nep-law New Economics Papers
on Law and Economics
Issue of 2020‒10‒19
eleven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Economics of Hacking By Hui, Kai-Lung; Zhou, Jiali
  2. Global Software Piracy, Technology and Property Rights Institutions By Asongu, Simplice
  3. Deterrence Effects of Antifraud and Abuse Enforcement in Health Care By David H. Howard; Ian McCarthy
  4. The Effect of Grade Retention on Adult Crime: Evidence from a Test-Based Promotion Policy By Eren, Ozkan; Lovenheim, Michael; Mocan, Naci
  5. The Effects of the Summer All Out Foot Patrol Initiative in New York City: A Difference-in-Differences Approach By Bilach, Thomas J.; Roche, Sean Patrick; Wawro, Gregory J.
  6. The Effects of Government Licensing on E-commerce: Evidence from Alibaba By Ginger Zhe Jin; Zhentong Lu; Xiaolu Zhou; Chunxiao Li
  7. Bridging the gap in transatlantic data protection By Maldonado, Eric
  8. Do-It-Yourself medicine? The impact of light cannabis liberalization on prescription drugs By Vincenzo Carrieri; Leonardo Madio; Francesco Principe
  9. Termination of right in the mechanism of civil legal relations By Anatoliy Kostruba; V Vasylyeva
  10. Online Cheating Amid COVID-19 By Bilen, Eren; Matros, Alexander
  11. What Do Employers' Associations Do? By Martins, Pedro S.

  1. By: Hui, Kai-Lung; Zhou, Jiali
    Abstract: Hacking is becoming more common and dangerous. The challenge of dealing with hacking often comes from the fact that much of our wisdom about conventional crime cannot be directly applied to understand hacking behavior. Against this backdrop, this essay reviews hacking studies, with a focus on discussing the new features of cybercrime and how they affect the application of classical economic theory of crime in the cyberspace. Most findings of hacking studies can be interpreted with a parsimonious demand and supply framework. Hackers decide whether and how much to “supply” hacking by calculating the return on hacking over other opportunities. Defenders optimally tolerate some level of hacking risks because defense is costly. This tolerance can be interpreted as an indirect “demand” for hacking. Variations in law enforcement, hacking benefits, hacking costs, legal alternatives, private defense, and the dual use problem can variously affect the supply or demand for hacking, and in turn the equilibrium observation of hacking in the market. Overall, this essay suggests that the classical economic theory of crime remains a powerful framework to explain hacking behaviors. However, the application of this theory calls for considerations of different assumptions and driving forces, such as psychological motives and economies of scale in offenses, that are often less prevalent in conventional (offline) criminal behaviors, but that tend to underscore hacking in the cyberspace.
    Keywords: hacker, hacking, cybercrime, supply, demand, law enforcement
    JEL: K42
    Date: 2020–09–19
  2. By: Asongu, Simplice
    Abstract: This study extends the literature on fighting software piracy by investigating how Intellectual Property Rights (IPRs) regimes interact with technology to mitigate software piracy when existing levels of piracy are considered. Two technology metrics (internet penetration rate and number of PC users) and six IPRs mechanisms (constitution, IPR law, main IP laws, WIPO Treaties, bilateral treaties and multilateral treaties) are used in the empirical analysis. The statistical evidence is based on: (i) a panel of 99 countries for the period 1994-2010 and (ii) interactive contemporary and non-contemporary Quantile regressions.The findings show that the relevance of IPR channels in the fight against software piracy is noticeably contingent on the existing levels of technology embodied in the pirated software. There is a twofold policy interest for involving modern estimation techniques such as interactive Quantile regressions. First, it uncovers that the impact of IPR systems on software piracy may differ depending on the nature of technologies used. Second, the success of initiatives to combat software piracy is contingent on existing levels of the piracy problem. Therefore, policies should be designed differently across nations with high-, intermediate- and low-levels of software piracy.
    Keywords: Piracy; Business Software; Software piracy; Intellectual Property Rights
    JEL: F42 K42 O34 O38 O57
    Date: 2020–01
  3. By: David H. Howard; Ian McCarthy
    Abstract: Estimates of the benefits of antifraud enforcement in health care typically focus on direct monetary damages. Deterrence effects are acknowledged but unquantified. We evaluate the impact of a Department of Justice investigation of hospitals accused of billing Medicare for unnecessary implantable cardiac defibrillator (ICD) procedures on their use. Using 100% inpatient and outpatient procedure data from Florida, we estimate that the investigation caused a 22% decline in unnecessary ICD implantations. The present value of savings nationally over a 10 year period is $2.7 billion, nearly 10 times larger than the $280 million in settlements the Department of Justice recovered from hospitals. The investigation had a large and long-lasting effect on physician behavior, indicating the utility of antifraud enforcement as a tool for reducing wasteful medical care.
