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on Law and Economics |
| By: | Chiara Fumagalli; Massimo Motta; Emanuele Tarantino |
| Abstract: | We analyse the optimal policy of an antitrust authority towards the acquisitions of potential competitors in a model with financial constraints. With respect to traditional mergers, these acquisitions trigger a new trade-off. On the one hand, the acquirer may decide to shelve the project of the potential entrant. On the other hand, the acquisition may allow for the development of a project that would otherwise never reach the market. We first show that a merger policy does not need to be lenient towards acquisitions of potential competitors to take advantage of their pro-competitive effects on project development. This purpose is achieved by a policy that pushes the incumbent towards the acquisition of the potential entrants that lack the financial resources to develop the project. To this end, the implementation of this policy can be contingent to the bid formulated by the acquirer. However, we also show that, if the anticipation of a takeover relaxes the target firm's financial constraints, a more lenient merger policy, which allows for the acquisition of firms that have already committed to enter the market, may be optimal. |
| Keywords: | merger policy, digital markets, potential competition, conglomerate mergers |
| JEL: | L41 L13 K21 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1197&r=all |
| By: | Cécile Bourreau-Dubois; Myriam Doriat-Duban; Bruno Jeandidier; Jean Claude Ray |
| Abstract: | We study decision-making of judges in an experimental setting resembling real world judicial decision making. We gave to 312 future judges 48 vignettes built from real data related to divorce cases involving children. We compare two different subject pools: judges who were asked to set child support awards with a guideline and judges who were asked to set child support awards without any guideline. We found that the introduction of a guideline contributes to reduce the disparity between judges (i.e. the variance for like cases is lower when the subjects have the opportunity to use the guideline) but this effect is not systematic, an increase in heterogeneity being observed for some specific cases. |
| Keywords: | controlled experiment, field experiment, judicial sentencing, child support. |
| JEL: | K42 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2020-28&r=all |
| By: | José Garrido; Wolfgang Bergthaler; Chanda M DeLong; Juliet Johnson; Amira Rasekh; Anjum Rosha; Natalia Stetsenko |
| Abstract: | To date, the use of empirical data in insolvency law analysis has been sporadic. This paper provides a conceptual framework for the use of data to assess the effectiveness and efficiency of insolvency systems. The paper analyzes the existing sources of data on insolvency proceedings, including general insolvency statistics, judicial statistics, statistics of insolvency regulators and other sources, and advocates for the design of special data collection mechanisms and statistics to conduct detailed assessments of insolvency systems and to assist in the design of legal reforms. |
| Keywords: | Economic growth;Social security;Bank credit;Risk management;Interest costs;Bankruptcy, Insolvency, Statistics, Assessment of Laws,Law Design,insolvency,recovery rate,secured creditor,data collection system,statistical report |
| Date: | 2019–02–04 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2019/027&r=all |
| By: | Jens-Uwe Franck; Dimitrios Linardatos |
| Abstract: | As of January 2020, Section 58a of the German Payment Services Supervisory Act (PSSA) provides a right for payment service providers and e-money issuers to access technical infrastructure that contributes to mobile and internet-based payment services. This right of access is intended to promote technological innovation and competition in the consumers’ interests in having a wide choice among payment services, including competing solutions for mobile and internet-based payments. The provision has been dubbed ‘Lex Apple Pay’ as it seems to have been saliently motivated by the objective to give payment service providers the right of direct access to the NFC interfaces of Apple’s mobile devices. In enacting Section 58a PSSA, the German legislature has rushed forwards, overtaking the EU Commission’s ongoing competition investigation into Apple Pay as well as the pending reform of the German Competition Act, which is aimed precisely at operators of technological platforms, which enjoy a gatekeeper position. This article explores the scope of application and the statutory requirements of this right of access as well as available defences and possible legal barriers. We point out that, to restore a level playing field in the internal market, the natural option would be to further harmonize EU payment services regulation, including the availability of a right of access to technical infrastructure for mobile and internet-based payment services and e-money issuers. |
| Keywords: | ‘Lex Apple Pay’; Technology platforms; Antitrust; Payment Services Regulation; Mobile Payment; Access to NFC interfaces; Wallet Apps; Internal Market Regulation |
| JEL: | K21 K22 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_173v2&r=all |
| By: | McGowan, Danny; Nguyen, Huyen |
