nep-law New Economics Papers
on Law and Economics
Issue of 2021‒12‒20
eight papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Cartel behavior and efficient sanctioning by criminal sentences By Thomas Wein
  2. Discontinuities in the Age-Victimization Profile and the Determinants of Victimization By Bindler, Anna; Hjalmarsson, Randi; Ketel, Nadine; Mitrut, Andreea
  3. Ambulance Taxis: The Impact of Regulation and Litigation on Health Care Fraud By Paul J. Eliason; Riley J. League; Jetson Leder-Luis; Ryan C. McDevitt; James W. Roberts
  4. Privacy Paradox – Economic Uncertainty Theory and Legal Consequences By Sarah Geschonke; Thomas Wein
  5. An Empirical Evaluation of the Impact of New York's Bail Reform on Crime Using Synthetic Controls By Angela Zhou; Andrew Koo; Nathan Kallus; Rene Ropac; Richard Peterson; Stephen Koppel; Tiffany Bergin
  6. The draft digital markets act: a legal and institutional analysis By Ibáñez Colomo, Pablo
  7. Competition and regulation in the Finnish ATM industry By Markkula, Tuomas; Takalo, Tuomas
  8. Collective Bargaining and Social Justice in the Post-Covid Digital Era By Julius, Daniel J.

  1. By: Thomas Wein (Leuphana University of Lüneburg)
    Abstract: Hardcore cartels that make agreements on quantities, prices, or areas, risk receiving both administrative fines from the cartel authority and civil law claims for damages. In addition to these risks, there is a recurring legal policy discussion that cartelist should also face criminal law consequences, such as fines and imprisonment with or without probation. In Germany, for example, companies may be found guilty of an administrative offence or have to answer for damages they cause. The cartel authority may fine employees who contribute significantly to the establishment and enforcement of the cartel within a company. As well, such as in the case of a tendering cartel, individuals may face prosecution. According to Becker's theory of crime, penalties must be at least as high as expected benefits to deter crimes. For example, we start by multiplying cartel infringement by the reciprocal of the probability of detection and punishment. When we factor in expected reductions due to leniency and settlements, it’s easy to see there must be an increase in penalties for them be effective. From the company perspective, there is a substitutive relationship between administrative penalties and compensation payments under private law. Criminal penalties such as fines or imprisonment have a negative impact on an employees’ concept of personal benefits. In theory, deterrence to participate in cartel activities must be based both on the incentives of firms as a whole, and on the individual participants’ perspectives. Sanctions by the Bundeskartellamt in the last decade provide information on the profits made from cartel offences despite current restrictions, and take into account cartel surcharges discussed in the literature. By applying the empirically determined probabilities of punishment, we can calculate the minimum level of fines required to deter cartel infringement ex-post for each case, and compare the figures to the actual penalties. In many cases, the calculated minimum penalties would result in a considerable increase in fines, which would have to be covered either by compensation payments, or criminal sanctions. If custodial sentences were based on the probability of zero compensation payments, and the monetary loss of benefit, the result would sometimes equal an impractically long criminal sentence. Sensitivity analyzes that use alternative values for the probability of punishment usually still result in long prison sentences. In light of these estimates, the practicality of achieving a sufficient degree of deterrence through criminal sanctions is highly questionable. From a legal policy perspective, it would be more effective to raise administrative sanctions to a sufficient level, especially against individuals, if compensation payments cannot be increased substitutionally.
    Keywords: hard-core-cartels, deterrence, criminal penalty
    JEL: L41 K14 K21
    Date: 2020–07
  2. By: Bindler, Anna (University of Colonge); Hjalmarsson, Randi (Department of Economics, School of Business, Economics and Law, Göteborg University); Ketel, Nadine (Vrije Universiteit Amsterdam); Mitrut, Andreea (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Many rights are conferred on Dutch youth at ages 16 and 18. Using national register data for all reported victimizations, we find sharp and discontinuous increases in victimization rates at these ages: about 13% for both genders at 16 and 9% (15%) for males (females) at 18. These results are comparable across subsamples (based on socio-economic and neighborhood characteristics) with different baseline victimization risks. We assess potential mechanisms using data on offense location, cross-cohort variation in the minimum legal drinking age driven by a 2014 reform, and survey data of alcohol/drug consumption and mobility behaviors. We conclude that the bundle of access to weak alcohol, bars/clubs and smoking increases victimization at 16 and that age 18 rights (hard alcohol, marijuana coffee shops) exacerbate this risk; vehicle access does not play an important role. Finally, we do not find systematic spillover effects onto individuals who have not yet received these rights.
