nep-law New Economics Papers
on Law and Economics
Issue of 2022‒01‒03
thirteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. How Much Violence Does Football Hooliganism Cause? By Helmut Rainer; Marc Fabel
  2. How laws affect the perception of norms: empirical evidence from the lockdown By Roberto Galbiati; Emeric Henry; Nicolas Jacquemet; Max Lobeck
  3. Collusion in the US Generic Drug Industry By Robert Clark; Christopher Anthony Fabiilli; Laura Lasio
  4. Does Board Overlap Promote Coordination Between Firms? By Heng Geng; Harald Hau; Roni Michaely; Binh Nguyen
  5. Marketed Tax Avoidance Schemes: An Economic Analysis By Jiao Li; Duccio Gamannossi Degl’Innocenti; Matthew D. Rablen
  6. Shooting up liquidity: the effect of crime on real estate By Alexander Dentler; Enzo Rossi
  7. Slanted media does not increase police killings By Charles Crabtree; Michael Poyker
  8. Hub-and-spoke cartels: Theory and evidence from the grocery industry By Robert Clark; Ig Horstmann; Jean-Francois Houde
  9. Women's Land Rights and Village Institutions in Tanzania By Garance Genicot; Maria Hernandez de Benito
  10. Does greater discretion improve the performance in the execution of public works? Evidence from the reform of discretionary thresholds in Italy By Finocchiaro Castro, Massimo; Guccio, Calogero
  11. Shifting Punishment on Minorities: Experimental Evidence of Scapegoating By Michal Bauer; Jana Cahlíková; Julie Chytilová; Gérard Roland; TomᚠŽelinskı
  12. Using a natural experiment in the taxicab industry to analyze the effects of third-party income reporting By Bibek Adhikari; James Alm; Brett Collins; Michael Sebastiani; Eleanor Wilking
  13. Paternalism Attitudes and the Happiness Value of Fundamental Freedoms By Kai A. Konrad; Sven A. Simon

  1. By: Helmut Rainer; Marc Fabel
    Abstract: This paper quantifies how much of violent crime in society can be attributed to football-related violence. We study the universe of professional football matches played out in Germany’s top three football leagues over the period 2011-2015. To identify causal effects, we leverage time-series and cross-sectional variation in crime register data, comparing the number of violent crimes on days with and without professional football matches while controlling for date heterogeneity, weather, and holidays. Our main finding shows that violent crime increases by 21.5 percent on a match day. In total, professional football matches explain almost 18 percent of all violent assaults in the regions studied, and generate annual social costs of 95 million euros. Exploring possible mechanisms, we establish that the match day effect cannot be explained by emotional cues stemming from either unsettling events during a match or unexpected game outcomes, nor is it driven by increases in domestic violence. Instead, we find that the match day effect can be attributed to violence among males in the 18-29 age group, rises to almost 70 percent on days with high-rivalry derby matches, and that a non-negligible share of it stems from violent assaults on police officers. These findings are inconsistent with frustration-aggression theories that can explain sports-related violence in the United States, but can be accommodated by social identity explanations of football hooliganism.
    Keywords: violent crime, football hooliganism
    JEL: J19 K42 Z13 Z29
    Date: 2021
  2. By: Roberto Galbiati (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Nicolas Jacquemet (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Max Lobeck (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: Laws not only affect behavior due to changes in material payoffs, but they may also change the perception individuals have of societal norms, either by shifting them directly or by providing information on these norms. Using detailed daily survey data and exploiting the introduction of lockdown measures in the UK in the context of the COVID-19 health crisis, we provide causal evidence that the law drastically changed the perception of the norms regarding social distancing behaviors. We show this effect of laws on perceived norms is mostly driven by an informational channel.
    Date: 2020–10–05
  3. By: Robert Clark (Queen's University); Christopher Anthony Fabiilli (Competition Bureau Canada); Laura Lasio (McGill University)
    Abstract: We study cartels that operated in the US generic drug industry, leveraging quarterly Medicaid data from 2011-2018 and a difference-in-differences approach comparing the evolution of prices of allegedly collusive drugs with a group of competitive control drugs. Our analysis highlights (i) the difficulty of establishing a suitable control group when collusion is pervasive, (ii) the importance of accounting for market structure changes when defining the control period, and (ii) the existence of across- and within-drug heterogeneity. We focus on six drug markets that that were part of the expanded initial complaint and where there was no entry in the same class during the collusive period, permitting a clean measure of the causal impact of collusion on prices. Our most conservative estimates suggest that collusion led to price increases of between 0% and 166% for each of the six drugs, and damages of between $0 and $3 million for the Medicaid market.
    Keywords: antitrust, generic drugs, price fixing
    JEL: L41 L12 L13 D22 D43 K21 I18 L65
    Date: 2021–11
  4. By: Heng Geng (Victoria University of Wellington); Harald Hau (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)); Roni Michaely (The University of Hong Kong; ECGI); Binh Nguyen (Victoria University of Wellington - Victoria University of Wellington, Students)
    Abstract: We investigate how board overlap affects coordination and performance among public firms. Our identification exploits the staggered introduction of Corporate OpportunityWaivers (COWs) in nine U.S. states since 2000. By reducing legal risk to directors serving on multiple boards, the COW legislation increased intra-industry board overlap for those firms that benefit most from the information flow facilitated by board overlap. We find that more board overlap improves firm profitability but also reduces investment, product overlap, and innovation. Our findings support the notion that board overlap curtails firm rivalry.
