standards By Piasecki, Stanislaw; Urquhart, Lachlan; McAuley, Derek
  13. Paying Outsourced Labor: Direct Evidence from Linked Temp Agency-Worker-Client Data By Andres Drenik; Simon Jäger; Miguel Pascuel Plotkin; Benjamin Schoefer

  1. By: Marcelo Caffera; Carlos Chávez; Carol Luengo
    Abstract: We present the results of a series of laboratory economic experiments designed to study compliance behavior of polluting firms when information on the penalty is uncertain. The experiments consist of a regulatory environment in which university students face emission standards and an enforcement mechanism composed of audit probabilities and penalties (conditional on detection of a violation). We examine how uncertainty on the penalty affects the compliance decision and the extent of violation under two enforcement levels: one in which the regulator induces perfect compliance and another one in which it does not. Our results suggest that in the first case, uncertain penalties increase the extent of the violations of those firms with higher marginal benefits. When enforcement is not sufficient to induce compliance, the uncertain penalties do not have any statistically significant effect on compliance behavior. Overall, the results suggest that a cost-effective design of emission standards should consider including public and complete information on the penalties for violations.
    Keywords: uncertainty, penalty, emission standard, economic experiment
    JEL: C91 L51 Q58 K42
    Date: 2019
  2. By: Guy Aridor; Yeon-Koo Che; Tobias Salz
    Abstract: This paper studies the effects of the EU’s General Data Protection Regulation (GDPR) on the ability of firms to collect consumer data, identify consumers over time, accrue revenue via online advertising, and predict their behavior. Utilizing a novel dataset by an intermediary that spans much of the online travel industry, we perform a difference-in-differences analysis that exploits the geographic reach of GDPR. We find a 12.5% drop in the intermediary-observed consumers as a result of the new opt-in requirement of GDPR. At the same time, the remaining consumers are observable for a longer period of time. We provide evidence that this pattern is consistent with the hypothesis that privacy-conscious consumers substitute away from less efficient privacy protection (e.g, cookie deletion) to explicit opt out, a process that would reduce the number of artificially short consumer histories. Further in keeping with this hypothesis, we observe that the average value of the remaining consumers to advertisers has increased, offsetting most of the losses from consumers that opt out. Finally, we find that the ability to predict consumer behavior by the intermediary’s proprietary machine learning algorithm does not significantly worsen as a result of the changes induced by GDPR. Our results highlight the externalities that consumer privacy decisions have both on other consumers and for firms.
    JEL: L0 L5 L81
    Date: 2020–03
  3. By: Benjamin Radoc (Philippine Competition Commission and Department of Economics, Ateneo de Manila University); Philip Amadeus Libre (Asian Development Bank (Consultant)); Shanti Aubren Prado (World Bank Group (Consultant))
    Abstract: Competition authorities around the world have adopted leniency programs creating incentives for cartel members to come forward and provide information sufficient for cartel prosecution. We conducted a laboratory experiment simulating an infinitely repeated 4-player Bertrand game with homogeneous goods. The experiment allowed us to determine the effect of detection rate, penalty discount, and penalty rate on cartel formation and leniency application. Similar to past studies, we find that imposing a leniency program effectively deters cartel formation. However, surviving cartels quickly learn to cooperate. Leniency application is dependent on the immunity incentive (full penalty discount) and the risk of cartel detection, but not on the penalty rate.
    Keywords: antitrust, cartel, experiment, leniency program
    JEL: K21 L13 L44
    Date: 2020–03
  4. By: Anatoliy Kostruba (Vasyl Stefanyk Precarpathian National University)
    Abstract: Breaching of contractual obligations may lead to certain negative consequences. Hence, this work analyzes the theoretical aspects of termination of contractual obligations in Ukraine's civil law. The article aims to study the obligation termination mechanism by determining the legal framework for its functioning. The author focuses on one of the forms of contractual obligation termination, more specifically, the start of cancellation and deferred status of a legal transaction. Using normative and protective functions in legislation, the author plans to determine specifics of legal facts of normative compensatory nature. It is established, that the condition for cancellation of a legal transaction, can be a direct or reverse mechanism for the termination of contractual obligations. A condition for cancellation of a legal transaction can be applied to the whole transaction or to its separate parts.
