nep-law New Economics Papers
on Law and Economics
Issue of 2022‒03‒14
ten papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Police violence reduces civilian cooperation and engagement with law enforcement By Desmond Ang; Panka Bencsik; Jesse Bruhn; Ellora Derenoncourt
  2. When Should Bankruptcy Law Be Creditor- or Debtor-Friendly: Theory and Evidence By David Schoenherr; Jan Starmans
  3. Instıtute of oblıgatory consolıdatıon of corporate control: corporate rıghts restrıctıon By Anatoliy Kostruba
  4. Bankruptcy Shocks and Legal Labor Markets: Evidence from the Court Competition Era By Chad Brown; Jeronimo Carballo; Alessandro Peri
  6. The Inner Workings of a Hub-and-Spoke Caretl in the Automotive Fuel Industry By Daniel Chaves; Marco Duarte
  7. Patenting inventions or inventing patents? Continuation practice at the USPTO By Cesare Righi; Timothy Simcoe
  8. Women's inheritance rights and time use: Evidence from Hindu Succession Act in India By Tanu Gupta
  9. Evaluating a Gamified Bystander Program: Evidence from Two Randomized Online Field Experiments By Ebers, Axel; Thomsen, Stephan L.
  10. The Impact of Claimant Representation Fee Schedules on the Disability Applicant Process and Recipient Outcomes By Cody Tuttle; Riley Wilson

  1. By: Desmond Ang (Harvard University); Panka Bencsik (University of Chicago); Jesse Bruhn (Brown University); Ellora Derenoncourt (Princeton University)
    Abstract: How do high-profile acts of police brutality affect public trust and cooperation with law enforcement? To investigate this question, we develop a new measure of civilian crime reporting that isolates changes in community engagement with police from underlying changes in crime: the ratio of police-related 911 calls to gunshots detected by ShotSpotter technology. Examining detailed data from eight major American cities, we show a sharp drop in both the call-to-shot ratio and 911 call volume immediately after the police murder of George Floyd in May 2020. Notably, reporting rates decreased significantly in both non-white and white neighborhoods across the country. These effects persist for several months, and we find little evidence that they were reversed by the conviction of Floyd’s murderer. Together, the results illustrate how acts of police violence may destroy a key input into effective law enforcement and public safety: civilian engagement and reporting.
    Keywords: police, crime reporting, use of force, race
    JEL: K4
    Date: 2021–09
  2. By: David Schoenherr (Princeton University); Jan Starmans (Stockholm School of Economics)
    Abstract: We examine how creditor protection affects firms with different levels of owners’ and man- agers’ personal costs of bankruptcy. Theoretically, we show that firms with high personal costs of bankruptcy borrow and invest more under a more debtor-friendly management stay system, whereas firms with low personal costs of bankruptcy borrow and invest more under a more creditor-friendly receivership system. Intuitively, stronger creditor protection relaxes financial constraints but reduces credit demand. Which effect dominates depends on owners’ and managers’ personal costs of bankruptcy. Empirically, we find support for these predictions using a Korean bankruptcy reform, which replaced receivership with management stay.
    Keywords: Bankruptcy, personal costs of bankruptcy, investment, law and economics
    JEL: G31 G32 G33 G38 K22
    Date: 2021–08
  3. By: Anatoliy Kostruba (Vasyl Stefanyk Precarpathian National University)
    Abstract: Today in many countries around the world the procedure of the compulsory purchase of the shares of minority shareholders (squeeze-out) by majority shareholders is an effective means of protection of rights of large investors and a widely used tactical technique that effectively regulates the process of corporate governance in business organizations, a toolkit to prevent corporate conflicts between members and business paralysis. While emphasizing the relevance of the attempt to limit the ownership rights of minority shareholders in the interest of the majority, the court concluded that the application of a squeeze-out can be justified, and the initiation of this procedure does not indicate abuse of the economic position by the majority shareholder. The interest of the majority shareholder in the free exercise of entrepreneurial activity may be placed above the interests of the minority shareholders, provided that the latter are protected against abuse of the economic forces by the majority shareholder, as well as provided that compensation is paid for the lost shares. Supporters of the opposite point of view argue that the monopolization of large blocks of shares is a threat to the functioning of the Ukrainian economy, its investment climate and the activity of the stock market. Georgia's administration of law is illustrative. The Constitutional Court of Georgia in its decision d/d May 18, 2007 on the constitutionality of article 53-3 of the Business Act found that the squeeze-out of minority shares is not a public need and a legitimate goal, as it provides for certain restrictions (minority ownership rights). The institute of forced termination of ownership is not a new phenomenon for civil law. It is based on the idea of restricting the right to hold, use, and dispose of the property of an individual owner in the interest of the vast majority. Rights equally guarantee the protection of the interests of society as a whole, as well as the interests of individual groups that may be affected in the process of exercising the powers of an authorized person. This objectively requires the correlation of the individual with the collective, and the private with the public. Constitutional and legal guarantees of an individual's private property right cannot override the corresponding guarantees granted to a group of persons acting in the general interest. The conflict between them shall be resolved by establishing the priority of the majority over the interests of the minority. The corresponding termination may not substantially prejudice interests of the minority shareholder because of the organizational and economic disproportionality of the "energy consumption" associated with holding insignificant block of shares, participation in the affairs of the corporation and the amount of the corporate rights issuer's profits in favor of the minority shareholder. The aforesaid demonstrates existing reasonable legal and economic prerequisites for interference with the peaceful ownership of property, which is not only consistent with the economic interests of the group of individuals, but also is proportional to its objectives and fair in view of the obligatory compensatory nature of the existing deprivation in favor of the holder of an insignificant block of shares of a joint stock company.
