nep-law New Economics Papers
on Law and Economics
Issue of 2020‒06‒29
fifteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Platform Mergers: Lessons from a Case in the Digital TV Market By Ivaldi, Marc; Zhang, Jiekai
  2. Policing the Police: The Impact of "Pattern-or-Practice" Investigations on Crime By Tanaya Devi; Roland G. Fryer Jr
  3. 25 Years of European Merger Control By Affeldt, Pauline; Duso, Tomaso; Szücs, Florian
  4. Guilt and Antisocial Conformism: Experimental Evidence from Bangladesh By Shoji, Masahiro
  5. Job Protection, Housing Market Regulation and the Youth By Antoine Bonleu; Bruno Decreuse; Tanguy van Ypersele
  6. How to Get Away with Merger: Stealth Consolidation and Its Real Effects on US Healthcare By Thomas G. Wollmann
  7. Blockchain-mediated Licensing: Legal Engineering for Artist Empowerment By Adjovu, Charles; Fabian, Ewa
  8. Persistent Effects of Violent Media Content By Jason M. Lindo; Isaac D. Swensen; Glen R. Waddell
  9. Competition Laws and Corporate Innovation By Ross Levine; Chen Lin; Lai Wei; Wensi Xie
  10. Stereotypes in High-Stakes Decisions : Evidence from U.S. Circuit Courts By Ash, Elliott; Chen, Daniel L.; Ornaghi, Arianna
  11. Pernicious Bias and Judicial Illegitimacy: Do Americans Perceive Diverse Judges as Inherently Biased? By ONO Yoshikuni; Michael A. ZILIS
  12. Military Conscription, Sexist Attitudes, and Intimate Partner Violence By María Amelia Gibbons; Martín Rossi
  13. Income Levels, Governance and Inclusive Human Development in Sub-Saharan Africa By Asongu, Simplice; Odhiambo, Nicholas
  14. The Effect of Job Loss and Unemployment Insurance on Crime in Brazil By Britto, Diogo; Pinotti, Paolo; Sampaio, Breno
  15. Do sound infrastructure governance and regulation affect productivity growth? New insights from firm level data By Lilas Demmou; Guido Franco

  1. By: Ivaldi, Marc; Zhang, Jiekai
    Abstract: This paper contributes to the analysis of mergers in two-sided markets, notably those in which a platform provides its service for free on one side but obtains all its revenues from the other, as in the digital TV industry. Specifically, we assess a decision of the French competition authority which approved the merger of the broadcasting services of the TV channels involved but imposed a behavioral remedy prohibiting the merger of their respective advertising sales services. To do so, we build a structural model allowing for multi-homing of advertisers and, using a comprehensive dataset, we estimate the demand of viewers and advertisers. Our evaluation provides evidence that the remedy has been ineffective at limiting the increase in prices and amounts of advertising, due to the cross-side externalities between viewers and advertisers. Without resulting in significant positive effects on the viewers' surplus, the remedy has also drastically increased the advertisers' total cost. Nevertheless, the remedy has benefited the competitors of the merging channels. The main lesson of our analysis is that, in the process of designing competition or regulatory policy for two-sided markets, ignoring the interaction between the two sides of platforms can result in unexpected outcomes.
    Keywords: Two-sided market; platform merger; advertising; TV market; competition policy
    JEL: K21 L10 L40 L82 M37
    Date: 2020–06
  2. By: Tanaya Devi; Roland G. Fryer Jr
    Abstract: This paper provides the first empirical examination of the impact of federal and state "Pattern-or-Practice" investigations on crime and policing. For investigations that were not preceded by "viral" incidents of deadly force, investigations, on average, led to a statistically significant reduction in homicides and total crime. In stark contrast, all investigations that were preceded by "viral" incidents of deadly force have led to a large and statistically significant increase in homicides and total crime. We estimate that these investigations caused almost 900 excess homicides and almost 34,000 excess felonies. The leading hypothesis for why these investigations increase homicides and total crime is an abrupt change in the quantity of policing activity. In Chicago, the number of police-civilian interactions decreased by almost 90% in the month after the investigation was announced. In Riverside CA, interactions decreased 54%. In St. Louis, self-initiated police activities declined by 46%. Other theories we test such as changes in community trust or the aggressiveness of consent decrees associated with investigations -- all contradict the data in important ways.
