|
on Law and Economics |
| By: | Panagiota Papadimitri (University of Portsmouth); Ansgar Wohlschlegel (Swansea University) |
| Abstract: | We suggest a novel explanation for lobbying in the context of enforcement. Offenders may lobby to communicate some private information, which may allow enforcement agents to focus their enforcement effort on investigating those individuals whose offending would be particularly harmful for society. Our model shows that, if the enforcement agent’s objective is to maximise social welfare, the availability of lobbying can never reduce welfare in equilibrium. In the special case of the social value of an offense being aligned with the offender’s private benefit, it will be the least socially harmful potential offenders who escape investigation and punishment because of lobbying, whereas a medium range of types will commit the offense but not lobby. However, if enforcement is delegated to a self-interested agent, lobbying may reduce welfare, as the enforcement agent induces the ’wrong’, intermediate types of offenders to lobby whereas the least harmful types of offenders commit an offense without lobbying. We briefly discuss applying the model to bank regulation and show that evidence from regulatory enforcement actions against banks in the US is in line with the first of these model versions." |
| Keywords: | Lobbying, enforcement, bank regulation |
| JEL: | D72 K42 G28 |
| Date: | 2020–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:swn:wpaper:2020-01&r=all |
| By: | Nicholas Economides (Professor of Economics, NYU Stern School of Business, New York, New York 10012); Ioannis Lianos (President, Hellenic Competition Commission and Professor of Global Competition Law and Public Policy, Faculty of Laws, University College London) |
| Abstract: | Dominant digital platforms such as Google and Facebook collect personal information of users by default precipitating a market failure in the market for personal information. We establish the economic harms from the market failure. We discuss conditions for eliminating the market failure and various remedies to restore competition. |
| Keywords: | personal information; Internet search; Google; Facebook; digital; privacy; restrictions of competition; exploitation; market failure; data dominance; abuse of a dominant position; unfair commercial practices; excessive data extraction; self-determination; behavioral manipulation; remedies; portability; opt-out. |
| JEL: | K21 L1 L12 L4 L41 L5 L86 L88 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:net:wpaper:2101&r=all |
| By: | Koopmans, Ruud; Orgad, Liav |
| Abstract: | Multiculturalism has taken a life of its own, swinging too far in one direction. The authors claim that the rapidly changing reality calls for a new majority-minority theory and argue that the moral justifications for cultural minority rights should also apply to majority groups. They present two areas in which majorities may become culturally vulnerable and need legal protection: the regulation of immigration and representations of national identity in the public sphere. The core of the argument is rooted in a unique framework to address majority-minority constellations. This "intergroup differentiation approach" distinguishes between "homeland majorities" and "migratory majorities", alongside the traditional distinction of indigenous/national and migratory minorities. In doing so, the authors criticize the tendency in the multiculturalism literature to gloss over differences between the Anglo-Saxon classical immigration countries, where majorities are of migratory origin, and the countries of the Old World, where new minorities of immigrant origin face indigenous majorities. The authors provide practical examples for the implementation of their approach and explain the different meanings of cultural majority rights. Only by a contextualized and relational consideration of groups, they thus conclude, can competing demands of majorities and minorities be fairly evaluated. |
| Keywords: | majority rights,minority rights,nationalism,multiculturalism,populism,immigration,indigenous peoples,Mehrheitsrechte,Minderheitenrechte,Nationalismus,Multikulturalismus,Populismus,Zuwanderung,indigene Völker |
| JEL: | J15 K33 K37 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbmit:spvi2020104&r=all |
| By: | Murat C. Mungan (Antonin Scalia Law School George Mason University); Marie Obidzinski (Université Paris II Panthéon-Assas, CRED EA 7321, 75005 Paris, France); Yves Oytana (CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France) |
| Abstract: | We study how legal procedures may evolve over time in response to technological advancements which increase the accuracy of evidence collection methods. First, we show that accuracy and type-1 errors (wrongful findings of liability) must reduce each other's effectiveness in mitigating optimal type-2 errors (wrongful failures to assign liability) for previous results in the literature to hold. When this condition holds, for major crimes the median voter's tolerance for type-1 errors is reduced as the legal system's accuracy increases. However, this relationship need not hold for minor offenses. Our analysis also reveals that legal processes that emerge under electoral pressures convict more often than is optimal but less often than necessary to maximize deterrence. Moreover, when the median voter's preferences are implemented, an increase in accuracy can counter-intuitively reduce welfare. |
| JEL: | K4 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:crb:wpaper:2020-09&r=all |
| By: | Kamara, Irene (Tilburg Law School) |