    Keywords: freeze-out,Squeeze-out,Sell-out,Corporative governance,Corporation,Legal entities of commercial law,Legal entities,Partnership,Kostruba
    Date: 2021–12–21
  4. By: Chad Brown; Jeronimo Carballo; Alessandro Peri
    Abstract: We study how Chapter 11 bankruptcies affect local legal labor markets. We document that bankruptcy shocks increase county legal employment and corroborate this finding by exploiting a stipulation of the law known as Forum Shopping during the Court Competition Era (1991-1996). We quantify losses to local communities from firms forum shopping away from their local area as follows. First, we calculate the unrealized potential employment gains implied by our reduced-form results. Second, we structurally estimate a model of legal labor markets and quantify welfare losses. We uncover meaningful costs to local communities from lax bankruptcy venue laws.
    Date: 2022–01
  5. By: Tulun, Teoman Ertuğrul
    Abstract: The neo-Nazi Nationalist Socialist Underground (NSU) terrorist group killed ten people in Germany between 2000-2007. Eight of the victims were members of the Turkish community of more than three million people living in Germany. Beate Zschäpe, Uwe Mundlos, and Uwe Böhnhardt were the nucleus of the National Socialist Underground NSU . Two of them, Uwe Mundlos and Uwe Böhnhardt, had killed themselves in the operations. Beate Zschäpe was the only core member of the NSU stayed alive when NSU trial began. Along with Beate Zschäpe, the four suspected accomplices deemed to be in the close periphery of the NSU trio, including Ralf Wohlleben and André Eminger were tried and received varying degrees of imprisonment. Germany’s highest court of appeals, which is Federal Court of Justice, had rejected appeals by Beate Zschäpe and other two convicted accomplices on 19 August 2021. The Federal Court has recently upheld the exceptionally light prison sentence of two and a half years that Andre Eminger received in 2018. Thus, the Munich court's verdict has become fully legally binding through this decision. It is reported that the high court did not find any legal errors or gaps in the arguments of the Munich court for the verdict and rejected appeals. Ten years after the NSU Neo-Nazi terror cell was exposed, with this decision of the German Federal Court of Justice, the NSU case was legally concluded and closed in its entirety. We have already explained in our previous analyses that racism and xenophobia, Islamophobia is on the rise in Germany and that we, as AVİM, consider this fact a worrying development. We should underline that the totality of court decisions regarding the NSU murders reinforced the perception that racism, xenophobia, and Islamophobia did not receive the punishment they deserved in Germany and that the true dimensions of the NSU organization wilfully be left unclarified.
    Date: 2021–12–19
  6. By: Daniel Chaves (University of Western Ontario); Marco Duarte
    Abstract: We analyze a hub-and-spoke cartel in the Brazilian automotivefuel industry. Using the court documents and detailed data on the supply chain we uncover three mechanisms beyond information sharing used by wholesalers (hub) to help retailers (spokes) solve the obstacles of price coordination: vertical transfers across asymmetric spokes; subsidies during punishment; and cost stabilization. We argue that wholesalers benefited from the cartel by being the exclusive supplier during the scheme. We use the synthetic control approach to quantify how successful the cartel was in increasing markups. We find that not only retailers, but wholesalers benefited from the cartel.
