nep-law New Economics Papers
on Law and Economics
Issue of 2021‒10‒25
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Evolution of Citizen Security in Colombia in Times of COVID-19 By Santiago Tobón Zapata; Nathalie Alvarado; Ervyn Norza; Santiago M. Perez-Vincent; Martín Vanegas-Arias
  2. Intermediary Liability and Trade in Follow-on Innovation By Alexander Cuntz; Matthias Sahli
  3. The economics of dependence: A theory of relativity By Hans W. Friederiszick; Alexis Walckiers
  4. Platform Liability and Innovation By Doh-Shin Jeon; Yassine Lefouili; Leonardo Madio
  5. Stable marriage in the eyes of the law By Mikhail Freer; Khushboo Surana
  6. Prosecutor Politics: The Impact of Election Cycles on Criminal Sentencing in the Era of Rising Incarceration By Chika O. Okafor
  7. Does consumer protection enhance disclosure credibility in reward crowdfunding? By Cascino, Stefano; Correia, Maria; Tamayo, Ane
  8. Legislative Tax Announcements and GDP: Evidence from the United States, Germany, and the United Kingdom By Bernd Hayo; Sascha Mierzwa
  9. Optimal mixed payment system and medical liability. A laboratory study By Finocchiaro Castro, Massimo; Ferrara, Paolo Lorenzo; Guccio, Calogero; Lisi, Domenico

  1. By: Santiago Tobón Zapata; Nathalie Alvarado; Ervyn Norza; Santiago M. Perez-Vincent; Martín Vanegas-Arias
    JEL: J18 K42
    Date: 2021–10–20
  2. By: Alexander Cuntz; Matthias Sahli
    Abstract: Liability rules affect the incentives of intermediaries to disseminate and curate creative works, in particular when works build on the work of predecessors and they are potentially infringing copyright. In an application to the visual arts, we show that appropriation artists borrow images from different sources and incorporate them into new, derivative works of art. By doing so, they risk infringing copyright but also put commercial trade and availability of the work at litigation risk as liability can extend to intermediaries in markets (auction houses) or in public exhibitions (museums). Using a differences-in-differences model and unique data on the level of the individual art work, we empirically investigate the impact of the prominent 2013 Cariou v. Prince U.S. court decision on trade and availability in Appropriation Art.
    Keywords: Copyright, Intermediary Liability, Reuse, Appropriation Art, Auctions
    JEL: O31 O34 Z11
    Date: 2021–10
  3. By: Hans W. Friederiszick (ESMT European School of Management and Technology and E.CA Economics); Alexis Walckiers (E.CA Economics and ECARES – Université Libre de Bruxelles)
    Abstract: An increasing number of countries have introduced some form of prohibition of abuses of economic dependence or broadened the scope of their existing legislation. Yet, very little has been written on the economics of economic dependence, that is on economic reasoning, tools or metrics that can be relied upon to identify whether a company is economically dependent on another company. The present paper aims to fill this gap, and argues that bargaining theory and the economics of relative market power can be helpful to characterise economic dependence. We summarise a number of takeaways from this literature, and describe empirical strategies that can be relied upon to try and quantify economic dependence in specific cases.
    Keywords: economic dependency, bargaining theory, vertical restraints, law & economics, competition law
    JEL: D43 D86 L42 K21
    Date: 2021–10–14
  4. By: Doh-Shin Jeon (Toulouse School of Economics, University of Toulouse Capitole, 1, Esplanade de l’Université, 31080 Toulouse, Cedex 06, France); Yassine Lefouili (Toulouse School of Economics, University of Toulouse Capitole, 1, Esplanade de l’Université, 31080 Toulouse, Cedex 06, France); Leonardo Madio (University of Padova, Department of Economics and Management, Via del Santo, 33, 35139 Padova, Italy)
    Abstract: We study an e-commerce platform's incentives to delist IP-infringing products and the effects of introducing a liability regime that induces the platform to increase its screening intensity. We identify conditions under which platform liability is socially desirable (respectively, undesirable) by analyzing its intended and unintended effects on the innovation incentives of brand owners. We show that making the platform liable for the presence of IP-infringing products can lead to a reduction (instead of an increase) in brand owners' innovation if the platform responds to more screening by raising its commission rate. We then consider various extensions that allow us to identify additional forces that strengthen (respectively, weaken) the social desirability of liability. We conclude by presenting some implications for policymakers.