| Abstract: | In 2019, the Cybersecurity Act, the EU law aiming to achieve high level of cybersecurity in the Union and Member States, entered into force. The CSA belongs to a broader set of Union laws providing a framework of legal protection of individual and collective rights from harmful use of information and communication technologies. Those laws introduce private law instruments for the achievement of legislative goals.1 Despite the overarching similarities of the regulated fields, the Union legislator adopted seemingly different approaches in introducing private law instruments. The Chapter seeks to comparatively present the certification frameworks as introduced in the Cybersecurity Act and the General Protection Regulation, with the aim to provide an understanding on the legislative choices and the normative, implementation and policy reasons underpinning the introduction of private law instruments in Union laws. |
| Date: | 2020–12–06 |
| URL: | http://d.repec.org/n?u=RePEc:osf:lawarx:82un9&r=all |
| By: | Florian Engl |
| Abstract: | This paper studies experimentally when and how ideological motives shape outcomes in group decision-making scenarios. Groups play a repeated coordination game in which they can agree on a payoff-dominant or a payoff-dominated but ideologically preferred outcome, or disagree and forego all payoffs. We find that groups which disagree initially are more likely to end up agreeing on the ideologically preferred outcome. We classify subjects into ideologically motivated and payoff motivated types and show that this effect stems from the two types’ differential reaction to disagreements. After disagreements, ideologically motivated types are more committed and steer the group towards their preferred outcome. Heterogeneous groups disagree more often and, thus, foster agreements on the ideologically motivated outcome. Our treatments show that, because of this mechanism, large groups are more likely to implement the ideologically preferred outcome than small groups. Furthermore, we show that individual ideological commitment is stronger when it targets the prevention of an outcome in conflict with the ideology than when it targets the implementation of an outcome aligned with the ideology. Theoretically, we study whether fixed or malleable ideological preferences can explain our results. |
| Keywords: | ideology, group decision-making, coordination, heterogeneous types |
| JEL: | C92 D01 D70 D91 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8742&r=all |
| By: | Patrice Bougette (Université Côte d'Azur; GREDEG CNRS); Frédéric Marty (Université Côte d'Azur, France; GREDEG CNRS; OFCE, Sciences Po., Paris; CIRANO, Montréal) |
| Abstract: | During the 1920s, two different proposals of a regulated competition competed in the US. The first, inspired by trade associations, was advocated by Herbert Hoover. This approach echoes a managerialist view of a coordinated competition under state support. The second - promoted by Louis Brandeis - provides an alternative view of what a regulated competition should be: avoiding a ruinous competition through information exchange among small firms. From his involvement in the Wilson’s campaign team in 1912, to his dissent in the American Colum ruling of the US Supreme Court in 1923 and his position against the National Industrial Recovery Act in Schechter Poultry in 1935, we argue that Louis Brandeis was constant in his opposition to such a convergence between Big Business and Big Government. His intemporal coherence relies in his Jeffersonian approach advocating for a dispersion of economic powers for both efficiency and political purposes. At the opposite, both the trade associations’ movement and the NIRA experience pertain to a Hamiltonian perspective that is based on an equilibrium between the economic gains resulting from concentration or coordination and a strong political control. |
| Keywords: | Louis Brandeis, antitrust, information exchange, Federal Trade Commission (FTC), New Deal, National Industrial Recovery Act (NIRA) |
| JEL: | L40 K21 N12 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2020-56&r=all |
| By: | Tommaso Orlando (Bank of Italy); Giacomo Rodano (Bank of Italy) |
| Abstract: | In a context characterized by upcoming regulatory changes and deeply affected by the COVID-19 epidemic, this paper examines the diffusion of firm undercapitalization (i.e., the firm displaying a level of equity below the legal limit) among Italian corporations. In a proposal by the National Board of Accountants, business crisis is substantially identified with undercapitalization. Indeed, our analyses show that the onset of undercapitalization often anticipates business termination: around 60 percent of involved firms go out of business within 3 years. In 2010-18, on average around 8.5 percent of Italian companies were undercapitalized. The impact of the COVID-19 epidemic may be substantial: our predictions indicate that the share of undercapitalized firms at the end of 2020 may exceed 12 percent. This estimate incorporates the powerful mitigating effects of several interventions enacted by the Italian government between March and August 2020 to support firms damaged by the pandemic. The increase in undercapitalization may reverberate onto the functioning of the new ‘early warning’ system, which will become operational in September 2021: our predictions suggest that the number of firms that could be involved in early warning procedures may be almost twice as large as that foreseeable on the basis of accounting data from 2018. |
| Keywords: | firm undercapitalization, equity deficit, early warning, impact of COVID-19 on Italian corporations |
| JEL: | G32 G33 K29 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_590_20&r=all |
| By: | Juan F. Castro (Universidad del Pacífico); Daniel Velásquez (University of Michigan); Arlette Beltrán (Universidad del Pacífico); Gustavo Yamada (Universidad del Pacífico) |