| Abstract: | We evaluate lenders' incentives to mitigate credit default risk through pricing or securitisation. Exploiting exogenous variation in credit default risk created by differences in foreclosure law along US state borders, we find that lenders in the mortgage market respond to the law in heterogeneous ways. In the agency market where the GSEs mandate a common interest rate policy, foreclosure law provokes a 4.5% increase in securitisation rates but does not affect interest rates. For nonagency loans where market participants demand risk premium, foreclosure law does not incentivise lenders to transfer the risk through the use of securitisation but causes a 625 basis point increase in interest rates. The results highlight how the GSEs' common interest rate policy inhibits lenders' risk-based pricing incentives, increases the GSEs' debt holdings by $70 billion per annum, and exposes taxpayers to preventable losses in the housing market. |
| Keywords: | loan pricing,securitisation,credit risk,GSEs |
| JEL: | G21 G28 K11 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:102020&r=all |
| By: | Alex Bryson (University College London); Peter Dolton (University Of Sussex); J James Reade (University of Reading); Dominik Schreyer (Otto Beisheim School of Management, Düsseldorf, Germany); Carl Singleton (University of Reading) |
| Abstract: | The Covid-19 pandemic has induced worldwide natural experiments on the effects of crowds. We exploit one of these experiments currently taking place over several countries in almost identical settings: professional football matches played behind closed doors. We find large and statistically significant effects on the number of yellow cards issued by referees. Without a crowd, fewer cards were awarded to the away teams, reducing home advantage. These results have implications for the influence of social pressure and crowds on the neutrality of refereeing decisions. |
| Keywords: | Attendance, Coronavirus, Covid-19, Home Advantage, Natural Experiments, Referee Bias, Social Pressure |
| JEL: | B41 C01 C12 C25 C52 K42 |
| Date: | 2020–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:qss:dqsswp:2004&r=all |
| By: | Alessandro Danovi (University of Bergamo); Iacopo Donati (University of Florence); Ilaria Forestieri (University of Florence); Tommaso Orlando (Bank of Italy); Andrea Zorzi (University of Florence) |
| Abstract: | The Italian insolvency framework makes several restructuring tools available to firms and their creditors, so that distress does not necessarily lead to liquidation. This paper analyses two such instruments: debt restructuring agreements (DRAs) and compositions with creditors (CCs), both commonly used to reorganize distressed firms and preserve their continuity. These procedures typically involve large firms, particularly in the case of DRAs where judicial control over negotiations is milder. Firms using DRAs are in less critical economic conditions when they file for restructuring, but they do so after longer periods of distress. Despite their declared aim, the effectiveness of these instruments in terms of business continuity is limited: many firms that use them end up exiting the market, in particular in DRAs. Firms that survive display only partial recovery, which is relatively more intense in CCs. However, the apparently superior performance of CCs is overshadowed by the long duration of restructuring, which may prevent us from observing definitive outcomes. |
| Keywords: | insolvency, firm restructuring, business continuity |
| JEL: | G33 G34 K29 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_574_20&r=all |
| By: | Petrich, Damon M.; Pratt, Travis C.; Jonson, Cheryl Lero; Cullen, Francis T. |
| Abstract: | Research Summary: Despite a downsizing of the prison population over the last decade, the United States remains the world’s largest incarcerator. While prior meta-analytic reviews have indicated prisons have a null or slight criminogenic effect, there has been a substantial increase in primary studies assessing the impact of custodial sanctions on reoffending since 2010. The current study conducts the most comprehensive and rigorous meta-analytic review of research to date comparing the effects of custodial and non-custodial sanctions on reoffending. Using a sample of 959 effect sizes calculated from 116 studies, this review builds on prior research by (a) conducting the first inclusive review of the research in over a decade; (b) drawing on advancements in modeling techniques that could account for the precision and statistical dependence of effect sizes; and (c) examining whether a wide variety of methodological characteristics moderate mean effect sizes. The results of multilevel analyses revealed that custodial sanctions have a weak criminogenic effect on reoffending and that this effect is relatively robust across a wide variety of methodological moderators. Policy Implications: America’s reliance on incarceration is unlikely to wane in the near future. However, the results of the current study illustrate that incarceration is not achieving one of its oft-desired goals of deterrence. While there is certainly a subset of high-risk offenders for whom incapacitation is warranted, in general, placing individuals in custodial sanctions appears to contribute to, rather than reduce, reoffending. As a result, sentencing low-level offenders and marginal felons to non-custodial sanctions may lead to considerable savings for correctional departments and allow offenders to be connected to and contribute to their communities while reducing reoffending. For the sake of public safety and those for whom incarceration is appropriate, however, more research is needed on the in-prison social and psychological dynamics increase post-release criminal behavior. |
| Date: | 2020–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:f6uwm&r=all |
| By: | Richard Holden (UNSW Business School); Michael Keane (UNSW Business School); Matthew Lilley (Harvard University) |
