nep-law New Economics Papers
on Law and Economics
Issue of 2021‒01‒18
23 papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. A Machine-Learning History of English Caselaw and Legal Ideas Prior to the Industrial Revolution II: Applications By Peter Grajzl; Peter Murrell
  2. Appointed or Elected? How Mayoral Accountability Impacts the Provision of Policing By Colombo, Andrea; Tojerow, Ilan
  4. Fraud Deterrence Institutions Reduce Intrinsic Honesty By Galeotti, Fabio; Maggian, Valeria; Villeval, Marie Claire
  5. A Note on Antitrust, Labor, and “No Cold Call” Agreements in Silicon Valley By Pittman, Russell
  6. How Countries Can Fully Implement the New York Convention By Xavier Forneris; Nina Mocheva
  8. Policing and Crime By Tom Kirchmaier
  9. Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations By Wouter Bossu; Masaru Itatani; Catalina Margulis; Arthur D. P. Rossi; Hans Weenink; Akihiro Yoshinaga
  10. To change or not to change: the impact of the law on mortgage origination By Ana Isabel Sá
  11. Judicial Independence and Development: Evidence from Pakistan By Sultan Mehmood
  12. Spillovers and Long-Run Effects of Messages on Tax Compliance: Experimental Evidence from Peru By Castro, Juan Francisco; Velásquez, Daniel; Beltrán, Arlette; Yamada, Gustavo
  13. Revealing Corruption: Firm and Worker Level Evidence from Brazil By Colonnelli, Emanuele; Lagaras, Spyridon; Ponticelli, Jacopo; Prem, Mounu; Tsoutsoura, Margarita
  14. Corruption and Firms By Colonnelli, Emanuele; Prem, Mounu
  15. Conscription and Military Service: Do They Result in Future Violent and Non-Violent Incarcerations and Recidivism? By Wang, Xintong; Flores-Lagunes, Alfonso
  16. IEAs and compliance: Do treaty linkages play a role? By Maamoun, Nada
  17. A Machine-Learning History of English Caselaw and Legal Ideas Prior to the Industrial Revolution I: Generating and Interpreting the Estimates By Peter Grajzl; Peter Murrell
  18. Implications of CJEU Jurisprudence on the Delimitation of Working Time by Rest Time in the Collaborative Economy By Anghel, Răzvan
  20. Prison Rehabilitation Programs: Efficiency and Targeting By William Arbour; Guy Lacroix; Steeve Marchand
  21. Protecting Women from Violence By Paula Tavares; Isabel Santagostino Recavarren; Aarushi Sinha
  22. Post-Cartel Behavior: ssessing the effects of antitrustpolicy on Brazilian fuel market By Pedro Cavalcanti G. Ferreira
  23. The Screening Function of International Search Authorities under the Patent Cooperation Treaty: Evidence from the Japanese Government’s Policy Change in 1999 By Okada, Yoshimi

  1. By: Peter Grajzl; Peter Murrell
    Abstract: This is the second of two papers that generate and analyze quantitative estimates of the development of English caselaw and associated legal ideas before the Industrial Revolution. In the first paper, we estimated a 100-topic structural topic model, named the topics, and showed how to interpret topic-prevalence timelines. Here, we provide examples of new insights that can be gained from these estimates. We first provide a bird's-eye view, aggregating the topics into fifteen themes. Procedure is the highest-prevalence theme, but by the mid-18th century attention to procedure decreases sharply, indicating solidification of court institutions. Important ideas on real-property were substantially settled by the mid-17th century and on contracts and torts by the mid-18th century. Thus, crucial elements of caselaw developed before the Industrial Revolution. We then examine the legal ideas associated with England's financial revolution. Many new legal ideas relevant to finance were well accepted before the Glorious Revolution. Finally, we examine the sources of law used in the courts. Emphasis on precedent-based reasoning increases by 1650, but diffusion was gradual, with pertinent ideas solidifying only after 1700. Ideas on statute applicability were accepted by the mid-16th century but debates on the legislature’s intent still occurred in 1750.
