nep-law New Economics Papers
on Law and Economics
Issue of 2021‒04‒19
eleven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Gender, Crime and Punishment: Evidence from Women Police Stations in India By Amaral, Sofia; Bhalotra, Sonia R.; Prakash, Nishith
  2. Theoretical substantiation of the model of borrowing rights-terminating facts By Anatoliy Kostruba; Oleh Hyliaka
  3. Indecent Disclosures: Anti-Corruption Reforms and Political Selection By David Szakonyi
  4. New Frontiers in Asia-Pacific Trade, Investment and International Business Dispute Resolution By Luke Nottage; Bruno Jetin
  5. Surprised by Wirecard? Enablers of Corporate Wrongdoing in Europe By Spagnolo, Giancarlo; Nyreröd, Theo
  6. The Role of Insolvency Tests: Implications for Indian Insolvency Law By Ram Mohan, M.P.
  7. Limits of Personalization of Default Rules – Towards a Normative Theory By Philip M. Bender
  8. Can Formal Institutions Lead to the Spillover Effect of Cooperation? By Mekvabishvili, Rati
  9. What are the priorities of bureaucrats? Evidence from conjoint experiments with procurement officials By Tukiainen, Janne; Blesse, Sebastian; Bohne, Albrecht; Giuffrida, Leonardo M.; Jääskeläinen, Jan; Luukinen, Ari; Sieppi, Antti
  10. Pecunia Non Olet – On the Self-selection Into (Dis)honest Earning Opportunities By Kai A. Konrad; Tim Lohse; Sven A. Simon
  11. The global value of water in agriculture. By D'Odorico, Paolo; Chiarelli, Davide Danilo; Rosa, Lorenzo; Bini, Alfredo; Zilberman, David; Rulli, Maria Cristina

  1. By: Amaral, Sofia (Ifo Institute for Economic Research); Bhalotra, Sonia R. (University of Warwick); Prakash, Nishith (University of Connecticut)
    Abstract: We examine the impact of establishing women police stations (WPS) on reporting of gender- based violence. Using administrative crime data and exploiting staggered implementation across Indian cities, we find that the opening of WPS is associated with an increase in police reports of crimes against women of 29 percent, a result driven by domestic violence. This appears to reflect reporting rather than incidence as we find no changes in femicide or in survey-reported domestic violence. We also find some evidence of an increase in women's labor supply following WPS opening, consistent with women feeling safer once the costs of reporting violence fall.
    Keywords: women police stations, gender-based violence, women in policing, India
    JEL: J12 J16 J78 K14 K31 K42 N92 I12
    Date: 2021–04
  2. By: Anatoliy Kostruba (Vasyl Stefanyk Precarpathian National University); Oleh Hyliaka
    Abstract: The relevance of the research is determined by the fact that it is necessary to differentiate the possibility of applying rights-terminating facts not only in general constructs of the civil branch of legislation but also in a number of private practices of sub-industries regulating general socioeconomic relations. Such differentiation can contribute to the sustainable development of the civil sector of legislation. The aim of the article was to show new constructions in connection with the judicial system and the system of socioeconomic forecasting. The main importance of legal consists in the fact that they can be applied in general in the category of civil law and at the same time their role as regulators of the civil branch of legislation is minimized or does not work at all. In this regard, for the termination of legal relations, mainly general constructs of juridical facts without formalization for industry values are used. Such constructions contribute to equality between members of society, which in turn contributes to its development and well-being. It is found that the main task of the formation of the practice of applying rights-terminating facts is to determine the limits of liability of industry-specific legislation. The practical significance of the research is determined by the fact that for the first time the aspects of sectoral planning of the system of application of rights-terminating facts are revealed. The developed model can be applied both in the process of adjudication and in the process of socioeconomic development programmers. The novelty of the research is determined by the fact that in the literature, aspects of the formation of industrial legislative grounds for the application of local juridical facts are shown for the first time.
    Keywords: Social security law,Systematisation,Legislation,Legal relations,Rulemaking entities,Contract law
    Date: 2021–03–25
  3. By: David Szakonyi (George Washington University)
    Abstract: Cracking down on corruption has become a key tool for politicians to build popular support. But little is known about whether anti-corruption measures actually change political behavior. This paper evaluates the effects of a common reform -- financial disclosures -- using data on 25,724 elections in Putin-era Russia. I argue that financial disclosures function like a personal audit, generating information for journalists and prosecutors to investigate illicit gains earned inside and outside of government. Exploiting staggered elections, I find that the passage of a disclosures requirement led to roughly 25% fewer incumbents seeking re-election and 10% fewer candidates with suspicious financial histories. Greater media freedom and law enforcement capacity further increase the risk of corruption and tax evasion being exposed, resulting in even fewer candidacies from those criminally exposed. Increasing transparency changes the incentives for serving in elected office, even in settings where other political motives may be at play.