| Abstract: | Using data on essentially every US Supreme Court decision since 1946, we estimate a model of peer effects on the Court. We consider both the impact of justice ideology and justice votes on the votes of their peers. To identify these peer effects we use two instruments that generate plausibly exogenous variation in the peer group itself, or in the votes of peers. The first instrument utilizes the fact that the composition of the Court varies from case to case due to recusals or absences for health reasons. The second utilizes the fact that many justices previously sat on Federal Circuit Courts. Those who served on the Circuit Courts for short (long) periods of time are empirically much more (less) likely to affirm decisions from their “home” court. We find large peer effects. Replacing a single justice with one who votes in a conservative direction 10 percentage points more frequently increases the probability that each other justice votes conservative by 1.6 percentage points. Further, a 10% increase in the probability that a given justice votes conservative leads to a 1.1 percentage point increase in the probability that each other justice votes conservative. This indirect effect increases the share of cases with a conservative outcome by 3.6 percentage points (excluding the direct effect of the new justice). In general, we find indirect effects are large relative to the direct mechanical effect of a justice’s own vote. |
| Keywords: | Supreme Court, Peer Effects, Recusal |
| JEL: | K00 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:swe:wpaper:2019-01b&r=all |
| By: | Brennan, Iain; Myhill, Andy; Tagliaferri, Giulia; Tapley, Jacki |
| Abstract: | Objective: Following a pre-registered study design, estimate the effect of police force-wide domestic abuse training on arrests for the new crime of ‘controlling or coercive behaviour’. Methods: Using data on monthly count of arrest for controlling or coercive behaviour in 33 police forces, we used a negative binomial difference-in-difference analysis and capitalised on differences in intervention timing to undertake an event study. Results: Training was associated with a 41% increase in arrest for controlling or coercive behaviour for trained forces compared to untrained forces (IRR 1.413, 95% CI 1.235–1.617). The event study illustrated that the increase in arrests in trained forces was consistent with the timing of the training. Conclusions: Training entire police forces to understand the dynamics of domestic abuse, including the new offence of coercive control, is effective in increasing the rate of arrest for coercive control. |
| Date: | 2020–07–14 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:d428k&r=all |
| By: | Buil-Gil, David (University of Manchester); Moretti, Angelo; Langton, Samuel |
| Abstract: | Police-recorded crimes are used by police forces to map crime patterns and design spatially-targeted strategies. Nevertheless, maps of crimes known to police are affected by selection biases driven by unequal crime reporting rates across social groups. This paper presents a simulation study to analyse the impact of selection biases on crime maps produced at different spatial scales. Based on parameters obtained from the UK Census, we simulate a synthetic population consistent with the characteristics of Manchester. Then, based on parameters derived from the Crime Survey for England and Wales, we simulate crimes suffered by individuals, and their likelihood to be known to police. This allows comparing the relative difference between all crimes and police-recorded incidents at the different spatial scales. While the average relative difference between all crimes and those known to police is 62% across all geographical scales, the measures of dispersion of the relative difference are larger when crimes are aggregated to small geographies. The percentage of crimes unknown to police varies widely across small areas, underestimating the prevalence of crime in certain places while overestimating it in others. Micro-level crime maps are affected by a larger risk of bias than maps produced at larger scales. |
| Date: | 2020–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:myfhp&r=all |
| By: | King Yoong Lim; Reagan Pickering |
| Abstract: | We examine the effects of welfare spending on crime, using the universal credit (UC) system in England and Wales as a case study. Motivated by a seemingly positive crime-UC nexus, we develop a novel theoretical model of crime and cash transfer that distinguishes between introductory and level effect, as well as a crime-specific human capital-induced heterogeneity between criminal activities. Based on county-level data for 10 crime types, we use both standard fixed-effect estimator and different instrumental variable-estimation strategies (to account for endogeneity of the UC rate) to evaluate the theoretical propositions. Criminal damage and arson are found to exhibit the characteristics of being criminal human capital-dependent. In contrast, as a poliy tool to combat crime, welfare spending appears to be most effective in reducing public disorder and weapon possessions. Overall, we find the claim that UC policy has led to an increase in crime rate to be overstated. |
| Keywords: | Crime Heterogeneity, England and Wales, Universal Credit, Welfare Spending |
| JEL: | C26 H53 H75 K42 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbs:wpaper:2020/04&r=all |
| By: | Maximilian Andres (University of Potsdam); Lisa Bruttel (University of Potsdam); Jana Friedrichsen (HU Berlin, WZB Berlin Social Science Center, DIW Berlin) |
| Abstract: | Numerous studies investigate which sanctioning institutions prevent cartel formation but little is known as to how these sanctions work. We contribute to understanding the inner workings of cartels by studying experimentally the effect of sanctioning institutions on firms’ communication. Using machine learning to organize the chat communication into topics, we find that firms are significantly less likely to communicate explicitly about price fixing when sanctioning institutions are present. At the same time, average prices are lower when communication is less explicit. A mediation analysis suggests that sanctions are effective in hindering cartel formation not only because they introduce a risk of being fined but also by reducing the prevalence of explicit price communication. |