    Keywords: Legal basis,self-organization,alienation,legal transaction,circumstance,Civil Code,Ukraine,Contracts law,obligations
    Date: 2019–06–10
  5. By: Charles Cameron; John M. de Figueiredo
    Abstract: We formally model the impact of presidential policymaking on the willingness of bureaucrats to exert effort and stay in the government. In the model, centralized policy initiative by the president demotivates policy-oriented bureaucrats and can impel them to quit rather than implicate themselves in presidentially imposed policies they dislike. Those most likely to quit are a range of moderate bureaucrats. More extreme bureaucrats may be willing to wait out an incumbent president in the hope of shaping future policy. As control of the White House alternates between ideologically opposed extreme presidents, policy-minded moderates depart from bureaucratic agencies leaving only policy extremists or poorly performing "slackers." The consequences for policy making are substantial. Despite these adverse consequences, presidents have strong incentives to engage in centralized policymaking.
    JEL: H11 H83 J45 K00
    Date: 2020–04
  6. By: Michela Giorcelli; Petra Moser
    Abstract: This paper exploits exogenous variation in the adoption of copyrights – as a result of the timing of Napoléon’s military victories in Italy – to examine the effects of copyrights on creativity. To measure changes in creative output we compare changes in the creation of new operas across states with and without copyrights. Difference-in-differences analyses show that basic copyrights increased both the number and the quality of operas, measured by their popularity and durability. Notably, there is no evidence of comparable benefits for extensions in copyright lengths. Complementary analyses for other types of musical compositions confirm the main results.
    JEL: K0 N23 O3 O34
    Date: 2020–03
  7. By: Sara Markowitz; E. Kathleen Adams
    Abstract: This paper studies the effects of changes in states’ scope of practice laws (SOP) for advanced practice registered nurses (APRNs) on individual labor supply decisions. Restrictive SOP impose costs and other barriers to practice that may affect these decisions. Using survey data on APRNs, we analyze employment in nursing, work hours, part-time work status, multiple job holding, self-employment, wages, and migration. Results show that the level of SOP restrictions are not strong determinants of many labor market decisions, with a few exceptions. We find that hours worked and self-employment both increase when nurses practice in regulatory environments that are free from physician oversight requirements.
    JEL: I1 J01 K0
    Date: 2020–03
  8. By: Shekhar, Shiva
    Abstract: This article studies competition between different types of ad-funded platforms attracting consumers with free services. Consumers often find advertisements a nuisance on such platforms. We study how under a competitive setting platforms balance the tension between attracting consumers and rent extraction from the advertising side. We propose a flexible yet simple model that studies competition between standard platforms and social media platforms (with same-side network effects). We find that an increase in either positive same-side network effects or an increase in consumer disutility from advertisements leads to a reduction in the number of ads on that platform. When competing platforms merge, consumer side network effects do not impact prices and the number of ads is higher. In a setting where consumers present a negative (congestion) externality on each other, competition fails to protect consumer welfare and behaves erratically. Finally, we present a few extensions and discuss some policy implications.
    Keywords: Social media platforms, platforms, two-sided markets, same side network effects, cross side network effects, advertising.
    JEL: K21 L13 L82 L86
    Date: 2020–03
  9. By: Anatoliy Kostruba (Vasyl Stefanyk Precarpathian National University)
    Abstract: The article is devoted to the study of the legal nature of the state. The author departs from the traditional public-law understanding of the state. Using the theory of George Ellinek, who examines the legal construction of the state not only from the standpoint of legal 156 science, but also from the position of sociology, the author presents the substantiation of the private legal nature of the state. Yes, the state is a legal form and legal means of securing the interest of civil society, which is carried out by its structural self-organization on cultural grounds. The state is the bearer of subjective rights and legal obligations as a result of individualized volitional activity in the exercise of self-interest in public relations. This approach allows us to refer it to a legal entity. Having universal legal capacity, the civil capacity of the state is revealed through the institution of representation, which is realized through the activities of a state authority endowed with a state of special capacity
    Keywords: state,subject of law,Society civile,legal capacity,capacity,legal entity,state authority,legal personality.