    Keywords: Platforms, Platform Liability, Intellectual Property, Innovation, Delisting
    JEL: L13 L43 L96
    Date: 2021–09
  5. By: Mikhail Freer; Khushboo Surana
    Abstract: We present a framework to study household consumption under the assumption of marital stability in the presence of divorce legislation. Using this model, we derive nonparametric conditions that allow us to identify the intrahousehold consumption allocation. We study two integral dimensions of divorce legislation. First, we consider a regime governing divorce itself. The legislation either allows partners to divorce unilaterally at will or requires the mutual consent of both partners to dissolve the marriage. Second, for couples with children, we consider the implications of sole and joint custody arrangements for marital stability. Under sole custody, children reside with the custodian parent, whereas under joint custody, both parents equally share the responsibilities of children after the divorce. We illustrate the importance of these legislative aspects of divorce and marriage in the empirical identification of intrahousehold allocations through an application to household data from Russia. %Russia is an attractive setting for this study: first, it has one of the highest divorce rates in the world, and, second, Russian family laws are straightforward and practiced quite closely. Our results suggest that a model incorporating divorce legislation better fits the data than a benchmark model without divorce legislation, especially for couples with children. Next, we show that ignoring the law-based implications results in notably different estimates of intrahousehold resource shares. For example, we find that a model without divorce legislation significantly underestimates the mother's share of private consumption. Bias in the estimates of intrahousehold allocations can lead to misleading policy implications. We illustrate this by conducting a poverty analysis at the level of individual household members.
    Date: 2021–10
  6. By: Chika O. Okafor
    Abstract: I investigate how political incentives affect the behavior of district attorneys (DAs). I develop a theoretical model that predicts DAs will increase sentencing intensity in an election period compared to the period prior. To empirically test this prediction, I compile one of the most comprehensive datasets to date on the political careers of all district attorneys in office during the steepest rise in incarceration in U.S. history (roughly 1986-2006). Using quasi-experimental methods, I find causal evidence that being in a DA election year increases total admissions per capita and total months sentenced per capita. I estimate that the election year effects on admissions are akin to moving 0.85 standard deviations along the distribution of DA behavior within state (e.g., going from the 50th to 80th percentile in sentencing intensity). I find evidence that election effects are larger (1) when DA elections are contested, (2) in Republican counties, and (3) in the southern United States--all these factors are consistent with the perspective that election effects arise from political incentives influencing DAs. Further, I find that district attorney election effects decline over the period 1986-2006, in tandem with U.S. public opinion softening regarding criminal punishment. These findings suggest DA behavior may respond to voter preferences--in particular to public sentiment regarding the harshness of the court system.
    Date: 2021–10
  7. By: Cascino, Stefano; Correia, Maria; Tamayo, Ane
    Abstract: We study how the interplay of disclosure and regulation shapes capital allocation in reward crowdfunding. Using data from Kickstarter, the largest online reward crowdfunding platform, we show that, even in the absence of clear regulation and enforcement mechanisms, disclosure helps entrepreneurs access capital for their projects and bolsters engagement with potential project backers, consistent with the notion that disclosure mitigates moral hazard. We further document that, subsequent to a change in Kickstarter’s terms of use that increases the threat of consumer litigation, the association between project funding and disclosure becomes stronger. This evidence suggests that consumer protection regulation enhances the perceived credibility of disclosure. We find the effect of the change in terms of use to be more pronounced in states with stricter consumer protection regulations. Taken together, our findings yield important insights on the role of disclosure, as well as on the potential effects of increased regulation on crowdfunding platforms.
    Keywords: crowdfunding; Disclosure; Consumer Protection; Regulation; Enforcement
    JEL: G18 M41 O31 O38
    Date: 2019–12–01
  8. By: Bernd Hayo (Philipps-Universitaet Marburg); Sascha Mierzwa (Philipps-Universitaet Marburg)
    Abstract: We study the announcement effect of legislated tax changes on GDP in the US, Germany, and the UK. Using, as the shock of interest, narratively identified information (Romer & Romer, 2009) about future tax changes at the quarter of their introduction to the legislative body, we analyse the dynamic results of Local Projections (Jordà , 2005). We find heterogeneous effects across the three countries: economic activity declines (increases) in the US (the UK), but remains unaffected in Germany. When allowing the responses to vary over the business cycle, we find evidence that US GDP drops regardless of the business cycle, whereas UK GDP rises only during non-recessionary times. We find significant effects for German GDP too: it rises (drops) during recessionary (non-recessionary) times. In general, consumption, investment, and employment follow in the path of GDP.
    Keywords: Fiscal policy, tax policy, legislated tax changes, announcement effect, state dependence, United States, Germany, United Kingdom, local projections, narrative approach
    JEL: E62 E63 H20 H30 K34
    Date: 2021
  9. By: Finocchiaro Castro, Massimo; Ferrara, Paolo Lorenzo; Guccio, Calogero; Lisi, Domenico
    Abstract: In a controlled laboratory environment, we test the role of medical malpractice liability on physicians’ service provision under fee-for-service, capitation, and mixed payment. We find that the introduction of medical liability causes a significant deviation from patient-optimal treatment that it is not mitigated by the use of a standard mixed payment system. Specifically, we find that the presence of medical liability pressure involves a proper optimal calibration of mixed payment system. Our findings have relevant policy implications for the correct calibration and implementation of the mixed payment system.
    Keywords: medical liability; defensive medicine; payment systems; physicians’ behaviour; laboratory experiment
    JEL: C91 I12 K13
    Date: 2021–10–20

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