nep-law New Economics Papers
on Law and Economics
Issue of 2022‒01‒10
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Learning by litigating: An application to antitrust commitments By Andreea Cosnita-Langlais; Jean-Philippe Tropeano
  2. The Right to Health and the Health Effects of Denials By Bhalotra, Sonia; Fernandez, Manuel
  3. Marketed Tax Avoidance Schemes: An Economic Analysis By Jiao Li; Duccio Gamannossi Degl'Innocenti; Matthew D. Rablen
  4. The Nexus Between Political Institutions and Corruption: Lessons for Nigeria By A. Abdulhakeem, Kilishi
  5. Evaluating the US pharmaceutical patent policy By Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
  6. Occupational Licensing and Intra-MSA Effects: Massage Therapists in the US By Noah J. Trudeau
  7. Promoting comparability in personal data breach notification reporting By Suguru Iwaya; Elif Koksal-Oudot; Elettra Ronchi
  8. Do Different Estimation Methods Lead to Implausible Differences in the Size of the Non-Observed or Shadow Economies? A Preliminary Answer By Friedrich Schneider
  9. The need for local governance of global commons: The example of blue carbon ecosystems By Merk, Christine; Grunau, Jonas; Riekhof, Marie-Catherine; Rickels, Wilfried

  1. By: Andreea Cosnita-Langlais; Jean-Philippe Tropeano
    Abstract: This paper examines the impact of commitment decisions on the efficiency of antitrust enforcement. We discuss the optimal use of commitments considering past rulings as a source of knowledge to better assess future similar antitrust cases. Our framework combines two key effects: the deterrence of the anticompetitive behavior by the different enforcement regimes, and the dynamic perspective through litigation as a source of learning. We show that if the level of penalty is high enough, the antitrust authorities undervalue the dynamic informational benefit of litigation and tend to over-use commitments.
    Keywords: antitrust, commitments, deterrence, legal learning
    JEL: L41 K21 D82
    Date: 2021
  2. By: Bhalotra, Sonia (University of Warwick, CEPR, IZA, IEA, CAGE); Fernandez, Manuel (Universidad de los Andes and IZA)
    Abstract: We investigate supply-side barriers to medical care in Colombia, where citizens have a constitutional right to health, but insurance companies impose restrictions. We use administrative data on judicial claims for health as a proxy for unmet demand. We validate this using the health services utilization register, showing that judicial claims map into large, pervasive decreases in medical consultations, procedures, hospitalizations and emergency care. This manifests in population health outcomes. We identify increases in mortality pervasive across cause, age and sex, with larger increases for cancer, individuals over the age of fifty, women and the poor.
    Keywords: Health care, health insurance, mortality, right-to-health, litigation, universalhealth-coverage, Colombia JEL Classification: G22, I11, I13, I18, K38, K42
    Date: 2021
  3. By: Jiao Li; Duccio Gamannossi Degl'Innocenti; Matthew D. Rablen
    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
  4. By: A. Abdulhakeem, Kilishi (Department of Economics)
    Abstract: This paper examines the relationship between corruption and measures of political institutions using Africa sample. The analyses show that there is negative relationship between political institutions and corruption. Meaning that corruption declines as political institutions improve. Rule of law depicts the strongest relationship with corruption. Governance is next to rule of law in terms of strength of relationship, follow by judicial independence, voice and accountability, press freedom, and free and fair election in that order. Therefore, for Nigeria and any country facing corruption crisis should make conscious efforts to improve quality of political institutions so as to win the war against corruption
    Keywords: corruption; rule of law; judicial independence; voice and accountability; press freedom; free and fair election; governance
    Date: 2021–12–24
  5. By: Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
    Abstract: The debate on whether COVID-19 vaccine patents are slowing down the pace of vaccination and the recovery from the crisis has brought the optimal design of pharmaceutical patent policy to the fore. In this paper we evaluate patent policy in the US pharmaceutical industry. We estimate the effect of patent length and scope on generic entry prior to the expiration of new drug patents using two quasi-experimental approaches: one based on changes in patent laws and another on the allocation of patent applications to examiners. We find that extending effective patent length increases generic entry whereas broadening protection reduces it. To assess the welfare effects of patent policy, we match these empirical results with a model of new drug development, generic entry, and patent length and scope. Optimal policy calls for shorter but broader pharmaceutical patents.
