nep-law New Economics Papers
on Law and Economics
Issue of 2020‒07‒13
fifteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The draft for the 10th amendment of German competition law: Towards a new concept of "Outstanding relevance across markets"? By Budzinski, Oliver; Gänßle, Sophia; Stöhr, Annika
  2. The impact of EU cartel policy reforms on the timing of settlements in private follow-on damages disputes: An empirical assessment of cases from 2001 to 2015 By Hans W. Friederiszick,; Linda Gratz,; Michael Rauber,
  3. European Privacy Law and Global Markets for Data By Batikas, Michail; Bechtold, Stefan; Kretschmer, Tobias; Peukert, Christian
  4. Innovation, information, lobby and tort law under uncertainty. By Julien Jacob; Caroline Orset
  5. Lending to the Unbanked: Relational Contracting with Loan Sharks By Lang, Kevin; Leong, Kaiwen; Li, Huailu; Xu, Haibo
  6. Laying the Foundation for Effective Partnerships: An Examination of Data Sharing Agreements By Dahmm, Hayden
  7. Solving Structural Competition Problems Require Changes in EU Merger Regulation By Koski, Heli
  8. Stabbed in the back? Mandated political representation and murders By Victoire Girard
  9. Experimental test of the effects of punishment probability and size on the decision to take a bribe By Bahník, Štěpán; Vranka, Marek Albert
  10. Opinions can be incorrect! In our opinion: on data protection law’s accuracy principle By Zuiderveen Borgesius, Frederik; Hallinan, Dara
  11. Police Response Times and Injury Outcomes By DeAngelo, Gregory; Toger, Marina; Weisburd, Sarit
  12. Post-9/11 War Deployments Increased Crime among Veterans By Resul Cesur; Joseph J. Sabia; Erdal Tekin
  13. Investor-State vs. State-State Dispute Settlement By Horn, Henrik; Tangerås, Thomas
  14. Aggressive Tax Policy versus Aggressive Tax Planning By Akın, Emre
  15. Spoiled Food and Spoiled Surprises: Inspection Anticipation and Regulatory Compliance By Makofske, Matthew

  1. By: Budzinski, Oliver; Gänßle, Sophia; Stöhr, Annika
    Abstract: The ministerial proposal for a 10th amendment of the German competition law particularly addresses abuse control and seeks to tighten this pillar of competition policy against the background of the challenges from the digital economy. Next to extending the classic policy instruments of abuse control, the reform proposal suggests to introduce an additional and novel type of market power: the outstanding relevance across markets (ORAM). From an economic perspective, such an institution is interesting as it emphasizes non-horizontal and less direct anticompetitive abuses of market power. We review what type of cases could be subject to such a concept of systemic market power. Furthermore, we address the question whether merger control could also benefit from an ORAM-style conception.
    Keywords: competition policy,abuse control,digital economy,market power,merger control,antitrust
    JEL: L40 K21 L41 L42 L49 K42 L81 L86 M21
    Date: 2020
  2. By: Hans W. Friederiszick, (ESMT European School of Management and Technology and E.CA Economics); Linda Gratz, (E.CA Economics); Michael Rauber, (E.CA Economics)
    Abstract: Private cartel damages litigation is on the rise in Europe since early 2000. This development has been initiated by the European courts and was supported by various policy initiatives of the European Commission, which found its culmination in the implementation of the EU Directive on Antitrust Damages end of 2016. This paper explores the impact of this reform process on effective compensation of damaged parties of cartel infringements. For that purpose we analyse all European cartel cases with a decision date between 2001 and 2015, for which we analyse litigation activity and speed. Overall, we find a substantial reduction of the time until first settlement (increase in litigation speed) together with a persisting high share of cases being litigated (high litigation activity). This supports the view that the reform not only increased the claimant’s expectation about the amount of damages being awarded, but also resulted in an alignment in the expectations of claimants and defendants in the final damages amount, i.e. the European Commission succeeded in reaching its objective to clarify and harmonize legal concepts across Europe.
    Keywords: Cartels, private damages, competition law
    Date: 2019–08–26
  3. By: Batikas, Michail; Bechtold, Stefan; Kretschmer, Tobias; Peukert, Christian
    Abstract: We demonstrate how privacy law interacts with competition and trade policy in the context of the European General Data Protection Regulation (GDPR). We follow more than 110,000 websites for 18 months to show that websites reduced their connections to web technology providers after GDPR became effective, especially regarding requests involving personal data. This also holds for websites catering to non-EU audiences and therefore not bound by GDPR. We further document an increase in market concentration in web technology services after the introduction of GDPR. While most firms lose market share, the leading firm, Google, significantly increases market share.