    Keywords: corruption; anti-corruption; Russia; reforms; elections
    JEL: D7 H40 D73
    Date: 2020
  4. By: Luke Nottage; Bruno Jetin (CEPN - Centre d'Economie de l'Université Paris Nord - UP13 - Université Paris 13 - USPC - Université Sorbonne Paris Cité - CNRS - Centre National de la Recherche Scientifique, Universiti Brunei Darussalam)
    Abstract: Asia-Pacific trade and investment flows have burgeoned over recent decades, albeit impacted by China-US trade tensions and especially the COVID-19 pandemic (§1.02). International investment agreements have proliferated to liberalise and protect investments (§1.03), mostly adding the option of investor-state dispute settlement (ISDS). Asia-related ISDS cases have also started to grow, albeit somewhat belatedly (§1.04), complementing a more longstanding upward trend in international commercial arbitration (ICA) cases involving Asian parties filed in the region as well as the traditional Western centres (§1.05). The eastward shift in international dispute resolution has already involved initiatives to improve not just support for ICA and ISDS arbitrations, but also to develop alternatives such as international commercial courts and mediation. Core arguments from ensuing chapters (§1.06) cover the main existing venues for international dispute resolution in Asia (China, Hong Kong and Singapore) but also some emerging contenders (Japan, Malaysia, India and Australia). Overall (§1.07), can ICA venues improve their attractiveness through law reforms, case law development and other measures, despite growing concerns about costs and delays? Will some emerging concerns about ISDS prompt Asia-Pacific states to become more active 'rule makers' in international investment law? How might these issues be affected by the COVID-19 pandemic?
    Keywords: international trade,foreign direct investment (FDI),free trade agreements (FTAs),international investment treaties,international economic law,arbitration,mediation,international commercial courts,Asia,COVID-19
    Date: 2021–04–03
  5. By: Spagnolo, Giancarlo (Stockholm Institute of Transition Economics); Nyreröd, Theo (Stockholm Institute of Transition Economics)
    Abstract: In the last two decades prolonged instances of corporate wrongdoing in Europe have been un-covered: from Siemens’ systemic bribery to HSBC and other major bank’s money laundering issues, Dieselgate, LIBOR price-rigging, and the recent Wirecard debacle. What has driven European firms to engage in such systematic wrongdoing? In this article, we first use data on US investigations to identify the European countries hosting most corporate wrongdoers. We then consider these countries’ legal, institutional, and political contexts in search for explanations of the main enablers of this behavior, ending with some policy recommendations.
    Keywords: corporate wrongdoing; financial fraud; money laundering; corruption; whistleblowers
    JEL: K42
    Date: 2021–04–09
  6. By: Ram Mohan, M.P.
    Abstract: Insolvency determination is central to the formal insolvency and bankruptcy proceedings of a debtor entity. In determining whether a company is solvent or insolvent, two tests are generally used by the bankruptcy courts across all jurisdictions: the Commercial Cash Flow and the Balance Sheet test. While enacting IBC, India has moved away from the traditional dual test approach followed by Indian courts under the Indian Companies Act to specific Cash Flow test. This paper discusses conceptual basis of the two tests as evolved under insolvency laws of the United Kingdom and United States, with a view to comparatively study the nascent Indian insolvency regime. We conclude that irrespective of the statutorily prescribed test, over the years, courts across jurisdictions have taken recourse to both the tests to ascertain the overall commercial viability. In this lies an answer for India’s work in progress - Insolvency & Bankruptcy Code, 2016. While the cash flow test is the test specified under Indian insolvency law, the paper shows, both the tests exist for a reason and Indian regime may have to adopt international experience in applying both the tests more or less jointly within the spirit of efficient debt resolution.
    Date: 2021–04–09
  7. By: Philip M. Bender
    Abstract: Some scholars today praise a “personalization of the law†due to new technological possibilities such as algorithmic analysis of Big Data. Especially default rules seem to be particularly apt for personalization, because they are – at first glance – supposed to mirror what the parties would have wanted. This article aims to unveil the limits of preference-based personalization of default rules. In the first part, I attack default rule personalization on theoretical grounds. I analyze the theoretical underpinnings of default rule personalization, which I describe as “empirical subjectivism,†and I challenge this position with arguments from classical and behavioral law and economics. I thereby develop a different explanatory model: “normative objectivism.†The arguments presented also provide new insights of default rule analysis which are valid well beyond the personalization debate. The “default rule paradox,†“pushing and pulling default rules,†and default rules as “property rules†and as “rules of civility†are some examples. In the second part, I attack default rule personalization on constitutional grounds with particular focus on the United States and Germany. So far, neither default rules nor personalization have received a detailed analysis based on constitutional principles. My article provides this analysis with regard to the principles of freedom and equality. I show how personalization limits freedom in the private and public sphere, because the so-called choice- or agency-dimension of freedom will be significantly limited. In broader terms, the paternalistic tendencies of personalization will trigger a shift from “entrepreneur†and “citizen†to “consumer.†Economically, this shift will be accompanied by a shift from capitalism to what I call “microsocialism.†With regard to the principle of equality, I analyze how personalization leads to inequality by distinguishing “intra-preference-classifications†and “inter-preference-classifications.†I then present justification problems, especiall in the domain of strict and intermediate scrutiny, of preference-based personalization. Finally, I sketch out how personalization would dissolve the essence of the principle of equality and thereby trigger a shift “from contract to contact†or “from association to accumulation,†which is no less important than the older shift “from status to contract†or “from community to association.†Again, those shifts reflect – in economic terms – the advent of “micro-socialism.†A brief conclusion will point to some potentials of personalization, for instance with regard to information disclosure. In sum, the article combines different discourses around default rules, personalization, and constitutional law, and thereby provides new insights in each of them.