    Keywords: English history, institutional development, caselaw, financial revolution, sources of law
    JEL: C80 N00 K10 O43
    Date: 2020
  2. By: Colombo, Andrea (Université Libre de Bruxelles); Tojerow, Ilan (Free University of Brussels)
    Abstract: This paper studies how the system by which mayors are elected impacts mayoral accountability and their provision of public goods. To do so, we analyze policing and crime incidence under mayors directly elected by voters and under mayors appointed by an elected body. Our identification strategy exploits a natural experiment provided by the introduction in 2005 of direct mayoral elections in the municipalities of one region of Belgium, Wallonia. Estimating a difference-in-differences model with a rich dataset registering locally-reported crimes from 2000 to 2012, our results show a post-reform decrease in overall crime between 4.9% and 5.7%, depending on the specification. Our results further suggest that more accountable mayors prefer fighting certain type of crimes more intensely, rather than increasing police efficiency overall. Lastly, our results show that the post-reform benefits we observe dissolve when the management of local police has to be coordinated among neighboring mayors, especially if they come from different political parties.
    Keywords: electoral accountability, crime, mayoral election, police
    JEL: D72 H10 K14 K40
    Date: 2020–12
  3. By: Anatoliy Kostruba (Vasyl Stefanyk Precarpathian National University)
    Abstract: In order to exercise effectively the right to a fair trial in Ukraine, in addition to institutional changes, systematic changes in the procedural legislation of Ukraine were made during 2017-2018. Thus, amendments to the Commercial Procedural Code of Ukraine, the Civil Procedure Code of Ukraine, the Code of Administrative Procedure of Ukraine (Law of Ukraine "On Amendments to the Commercial Procedural Code of Ukraine, the Civil Procedure Code of Ukraine, the Code of Administrative Procedure of Ukraine and Other Legal Acts" of October 3, 2017 № 142147-VIII) helps to overcome procedural problems that previously hindered effective judicial protection in Ukraine, in particular: - insufficient level of unity and consistency of law enforcement practice; - imperfection, and in some cases - the lack of effective procedural tools to protect the rights and interests of persons appealing to the court; - unjustified formal and informal restrictions in the use of certain means of proof, etc. One of the current trends in the procedural law in Ukraine is the functioning of the legal expert institute. The participation in the case of legal expert known as "amicus curiae", born in the XVII century in Britain is an achievement of the Anglo-Saxon legal system. Its borrowing by the national legal system is the result of convergence, the precedent law system and the Romano-Germanic legal family, a trend that has emerged over the past two decades. The need to involve this person is caused by the same circumstances as the involvement of experts from other fields of science and technology. Namely, the need to obtain special knowledge, which the court due to its professional orientation does not have. The involvement of legal experts may be considered questionable in the light of a judge's professional experience. At the same time, it is not accidental that it is necessary to resolve one or another particular legal case, taking into account the developed theoretical approaches to the application of legal norms that may have certain conflicts with each other in the regulation of disputed legal relations. Therefore, their activities are not aimed at establishing evidence, but are in the nature of a consultative explanation of the mechanism of law enforcement in resolving the case. In determining the procedural status of legal expert, its normative inconsistency with regard to the procedural outcome of his/her activity should be emphasized. According to Article 70, legal expert is a party to the proceedings. The procedural result of his/her activity, based on the normative structure of the procedural legislation of Ukraine, is legal expert opinion. However, among other participants in the trial, the status of which is enshrined in Chapter 4 of the Commercial Procedural Code of Ukraine, there is no this procedural figure. His/her legal status seems uncertain. A reasonable question arises either (1) legal expert submits an opinion whose procedural significance is not defined by law, or (2) legal expert's opinion is submitted by a person who does not have the relevant procedural status or (3) anyway, the expert's opinion is the result of the procedural activities of such a participant in the proceedings as legal expert. There is no doubt that the logic of the legislator is not to create artificial phenomenological problems in the application of this legal construction, so it is obvious that the hermeneutic discrepancy is the result of imperfect legislative techniques. If Article 70 of the Commercial Procedural Code of Ukraine determines the legal status of legal expert, the provisions of Article 108 of the Code enshrine the legal aspects of his/her procedural activities. So it is a holistic legal structure that determines the participant in the trial and the subject of his/her professional activity in it. The mechanism of procedural participation of this person is not less contradictory. Is the court's decision to admit to the case a basis for preparing legal expert opinion and his/her subsequent involvement by the court (part 1 of Article 70 of the Commercial Procedure Code of Ukraine) or the relevant actions of the court are made after the court opinion (Part 1 of Article 108 of the Commercial Procedural Code of Ukraine)? Whether legal expert is limited to the application of analogy of statute, analogy of law and content of foreign law in accordance with their official or generally accepted interpretation, practice in the application, doctrine in the relevant foreign country or his/her procedural activities extend to an unlimited range of aspects of law enforcement (Part 1 of Article 108 procedural code of Ukraine)? The result of legal expert's procedural activity is legal expert opinion - new or significantly improved law enforcement decisions obtained during research, which can be introduced into the law enforcement practice of the court in the administration of justice during the proceedings. There is no doubt that the subject of expert activity is limited to a range of issues related to the conflicting use of legal rule.