    Keywords: Board overlap, corporate opportunity waivers, firm coordination, market power
    JEL: G30 G38 K21 K22
    Date: 2021–11
  5. By: Jiao Li (Department of Economics, University of Sheffield, UK); Duccio Gamannossi Degl’Innocenti (Department of Economics and Finance, Universit`a Cattolica del Sacro Cuore, Via Necchi 5, 20123, Milan, Italy and Tax Administration Research Centre, University of Exeter, Exeter, UK); Matthew D. Rablen (Department of Economics, University of Sheffield, UK)
    Abstract: Recent years have witnessed the growth of mass-marketed tax avoidance schemes aimed at the middle (not top) of the income distribution, with significant implications for tax revenue. We examine the consequences, for the structure of income tax, and for tax authority anti-avoidance efforts, of tax avoidance of this type. In a model that allows for both demand- and supply-side considerations, we find that (1) there is an endogenous threshold income below which taxpayers do not avoid, and above which they avoid maximally; (2) the per-dollar price of tax avoidance is decreasing in income under progressive taxation; (3) endogenous adjustments in the price of avoidance make supply less responsive to anti-avoidance activity than thought previously; and (4) that avoidance may drive a non-monotone (Laffer) relationship between tax rates and tax revenue. The findings suggest that new approaches to anti-avoidance, beyond legal enforcement, may be needed.
    Keywords: Tax avoidance; Marketed avoidance schemes; Progressive taxation; Anti- avoidance
    JEL: H26 D85 K42
    Date: 2021–11
  6. By: Alexander Dentler; Enzo Rossi
    Abstract: We combine real estate data with various types of crime data using time and geospatial information to detect discontinuities in transaction densities and pricing around crime events in Rochester, NY. Discontinuities in transaction densities invalidate causal inference for price responses implied by the regression discontinuity design (RDD) approach. However, these discontinuities also capture the liquidity response to crimes and, together with the commonly emphasized price response, provide a richer picture of how crime affects housing valuation. A calibrated match-and-bargain model reveals that house valuations decrease between 6% and 25% after a crime, depending on the type of crime. These predictions are manifolds of the estimated effect on prices documented in this paper and in the literature. The welfare effects of crime are not uniform across market participants and can elicit considerable disappointment to uninformed buyers that move into a high-crime neighborhood.
    Keywords: Crime, real estate, liquidity effects, density discontinuity
    JEL: C31 R21 R23 R30
    Date: 2021
  7. By: Charles Crabtree; Michael Poyker
    Abstract: To what extent do slanted media influence police perceptions and thereby their use of violent forces? We know that media bias affects many aspects of American life, such as perceptions of facts and views of politicians and policies. In this paper, we show that there is little evidence that slanted media influences police violence. To assess this relationship, we employ instrument variable estimation using the quasirandom positioning of FNC in the cable lineup as a source of exogenous variation in viewership. The evidence shows that increased exposure to FNC does not lead to more frequent police killings of Black people or people of other races. Our results suggest that slanted media coverage of crimes does not necessarily lead to fatal racial discrimination by police officers.
    Keywords: JEL Codes: J15, K42, L82, Z13
    Date: 2021
  8. By: Robert Clark (Queen's University); Ig Horstmann (Rotman School of Management); Jean-Francois Houde (University of Wisconsin-Madison and NBER)
    Abstract: Numerous recently uncovered cartels operated along the supply chain, with firms at one end facilitating collusion at the other { hub-and-spoke arrangements. These cartels are hard to rationalize because they induce double marginalization and higher costs. We examine Canada's alleged bread cartel and provide the first comprehensive analysis of hub-and-spoke collusion. We make three contributions: i) Using court documents and pricing data we provide evidencethat collusion existed at both ends of the supply chain, ii) we show that collusion was effective, increasing inflation by about 40% and iii) we provide a model explaining why this form of collusion arose.