    Date: 2020–02
  8. By: Mekvabishvili, Rati
    Abstract: Can formal institutions shape prosocial behavior and lead to the spillover effect of cooperation? To explore this question, we experimentally test the spillover- based theory in a novel context. We measured the spillover effect on cooperation in the same domain measured by the repeated anonymous public goods game. We found strong evidence of altruism. Our results are inconsistent with prediction of the spillover-based theory. Our finding suggests that exposure to strong formal institutions that provide top-down motivation for cooperation substantially improves cooperation in their presence, but do not seem to lead to more prosociality after their absence.
    Keywords: Centralized Punishment, Spillover, Public Goods, Cooperation
    JEL: C92 D02 H41
    Date: 2021–03–09
  9. By: Tukiainen, Janne; Blesse, Sebastian; Bohne, Albrecht; Giuffrida, Leonardo M.; Jääskeläinen, Jan; Luukinen, Ari; Sieppi, Antti
    Abstract: A well-functioning bureaucracy is a precondition for efficient public goods provision. However, bureaucratic decision-making is still largely seen as a black box. We provide novel insights into the preferences of bureaucrats regarding their work outcomes. We focus on a major public sector activity and survey more than 900 real-life procurement officials in Finland and Germany. The questionnaire includes hypothetical choice experiments to study the relative importance of multiple features in tender outcomes. First, bureaucrats state to have substantial discretion at work but no important incentives. Second, our experimental results show that procurers are particularly worried about avoiding negative risks concerning prices and supplier reputation. Third, an avoidance of bidders with prior bad performance appears to be an extremely important factor. Fourth, procurers value a certain degree of competition, while litigation concerns and regional favoritism play only a small role. The striking lack of heterogeneous effects points towards the role of intrinsic motivation among public buyers in countries with high public sector capacity.
    Keywords: Bureaucrats,Public Procurement,Preferences,Intrinsic Motivation,Conjoint Experiment
    JEL: D73 D90 H11 H57 H83 K41 M54
    Date: 2021
  10. By: Kai A. Konrad; Tim Lohse; Sven A. Simon
    Abstract: We study self-selection into earning money in an honest or dishonest fashion based on individuals' attitudes toward truthful reporting. We propose a decision-theoretic framework where individuals' willingness to pay for honest earnings is determined by their (behavioral) lying costs. Our laboratory experiment identifies lying costs as the decisive factor causing self-selection into honest earning opportunities for individuals with high costs and into cheating opportunities for those prepared to misreport. Our experimental setup allows us to recover individual lying costs and their distribution in the population.
    Keywords: lying behavior, lying costs, misreporting, honest earnings, self-selection, laboratory experiment
    JEL: C91 D81 D91 K42
    Date: 2020–11
  11. By: D'Odorico, Paolo; Chiarelli, Davide Danilo; Rosa, Lorenzo; Bini, Alfredo; Zilberman, David; Rulli, Maria Cristina
    Abstract: Major environmental functions and human needs critically depend on water. In regions of the world affected by water scarcity economic activities can be constrained by water availability, leading to competition both among sectors and between human uses and environmental needs. While the commodification of water remains a contentious political issue, the valuation of this natural resource is sometime viewed as a strategy to avoid water waste. Likewise, water markets have been invoked as a mechanism to allocate water to economically most efficient uses. The value of water, however, remains difficult to estimate because water markets and market prices exist only in few regions of the world. Despite numerous attempts at estimating the value of water in the absence of markets (i.e., the "shadow price"), a global spatially explicit assessment of the value of water in agriculture is still missing. Here we propose a data-parsimonious biophysical framework to determine the value generated by water in irrigated agriculture and highlight its global spatiotemporal patterns. We find that in much of the world the actual crop distribution does not maximize agricultural water value.
    Keywords: Crops, Agricultural, Water, Conservation of Natural Resources, Water Supply, Agricultural Irrigation, irrigation, water productivity, water value
    Date: 2020–09–01

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