    JEL: I18 K42
    Date: 2020–10
  4. By: Eren, Ozkan (University of California, Riverside); Lovenheim, Michael (Cornell University); Mocan, Naci (Louisiana State University)
    Abstract: This paper presents the first analysis in the literature of the effect of test-based grade retention on adult criminal convictions. We exploit math and English test cutoffs for promotion to ninth grade in Louisiana using administrative data on all public K-12 students combined with administrative data on all criminal convictions in the state. Our preferred model uses the promotion discontinuity as an instrument for grade retention, and we find that being retained in eighth grade has large long-run effects on the likelihood of being convicted of a crime by age 25 and on the number of criminal convictions by age 25. Effects are largest for violent crimes: the likelihood of being convicted increases by 1.05 percentage points, or 58.44%, when students are retained in eighth grade. Our data allow an examination of mechanisms, and we show that the effects are likely driven by declines in high school peer quality and educational investments that result in lower non-cognitive skill acquisition. We find little effect on juvenile crime. Using the method proposed by Angrist and Rokkanen (2015), we also estimate effects of grade retention away from the promotion cutoff and show that our results are generalizable to a larger group of low- performing students. Our estimates indicate that eighth grade test-based promotion cutoffs lead to nontrivial private and social costs in terms of higher levels of long-run criminal convictions that are important to consider in the development and use of these policies.
    Keywords: grade retention, crime, grade promotion policies, regression discontinuity, education, discontinuity high school, middle school
    JEL: I2 K4
    Date: 2020–10
  5. By: Bilach, Thomas J.; Roche, Sean Patrick (Texas State University); Wawro, Gregory J.
    Abstract: Objectives: The New York City Police Department’s “Summer All Out” (SAO) initiative was a 90- day, presence-based foot patrol program in a subset of the city’s patrol jurisdictions. Methods: We assessed the effectiveness of SAO initiative in reducing crime and gun violence using a difference-in-differences (DiD) approach. Results: Results indicate the SAO initiative was only associated with significant reductions in specific property offenses, not violent crime rates. Foot patrols did not have a strong, isolating impact on violent street crime in 2014 or 2015. Deployments on foot across expansive geographies also has a weak, negligible influence on open-air shootings. Conclusions: The findings suggest saturating jurisdictions with high-visibility foot patrols has little influence on street-level offending, with no anticipatory or persistent effects. Police departments should exercise caution in deploying foot patrols over large patrol jurisdictions.
    Date: 2020–09–20
  6. By: Ginger Zhe Jin; Zhentong Lu; Xiaolu Zhou; Chunxiao Li
    Abstract: Using proprietary data from Alibaba, we examine how the 2015 Food Safety Law (FSL) affects e-commerce in China. The FSL requires most food sellers on e-commerce platforms to obtain a valid, online license for retail food handling. Because the FSL was rolled out progressively, we have a rare opportunity to observe a gradual transition from voluntary certification to partial licensing and mandatory licensing. Data summary shows that, conditional on sellers with valid licensing information, those that had a better online reputation and more online food sales before FSL tend to display their FSL license earlier on the platform, and buyers are more willing to transact with a seller after she displays her FSL license. To identify the causal impact of the FSL, we compare food and non-food categories via synthetic control matching. We find the average quality of surviving food sellers has improved after partial and mandatory licensing, partly because those who are unwilling to obtain the FSL license must exit the platform. Despite an increase in seller concentration, the platform's gross merchandise value (GMV) in the food category did not decline post FSL, nor did the average sales price increase significantly one year into full enforcement of the FSL.
