nep-law New Economics Papers
on Law and Economics
Issue of 2020‒05‒04
fifteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Can Child Marriage Law Change Attitudes and Behaviour? Experimental Evidence from an Information Intervention in Bangladesh By Amrit Amirapu; M Niaz Asadullah; Zaki Wahhaj
  2. 25 Years of European Merger Control By Pauline Affeldt; Tomaso Duso; Florian Szücs
  3. Measuring Racial Discrimination in Bail Decisions By David Arnold; Will S. Dobbie; Peter Hull
  4. Attention to online sales: The role of brand image concerns By Dertwinkel-Kalt, Markus; Köster, Mats
  5. Lending to the Unbanked: Relational Contracting with Loan Sharks By Kevin Lang; Kaiwen Leong; Huailu Li; Haibo Xu
  6. The Fight against Corruption : Taming Tigers and Swatting Flies By Chuah,Lay Lian; Loayza,Norman V.; Myers,C. Bernard
  7. EU Accession: A Boon or Bane for Corruption? By Vincenzo Alfano; Salvatore Capasso; Rajeev K. Goel
  8. Disputes in International Investment and Trade By Ralph Ossa; Robert W. Staiger; Alan O. Sykes
  9. Do Inheritance Rules Affect Voter Turnout? Evidence from an Alpine Region By Andrea Bonoldi; Chiara Dalle Nogare; Martin Mosler; Niklas Potrafke
  10. Does bilateral investment treaty arbitration have any value for multinational corporations? By Brada, Josef C.; Chen, Chunda; Jia, Jingyi; Kutan, Ali M.
  11. Family Types and Political Development By Gutmann, Jerg; Voigt, Stefan
  12. The need for global coordination and cooperation transparency and uncertainty amid the COVID -19 outbreak By Ojo, Marianne
  13. The Pursuit of Non-Trade Policy Objectives in EU Trade Policy By Ingo Borchert; Paola Conconi; Mattia Di Ubaldo; Cristina Herghelegiu
  14. Deus Ex Pandemus: Is Movement Control Here to Stay? By Podshivalov, Georgii
  15. Untying the Knot: How Child Support and Alimony Affect Couples’ Decisions and Welfare By Hanno Foerster

  1. By: Amrit Amirapu; M Niaz Asadullah; Zaki Wahhaj
    Abstract: The practice of child marriage is ubiquitous in developing countries, where one in three girls is married before the age of 18. Although most developing countries have a legal minimum age of marriage, in practice marriage age is determined by social norms rather than the law. In this paper, we test the hypothesis that formal laws can influence social norms and marriage behaviour in a setting with weak law enforcement. We do this by administering a randomised video-based information treatment that accelerates knowledge transmission about a new child marriage law in Bangladesh. Our information treatments led to a change in participants' own attitudes and behaviour (including reported attitudes regarding appropriate marriage age and willingness to contribute to a charity that campaigns against child marriage), but did not substantially influence their beliefs about attitudes or practices prevalent in their community. Follow-up surveys conducted 5 and 10 months after the intervention show an increase in early marriage among adolescent girls within treatment households. These perverse effects are driven by households where the father and family elders were informed about the new law but are absent in households where only the mother is informed. The findings highlight a) the existence of informational frictions within housholds and b) the risk of a backlash effect against a law that contradicts traditional norms and practices.
    Keywords: age of marriage; social norms; formal institutions; legal change
    JEL: J12 J16 K36
    Date: 2020–03
  2. By: Pauline Affeldt; Tomaso Duso; Florian Szücs
    Abstract: We study the evolution of EC merger decisions over the first 25 years of common European merger policy. Using a novel dataset at the level of the relevant antitrust markets and containing all merger cases scrutinized by the Commission over the 1990-2014 period, we evaluate how consistently arguments related to structural market parameters – dominance, concentration, barriers to entry, and foreclosure – were applied over time and across different dimensions such as the geographic market definition and the complexity of the merger. Simple, linear probability models as usually applied in the literature overestimate on average the effects of the structural indicators. Using non-parametric machine learning techniques, we find that dominance is positively correlated with competitive concerns, especially in concentrated markets and in complex mergers. Yet, its importance has decreased over time and significantly following the 2004 merger policy reform. The Commission’s competitive concerns are also correlated with concentration and the more so, the higher the entry barriers and the risks of foreclosure. These patterns are not changing over time. The role of the structural indicators in explaining competitive concerns does not change depending on the geographic market definition.
