nep-law New Economics Papers
on Law and Economics
Issue of 2022‒06‒20
eleven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. When Criminality Begets Crime: The Role of Elected Politicians in India By Prakash, Nishith; Sahoo, Soham; Saraswat, Deepak; Sindhi, Reetika
  2. Scientific Advancements in Illegal Drugs Production and Institutional Responses: New Psychoactive Substances, Self-Harm, and Violence inside Prisons By D'Este, Rocco
  3. Greek Myth or Fact? The Role of Greek Houses in Alcohol and Drug Violations on American Campuses By Raghav, Manu; Diette, Timothy M.
  4. Alcohol Price Floors and Externalities: The Case of Fatal Road Crashes By Francesconi, Marco; James, Jonathan
  5. Anti-competitive Behavior in Providing Internet Service in Multi-Tenant Environments in the Philippines By Estavillo, Javea Maria
  6. Firm Competition and Cooperation with Norm-Based Preferences for Sustainability By Inderst, Roman; Sartzetakis, Eftichios S.; Xepapadeas, Anastasios
  7. Land restitution and selective violence: Evidence from Colombia By Lucas Marín Llanes; Mauricio Velásquez; María Alejandra Vélez
  8. The Origins of Elite Persistence: Evidence from Political Purges in post-World War II France By Aidt, T.; Lacroix, J.; Meonx, P-E.
  9. Attribution: A major challenge for EU cyber sanctions. An analysis of WannaCry, NotPetya, Cloud Hopper, Bundestag Hack and the attack on the OPCW By Bendiek, Annegret; Schulze, Matthias
  10. Abortion Legalization in Uruguay: Effects on Adolescent Fertility By Cecilia Velázquez; Wanda Cabella
  11. Corporate Financial Disclosures and the Market for Innovation By Kim, Jinhwan; Valentine, Kristen

  1. By: Prakash, Nishith (University of Connecticut); Sahoo, Soham (Indian Institute of Management Bangalore); Saraswat, Deepak (University of Connecticut); Sindhi, Reetika (University of California, Santa Barbara)
    Abstract: This paper estimates the causal impact of electing criminally accused politicians and their nature of criminality on crime in India. We exploit the quasi-random variation in the outcome of close elections between candidates with and without criminal accusations to instrument the share of constituencies in the district won by criminally accused leaders. We find that a standard deviation increase in the share of criminally accused leaders in institutionally weaker states leads to a 4.3 percent increase in crime in districts, including crimes against women. The effect is more pronounced when the leaders are accused of serious crimes, indicating that seriously accused leaders have a detrimental impact on society.
    Keywords: close elections, elected leaders, criminal accusations, crime, India
    JEL: D72 D73 K42 O17
    Date: 2022–04
  2. By: D'Este, Rocco (University of Sussex)
    Abstract: Incarceration is a crucial part of the scholarly analysis of crime, but what happens inside penal institutions largely remains a 'black box' (Western, 2021). This paper studies the impact of the new psychoactive substances (NPS) epidemic within prisons. NPS are powerful addictive chemical compounds that mimic the pharmacological effects of conventional drugs of abuse (CDA) but avoid classification as illegal and detection in standard drug tests. To conduct the analysis, I have assembled a novel establishment-by-month database of all England and Wales prisons from 2007 to 2018 including information on drugs seizures, random mandatory drug test results, various measures of harm, violence, and causes of death. I first document a large increase in NPS availability and an alarming correlation with the steep rise in harm and violence behind bars. I then evaluate the impact of the Psychoactive Substances Act 2016, a supply-side intervention aimed at inhibiting the proliferation of NPS. The analysis exploits cross-prison variation in the initial size of the drug market and shows high-intensity NPS trafficking prisons experienced a sustained but partial reduction in NPS availability, limited substitution toward CDA, and a rise in violence, self-harm, and suicides following the law. Collectively, the findings suggest unwarranted responses to government interventions may be amplified within penal institutions and that new challenges stemming from scientific advances in illegal drugs production should be addressed through systemic interventions that also consider the demand for addictive substances.
    Keywords: illegal drugs, new psychoactive substances, prisons, violence, self-harm, supply-side intervention
    JEL: I18 K14 K42
    Date: 2022–04
  3. By: Raghav, Manu; Diette, Timothy M.
    Abstract: Greek-letter student social groups, better known as fraternities and sororities, are a ubiquitous feature on many American higher education campuses. These organizations, especially fraternities, have a reputation for encouraging unruly and improper behavior among both members and non-members. This paper investigates the effect of the degree of prevalence of these Greek organizations at a campus, as measured by the percentage of students who are members of fraternities and sororities, on the instances of liquor and drug law violations on campuses, as measured by the number of arrests for liquor and drug laws violations. Using a unique dataset, which combines data from three sources, we address any potential selection bias by including several controls associated with party culture and through the inclusion of institution-level fixed effects. We find that a larger percentage of students in fraternities (but not sororities) is associated with an increase in the number of arrests for drug law violations. A larger percentage of students in sororities (but not the percentage of students in fraternities) is associated with a larger number of arrests for liquor law violations. This result is highly significant and is robust across various specifications.