| Abstract: | We carry out a randomized controlled trial to evaluate the effect of three different types of messages sent to taxpayers on their compliance with the rental income tax (direct effect) and the spillovers produced on payments related to the capital gains and the self-employment income taxes. One message highlights detection, other appeals to social norms, and the third type appeals to altruism. This is the first study to evaluate if these messages can produce spillovers across taxes and to perform a long term follow-up. This is important to determine if the treatment increases tax revenues. We find that the message addressing detection produces a positive and permanent direct effect and a negative but transitory spillover on the other two taxes. Overall, it increases tax revenues by US$3.92 per dollar spent in the long run. The message appealing to social norms has no direct effect but produces a permanent negative spillover on the capital gains tax. Ignoring this spillover would have lead one to conclude that this message is innocuous when in fact produces a loss of US$ 5.20 per dollar spent in the long run. The message appealing to altruism produces a transitory negative e ect and no spillovers, and has no effect on tax revenues in the long run. |
| Keywords: | Social norms, Altruism, Tax evasion, Randomized controlled trial, Latin America |
| JEL: | D91 K42 H24 H26 H41 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:apc:wpaper:174&r=all |
| By: | Arevik Gnutzmann-Mkrtchyan; Hoffstadt |
| Abstract: | Antidumping creates opportunities for abuse to stifle market competition. Whether cartels actually abuse trade policy for anticompetitive purposes remains an open question in the literature. To address this gap, we construct a novel dataset that matches cartel investigations with trade data at the product level. We then estimate the world import price and quantity effects of antidumping in cartel products. We find that the use of antidumping in cartel industries helps to maintain higher world import prices and lower quantities during cartel periods, and to induce the establishment of a cartel. The effect is present both for antidumping cases that result in duties and cases that are withdrawn by the petitioning industry. |
| Keywords: | cartels, collusion, antitrust, antidumping, trade policy |
| JEL: | F13 F14 L41 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8729&r=all |
| By: | Giraudo, Marco (University of Turin) |
| Abstract: | A legal bubble is a notion that applies to the making of the legal foundations of innovative services. There is a legal bubble when economic agents plan their economic actions with respect to a new resource, in the light of property rights solutions provisionally backed by courts, in the belief they are stable. That gives rise to a period of accumulation of expectations about the possibility to secure robust property rights over the newly discovered resource, which in turn fuel further investments. In fact, courts' backing is only temporary and economic agents' expectations turn to be wrong, because early property rights have been supplied by courts out of haste and ignorance as to the implications of the new activities in terms of hierarchically superior rights – e.g. fundamental rights. Once courts learn about the actual implications of the newly emerged activity they start revising the balance between commodification claims and competing hierarchically superior rights. The burst of legal bubbles comes as a result of courts' hindsight attempt to re-adapt the legal foundations to the actual legal implications that previously were ignored. The economic fallout of the revision of early property rights solutions can generate investment debasement and economic disarray in ways similar to speculative bubbles. In fact, entrepreneurs discover their investments have been made in the light of still in-adapted property rights solutions doomed to be – often retroactively – reversed with potential demise of an whole industry. |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:uto:dipeco:202028&r=all |
| By: | Leerkes, Arjen (UNU-MERIT, Maastricht University, and Erasmus University Rotterdam); Fokkema, Tineke (NIDI, Erasmus University Rotterdam, and University of Groningen); Bening, Jonathan |
| Abstract: | There is considerable contextual variation in crime among immigrants and their native-born descendants, and this study aims to understand that variation better. It examines whether municipal variation in self-reported crimes among Turkish- and Moroccan-Dutch men living in 35 representative Dutch cities (N=911), including the four largest cities, is associated with municipal variation in multicultural attitudes, or 'community multiculturalism', among the native-Dutch (N=2,556). We propose, and test, a mechanism-based theoretical model that links Berry's acculturation theory to general strain theory, social bonding theory, and collective efficacy theory. Evidence is found for a protective effect of community multiculturalism for immigrant crime, which is mostly explained by collective efficacy theory with somewhat weaker evidence for general strain theory and social bonding theory. We discuss implications for the discussion on the (dis)advantages of multiculturalism, and suggest various avenues for further inquiry into immigrants' 'context of reception', and how the acculturation attitudes among established groups affect social cohesion outcomes in multi-ethnic societies. |
| Keywords: | acculturation theory, immigrant crime, context of reception, local-level variation, migration |
| JEL: | K13 I30 Y80 O15 |
| Date: | 2020–12–08 |
| URL: | http://d.repec.org/n?u=RePEc:unm:unumer:2020055&r=all |
| By: | McColloch, William (Keene State College); Vernengo, Matías (Bucknell University) |