    Keywords: merger policy, EU Commission, dominance, concentration, entry barriers, foreclosure, causal forests
    JEL: K21 L40
    Date: 2020
  3. By: David Arnold; Will S. Dobbie; Peter Hull
    Abstract: We develop new quasi-experimental tools to measure racial discrimination in the context of bail decisions. Observational comparisons of white and black pretrial release rates suffer from omitted variables bias when there are unobserved racial differences in pretrial misconduct potential. We show that the bias in these observational comparisons is a function of average white and black misconduct risk, which can be estimated from the quasi-random assignment of bail judges. Estimates from New York City show that less than one-third of the release rate disparity between white and black defendants is explained by unobserved differences in misconduct potential, with more than two-thirds explained by racial discrimination. We then develop a hierarchical marginal treatment effects model that imposes additional structure on the quasi-experimental variation to investigate the drivers of this discrimination. Model estimates show that discrimination in bail decisions is driven by both racial bias and statistical discrimination, with the latter coming from a higher level of average risk and less precise risk signals for black defendants.
    JEL: C26 J15 K42
    Date: 2020–04
  4. By: Dertwinkel-Kalt, Markus; Köster, Mats
    Abstract: We provide a novel intuition for why manufacturers restrict their retailers' ability to resell brandproducts online. Our approach builds on models of limited attention according to which pricedisparities across distribution channels guide a consumer's attention toward prices and lower herappreciation for quality. Thus, absent vertical restraints, one out of two distortions - a quality ora participation distortion - can arise in equilibrium. We show that, by ruling out both distortions,vertical restraints can be socially desirable, but can also hurt consumers through higher retail prices.Thereby, we identify a novel trade-off between efficiency and consumer surplus.
    Keywords: Limited Attention,Online Sales,Antitrust,Vertical Restraints
    JEL: D21 K21 L42
    Date: 2020
  5. By: Kevin Lang (Boston University); Kaiwen Leong (Nanyang Technological University); Huailu Li (Shanghai Institute of International Finance and Economics); Haibo Xu (Tongji University)
    Abstract: We study roughly 11,000 loans from unlicensed moneylenders to over 1,000 borrowers in Singapore and provide basic information about this understudied market. Borrowers frequently expect to repay late. While lenders do rely on additional punishments to enforce loans, the primary cost of not repaying on time is compounding of a very high interest rate. We develop a very simple model of the relational contract between loan sharks and borrowers and use it to predict the effect of a crackdown on illegal moneylending. Consistent with our model, the crackdown raised the interest rate and lowered the size of loans.
    Keywords: Illegal Lending, Enforcement, Relational Contract
    JEL: K42 L14
    Date: 2020–03
  6. By: Chuah,Lay Lian; Loayza,Norman V.; Myers,C. Bernard
    Abstract: Corruption robs the public of precious resources, distorts the incentives to engage in productive activities, destroys confidence in public institutions, and spurs political instability. It disproportionately harms the poor and vulnerable. In turn, corruption is the result of perverse incentives, concentration of power, and lack of accountability. Countries are not condemned to suffer from corruption. They can break the vicious cycle with a comprehensive approach that tackles country-specific governance gaps. This approach should include streamlining rules and regulations; building a meritocratic and well-paid civil service; promoting transparency in public employment, procurement, and services; enabling citizen voice and government accountability; and enforcing anti-corruption laws and penalties.
    Keywords: National Governance,Social Policy,Judicial System Reform,Youth and Governance,Legal Reform,Government Policies,Public Sector Economics,Legislation,Legal Products,Public Finance Decentralization and Poverty Reduction,Regulatory Regimes,Governance Indicators,Educational Sciences,Public Sector Administrative&Civil Service Reform,Administrative&Civil Service Reform,Democratic Government,Public Sector Administrative and Civil Service Reform,De Facto Governments
    Date: 2020–01–01
  7. By: Vincenzo Alfano; Salvatore Capasso; Rajeev K. Goel
    Abstract: The formation and expansion of the European Union (EU) have attracted much attention. However, the impact on the level of corruption in a nation after joining the Union has not been formally studied. Any nation that joins the European Union potentially faces two different and opposite effects on corruption. On the one hand, there are reasons to believe that corruption is going to decrease because of the efforts of the EU to fight corruption or because of the opening of the markets to trade; on the other hand, there are reasons to imagine that corruption may increase due to the increase in bureaucracy and new regulations. Hence, the overall effect is not entirely clear from this perspective. This work focuses on the last three rounds of EU entry and empirically studies the effects of joining the EU on corruption. Placing the analysis in the broader literature on the determinants of corruption, the results suggest that entry into the EU increases corruption. However, equally insightful is that this corruption increase does not hold for nations that are potential entrants or that are in the negotiation stage.