    JEL: J0 J15 K10
    Date: 2020–06
  3. By: Affeldt, Pauline; Duso, Tomaso; Szücs, Florian
    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 â?? dominance, concentration, barriers to entry, and foreclosure â?? 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: causal forests; Concentration; Dominance; Entry Barriers; EU Commission; foreclosure; Merger Policy
    JEL: K21 L40
    Date: 2020–04
  4. By: Shoji, Masahiro
    Abstract: This study conducted a lab-in-the-field experiment in rural Bangladesh to disentangle motives for conformity in antisocial behavior. In a take-away game, the previous participants’ choice is revealed before a decision is made. Conformism is measured by the correlation between the information and own choice. This design allows conformism via learning about social norms, changing social preference, and changing the belief about the opponent’s expected amount of take-away. To disentangle the effect of belief, the participants in the treatment group are also informed about the opponent’s expected amount to be taken away. The results show conformism only in the control group, suggesting the channel through the belief. These results are consistent with the broken windows theory and also support the relevance of belief-dependent social preference in decision making.
    Keywords: Conformism; guilt aversion; belief-dependent preference; antisocial behavior; broken windows theory
    JEL: C91 K42
    Date: 2020–05–28
  5. By: Antoine Bonleu (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Bruno Decreuse (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Tanguy van Ypersele (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Young Europeans experience high unemployment rates, job instability, and late emancipation. Meanwhile, they do not support reforms weakening protection on long-term contracts. In this paper, we suggest a possible rationale for such reform distaste. When the rental market is strongly regulated, landlords screen applicants with regard to their ability to pay the rent. Protecting regular jobs offers a second-best technology to sort workers, thereby increasing the rental market size. We provide a model where nonemployed workers demand protected jobs despite unemployment and the share of short-term jobs increases, whereas the individual risk of dismissal is unaffected. Our theory can be extended to alternative risks and markets involving correlated risks and commitment under imperfect information.
    Keywords: labor market dualism,screening,rent default
    Date: 2019–12
  6. By: Thomas G. Wollmann
    Abstract: Most US mergers are not reported to the government on the basis of their size, which can effectively exempt them from antitrust scrutiny, thereby leading to anticompetitive behavior. This paper studies premerger notification exemptions in the US dialysis industry. Over two decades, dialysis providers attempted over 4,000 facility acquisitions, half of which were not reported to the nation’s competition authorities. I estimate the effect of premerger notification exemptions on antitrust enforcement rates, and then I estimate the impact of the resulting market structure changes on patient health outcomes. First, I find that exemptions severely limit enforcement. Most striking, proposed facility acquisitions that would result in monopoly are blocked more than 80% of the time when apart of reportable mergers but less than 2% of the time when apart of exempt ones. Second, I find that the resulting market structure changes reduce the quality of care, evidenced by higher hospitalization rates and lower survival rates.
