nep-law New Economics Papers
on Law and Economics
Issue of 2022‒03‒28
nine papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Effects of Adult Entertainment Establishments on Sex Crime: Evidence from New York City By Riccardo Ciacci; María Micaela María
  2. Lenders' liability and ultra-hazardous activities By Gérard Mondello
  3. Discrimination Against Immigrants in the Criminal Justice System: Evidence from Pretrial Detentions By Patricio Dom\'inguez; Nicol\'as Grau; Dami\'an Vergara
  4. What are the odds? Lower compliance with Western loot box probability disclosure industry self-regulation than Chinese legal regulation By Xiao, Leon Y.; Henderson, Laura L.; Newall, Philip Warren Stirling
  5. Narratives, Imperatives, and Moral Persuasion By Roland Bénabou; Armin Falk; Jean Tirole
  6. Reunion of International Couples in Formal and Informal Relationships during the COVID-19 Pandemic. By Lee, Youngcho; Wiegand, Pilar; Odasso, Laura; Wels, Jacques
  7. Intellectual Property Rights Protection and Trade: An Empirical Analysis By Emmanuelle AURIOL; Sara BIANCINI; Rodrigo PAILLACAR
  8. Hate Crime Increases with Minoritized Group Rank By Mina Cikara; Vasiliki Fouka; Marco Tabellini
  9. Competitive effects of horizontal mergers with asymmetric firms By Edmond Baranes; Hung Cuong Vuong

  1. By: Riccardo Ciacci (Universidad Pontificia Comillas); María Micaela María (Princeton University)
    Abstract: This paper studies how the presence of adult entertainment establishments affects the incidence of sex crimes, including sexual abuse and rape. We build a high frequency daily and weekly panel that combines the exact location of not-self-reported sex crimes with the day of opening and exact location of adult entertainment establishments in New York City. We find that these businesses decrease sex crime by 13% per police precinct one week after the opening, and have no effect on other types of crimes. The results imply that the reduction is mostly driven by potential sex offenders frequenting these establishments rather than committing crimes. We also rule out the possibility that other mechanisms are driving our results, such as an increase in the number of police officers, a reduction in the number of street prostitutes and a possible reduction in the number of potential victims in areas where these businesses opened. The effects are robust to using alternative measures of sex crimes.
    Keywords: Sex crimes, rape, adult entertainment establishments, substitute services
    JEL: I18 J16 J47 K14 K42
    Date: 2020–05
  2. By: Gérard Mondello (UCA - Université Côte d'Azur)
    Abstract: The amendments made to CERCLA in 1996 reinforced the exemption of lenders that finance ultra-hazardous activities. Then, they become involved in liability only if they manage or own polluting activities. The paper compares strict liability and negligence rule in an agency model of vicarious liability type, and proposes to restore lenders as principal by applying negligence rules to them while operators would resort to a strict liability rule. This scheme leads the lender to propose to the borrower the most favorable loan level that induces the latter to provide the socially optimal security level.
    Keywords: risky activities.,lenders,judgment-proof,moral hazard,negligence rule,Strict liability,Negligence Rule,Strict Liability,ASYMETRIC INFORMATION,TORT LAW,CERCLA,Lenders,Banks
    Date: 2021
  3. By: Patricio Dom\'inguez; Nicol\'as Grau; Dami\'an Vergara
    Abstract: This paper tests for discrimination against immigrant defendants in the criminal justice system in Chile using a decade of nationwide administrative records on pretrial detentions. Observational benchmark regressions show that immigrant defendants are 8.6 percentage points less likely to be released pretrial relative to Chilean defendants with similar proxies for pretrial misconduct potential. Diagnostics for omitted variable bias -- including a novel test to assess the quality of the proxy vector based on comparisons of pretrial misconduct rates among released defendants -- suggest that the discrimination estimates are not driven by omitted variable bias and that, if anything, failing to fully account for differences in misconduct potential leads to an underestimation of discrimination. Our estimates suggest that discrimination stems from an informational problem because judges do not observe criminal records in origin countries, with stereotypes and taste-based discrimination playing a role in the problem's resolution. We find that discrimination is especially large for drug offenses and that discrimination increased after a recent immigration wave.
    Date: 2022–02
  4. By: Xiao, Leon Y. (IT University of Copenhagen); Henderson, Laura L.; Newall, Philip Warren Stirling (University of Warwick)
    Abstract: Loot boxes are purchased to obtain randomised rewards in video games. These mechanics are frequently implemented, including in children’s games, and are psychologically akin to gambling. Emulating gambling harm reduction measures, disclosing the probabilities of obtaining loot box rewards is a consumer protection measure that may reduce overspending. Presently, this has been adopted as law only in China, where a 95.6% disclosure rate was previously observed. In other countries, the industry has generally adopted this measure as self-regulation. This study assessed the compliance rate of self-regulation amongst the 100 highest-grossing UK iPhone games to be 64.0%, significantly lower than that of Chinese legal regulation. Additionally, only 6.7% of games containing first-party implemented loot boxes made reasonably prominent disclosures. Non-enforced Western self-regulation needs substantial improvements before it can be as effective as legal regulation: until then, uniform and prominent disclosures should be required by law to maximise their consumer protection benefits.