    Keywords: victimization; crime; youth; youth protection laws; alcohol; inequality; RDD
    JEL: I12 I14 J13 K36 K42
    Date: 2021–12
  3. By: Paul J. Eliason; Riley J. League; Jetson Leder-Luis; Ryan C. McDevitt; James W. Roberts
    Abstract: We study the relative effectiveness of administrative regulations, criminal enforcement, and civil lawsuits for combatting health care fraud. Between 2003 and 2017, Medicare spent $7.7 billion on 37.5 million regularly scheduled, non-emergency ambulance rides for patients traveling to and from dialysis facilities, with dozens of lawsuits alleging that Medicare reimbursed rides for patients who did not meet the requirements for receiving one. Using a novel data set and an identification strategy based on the staggered timing of regulations and lawsuits across the United States, we find that a regulation requiring prior authorization for ambulance reimbursements reduced spending much more than criminal and civil lawsuits did. Despite the sharp drop in both ambulance transports and the companies that provide them following prior authorization, patients’ health outcomes did not change, indicating that most rides were not medically necessary. Our results suggest that administrative actions have a much larger impact than targeted criminal enforcement, providing novel evidence that regulations may be more cost-effective than ex post ligation for preventing health care fraud.
    JEL: D22 D73 H41 I18 K42
    Date: 2021–11
  4. By: Sarah Geschonke; Thomas Wein (Leuphana University of Lüneburg)
    Abstract: Internet users generously disclose personal information to consume supposedly “free” digital services despite severe privacy concerns—a phenomenon termed privacy paradox. Humanities have thoroughly studied this discrepancy in attitude and behavior, yet have not developed a conclusive explanation for its occurrence, let alone a means to counter it. Both the quantity and the quality of data privacy laws, as well as the increasing number of court rulings dealing with digital business models, show the urgent need to better understand the cause of the privacy paradox and to mitigate it. This paper analyzes the contradictory phenomenon from an economic point of view. By applying the two-state of the world-model, the authors demonstrate that uncertainty about the extent and the likelihood of a data breach are explanatory factors for the privacy paradox. Taking the European General Data Protection Regulation as an exemplary showcase, the authors further examine the role of privacy laws to offset Internet users’ inconsistent privacy behavior. In theory, such a “rights and remedies” scheme is intended to counter the uncertainty factors provoking the privacy paradox; however, in practice, this intention is only partially served.
    Keywords: Data protection, Privacy paradox, Legal remedies
    JEL: K24 L15 L86
    Date: 2020–08
  5. By: Angela Zhou; Andrew Koo; Nathan Kallus; Rene Ropac; Richard Peterson; Stephen Koppel; Tiffany Bergin
    Abstract: We conduct an empirical evaluation of the impact of New York's bail reform on crime. New York State's Bail Elimination Act went into effect on January 1, 2020, eliminating money bail and pretrial detention for nearly all misdemeanor and nonviolent felony defendants. Our analysis of effects on aggregate crime rates after the reform informs the understanding of bail reform and general deterrence. We conduct a synthetic control analysis for a comparative case study of impact of bail reform. We focus on synthetic control analysis of post-intervention changes in crime for assault, theft, burglary, robbery, and drug crimes, constructing a dataset from publicly reported crime data of 27 large municipalities. Our findings, including placebo checks and other robustness checks, show that for assault, theft, and drug crimes, there is no significant impact of bail reform on crime; for burglary and robbery, we similarly have null findings but the synthetic control is also more variable so these are deemed less conclusive.
    Date: 2021–11
  6. By: Ibáñez Colomo, Pablo
    Abstract: The proposal for a Digital Markets Act signals a new approach to the regulation of Big Tech in the EU and beyond.1 The legislative machine has been set in motion following a change in the attitude of authorities and stakeholders vis-à-vis the growing and transformative role of online platforms in the economy. It has been argued—including in a number of reports for public authorities2—that competition law, in its current incarnation, would be unable to address the challenges raised by Big Tech. According to this view, it would not be sufficiently effective to respond to the actual or potential effects resulting from the power wielded by these firms. Several alleged...
    Keywords: OUP deal
    JEL: L81
    Date: 2021–09–01
  7. By: Markkula, Tuomas; Takalo, Tuomas
    Abstract: Declining ATM numbers pose a challenge for competition policy and financial regulatory authorities. In this report we review the Finnish experience of regulating the competition in the ATM industry. To analyze the Finnish developments we extend the model of Kopsakangas-Savolainen and Takalo (2014), and draw on the existing literature and benchmarks from the selected other countries. We document how changes in the ATM market regulation and market structure has decoupled the ATM network size from the declining cash use in Finland. The Finnish regulation has almost exclusively focused on foreign fees, while in general it would be better to regulate interchange fees. If the optimal fee regulation is not feasible, the authorities could also consider quantity regulation.
    Keywords: ATM industry,cash,competition policy,optimal regulation,retail payments
    Date: 2021
  8. By: Julius, Daniel J.
    Abstract: This paper examines social justice and collective bargaining with a focus on higher education. Observations are offered around the following issues: a) a brief history of social justice as it has been conceptualized in labor management relations with a particular focus on unions in higher education; b) identification of collective bargaining scenarios when social justice platforms may have a more salient impact on negotiations; c) actions and strategies the parties might consider to accommodate social justice concerns in the bargaining process; and d) measuring and assessing collective bargaining outcomes. Collective bargaining in post-secondary institutions remains a complex phenomenon where political and legal guidelines are evolving particularly in a post-COVID environment. Accurate assessment of bargaining outcomes presents a variety of methodological challenges.
    Keywords: Education, Social and Behavioral Sciences, collective bargaining, academic unions, social justice, higher education labor negotiations
    Date: 2021–12–07

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