    Keywords: procedure law,litigation,procedural code
    Date: 2020–09–25
  4. By: Galeotti, Fabio (CNRS, GATE); Maggian, Valeria (Ca' Foscari University of Venice); Villeval, Marie Claire (CNRS, GATE)
    Abstract: Deterrence institutions are widely used in modern societies to discourage rule violations but whether they have an impact beyond their immediate scope of application is usually ignored. Using a quasi-experiment, we found evidence of spillover effects across contexts. We identified fraudsters and non-fraudsters on public transport who were or not exposed to ticket inspections by the transport company. We then measured the intrinsic honesty of the same persons in a new, unrelated context where they could misappropriate money. Instead of having an expected educative effect across contexts, the exposure to deterrence practices increased unethical behavior of fraudsters but also, strikingly, of non-fraudsters, especially when inspection teams were larger. Learning about the prevailing norm is the most likely channel of this spillover effect.
    Keywords: deterrence institutions, intrinsic honesty, spillovers, quasi-experiment
    JEL: C93 K42 D02 D91
    Date: 2020–12
  5. By: Pittman, Russell
    Abstract: Firms that provide training to their labor force may risk ex post opportunistic behavior on the part of their workers or of competing firms. Some arguably restrictive firm practices that have been justified by this concern include employment contracts restricting the freedom of workers to seek employment from the firm’s competitors and agreements among competing firms not to solicit or hire certain of each other’s workers – sometimes termed “non-compete” and “no poach” agreements, respectively. This Note considers these two categories of practices in the context of recent public discussions and enforcement actions by the US competition law enforcement agencies.
    Keywords: antitrust, competition, labor markets, non-compete agreements, no-poach agreements
    JEL: J2 J24 L4 L41 L86
    Date: 2020–11–24
  6. By: Xavier Forneris; Nina Mocheva
    Keywords: Public Sector Development - Regulatory Regimes International Economics and Trade - Foreign Trade Promotion and Regulation International Economics and Trade - Trade Finance and Investment Law and Development - Law Enforcement Systems Law and Development - Settlement of Investment Disputes Law and Development - Trade Law Private Sector Development - Legal Regulation and Business Environment Law and Development - Arbitration
    Date: 2019–12
  7. By: Anatoliy Kostruba (Vasyl Stefanyk Precarpathian National University)
    Abstract: The legal personality of a legal entity is embodied in the activities of its management bodies, the purpose of which is to strive to achieve the results of business activities and meet other interests of the legal entity, its participants (founders). However, in the process of interaction between the management bodies of a legal entity, situations arise when the participants in such interaction pursue different or mutually exclusive goals, which is due to the polar desire to secure corporate interests, which leads to a corporate conflict. One of these is the construction of the legal liability of officials of the corporate governance body for the harm caused by their actions in the relevant area. In turn, fiduciary relations between a legal entity, its founders (shareholders) and officials of the relevant corporate governance body form a different legal model of interaction between them. Confidence in the integrity and goodwill of the party with whom the principal is in a relationship based on his trust does not imply that he expects irrational behavior of the attorney. Because the fiducia between participants of these relations creates higher risks of abuse, it is correct, in our opinion, to establish legal factors of not only reasonable compensation to the injured party, Theoretical aspects of civil liability of officers of body corporate management which is the institute of compensation of harm as such, but also to establish the prevention of abuse, other types of malevolent behavior increased the legal liability of officers of body corporate legal entity management by exception guilt as a condition of responsibility. In this method, the existing disparity in the legal capabilities of participants in the studied trust relationships is balanced, one of which is in a legally weak state. Thus, the principle of civil liability regardless of the fault of the delinquent becomes a reasonable balance in ensuring the interests of the legal entity and the implementation of the professional competence of the corporate governance body and its officials.