    Date: 2019–06–27
  10. By: Daniel S. Hamermesh; Scott Delhommer
    Abstract: Same-sex couples’ marital surplus, their excess total income over that predicted by their work times and predicted wages, increases little as the duration of their relationship lengthens. When/where same-sex marriage is legal, it rises sharply as duration increases. The availability of legal domestic partnership or civil union has no effect on the surplus. The likelihood of home ownership conditional on demographic characteristics also increases with partnerships’ duration only when/where same-sex marriage is legal. These results, based on data from the American Community Survey 2013-17, support the notion that greater legal protection enhances partners’ incentives to invest in their relationship.
    JEL: J12 J16 K30
    Date: 2020–03
  11. By: Wheeler, Andrew Palmer (University of Texas at Dallas); Reuter, Sydney
    Abstract: In this work we evaluate the predictive capability of identifying long term, micro place hot spots in Dallas, Texas. We create hot spots using a hierarchical clustering algorithm, using law enforcement cost of crime estimates as weights. Relative to the much larger current hot spot areas defined by the Dallas Police Department, our identified hot spots are much smaller (under 3 square miles), and capture crime harm at a higher density per the Predictive Accuracy Index statistic. We also show that the hierarchical clustering algorithm captures a wide array of hot spot types; some one or two addresses, some street segments, and others an agglomeration of larger areas. This suggests identifying hot spots based on a specific unit of aggregation (e.g. addresses, street segments), may be less efficient than using a hierarchical clustering technique in practice. Code and data to reproduce the analysis can be downloaded from 4v/AAC4CXk6NzUweyld2n4OznzWa?dl=0
    Date: 2020–03–30
  12. By: Piasecki, Stanislaw; Urquhart, Lachlan; McAuley, Derek
    Abstract: As part of the EPSRC Defence Against Dark Artefacts (DADA) project, this paper analyses the assumptions underpinning a range of smart home cybersecurity standards. We use case studies (such as the Mirai Botnet affair) and the criminological concept of ‘routine activity theory’ to situate our analysis. Our study shows that current cybersecurity standards mainly assume smart home environments are underpinned by cloud architectures, which is a shortcoming. This paper argues that edge computing approaches, such as those typified by the Databox system, are emerging and challenge the cloud focused assumptions of these standards. In edge computing, data is stored at the edge of the network, locally on the device, which can have advantages for security, privacy and legal compliance, over cloud-based approaches. As a consequence, standards should start to reflect the increased interest in this trend to make them more aspirational and show other data architectures are possible that can benefit designers and citizens. We hope that our paper may influence researchers, policy makers and IoT stakeholders to work towards the adoption of edge computing models, to better manage external cyber-criminality threats in smart homes. We also briefly discuss that standards currently do not account for the complex nature of everyday life in the home. In addition to technical aspects, the social and interactional complexities of the home mean internal threats can emerge too.
    Date: 2020–04–13
  13. By: Andres Drenik; Simon Jäger; Miguel Pascuel Plotkin; Benjamin Schoefer
    Abstract: We estimate how much firms differentiate pay premia between regular and outsourced workers. We study temp agency work arrangements where pay setting has previously escaped measurement because existing datasets do not report links between user firms (the workplaces where temp workers perform their labor) and temp agencies (their formal employers). We overcome this measurement challenge by leveraging unique administrative data from Argentina with such links. We estimate that temp agency workers receive 49% of the workplace-specific pay premia earned by regular workers in user firms: the midpoint between the benchmark for insiders (one) and the competitive spot-labor market benchmark (zero).
    JEL: J31 J53 K31 L24 M52 M54
    Date: 2020–03

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