    Keywords: antitrust; Hub-and-Spoke collusion; vertical restraints
    JEL: K21 L12 D43
    Date: 2021
  7. By: Cesare Righi; Timothy Simcoe
    Abstract: Continuations allow inventors to add new claims to old patents, leading to concerns about inadvertent infringement and holdup. We study the use of continuations to obtain standard essential patents (SEPs), a setting where patents are easily linked to possibly infringing technology. Continuation filings increase after standard publication. This effect is larger when patent examiners are more lenient, and for applicants with licensing-based business models. Claims of SEPs also become more similar after standard publication, and late claiming is positively correlated with litigation. Our findings suggest widespread use of continuations to "invent patents" that are infringed by already-published standards.
    Keywords: patents, standards, standard essential patents, continuations
    JEL: K11 L15 O34 O38
    Date: 2022–02
  8. By: Tanu Gupta
    Abstract: This paper examines the impact of the Hindu Succession Act on married women's time use in India. The Hindu Succession Act was amended between 1976 and 2005 by giving equal inheritance rights to women for inheriting property. To estimate the effect of the equal inheritance reform, I devise a difference-in-difference strategy by exploiting the features of the reform. Using the nationally representative Time Use Survey 2019, I find that women exposed to the reform are investing 46 minutes per day more in employment.
    Keywords: Time use, Inheritance and succession, Women, India
    Date: 2022
  9. By: Ebers, Axel; Thomsen, Stephan L.
    Abstract: Objective: Previous social-psychological research has demonstrated the positive effects of online bystander programs on various crime-related outcomes, while information systems research has demonstrated the ability of gamification to improve motivation, engagement, and learning. This study bridges the gap between social psychology and information systems research by evaluating a bystander program that combines the simulation of a dangerous situation in a virtual environment with the application of game principles and game design elements. Method: We developed three research hypotheses and tested them using two randomized online field experiments (RCTs). During the first experiment, we collected data from 4,188 users on Facebook and randomly assigned them to four treatment arms, including three different configurations of the treatment and one control group. During the second experiment, we collected data from a representative sample of the population and observed them across three waves. Results: The results from the first experiment support the hypotheses that the bystander program motivates people to intervene in violent situations and that gamification enhances the motivational effect. The results from the second experiment support the hypothesis that the program makes people feel more capable of intervening. They also show that the treatment effects persist over a long period of time and hold for the overall population. Conclusions: We conclude that the gamification approach offers great potential for bystander education and that social media are well suited for the dissemination and upscaling of bystander programs. Policymakers can use these findings to improve the effectiveness and efficiency of future bystander programs or similar prevention measures.
    Keywords: Bystander intervention; gamification; program evaluation; field experiments; social media; Facebook
    JEL: C93 D91 K42
    Date: 2022–02
  10. By: Cody Tuttle; Riley Wilson
    Abstract: Many applicants to Social Security Disability Insurance (SSDI) retain representation to help with the approval process. The Social Security Administration imposes strict rules on representative compensation. Representatives are paid only if claimants are awarded disability, and are paid the lesser of 25 percent of claimant's past due benefits or a pre-specified maximum fee dollar amount ($6,000 since 2009). Because past due benefits are a function of the number of months claimants wait to be awarded, representatives face incentives to delay case resolution until past due benefits push representative fees past the maximum fee threshold. This paper uses difference-in-differences and bunching strategies to evaluate how these incentives impact SSDI applicant wait times. To do this, we use information on claimant characteristics and wait times constructed from the Disability Analysis File Public Use File (DAF PUF). Difference-indifferences estimation show that after changes in the maximum fee threshold, average wait times increase by 0.4-0.7 months among applicants for whom the fee threshold is more binding. We also observe bunching in the wait time distribution around the fee threshold kink in years after the policy change relative to the preceding years. Although both policy changes occur in years associated with economic recessions (2002 and 2009), we provide suggestive evidence that the increase in wait times is not driven by secular economic trends. Key limitations of this paper are data availability issues in the DAF PUF. In the DAF PUF, we are unable to observe who retains representations, so we can only observe the reduced form impacts of representative fee schedules on claimant outcomes. With more complete information on the claimant application and appeal process, we could more effectively probe the types of impacts that representation have on case outcomes and the sensitivity of the results to secular economic trends.
    Date: 2021–09

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.