| Abstract: | The rise of the regulatory state during the Gilded Age was closely associated with the development of Institutionalist ideas in American academia. In their analysis of the emergent regulatory environment, Institutionalists like John Commons opera-ted with a fundamentally marginalist theory of value and distribution. This engagement is a central explanation for the ul-timate ascendancy of neoclassical economics, and the limitations of the regulatory environment that emerged in the Progres-sive Era. The eventual rise of the Chicago School and its deregulatory ambitions did constitute a rupture, but one achieved without rejecting preceding conceptions of competition and value. The substantial compatibility of the view of markets underlying both the regulatory and deregulatory periods is stressed, casting doubt about the transformative potential of the resurgent regulatory impulse in the New Gilded Age. |
| Keywords: | John Commons; George Stigler; Regulatory Capture; Deregulation |
| JEL: | B13 B15 B25 K20 L51 |
| Date: | 2020–12–16 |
| URL: | http://d.repec.org/n?u=RePEc:ris:sraffa:0046&r=all |
| By: | Markus Dertwinkel-Kalt; Christian Wey |
| Abstract: | We analyze oligopolistic third-degree price discrimination relative to uniform pricing when markets are always covered. Pricing equilibria are critically determined by supply-side features such as the number of firms and their marginal cost differences. It follows that each firm’s Lerner index under uniform pricing is equal to the weighted harmonic mean of the firm’s relative margins under discriminatory pricing. Uniform pricing then decreases average prices and raises consumer surplus. We provide an intriguingly simple approach to calculate the gain in consumer surplus and loss in firms’ profits from uniform pricing only based on market data of the discriminatory equilibrium (prices and quantities). |
| Keywords: | third-degree price discrimination, oligopolistic competition, market integration |
| JEL: | D43 L13 L41 K21 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8785&r=all |
| By: | Miguel García-Posada Gómez (Banco de España) |
| Abstract: | The inefficiency of Spanish insolvency proceedings – evidenced by their length and reflected in the fact that non-financial corporations and sole proprietors make limited use of both insolvency proceedings and pre-insolvency arrangements – is a structural shortcoming of the Spanish economy. It is a problem that has become particularly important against the backdrop of the COVID 19 crisis and the severe impact it is having on the financial situation of Spanish firms, despite the broad range of public measures introduced to mitigate it. This document analyses the functioning of the insolvency system, examines the pros and cons of the insolvency moratorium currently in place and proposes various alternatives that could make the system more efficient when the moratorium expires at the end of the year. |
| Keywords: | insolvency proceedings, pre-insolvency arrangements, insolvency moratorium,business activity, debt discharge, court congestion |
| JEL: | G33 K35 H12 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:bde:opaper:2029e&r=all |
| By: | Tomberg, Lukas; Smith Stegen, Karen; Vance, Colin |
| Abstract: | As immigration to Europe has increased, so has support for extremist parties. While many studies have examined the effect of immigration on election outcomes, few have probed the effect of asylum seekers - those fleeing strife and persecution - on voting, nor has there been much research on the mediating role of local economic conditions. Drawing on county level panel data from Germany, our study fills both gaps. We find that economic circumstances, as measured by the unemployment rate and the level of disposable income, condition voters' responses to the presence of asylum seekers, but the effects for parties on the far right and left diverge markedly. Under economic prosperity, immigration increases support on both sides of the political spectrum. As economic conditions worsen, however, the effect of asylum seekers on the vote share for the far right remains stable, but weakens for the left, eventually becoming negative. This divergence - which has not yet been reported in the literature - suggests that an influx of asylum seekers, particularly when coupled with an economic downturn, could tilt a political system rightwards. From a policy perspective, these results suggest that heterogeneity arising from local economic conditions has important implications for the regional allocation of asylum seekers. |
| Keywords: | asylum seekers,immigration,voting outcomes,fractional response |
| JEL: | D72 J15 K37 P16 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:rwirep:879&r=all |
| By: | Alexis Durand (OECD); Anna Pietikäinen (OECD) |
| Abstract: | Using data from the 2018 OECD Indicators on the Governance of Sector Regulators, this paper analyses the governance of economic regulators in seven Latin American economies (Argentina, Brazil, Chile, Colombia, Costa Rica, Mexico and Peru) and across five critical network sectors (energy, e-communications, rail transport, air transport and water). The indicators allow for direct comparison of thirty economic regulators and provide a snapshot of the governance arrangements designed to preserve independence, practices to promote accountability, and the functions of the regulators. After describing key institutional characteristics of the regulators in the sample, the paper uses the indicators to identify patterns in governance. Evidence from in-depth performance reviews of regulators complements the indicators, shedding light on cost recovery fees, budgetary processes, and the use of advisory bodies in Latin American regulators. |
| Keywords: | accountability, economic regulators, governance, independence, Latin America, network sectors, regulation, regulatory policy |
| JEL: | N46 L98 L50 K23 D73 |
| Date: | 2020–12–17 |
| URL: | http://d.repec.org/n?u=RePEc:oec:govaah:13-en&r=all |