    Keywords: corporate governance,corporative law,corporations,corporate liability,CIVIL LIABILITY OF BODY CORPORATE MANAGEMENT,BODY CORPORATE MANAGEMENT
    Date: 2020–10–23
  8. By: Tom Kirchmaier
    Abstract: A long period of austerity and budget cuts in policing that started when Theresa May became Home Secretary may be coming to an end. As austerity bit and budget cuts were implemented, this considerably reduced the size of UK forces and their ability to fight crime. But as violent crime has started to go back up over the past few years, so have voter concerns. According to a YouGov poll on 7 November 2019, crime is now ranked third in the list of issues facing the country, behind Brexit and the NHS. All three main parties have announced plans for investment in new police officers.
    Keywords: violent crime, austerity, budget cuts
    Date: 2019–11
  9. By: Wouter Bossu; Masaru Itatani; Catalina Margulis; Arthur D. P. Rossi; Hans Weenink; Akihiro Yoshinaga
    Abstract: This paper analyzes the legal foundations of central bank digital currency (CBDC) under central bank and monetary law. Absent strong legal foundations, the issuance of CBDC poses legal, financial and reputational risks for central banks. While the appropriate design of the legal framework will up to a degree depend on the design features of the CBDC, some general conclusions can be made. First, most central bank laws do not currently authorize the issuance of CBDC to the general public. Second, from a monetary law perspective, it is not evident that “currency” status can be attributed to CBDC. While the central bank law issue can be solved through rather straithforward law reform, the monetary law issue poses fundmental legal policy challenges.
    Keywords: Central Bank digital currencies;Currencies;Central bank legislation;Legal support in revenue administration;Payment systems;Central Bank Digital Currency,CBDC,Blockchain,Cryptocurrency,Crypto assets,WP,central bank law,monetary unit,book money,digital currency,law reform,token-based CBDC
    Date: 2020–11–20
  10. By: Ana Isabel Sá
    Abstract: Differences in mortgage law have significant effects on loan characteristics at origination. Borrower-friendly laws impose higher costs and risks for lenders and, thus, induce effects on mortgage pricing and leverage. However, not all borrower-friendly laws have the same effects. This finding is established using loan-level data for the U.S. mortgage market between 2001 and 2011. Judicial foreclosure requirements imply higher mortgage interest rates due to higher recovery costs and activate the price channel. Recourse restrictions imply higher loan collateralization to compensate for the fewer recovery opportunities and activate the collateral channel.
    JEL: E43 G21 G28 K25 K35
    Date: 2020
  11. By: Sultan Mehmood (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique - AMU - Aix Marseille Université)
    Abstract: This paper provides plausibly causal evidence that Presidential appointment of judges considerably impacts judicial independence and decision quality in Pakistan. We find that when the judge selection procedure changed from Presidential appointment to appointment by peer judges, rulings in favor of the government decreased significantly and the quality of judicial decisions improved. The age structure of judges at the time of the reform and the mandatory retirement age law provide us with an exogenous source of variation in the implementation of the reform. We test for and provide evidence against potential threats to identification and alternative explanations for our findings. The analysis of mechanisms reveals that our results are explained by rulings in politically salient cases and by "patronage" judges who hold political office prior to their appointments. According to our estimates, judicial appointment by peer judges prevents land expropriations worth 0.14 percent of GDP every year.
    Keywords: president,judges,property rights,patronage
    Date: 2020–11–14
  12. By: Castro, Juan Francisco (Universidad del Pacifico); Velásquez, Daniel (Universidad del Pacifico); Beltrán, Arlette (Universidad del Pacifico); Yamada, Gustavo (Universidad del Pacifico)
    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, another 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 effect 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
  13. By: Colonnelli, Emanuele; Lagaras, Spyridon; Ponticelli, Jacopo; Prem, Mounu; Tsoutsoura, Margarita
    Abstract: We study how the disclosure of corrupt practices affects firms and their employees. We construct novel firm-level measures of involvement in corrupt practices using randomized audits and public procurement suspensions in Brazil. On average, exposed firms grow larger after the audits. However, this result masks large heterogeneity depending on the degree of firm involvement in the corruption scheme. Using contract-, loan-, and worker- level data, we show that highly corrupt firms suffer after anti-corruption initiatives, while other exposed firms grow by changing their investment strategy when shifting away from doing business with the government.