    Keywords: Antitrust; Brussels effect; competition policy; compliance risk; cookies; GDPR; Internet regulation; privacy; web tracking
    JEL: K21 L12 L15 L86
    Date: 2020–03
  4. By: Julien Jacob; Caroline Orset
    Abstract: Recent environmental policies favour the ’pollutant-payer’ Principle. This principle points out the pollutant financial liability for potential incidents induced by its activities. Investing in technological innovations generates uncertainty on the future returns, as well as on the damages that such innovations could involve and on the cost to reimburse in the event that of troubles. To reduce this uncertainty, the firm has the opportunity to acquire information, for example through research activities, on its project’s potential consequences on human health and the environment. Nevertheless, in their efforts to achieve and/or to maintain a marketing authorisation with the agency, firms may develop specific strategies to exploit scientific uncertainty. They may produce favourable scientific findings. In case of accident, the firm utilising this type of behaviour can be legally charged. We then analyse whether liability rules and tort law incentive the firm both to invest in research and development to reduce the uncertainty and to decrease miscommunication on the results.
    Keywords: health and environmental risks, industrial risks, information acquisition, innovation, liability rules, lobby.
    JEL: D01 D72 K32 Q57
    Date: 2020
  5. By: Lang, Kevin (Boston University); Leong, Kaiwen (Nanyang Technological University, Singapore); Li, Huailu (Fudan University, China); Xu, Haibo (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: 2020–06
  6. By: Dahmm, Hayden
    Abstract: In the midst of the COVID-19 pandemic, data has never been more salient. COVID has generated new data demands and increased cross-sector data collaboration. Yet, these data collaborations require careful planning and evaluation of risks and opportunities, especially when sharing sensitive data. Data sharing agreements (DSAs) are written agreements that establish the terms for how data are shared between parties and are important for establishing accountability and trust. However, negotiating DSAs is often time consuming, and collaborators lacking legal or financial capacity are disadvantaged. Contracts for Data Collaboration (C4DC) is a joint initiative between SDSN TReNDS, NYU’s GovLab, the World Economic Forum, and the University of Washington, working to strengthen trust and transparency of data collaboratives. The partners have created an online library of DSAs which represents a selection of data applications and contexts. This report introduces C4DC and its DSA library. We demonstrate how the library can support the data community to strengthen future data collaborations by showcasing various DSA applications and key considerations. First, we explain our method of analyzing the agreements and consider how six major issues are addressed by different agreements in the library. Key issues discussed include data use, access, breaches, proprietary issues, publicization of the analysis, and deletion of data upon termination of the agreement. For each of these issues, we describe approaches illustrated with examples from the library. While our analysis suggests some pertinent issues are regularly not addressed in DSAs, we have identified common areas of practice that may be helpful for entities negotiating partnership agreements to consider in the future.
    Date: 2020–06–10
  7. By: Koski, Heli
    Abstract: Abstract EU competition law does not effectively address or make it possible to resolve some of the structural competition problems identified in the markets. The Commission plans to design and launch a new competition tool to ensure fair and undistorted competition, benefit consumers, and increase innovation. Economic research suggests that the market dominance of large platform companies may shift to traditional product markets through exploiting consumer data. Firms increasingly utilize algorithms, and also the non-dominant companies may use them for anti-competitive practices. The scope of a new competition tool should limit neither to dominant-based enforceability nor to sectors identified as being prone to structural competition problems. Under current EU legislation, it is not possible to intervene in acquisitions where global technology giants prevent small companies from becoming market challengers. It is necessary to amend EU merger control legislation to address the acquisitions of technology giants, potentially reducing future competition, even when the acquired companies’ turnover is relatively low. In the assessment of competitive impacts of acquisitions, it is essential to evaluate whether the acquiree’s innovation can challenge the buyer in its market in the future.
    Keywords: Competition, Competition policy, Algorithms, Data economy, Acquisitions
    JEL: G34 L1 L41
    Date: 2020–06–23
  8. By: Victoire Girard
    Abstract: This paper provides the first country-wide evidence that an affirmative action policy may induce a backlash. I exploit the timing of the implementation of caste-based electoral quotas across and within the states of India. The results show that the implementation of the electoral quotas coincides with an increase in the number of murders targeting members of the lower castes. The analysis of these administrative crime data is backed up by the complementary analysis of a nationally representative household survey. Households’ answers reveal an increase in inter-caste tensions and discrimination during the operation of caste quotas. The results are consistent with a backlash against electoral quotas (due to sabotage or retaliation), and inconsistent with other interpretations (such as empowerment).
    Keywords: Sabotage, backlash, affirmative action, electoral quota, crime, caste
    JEL: D72 D74 J15 K42 O12
    Date: 2020
  9. By: Bahník, Štěpán (University of Economics, Prague); Vranka, Marek Albert (University of Economics)
    Abstract: Punishment is one of the main methods for preventing corruption. However, studies on the effect of size and probability of punishment on bribe-taking have not yielded conclusive results. We introduce a punishment by a fine or termination of the task, both with varying probabilities, in a laboratory task modeling the decision to take a bribe. The punishment decreased the probability of taking higher bribes, even though the probability of taking lower bribes was unaffected. Participants took fewer bribes when the fine was larger and more probable. We did not observe any clear negative effects of small punishment crowding out intrinsic motivation to behave honestly. However, we found that effects of punishment differ based on emotionality and honesty-humility of participants. The study shows that the prospect of punishment may deter dishonest behavior; however, personality characteristics should be taken into account when devising an effective deterrence policy.