    JEL: D82 K23 L5 L81
    Date: 2020–10
  7. By: Maldonado, Eric
    Abstract: As technology continues to innovate at lightning speeds and technology becomes more central to everyday life, personal data must be protected. In 2017, the passage of the General Data Protection Regulation (GDPR) in the European Union set an important precedent in the world of data protection law. Building upon the Data Protection Directive (95/46/EC), the GDPR has taken the fundamental right to privacy and extended it to the transmission of personal data. The United States of America, however, offers no such protection at the federal level - the right to privacy within the U.S. is not absolute. This article will comparatively present the pattern of case law and legislation in the EU that led to the General Data Protection Regulation, and then the pattern of case law and legislation leading to data protection law(s) in the United States of America. The contrasting degrees of protection within the two regimes is a large discrepancy; the collection and transmission of personal data is protected by law in the EU and the US differs to such a degree that companies like Facebook, have had to drastically alter their services in Europe to comply with the stringent requirements of the GDPR. The paper continues on to addresses how personal data protection is being addressed by lawmakers vis-à-vis competition law and anti-trust regulation in the EU. While it may be difficult for the United States to develop a sweeping, federal-level piece of legislation like the GDPR, the increasing success of laws protecting personal data vis-à-vis competition law points to an area in which the U.S. and the E.U. can more easily harmonize their laws and protections. Finally, the paper offers a comment on the future of the transatlantic relationship and the role data protection law could play in strengthening that relationship.
    Keywords: data protection,GDPR,privacy,fundamental right,competition,policy,transatlantic,USA,Europe,regulation,directive,Schrems,Safe Harbor,coordination,technology
    Date: 2020
  8. By: Vincenzo Carrieri (UMG - Università degli Studi "Magna Graecia" di Catanzaro [Catanzaro, Italie]); Leonardo Madio (TSE - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Francesco Principe (Erasmus University School of Economics - Erasmus university)
    Abstract: Governments worldwide are increasingly concerned about the booming use of CBD (cannabidiol) products. However, we know little about the impact of their liberalization. We study a unique case of unintended liberalization of a CBD-based product (light cannabis) that occurred in Italy in 2017. Using unique and high-frequency data on prescription drug sales and by exploiting the staggered local availability of the new product in each Italian province, we document a significant substitution effect between light cannabis and anxiolytics, sedatives, opioids, anti-depressants and anti-psychotics. Results are informative for regulators and suggest that bans on light cannabis use would disregard the needs of patients to seek effective reliefs of their symptoms.
    Keywords: Light cannabis,self-medication,marijuana,difference-in-difference,prescription drugs,CBD.
    Date: 2020–12
  9. By: Anatoliy Kostruba (Vasyl Stefanyk Precarpathian National University); V Vasylyeva (Vasyl Stefanyk Precarpathian National University)
    Abstract: The article aims to research the termination of rights in the mechanism of civil legal relations. The relevance of the work is expressed by the fact that the analysis of the reasons for termination of right is based on the analysis of legal facts that are realized in the process of formalization of some civil legal relations. The following methods were used: analysis, synthesis, comparison , abstraction. The novelty of the study is determined by the fact that the authors of the article research the causes of termination of right and the possibility of implementing this process is universal and local legal systems. The authors consider each of the principles of termination of right as an opportunity to form a qualitatively new subject of research and development of the local legal system. The article analyzes the general grounds for termination of rights and suggests implementation measures with consideration of international law. The practical relevance of the study is determined by the fact that for the first time not only direct forms of restriction of rights and measures to terminate them were considered, but also recommendations were developed on the details of the matter in question.
    Keywords: branch formation,restriction,contractual relations,legal fact,Legal relations
    Date: 2020–09–20
  10. By: Bilen, Eren; Matros, Alexander
    Abstract: We present evidence of cheating that took place in online examinations during COVID-19 lockdowns and propose two solutions with and without a camera for the cheating problem based on the experience accumulated by online chess communities over the past two decades. The best implementable solution is a uniform online exam policy where a camera capturing each student’s computer screen and room is a requirement. We recommend avoiding grading on a curve and giving students less time but simpler questions on tests.
    Keywords: education, cheating, online examinations, online chess
    JEL: A2 I20 K42
    Date: 2020–09–12
  11. By: Martins, Pedro S. (Queen Mary, University of London)
    Abstract: While trade unions have been studied in detail, there is virtually no economics research on employer associations (EAs), their counterparts in many countries. Here we argue that EAs are important economic agents as they provide sectoral public goods such as collective bargaining, training, and representation. However, their net contributions are complex because of a number of issues, including free riding, firm heterogeneity, and collusion. We then study EAs empirically by comparing sales, employment, productivity, and wages of affiliated and non-affiliated firms. Exploiting changes in firm affiliation status over time in Portugal, we find a positive but small affiliation premium along most dimensions. This premium follows an inverted-U-shaped relationship with EA coverage (defined as the percentage of workers in the relevant industry/region domain employed by affiliated firms). Sectors as a whole also appear to benefit from EA coverage, even if non-affiliated firms do worse.
    Keywords: employer organisations, firm performance, social dialogue, public goods
    JEL: J58 L40 H41 K31
    Date: 2020–09

This nep-law issue is ©2020 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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