    Keywords: corruption, regulations, free trade European Union, joining the EU, EU negotiations, government
    JEL: D73 E60 F68 K42
    Date: 2020
  8. By: Ralph Ossa; Robert W. Staiger; Alan O. Sykes
    Abstract: International investment agreements employ dispute settlement procedures that differ markedly from their counterparts in trade agreements along three key dimensions: standing (i.e., the right to file grievances), the nature of the remedy, and the remedial period. In the state-to-state dispute settlement procedures of a typical trade agreement, only governments have standing, while private investors also have standing in the investor-state dispute settlement procedures employed by investment agreements. Trade agreements typically employ tariff retaliation as the remedy for violation of the agreement, while the award of cash damages is the norm in investment disputes. And trade agreements typically provide for only prospective remedies covering harm done subsequent to a ruling, while the damages awarded in investment disputes routinely cover past as well as future harms. We develop parallel models of trade agreements and investment agreements and employ them to study these differences. We argue that the differences can be understood as arising from the fundamentally different problems that trade and investment agreements are designed to solve.
    JEL: F02 F1 F23
    Date: 2020–04
  9. By: Andrea Bonoldi; Chiara Dalle Nogare; Martin Mosler; Niklas Potrafke
    Abstract: We examine the relationship between inheritance rules and voter turnout. Inheritance rules are measured by entailed farms in South Tyrol: land properties whose inheritance is regulated by a law similar to the right of primogeniture. Using data for municipalities between 1998 and 2010, we show that voter turnout is high in municipalities with many entailed farms relative to population. The effect is based on local elections. If the number of entailed farms per 100 inhabitants increases by one standard deviation, voting turnout in municipal and provincial elections increases by around 1.27 and 1.43 percentage points (around 25 and 35 percent of a standard deviation). Our results suggest that entailed farm owners themselves are more likely to vote, and that entailed farms owners encourage other citizens of their municipality to participate in local elections.
    Keywords: entailed farms, voter turnout, inheritance rules, identity, civic duty
    JEL: D72 H70 K11 Q15 Z19
    Date: 2020
  10. By: Brada, Josef C.; Chen, Chunda; Jia, Jingyi; Kutan, Ali M.
    Abstract: Using event study methodology, we investigate whether bilateral investment protection treaties afford protection to foreign investors. Examining arbitral decisions for firms from six countries shows that firms that received awards from arbitrators gained in market value by as much as 3%. Per dollar awarded, firms gained over $20 in market value. Thus, we conclude that the system of arbitration does afford significant benefits to firms that can demonstrate that they have been injured by host governments who violated the terms of the relevant investor protection treaty. We also find some evidence that arbitral decisions are anticipated by stock markets.
    JEL: F23 G14 K12 K33
    Date: 2020–04–22
  11. By: Gutmann, Jerg; Voigt, Stefan
    Abstract: Many years ago, Emmanuel Todd argued that differences in family organization - specifically the rules of inheritance, the number of generations living under one roof, and endogamous marriage - are reflected in the organization of the state. He also argued that different family types lead to different paths of economic development. Economists have long ignored these sweeping claims, but with increasing interest in the deep causes of economic development, family types have caught the attention of some economists. Here, we try to take Todd seriously and evaluate his predictions empirically. Relying on a parsimonious model with exogenous covariates, we find mixed results. On the one hand, countries in which authoritarian family types dominate have much higher levels of the rule of law and innovation than predicted by Todd. On the other, countries in which the communitarian family types dominate are characterized by racism, low levels of the rule of law, few checks on government, and late industrialization. Countries in which endogamy is frequently practiced display a high level of state fragility and have weak civil society organizations.