    Keywords: Crimes on Higher Education Campuses,Illegal Alcohol and Drug Use,Higher Education Greek Social Organizations
    JEL: I21 K42
    Date: 2022
  4. By: Francesconi, Marco (University of Essex); James, Jonathan (University of Bath)
    Abstract: In May 2018, Scotland introduced a minimum unit price on alcohol. We examine the impact of this policy on traffic fatalities and drunk driving accidents. Using administrative data on the universe of vehicle collisions in Britain and a range of quasi-experimental modeling approaches, we do not find that the policy had an effect on road crash deaths and drunk driving collisions. The results are robust to several sensitivity exercises. There is no evidence of effect heterogeneity by income and other predictors of alcohol consumption or cross-border effects. A brief discussion of the policy implications of our findings is provided.
    Keywords: motor vehicle collisions, minimum unit pricing, alcohol, externality, driving under the influence
    JEL: D12 D62 H23 K42 R41
    Date: 2022–05
  5. By: Estavillo, Javea Maria
    Abstract: Access to the internet has become a basic necessity. The Philippines already labors under low rates of access and slow connectivity, while two dominant internet service providers control nearly 80% of the market, rendering the market potentially vulnerable to anti-competitive conduct. An additional challenge is faced by consumers living in multi-tenant environments (MTEs), which accounts for more than 57% of households in Metro Manila. where developers can create a monopoly within the MTE through exclusive arrangements and other legal means. Recent decisions by the Philippine Competition Commission have struck down these arrangements as being uncompetitive and an abuse of market power. Low-income neighborhoods are most impacted by this lack of choice, where homeowners and tenants who are forced to engage with the monopolistic provider are unable to access the cheaper and more efficient fixed broadband internet services. Regulators should look into market concentration of internet service providers throughout various areas in the Philippines, and actively intervene when concentration leaves consumers little choice.
    Keywords: competition, anti-competitive behavior, competition policy, internet services, exclusive arrangements, Philippines
    JEL: K20 K21
    Date: 2022–05–16
  6. By: Inderst, Roman; Sartzetakis, Eftichios S.; Xepapadeas, Anastasios
    Abstract: We analyze firms incentives to coordinate on the introduction of a more sustainable product variant when consumers preferences for greater sustainability depend on the perceived social norm, which in turn is shaped by average consumption behavior. Such preferences lead to multiple equilibria. If the more sustainable variant allows firms to sufficiently expand their aggregate market share, when a lenient legal regime makes this feasible they will coordinate on the more sustainable outcome. If their aggregate market share however does not expand sufficiently under the more sustainable variant, coordination can forestall a more sustainable outcome. Our analysis thus both confrms and qualifies the notion of a sustainability first-mover disadvantage as a justification for an agreement between competitors, which has gained traction in antitrust. We also provide empirical evidence for norm-based sustainability preferences.
    Keywords: Sustainability,Antitrust,Firm Cooperation
    JEL: A13 D11 D22 K21 L11
    Date: 2022
  7. By: Lucas Marín Llanes; Mauricio Velásquez; María Alejandra Vélez
    Abstract: Designing victims' reparation policies and solving agrarian disputes are fundamental aspects to build peace after a civil conflict. In 2014, a ceasefire with the oldest Latin-American guerrilla took place in Colombia and a peace agreement was signed in 2016. The Land Restitution Policy (LRP) oriented to restore property rights of forcibly displaced victims was one of the peacebuilding and victims' reparation policies. In this paper, we explored the effect of the LRP on violence against social leaders. These actors represent the interests of their communities, oppose the expansion of illicit activities in their territories and are guarantors of informal property rights in most of Colombian rural areas. In this article we determined whether or not a comprehensive intervention, such as the LRP, had community spillover effects in social leaders' exposure to violence. We showed that the LRP significantly reduced the killing of social leaders. Yet, the effect depends on both the intensity of the policy's implementation and its interaction with improved territorial security conditions. Our results suggested a reduced rate of killing of social leaders in municipalities in which LRP was more intense (measured by the number of active processes registered in the program) after the ceasefire with the FARC. In absence of the LRP, after the ceasefire with FARC, the rate of killing of social leaders would have been 1.8 times higher. We explained our findings by an improvement of socioeconomic conditions, an increase in trust within beneficiaries' communities, and the design of a security intelligence mechanism implemented within the policy.