    JEL: D4 D43 I11 K21 L0 L1 L11 L13 L4 L40
    Date: 2020–05
  7. By: Adjovu, Charles; Fabian, Ewa
    Abstract: Licensing is one of the essential means of exploiting the monetary value of a musical work, and yet it is an area fraught with many issues and transactional costs which make it a difficult process for individuals and organizations. Many issues in music licensing arise from the legal complexity (e.g., national and international copyright law), business complexity (authentication, tracking, accounting, etc.), value web complexity (transparency of relationships among stakeholders), and technical complexity (e.g., establishing a global repertoire database for music, sufficient metadata standards) of working with music. Then, in addition to these issues, there are specific transactional costs (identification, negotiation, monitoring, and enforcement) associated with the licensing process. To mitigate the complexity and transactional costs associated with music and the licensing process, researchers and technologists have been investigating how new technologies and design models from the Web3 space, such as blockchain, linked data and Ricardian Contracts, can automate processes to reduce complexity, speed up payments, improve tracking, and provide other benefits in the music industry. In our report, we make our own attempt to reduce the complexity and transactional costs in the licensing process by developing an automated music license. In doing so, we first conducted a literature review scoping the intersection of music complexity and Web3 technologies to provide background and context to automating music licensing. Then we developed the Practical Tokenized Drafting (PTD) method, a set of core principles and practices for drafting Ricardian Contracts that interact with Web3 technologies (RC-Web3 Templates), and the Tokenized Music License (TML), an RC-Web3 Template standard form for music licensing on the OpenLaw platform. Both the PTD and TML can be adapted to meet the needs of music industry stakeholders and provide guidance to legal practitioners in drafting RC-Web3 Templates.
    Date: 2020–06–06
  8. By: Jason M. Lindo; Isaac D. Swensen; Glen R. Waddell
    Abstract: We document the immediate and long-term effects of violent media. Specifically, we evaluate the effects of The Ultimate Fighter, a hit TV show that features fighters competing in violent mixed martial arts and which brought Ultimate Fighting Championship into the mainstream. We estimate the effect of early exposure to this show using panel data from police agencies across the United States and a strategy that uses network ratings prior to the show's premier as an instrumental variable. We show that early exposure significantly reduced crime: these effects are particularly evident for assault, began in the month the show premiered, and persisted for many years. These estimates do not reflect systematic differences across geographic areas in their trends in crime rates prior to 2005. To complement our main results, we also investigate the effects of "UFC Main Events," which air in bars and on Pay-Per-View. This analysis additionally suggests reductions in violence caused by viewership.
    JEL: H0 K42 L82 L83
    Date: 2020–05
  9. By: Ross Levine; Chen Lin; Lai Wei; Wensi Xie
    Abstract: A central debate in economics concerns the relationship between competition and innovation, with some stressing that competition discourages innovation by reducing post-innovation rents and others emphasizing that more contestable markets spur currently dominant and other firms to invest more in innovation. We examine the impact of competition laws on innovation. We create a unique firm-level dataset on patenting activities that includes over 1.4 million firm-year observations, across 68 countries, from 1991 through 2015. Using a new, comprehensive dataset on competition laws, we find that more stringent competition laws are associated with increases in firms’ number of self-generated patents and the citation-impact and explorative nature of those patents. We also conduct the first examination of the relationship between competition laws and firms’ acquisition of patents from other firms. We find that competition increases patent acquisitions but lowers the ratio of acquired to self-generated patents. The results hold when using country-industry data on 186 countries over the 1888-2015 period.