    Keywords: Family types,family systems,family structures,ideology,state formation,constitutional structure,economic development
    JEL: D10 H11 J12 K36 N30 O17 Z12
    Date: 2020
  12. By: Ojo, Marianne
    Abstract: The COVID-19 pandemic has highlighted how intricately linked the global community has become with the advent of globalization, rapid growth of Information Technology and the Internet Revolution. Since many global economies have become interdependent on each other – as further reflected by sectors who have generated greater domino effects on one other, there have been suggestions and recommendations for shorter supply chains. Just how far can associated risk levels and particularly those with seismic and systemic effects on the economy be mitigated – whilst ensuring that appropriate balance is maintained in assessing and estimating accurate and reliable forecasts – particularly where past historical data , to an extent, will be required to achieve such an assessment? The COVID pandemic has also highlighted that unexpected events such as recent developments will impact prior measures in such a way as never before – not only because of the unique attributes of this Crisis – both an economic and medical one, but also by virtue of the impact and interconnections globally. How reliable are prior measures and should this imply that less reliance will be placed on historical data and greater reliance on forward looking provisioning? Technological advances , it would appear, should have facilitated the mitigation of information asymmetries however, the pandemic also reflects the growing need for digital measures to keep economies functioning and will certainly play fundamental and formidable roles in the future workplace. Stay at home measures have been greatly facilitated through digital advancements, virtual communication and conferences and it is without doubt that new regulations in respect of internet regulation and privacy laws may be reviewed and revised in several jurisdictions and regions. Global coordination will certainly be required to overcome this pandemic. In addressing the afore mentioned questions, this papers aims to highlight , amongst other objectives how and why such a coordination can be achieved.
    Keywords: coordination; temporary pandemic emergency purchase programme ; forward looking standards; loan loss provisioning; enhanced targeted longer term refinancing operations; supply chains
    JEL: E58 E6 F16 K20 M41
    Date: 2020–04
  13. By: Ingo Borchert (Department of Economics, University of Sussex, Falmer, United Kingdom); Paola Conconi (Université Libre de Bruxelles); Mattia Di Ubaldo (Department of Economics, University of Sussex, Falmer, United Kingdom); Cristina Herghelegiu (Université Libre de Bruxelles)
    Abstract: The European Union (EU) often conditions preferential access to its market upon compliance by its trading partners with Non-Trade Policy Objectives (NTPOs), including human rights and labor and environmental standards. We systematically document the coverage of NTPOs in EU trade agreements and in its Generalized System of Preferences (GSP). We then examine the extent to which trade agreements and GSP programs can be used to promote NTPOs. Preferential trade agreements are negotiated under multilateral rules, which require members to eliminate all tariffs reciprocally. As a result, once a trade agreement enters into force, the EU cannot easily restrict or extend access to its market so as to “punish bad behavior” or “reward good behavior” on NTPOs by its trading partners. By contrast, GSP preferences are granted on a unilateral basis, so they can be limited or extended, depending on compliance with NTPOs. EU GSP programs can thus provide a carrot-and-stick mechanism to promote NTPOs in partner countries.
    Keywords: Trade Agreements, GSP, Conditionality, Non-Trade Policy Objectives
    JEL: F13 F50 J80 K32
    Date: 2020–04
  14. By: Podshivalov, Georgii
    Abstract: Conspiracy theorists and laymen wonder whether the emergency measures introduced in response to COVID-19 will be upheld even after the pandemic is over. Using plot elements of Deus Ex the video game, one can show that measures such as movement control are not sustainable in the long run.
    Keywords: Economic Though, Monopoly, Oligarchy, Coronavirus, COVID-19, Pandemic, Dystopia, Video Games, Deus Ex, Illuminati, World Government, Shadow Government, Conspiracy Theory, Movement Control, Rationality.
    JEL: D42 D7 F6 H12 H19 I18 K19 O19 P19
    Date: 2020–04–17
  15. By: Hanno Foerster
    Abstract: In many countries divorce law mandates post-marital maintenance payments (child support and alimony) to insure the lower earner in married couples against financial losses upon divorce. This paper studies how maintenance payments affect couples’ intertemporal decisions and welfare. I develop a dynamic model of family labor supply, housework, savings and divorce and estimate it using Danish register and survey data. The model captures the policy trade off between providing insurance to the lower earner and enabling couples to specialize efficiently, on the one hand, and maintaining labor supply incentives for divorcees, on the other hand. I use the estimated model to study various counterfactual policy scenarios. I find that alimony payments come with strong labor supply disincentives and as a consequence fail to provide consumption insurance. The welfare maximizing policy involves increasing the lump sum component of child support, increasing the dependence of child support on the payer’s income and reducing alimony payments relative to the Danish status quo. Switching to the welfare maximizing policy makes women better and men worse off, but comparisons to first best allocations show that Pareto improvements are feasible, highlighting a limitation of child support and alimony policies.
    Keywords: marriage and divorce, child support, alimony, household behavior, labor supply, limited commitment
    JEL: D10 D91 J18 J12 J22 K36
    Date: 2020–04

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