    JEL: I18 K20 L13 O34 O31
    Date: 2021–12–29
  6. By: Noah J. Trudeau (West Virginia University, Department of Economics)
    Abstract: Occupational licensing has been shown to have many pervasive economic effects. Licensing restricts competition, which causes wage premiums, potentially induces rent seeking, and ultimately results in consumers having to pay high prices through both channels of reduced supply and producers passing on increased cost of doing business. Licensing laws are passed at the state level; and thus, there can be considerable variation across states. Should there be much economic activity at state borders, this would be inconsequential. Yet, the existence of metropolitan areas spanning state borders begs the question of what effects can restricting competition be when competitive substitutes are easily available. This theory is tested using major MSAs that cross state borders and data from the American Community Survey to show how the differing licensing schemes affect the incomes of practicing massage therapists. Ultimately, it appears that the effect of easily available substitutes of massage therapists in the border state mutes the effect of the wage premium that would be caused by a more restrictive licensure scheme. Not only do wage premiums not appear in geographically adjacent states, it is especially missing in border MSAs.
    Keywords: Occupational Licensing, Massage Therapists
    JEL: J44 K31
    Date: 2021–06
  7. By: Suguru Iwaya; Elif Koksal-Oudot; Elettra Ronchi
    Abstract: This report provides the key findings of an OECD survey on comparability in personal data breach notification (PDBN) reporting that was implemented from June 2019 to February 2020. The main findings show a general trend towards mandatory PDBN regulation and identify internationally comparable data metrics used by privacy enforcement authorities (PEAs). The metrics include the number of reported PDBNs, data on the nature of causes, specific causes, and the types of data breached. In addition, the survey identified the types of questions suitable for internationally comparable data collections by PEAs. These include questions on sectoral application of mandatory PDBN, thresholds and timeframes for notifications to the designated authorities and data subjects, and the use of collected data for enforcement collaboration. The survey also sheds light on some of the possible challenges in improving international comparability such as lack of common standards in the industrial classifications used by PEAs.
    Date: 2021–12–21
  8. By: Friedrich Schneider
    Abstract: In this paper, first, six micro (4) and macro (2) estimation approaches are briefly described; they are the National Accounts Statistics discrepancy method and two new micro survey methods, a third one using a combination of company manager surveys and their knowledge to calibrate the size of the shadow economy in firms, and the consumption-income-gap of households method. The two macro methods are the MIMIC method and a structured hybrid method of the Currency demand and MIMIC models. Second, a detailed comparison of the results of four micro estimation methods with the macro MIMIC method are presented. One major result is that the estimated size of the shadow economy using the MIMIC method comes close to the size of the shadow economy of various types of recently developed micro survey methods. Third, using behavioral economics, some remarks are made about the reasons that individuals work in the shadow economy, and which estimation methods are best suited to apply this approach.
    Keywords: MIMIC estimation methods, macro and adjusted, micro survey method asking company managers, micro survey method using household data, using the consumption-income-gap, comparison of results of size of shadow economy of mostly OECD countries, shadow economy
    JEL: E26 E01 H26 H32 K42 P24 O17
    Date: 2021
  9. By: Merk, Christine; Grunau, Jonas; Riekhof, Marie-Catherine; Rickels, Wilfried
    Abstract: To limit global warming to 1.5êC, vast amounts of CO2 will have to be removed from the atmosphere via Carbon Dioxide Removal (CDR). Enhancing the CO2 sequestration of ecosystems will require not just one approach but a portfolio of CDR options, including so-called nature-based approaches alongside CDR options that are perceived as more technical. Creating a CDR 'supply curve' would however imply that all CDR approaches are considered to be perfect substitutes. The various co-benefits of nature-based CDR approaches militate against this as their common-pool resource characteristics could result in undesired outcomes for CO2-only incentive schemes. We discuss this aspect of nature-based solutions in connection with the enhancement of blue carbon ecosystems (BCE) such as mangrove or seagrass habitats. Enhancing BCEs can indeed contribute to CO2 sequestration, but the value of their carbon storage is low compared to the overall contribution of their ecosystem services to wealth. Furthermore, they are de facto open-access regimes with unclear property rights. Hence, payment schemes that only compensate BCE carbon sequestration could create tradeoffs at the expense of other important ecosystem services and might not result in socially optimal outcomes. Accordingly, one chance for preserving and restoring BCEs lies in the consideration of all services in potential compensation schemes for local communities. Also, local contexts, management structures, and benefit-sharing rules are crucial factors to be taken into account when setting up international payment schemes to support the use of BCEs and other nature- or ecosystem-based CDR. However, regarding these options as the only hope of achieving more CDR will very probably not bring about the desired outcome, either for climate mitigation or for ecosystem preservation. On the other hand, unhalted degradation will make matters worse due to the large amounts of stored carbon that would be released. Hence, countries committed to climate mitigation in line with the Paris targets should not hide behind vague pledges to enhance natural sinks for removing atmospheric CO2 but commit to scaling up engineered CDR.
    Keywords: Carbon Dioxide Removal,nature-based solutions,blue carbon ecosystems,common pool resources,governance,property rights
    JEL: K33 Q54 Q58
    Date: 2021

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