    Keywords: antitrust, vertical collusion, grocery industry
    JEL: L41 L44 L12 L13 D22 L66
    Date: 2021–09
  9. By: Garance Genicot (Department of Economics, Georgetown University); Maria Hernandez de Benito (University of Alicante)
    Abstract: Strengthening women's ownership of and control over land is an important development goal. This paper studies the extent of women's land rights in rural Tanzania and how patrilineal norms affect them. We show that married women in rural Tanzania still own little land without their husbands and have limited rights over the jointly owned land. In Tanzania, an inherent tension lies in the recognition of customary laws that explicitly discriminate against women and statutory laws that establish equal rights for men and women. Customary patrilineal practices persist. In particular, we find that firstborn sons are expected to inherit more land than firstborn daughters, and widows' inheritance rights are affected by the gender of their children. We also show that women's tenure security in case of divorce or inheritance is fragile. In Tanzania, village institutions play a key role in the management of land rights and the mediation of land disputes. We find that members of village institutions have more pro-women views on land rights than the average household respondent. However, using randomized vignettes to measure gender bias, we show they do not always make gender-neutral recommendations in case of land disputes. Classification- O17, O12, D13, K11
    Keywords: Tanzania, Gender, Land Rights, Inheritance, Institutions, Vignettes
    Date: 2021–11–05
  10. By: Finocchiaro Castro, Massimo; Guccio, Calogero
    Abstract: In this work, adopting a semi-parametric approach and a quasi-experiment setting, we empirically assess the effects of a reform of public procurement regulation in Italy, approved in 2011, that increased the discretion of bureaucrats in selecting the procurer. To this end, employing a large dataset of public works managed by Italian municipalities in the period 2009-2013, we first estimate contract execution performance; then, we test the impact of the reform on the efficiency of public works execution in an institutional context characterized by large differences in social capital and trust in institutions. The results provide evidence that the reform exerted a positive, albeit small, effect on public works execution performance. However, the beneficial role exerted by increased discretion is positive and significant only in those areas where social capital and trust in institutions have reached higher levels. These results seem to suggest that more discretion leads to greater efficiency but also to greater corruption risks suggesting that increased discretion must be balanced by strengthened ex-post controls, particularly in high-risk areas.
    Keywords: Bureaucratic discretion,Social capital,Corruption,Public works contracts,Efficiency,Non-parametric frontier,Semi-parametric methods
    JEL: D24 D73 H57 P16
    Date: 2021
  11. By: Michal Bauer; Jana Cahlíková; Julie Chytilová; Gérard Roland; TomᚠŽelinskı
    Abstract: This paper provides experimental evidence showing that members of a majority group systematically shift punishment on innocent members of an ethnic minority. We develop a new incentivized task, the Punishing the Scapegoat Game, to measure how injustice affecting a member of one’s own group shapes punishment of an unrelated bystander (“a scapegoat†). We manipulate the ethnic identity of the scapegoats and study interactions between the majority group and the Roma minority in Slovakia. We find that when no harm is done, there is no evidence of discrimination against the ethnic minority. In contrast, when a member of one’s own group is harmed, the punishment †passed†on innocent individuals more than doubles when they are from the minority, as compared to when they are from the dominant group. These results illuminate how individualized tensions can be transformed into a group conflict, dragging minorities into conflicts in a way that is completely unrelated to their behavior.
    Keywords: punishment, minority groups, inter-group conflict, discrimination, scapegoating, lab-in-field experiments
    JEL: C93 D74 D91 J15
    Date: 2021–07
  12. By: Bibek Adhikari (Illinois State University); James Alm (Tulane University); Brett Collins (Internal Revenue Service); Michael Sebastiani (Internal Revenue Service); Eleanor Wilking (Cornell School of Law)
    Abstract: This paper uses confidential tax returns data from sole proprietor businesses to estimate behavioral responses to the introduction of Form 1099-K, a third-party income reporting law that requires credit and debit card companies to report to the Internal Revenue Service gross of payment transactions that businesses receive through their payment systems. We estimate the causal impact of Form 1099-K on business reporting by exploiting a natural experiment in which some cities in the U.S. passed ordinances requiring taxicabs to install credit card readers in their vehicles, while other cities did not pass such ordinances, creating plausibly exogenous variation in the share of receipts reported on Form 1099-K. We find that taxpayers respond to third-party information reporting in offsetting ways. In particular, we find that businesses from cities with mandatory credit card in taxicab ordinances reported more receipts after the introduction of Form 1099-K compared to similar businesses from cities without mandatory credit card in taxicab ordinances, but they also reported an increase in expenses of similar magnitude. On net, third-party information reporting led to small and statistically insignificant changes in taxable income, profit, and tax liability. These results are robust to a variety of alternative specifications and placebo tests.
    Keywords: Income reporting, Tax enforcement, Tax compliance, Taxi industry, Sole proprietors
    JEL: H25 H26 H32
    Date: 2021–12
  13. By: Kai A. Konrad; Sven A. Simon
    Abstract: The Governmental Paternalism Index is a new empirical index that measures individuals´ attitudes toward governmental regulation and prescriptions that aim at preventing potentially self-harming behavior. Our results indicate considerable heterogeneity in how individuals support, or object to, such governmental prescriptions. We design and use this new index in a survey on life satisfaction during the Covid-19 pandemic to assess how restrictions of personal freedoms a¤ect life satisfaction, and how the attitudes toward governmental paternalism a¤ect this relationship. Our results indicate that losses in life satisfaction in the course of the Covid-19 pandemic are mainly attributed to restrictions in personal freedom and to a negative outlook on societal change, and that individuals´ value in the Governmental Paternalism Index is a major determinant of the size of this e¤ect.
    Keywords: governmental regulation, Governmental Paternalism Index, self-harming behavior, life satisfaction, civil liberties
    JEL: H11 H12 C90 K38
    Date: 2021–03

This nep-law issue is ©2022 by Eve-Angeline Lambert. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.