    Date: 2021–09–29
  5. By: Roland Bénabou (Princeton University); Armin Falk (University of Bonn); Jean Tirole (University of Toulouse Capitole)
    Abstract: We study the production and circulation of arguments justifying actions on the basis of morality. By downplaying externalities, exculpatory narratives allow people to maintain a positive image while acting selfishly. Conversely, responsibilizing narratives raise both direct and reputational stakes, fostering prosocial behavior. These rationales diffuse along a linear network, through both costly signaling and strategic disclosure. The norms that emerge reflect local correlation in agents’ incentives (reputation versus influence concerns), with low mixing generating both a polarization of beliefs across groups and less moral behavior on average. Imperatives (general precepts) constitute an alternative mode of moral influence. We analyze their costs and benefits relative to those of narratives, and when the two will be used as substitutes or complements.
    Keywords: Moral behavior, narratives, imperatives, rules, excuses, responsibility, networks, viral transmission, influence, reputation, disclosure, communication, social norms
    JEL: D62 D64 D78 D83 D85 D91 H41 K42 L14 Z13
    Date: 2020–04
  6. By: Lee, Youngcho; Wiegand, Pilar; Odasso, Laura; Wels, Jacques
    Abstract: The COVID-19 epidemic has generated major social disruptions, including the implementation of border enforcement measures in many countries to contain international travel. As tourism has been the most frequent means for international couples to reunite, a minority of countries have implemented specific measures to allow foreign partners to cross the borders. The purpose of this article is to provide a global overview of the regulations of cross-border travel for couples respectively in formal and informal relationships. This research is based on data on travel guidelines from 175 countries and a typology that distinguishes countries that have not implemented travel restrictions (46%), countries that have enacted border enforcement regulations but with special measures to allow formal and informal couples (15%), countries with border enforcement and special measures for formal couples only (15%) and countries that have implemented a travel ban with no special measures (23%). Results show that the specific measures for formal and informal couples are implemented independently from the region but with much higher propensities in high-income countries. However, the administrative requirements, particularly for informal couples, vary greatly among the countries that allow couples to reunite. The article concludes that exemptions are key when analysing border closures and that specific measures could be applied more inclusively to allow informal couples to reunite.
    Date: 2021–10–11
  7. By: Emmanuelle AURIOL; Sara BIANCINI; Rodrigo PAILLACAR
    Abstract: The paper proposes an empirical analysis of the determinants of the adoption of intellectual property rights (IPR) and their impact on innovation in manufacturing. The analysis is conducted with panel data covering 112 countries. First, we show that IPR enforcement is U-shaped in a country's market size relative to the aggregated market size of its trade partners. Second, reinforcing IPR protection reduces on-the-frontier and inside-the-frontier innovation in developing countries, without necessarily increasing innovation at the global level.
    JEL: Q
    Date: 2022–03–21
  8. By: Mina Cikara (Harvard University); Vasiliki Fouka (Stanford University); Marco Tabellini (Harvard Business School, Business, Government and the International Economy Unit)
    Abstract: People are on the move in unprecedented numbers within and between countries. How does demographic change affect local intergroup dynamics? In complement to accounts that emphasize stereotypical features of groups as determinants of their treatment, we propose the group reference dependence hypothesis: violence and negative attitudes toward each minoritized group will depend on the number and size of other minoritized groups in a community. Specifically, as groups increase or decrease in rank in terms of their size (e.g., to largest minority within a community), discriminatory behavior and attitudes toward them should change accordingly. We test this hypothesis for hate crimes in U.S. counties between 1990 and 2010 and attitudes in the U.S. and U.K. over the last two decades. Consistent with this prediction, we find that, as Black, Hispanic/Latinx, Asian, and Arab populations increase in rank relative to one another, they become more likely to be targeted with hate crimes and more negative attitudes. The rank effect holds above and beyond group size/proportion, growth rate, and many other alternative explanations. This framework makes novel predictions about how demographic shifts may affect coalitional structures in the coming years and helps explain previous findings in the literature. Our results also indicate that attitudes and behaviors toward social categories are not intransigent or driven only by features associated with those groups, such as stereotypes.
    Keywords: hate crimes, prejudice, minority, reference dependence, demographics, rank and position, prejudice and bias, crime and corruption,
    Date: 2020–10
  9. By: Edmond Baranes (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier); Hung Cuong Vuong (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)
    Abstract: This paper aims at investigating the impacts of introducing cost asymmetry in horizontal merger analysis. In the absence of efficiency gains, previous literature states the negative competitive effects of a merger between symmetric firms. We go beyond the literature and show that the result is only likely to hold for a low level of asymmetry. In particular, we build a tractable model with three firms in which one of them has a different cost structure. After merging two symmetrical firms, the outsider always reduces (increases) price (investments), while the insiders choose the opposite strategies. In particular, if the outsider's cost is sufficiently low, the increase in its investment could outweigh the decreases in those of the merged entity, leading to higher total investments post-merger. Similarly, consumer surplus could be improved thanks to the decrease in the outsider's price.
    Date: 2021–04–11

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