    Date: 2020–12–30
  14. By: Colonnelli, Emanuele; Prem, Mounu
    Abstract: We estimate the causal real economic effects of a randomized anti-corruption crackdown on local governments in Brazil using rich micro-data on corruption and firms. After anti-corruption audits, municipalities experience an increase in the number of firms concentrated in sectors most dependent on government relationships. Through the estimation of geographic spillovers and additional tests, we show that audits operate via both a direct detection effect as well as through indirect deterrence channels. Politically connected firms suffer after the audits. Our estimates indicate the anti-corruption program generates significant local multipliers which are consistent with the presence of a large corruption tax on government-dependent firms.
    Date: 2020–12–30
  15. By: Wang, Xintong; Flores-Lagunes, Alfonso
    Abstract: Employing nonparametric bounds, we examine the effect of military service on incarceration outcomes using the Vietnam draft lotteries as a possibly invalid instrumental variable for military service. The draft is allowed to have a direct effect on the outcomes independently of military service, disposing of the exclusion restriction. We find: (i) suggestive but not strong statistical evidence that the direct effect of the draft increases the incarceration rate for violent offenses for a particular cohort of draft avoiders, and (ii) military service increases the incarceration rate for violent and nonviolent crimes of white volunteers and veterans in certain birth cohorts.
    Keywords: Conscription,Military Service,Incarceration,Crime,Nonparametric Bounds
    JEL: K4 C31 C36
    Date: 2021
  16. By: Maamoun, Nada
    Abstract: International environmental agreements (IEAs) address cross-border public goods, therefore they are faced with free-riding problems. Generally, the incentives of states to comply with such treaties are low as the benefits of compliance do not always outweigh the cost. Previous literature has pointed towards the importance of the treaty design characteristics in motivating compliance and deterring free-riding. The aim of this paper is to investigate the association of using of those mechanisms -treaty linkages- and the compliance with IEAs. By using data on 92 IEAs from the international regime database (IRD), the paper finds that the number of reinforcing links per treaty has a positive and significant association with better compliance. Counter to existing literature, trade links, however, do not exhibit a significant association with better compliance.
    Keywords: International Environmental agreements,Treaty linkages,Compliance,Public goods
    JEL: H41 K33 O19 Q50 Q56
    Date: 2021
  17. By: Peter Grajzl; Peter Murrell
    Abstract: The history of England’s institutions has long informed research on comparative economic development. Yet to date there exists no quantitative evidence on a core aspect of England’s institutional evolution, that embodied in the accumulated decisions of English courts. Focusing on the two centuries before the Industrial Revolution, we generate and analyze the first quantitative estimates of the development of English caselaw and its associated legal ideas. We achieve this in two companion papers. In this, the first of the pair, we build a comprehensive corpus of 52,949 reports of cases heard in England's high courts before 1765. Estimating a 100-topic structural topic model, we name and interpret all topics, each of which reflects a distinctive aspect of English legal thought. We produce time series of the estimated topic prevalences. To interpret the topic timelines, we develop a tractable model of the evolution of legal-cultural ideas and their prominence in case reports. In the companion paper, we will illustrate with multiple applications the usefulness of the large amount of new information generated by our approach.
    Keywords: English history, institutional development, machine learning, caselaw, idea diffusion
    JEL: C80 N00 K10 Z10 P10
    Date: 2020
  18. By: Anghel, Răzvan (Constanța Court of Appeal, Romania)
    Abstract: The specificity of the collaborative economy has raised a number of issues with regard to the qualification of legal relationships between workers, final beneficiaries and the online platform that mediates the provision of work, respectively whether between the platform and the worker there is an employment relationship or there is a commercial relationship between the platform, self-employees and consumers. In particular, the question arises whether, in the case of these workers, the working time regulations apply and, if so, how they can be applied in concrete manner. The article contains an analysis on how some principles derived from the CJEU case law can be used to determine whether and under what conditions workers in the collaborative economy can benefit from protection by limiting working time and how can work time be delimited by rest time in their case, given the specificity of their work condition, in order to ensure an effective protection.