| Keywords: | cartel, collusion, communication, machine learning, experiment |
| JEL: | C92 D43 L41 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:19&r=all |
| By: | Massimo Motta; Martin Peitz |
| Abstract: | Big tech mergers are frequently occurring events. What are the competitive effects of these mergers? With the help of a simple model we identify the acquisition of potential competitors as a pressing issue for merger control in digital industries. We also sketch a few recent theories of harm of horizontal and conglomerate mergers that are potentially relevant in digital industries. Finally, we draw some policy recommendations on how to deal with mergers in such industries. |
| Keywords: | merger policy, digital markets, potential competition, conglomerate mergers |
| JEL: | L41 L13 K21 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1736&r=all |
| By: | Chiara Fumagalli; Massimo Motta; Martin Peitz |
| Abstract: | In response to the severe economic crisis triggered by Covid-19, state aid and a relaxation of competition rules, including merger control, have been proposed as policyoptions. We argue that there is a clear role for state aid in sectors experiencing a temporary shock, whereas state aid in sectors affected by a permanent long-term shock is more problematic. We also argue that merger control should not be relaxed and that in particular any merger proposal invoking the failing firm defence requires close scrutiny. |
| Keywords: | competition policy, state aid, merger control, Covid-19, failing firm defence |
| JEL: | L52 L53 K21 H25 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2020_184&r=all |
| By: | Emiliano Brancaccio (Universita' degli studi del Sannio); Fabiana De Cristofaro (Institute of Economics and EMbeDS Department, Scuola Superiore Sant’Anna, Pisa); Raffaele Giammetti (Department of Economics and Social Sciences, Universita' Politecnica delle Marche (Italy)) |
| Abstract: | The so-called 'IMF-OECD consensus' suggests that labour market deregulations increase employment and reduce unemployment. We present a first meta-analysis on the subject based on MAER-NET guidelines. We examine the relation between Employment Protection Legislation indexes on one hand and employment and unemployment on the other. Among 53 academic papers published between 1990 and 2019 and contained in the Web of Science, only 28% supports the 'consensus' while the remaining 72% report results that are controversial (21%) or contrary to the 'consensus' (51%). The decline in 'consensus' is particularly evident in the last decade. Results are independent of the citations of the papers examined, the impact factor of the journals and the techniques used. A FAT-PET meta-regression model confirms these outcomes. |
| Keywords: | Labour market, Employment protection legislation, Unemployment, Meta-analysis, Meta-Regression |
| JEL: | B5 C83 E24 J48 K31 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:anc:wpaper:445&r=all |
| By: | Barry Hashimoto (Division of Social Science) |
| Abstract: | This article contributes to an understanding of why autocrats have accepted the jurisdiction of the International Criminal Court. Leveraging their ability to obstruct their own prosecution, autocrats have traded off the risk of unwanted prosecutions against the deterrent threat that prosecutions pose to political rivals and patrons of their enemies conspiring to oust them. The risk of unwanted prosecutions and the court’s deterrent threat both arise because ICC prosecutions credibly communicate guilt for international crimes to capital-disbursing democracies, which may, insofar as possible, use leader-specific economic statecraft to prevent the administration of foreign states by those whom the court signals are guilty of international crimes. Analysis using fixed effects and matching shows that a greater reliance on capital publicly financed by democracies increased the probability that a state accepted the court’s jurisdiction only when it was an autocracy (1998–2017). ICC jurisdiction also lengthened the tenure of autocrats and reduced the severity of civil conflict in autocracies. |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:nad:wpaper:20190024&r=all |
| By: | Lucia Rizzica (Bank of Italy); Giacomo Roma (Bank of Italy); Gabriele Rovigatti (Bank of Italy) |
| Abstract: | We estimate the effects of the deregulation of shop opening hours on the market structure of the retail sector and on the size and composition of the labour force employed there. To identify these effects, we exploit the staggered implementation of a reform that allowed Italian municipalities to adopt fully flexible opening hours in the late 1990s. Our findings indicate that the possibility of opening shops 24/7 increased employment in the retail sector by about three per cent and raised the number of shops in the affected municipalities by about two per cent. The effects were concentrated amongst workers employed in larger commercial outlets that were better able to exploit the flexibility introduced by the new regime. An analysis of individual-level evidence suggests that the deregulation also produced a recomposition of employment towards regular employees rather than self-employed workers. |
| Keywords: | regulation, retail sector, employment |
| JEL: | J21 K20 L51 L81 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1281_20&r=all |