    JEL: K21 L4 O3
    Date: 2020–05
  10. By: Ash, Elliott (ETH Zurich); Chen, Daniel L. (Toulouse School of Economics); Ornaghi, Arianna (University of Warwick)
    Abstract: Stereotypes are thought to be an important determinant of decision making, but they are hard to systematically measure, especially for individuals in policy-making roles. In this paper, we propose and implement a novel language-based measure of gender stereotypes for the high-stakes context of U.S. Appellate Courts. We construct a judge-specific measure of genderstereotyped language use – gender slant – by looking at the linguistic association of words identifying gender (male versus female) and words identifying gender stereotypes (career versus family) in the judge’s authored opinions. Exploiting quasi-random assignment of judges to cases and conditioning on detailed biographical characteristics of judges, we study how gender stereotypes influence judicial behavior. We find that judges with higher slant vote more conservatively on women’s rights’ issues (e.g. reproductive rights, sexual harassment, and gender discrimination). These more slanted judges also influence workplace outcomes for female colleagues : they are less likely to assign opinions to female judges, they are more likely to reverse lower-court decisions if the lower-court judge is a woman, and they cite fewer femaleauthored opinions
    Date: 2020
  11. By: ONO Yoshikuni; Michael A. ZILIS
    Abstract: Perceptions of procedural fairness play an integral role in the legitimacy of the legal system. We explore whether bias against women and minority judges undermines their perceived fairness of their rulings in court. Our exploration follows recent work on bias, but we offer a theoretical contribution by targeting its pernicious nature. Because women and minorities constitute a substantial portion of the bench, we do not expect most citizens to perceive them as entirely unfit to serve as judges. Rather, we argue that bias manifests in a subtle way – in the belief that diverse judges cannot fairly adjudicate controversies that involve their ingroup. To test our theory, we use a list experiment specifically developed to minimize social desirability effects. Our results highlight the pernicious nature of bias, providing some of the first insights into how stereotyping influences perceptions of the U.S. legal system, and suggest serious negative implications for the rule of law.
    Date: 2020–04
  12. By: María Amelia Gibbons (Department of Economics, Universidad de San Andres); Martín Rossi (Department of Economics, Universidad de San Andres)
    Abstract: We provide empirical evidence on the long-term causal impact of military conscription on sexist attitudes and intimate partner violence. To address potential endogeneity, we exploit the conscription draft lottery in Argentina. We combine the draft administrative data with self-reported survey data. We find that conscripted men are more likely to embrace more sexist attitudes in dimensions such as justification of sexism and violence, sexual machismo, negative attitude towards homosexuality, old-fashioned sexism, and hostile sexism. We also find that men who served are more likely to engage in intimate partner violence, as measured by non-physical abuse and physical violence.
    Keywords: military service, sexism, physical violence, non-physical abuse
    JEL: K42
    Date: 2020–06
  13. By: Asongu, Simplice; Odhiambo, Nicholas
    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
  14. By: Britto, Diogo (Bocconi University); Pinotti, Paolo (Bocconi University); Sampaio, Breno (Universidade Federal de Pernambuco)
    Abstract: We investigate the effect of job loss and unemployment benefits on criminal behavior, exploiting individual-level data on the universe of workers and criminal cases in Brazil over the 2009-2017 period. We match workers displaced upon plausibly exogenous mass layoffs with observationally-equivalent control groups to identify dynamic treatment effects of job loss while allowing for treatment effect heterogeneity. In our preferred specification, the probability of criminal prosecution increases by 23% upon job loss and remains approximately constant during the following years. Our unusually large dataset allows us to precisely estimate increases in almost all types of crimes - including offenses with no economic motivation - as well as spillover effects on other household members. The estimated effects remain robust when restricting to arrests "in flagrante", which are less subject to differential reporting by employment status. We then evaluate the mitigating effect of unemployment benefits leveraging on discontinuous changes in eligibility. Regression discontinuity estimates suggest that unemployment benefits covering 3 to 5 months after displacement completely offset potential crime increases upon job loss, especially for liquidity-constrained individuals, although this effect completely vanishes upon benefit expiration. Our findings point at liquidity constraints and psychological stress as main drivers of criminal behavior upon job loss, while substitution between time on the job and leisure does not seem to play an important role.
    Keywords: unemployment, crime, unemployment insurance, registry data
    JEL: K42 J63 J65
    Date: 2020–05
  15. By: Lilas Demmou; Guido Franco
    Abstract: Measuring the quality of governance and regulation in various ways and focusing on energy, transport and telecommunications, this paper shows that both sound governance of infrastructure investment and pro-competitive regulation in network industries are associated with stronger productivity growth in firms operating downstream.
    Keywords: governance, infrastructure, investment, regulation, total factor productivity
    JEL: D24 H54 K23 L50
    Date: 2020–06–25

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