    Date: 2019–11–30
  19. By: Anghel, Răzvan (Constanța Court of Appeal, Romania)
    Abstract: The CJEU judgement in Sindicatul Familia case (C‑147/17) is a steppingstone for the working time Directive 2003/88 interpretation and application and for the European debate regarding the foster carer for children statute, the remuneration and working time. The article presents the national court decision following the CJEU judgement accompanied by the author´s commentaries. The purpose of the article is to provide legal professionals with the information on the practical results of the dialog between CJEU and national courts and the way national courts use European legislation interpretations given in the preliminary ruling procedure aiming at its uniform application in the EU member states.
    Date: 2020–06–30
  20. By: William Arbour; Guy Lacroix; Steeve Marchand
    Abstract: Increasing evidence suggests that incarceration, under certain circumstances, can improve inmates’ social reintegration upon release. Yet, the mechanisms through which incarceration can lead to successful rehabilitation remain largely unknown. This paper finds that participation in social rehabilitation programs while incarcerated can significantly reduce recidivism. This result is entirely driven by inmates whose risk and needs were evaluated by a widely used assessment tool identifying their criminogenic needs. For this group, we estimate that participation in these programs reduces recidivism by about 9 percentage points within three years following release. Our results suggest targeting criminogenic needs is crucial for successful rehabilitation. We also find considerable heterogeneous program treatment effects: inmates with a high overall risk score, or who exhibit procriminal attitudes, benefit little if at all from program participation. We investigate the stability of the treatment effect coefficients and conclude they unlikely suffer from an omitted variable bias.
    Keywords: Incarceration,Recidivism,Rehabilitation Programs,Risk Assessment,
    JEL: K42
    Date: 2021–01–06
  21. By: Paula Tavares; Isabel Santagostino Recavarren; Aarushi Sinha
    Keywords: Gender - Gender and Law Law and Development - Justice for the Poor Law and Development - Law and Gender Law and Development - Law and Justice Institutions
    Date: 2019–12
  22. By: Pedro Cavalcanti G. Ferreira
    Abstract: Papers assessing the antitrust effect on cartel cases usually take the form of a quantifying approach, measuring the impact on prices with methods like before-and-after dummyregressions, difference-in-difference, or synthetic controls designs. However, these approaches have some downsides (notably, the requirement of establishing an exogenous date or breakthrough event, based on assumptions that may not be accurate). To over-come this weakness, we applied Structural Break Analysis (Bai and Perron Test) and Markov Switching Regressions to four cases in the Brazilian fuel market (Brasilia, Belo Horizonte, São Luís and Londrina) to analyze the effectiveness of competition policies. As a comparative test between MSR and Bai Perron procedures, our paper shows that the former was more sensible to transitions between regimes, without missing breaks,and exhibited precise results. From the point of view of the antitrust policy evaluation, our findings indicate a low capacity of the antitrust authorities to extinguish price-fixing practices in targeted markets.
    Keywords: collusion, antitrust policy, Brazil, fuel market, structural breaks, markov switch, policy evaluation.
    Date: 2020–12
  23. By: Okada, Yoshimi
    Abstract: This article examines the screening function of the International Search authorities, which produce International Search Reports (ISRs) for international patent applications filed under the Patent Cooperation Treaty. It first reveals that the patent examination policy change from quantity-oriented to quality-oriented by the Patent Office of the Japanese government in 1999 increased the number of references cited in ISRs significantly. It uses this unexpected drastic policy change as an instrument for the quality of ISRs and finds that the effect of improving the quality of ISRs on the applicant’s decision to enter the national/regional phase procedure is significant, resulting in decrease in the entrance rates, by four percent for the United States national phase procedure and six percent for European regional phase procedure. Thus, the examination policy change made the information provided by ISRs on prior art become significantly more useful to applicants (e.g., more findings of unexpected prior art) and thus enhanced the screening function of ISRs significantly. The estimated coefficients of improving the quality of ISRs are more than ten times larger than those estimated by using the ordinary least squares method (OLS), showing that the endogeneity of examiner’s citations with respect to the patenting value is so significant that it leads to substantial underestimations by using the OLS.
    Keywords: Screening, International Search Report, Patent Cooperation Treaty, prior art search, quality of patent examination, patent examination policy change
    JEL: O34 O38 K29
    Date: 2020–07

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