    Date: 2020–06–10
  10. By: Zuiderveen Borgesius, Frederik; Hallinan, Dara
    Abstract: The GDPR contains an accuracy principle, as most data privacy laws in the world do. In principle, data controllers must ensure the personal data they process are accurate. Some have argued that the accuracy principle does not apply to personal data in the form of opinions about data subjects. We argue, however, from a positive law perspective, that the accuracy principle does apply to opinions. We further suggest, from a normative perspective, that the accuracy principle should apply to opinions.
    Date: 2020–01–28
  11. By: DeAngelo, Gregory; Toger, Marina; Weisburd, Sarit
    Abstract: The delayed response of law enforcement to calls for service has become a hot button issue when evaluating police department performance. While it is often assumed that faster response times could play an important role in quelling potentially violent incidents, to date there is no empirical evidence to support this claim. In this paper, we measure the effect of police response time on the likelihood that an incident results in an injury. To overcome the endogeneity between more severe calls being issued a higher priority, which requires a faster response, we take several steps. First, we focus on a subset of calls for service categorized as "Major Disturbance - Violence" that all receive the same priority level. Second, we instrument for police response time with the number of vehicles within a 2.5 mile radius of the call at the time it is received at the call center. When controlling for beat fixed effects, this instrumenting strategy allows us to take advantage of the geographical constraints faced by a dispatcher when assigning officers to an incident. In contrast to the OLS estimates, our two-stage least squares analysis establishes a strong, positive causal relationship between response time and the likelihood that an incident results in an injury. The effect is concentrated among female callers, suggesting that faster response time could potentially play an important role in reducing injuries related to domestic violence.
    Keywords: Injuries; Policing; Rapid Response; Safety
    Date: 2020–03
  12. By: Resul Cesur; Joseph J. Sabia; Erdal Tekin
    Abstract: Several high-profile news stories have linked post-September 11 (9/11) combat service to violent crime among veterans. Nevertheless, there is scant causal evidence for this claim. We exploit the administrative procedures by which U.S. Armed Forces senior commanders conditionally randomly assign active duty servicemen to overseas deployments to estimate the causal impact of modern warfare on crime. Using data from two national surveys and a unified framework, we find consistent evidence that post-9/11 combat service substantially increased the probability of crime commission among veterans. Combat increases the likelihood of property and violent crime, arrest, gang membership, trouble with police, and punishment under the Uniform Code of Military Justice. Back-of-the-envelope calculations suggest that post-9/11 combat exposure generated approximately $26.7 billion in additional crime costs. Finally, we document descriptive evidence that Traumatic Brain Injury and Post-Traumatic Stress Disorder (PTSD) may be important mechanisms to explain post-9/11 combat-induced increases in crime.
    JEL: H56 K14
    Date: 2020–05
  13. By: Horn, Henrik; Tangerås, Thomas
    Abstract: International investment agreements have been intensely criticized, and in particular the "ISDS" mechanisms that enable foreign investors to litigate against host countries. This paper examines the common claim that host countries benefiÂ?t from state-state dispute settlement (SSDS), since this yields less litigation. It assumes the standard rationale for ISDS, that SSDS causes political litigation costs. It shows how a host country might indeed beneÂ?fit from SSDS, but that there is no presumption that these conditions will prevail. Furthermore, negotiations regarding dispute settlement will plausibly yield ISDS, regardless of the distributional consequences for host countries, since SSDS is Pareto inefficient.
    Keywords: expropriation; IDSD; international investment agreement; regulatory chill
    JEL: F21 F23 F55 K33
    Date: 2020–03
  14. By: Akın, Emre
    Abstract: While the world taxpayers focus on aggressive tax planning, the world jurisdictions try to deal with that especially under the leadership OECD. Until now, it is hard to say that jurisdictions are successful to solve this problem. And some other countries have started to take unilateral measures to combat aggressive tax planning, which the author describes this as "aggressive tax policy"(ATPol).
    Keywords: aggressive tax policy, aggressive tax planning, international tax, unilateral measures
    JEL: F38 H26 K33 K34
    Date: 2020–06–01
  15. By: Makofske, Matthew
    Abstract: Periodic inspections, in which firms are punished for detected violations, are a popular means of enforcing environmental, health, and safety regulations. The effectiveness of these programs typically hinges on the timing of inspections being unannounced and difficult to anticipate, lest firms comply only when they believe inspections are likely. In Las Vegas, Nevada, many facilities—e.g., casinos, hotels, and shopping malls—house multiple food-service establishments, several of which are often inspected during the same inspector visit. Within such visits, all but the first establishment inspected likely anticipate their next inspection to a meaningful extent. Using data which record inspection starting times and span more than six years, I find that establishments in such facilities perform significantly and substantially worse when they receive the first inspection of a visit. Relative to their own performances on days when inspected later than first, establishments are assessed 21% more demerits and cited for 31% more critical violations in these surprise inspections.
    Keywords: inspection, compliance, regulation, enforcement, restaurant hygiene
    JEL: K32 Q18
    Date: 2020–06–03

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