    Keywords: Land restitution, victims, armed conflict, peace agreement, selective violence
    JEL: D74 H50 I38 Q15
    Date: 2022–05–27
  8. By: Aidt, T.; Lacroix, J.; Meonx, P-E.
    Abstract: This paper studies a new mechanism that allows political elites from a non-democratic regime to survive a democratic transition: connections. We document this mechanism in the transition from the Vichy regime to democracy in post-World War II France. The parliamentarians who had supported the Vichy regime were purged in a two-stage process where each case was judged twice by two different courts. Using a difference-in-differences strategy, we show that Law graduates, a powerful social group in French politics with strong connections to one of the two courts, had a clearance rate that was 10 percentage points higher than others. This facilitated the persistence of that elite group. A systematic analysis of 17,589 documents from the defendants' dossiers is consistent with the hypothesis that the connections of Law graduates to one of the two courts were a major driver of their ability to avoid the purge. We consider and rule out alternative mechanisms.
    Keywords: Purges, Political transitions, Elite persistence, Connections
    JEL: D73 K40 N44 P48
    Date: 2022–05–18
  9. By: Bendiek, Annegret; Schulze, Matthias
    Abstract: The attribution of cyberattacks is a sovereign act by the EU Member States. However, these all have different technical and intelligence capabilities. This leads to a lack of coherence in European cyber diplomacy, for example when imposing cyber sanctions. Analysis of policy responses to the WannaCry, NotPetya, Cloud Hopper, OPCW, and Bundestag hack cyber incidents reveals the following problems: Attribution takes a long time and relies on intelligence from NATO partners; the technical realities and the legal facts for classifying and prosecuting cyberattacks do not always match; the weighting of the criteria for establishing what constitutes a crime is unclear. Cyber sanctions should be proportionate, targeted measures and destructive attacks, such as WannaCry or NotPetya, should result in harsher punishment than everyday cases of cyber espionage, such as Cloud Hopper or the Bundestag hack. The EU must adapt its tools accordingly. The EU should tighten the legal criteria and harmonise the standards of evidence for attribution. The EU Joint Cyber Unit and EU INTCEN, part of the European External Action Service, should be strengthened to improve the exchange of forensic information and to coordinate attribution policy more effectively. EU Member States and their allied partners should better coordinate political signalling to condemn cyberattacks. To this end, it would make sense to allow qualified majority voting for the adoption of cyber sanctions.
    Date: 2021
  10. By: Cecilia Velázquez (CEDLAS-IIE-FCE-UNLP and CONICET and CINVE); Wanda Cabella (Facultad de Ciencias Sociales - Universidad de la República del Uruguay)
    Abstract: The Latin America and the Caribbean adolescent fertility rate is among the highest in the world: about 1.7 million children are born to teen mothers every year, and most of them are declared as being unintended pregnancies. The region also has the highest rate of unintended pregnancy of any world region, and nearly half of such pregnancies end in abortion. However, fewer than 18% of the region’s women live in countries where abortion is broadly legal. This paper estimates the causal effect of abortion legalization on adolescent fertility in Uruguay, using official data on legal abortions provided after the 2012 reform. We employed a difference-in-differences strategy, classifying states by whether they are responsive or unresponsive to the reform. The results suggest that abortion reform had a negative impact on the adolescent birth rate by 2.5 to 2.8 births per thousand adolescents aged 15–19 (4% decrease from the preintervention average). Additionally, we exploited variation in reform implementation intensity through the estimation of fixed-effect linear regression models and found consistent results. Our findings are robust to controlling for a concurrent large-scale program of contraceptive implants. We conclude that legislation aimed at enhancing rights and reducing avoidable deaths and complications from unsafe abortions may also have spillover effects that help reduce adolescent fertility.
    JEL: J13
    Date: 2022–06
  11. By: Kim, Jinhwan (Stanford U); Valentine, Kristen (U of Georgia)
    Abstract: We examine the spillover effect of public firm innovation disclosures on the patent trading market. Relative to equity markets, the patent market is decentralized and rife with information frictions, yet it serves as an important mechanism through which innovations reallocate to the most productive users. Using data on patent transactions, we find that going from the 25th percentile to the 75th percentile in innovation-relevant public firm disclosures – proxied by the number of innovation-relevant sentences in 10-K filings – is linked to a 13.0% to 14.9% increase in future patent sales by other parties that likely consume these disclosures. These results are consistent with financial statement disclosures generating positive information externalities useful for trading patents. The positive link between innovation-relevant firm disclosures is stronger where information asymmetry is likely greatest (transactions between public and private firms) and where information uncertainty likely prevails (transactions between private firms) relative to transactions less likely to suffer from information frictions (transactions between public firms). We corroborate that the positive link between public firm disclosures and other parties’ patent sales is likely due to the resolution of information frictions through several cross-sectional tests, the use of proprietary patent broker data, and the plausibly exogenous implementation of Edgar by public firms. Our results speak to an important, but previously underexplored, externality of financial statement disclosures – their contribution to a well-functioning patent market.
    JEL: D23 M40 M41 O30 O31 O32 O34 O39
    Date: 2022–03

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