nep-law New Economics Papers
on Law and Economics
Issue of 2022‒08‒08
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. State or Private Security Supply? An Analysis from the Institutional Economics Perspective By Wolfgang Bretschneider; Andreas Freytag; Johannes P. Rieckmann; Tim H. Stuchtey
  2. Economic Determinants of Intimate Partner Violence: The Case of Sweden during Covid-19 By Perrotta Berlin, Maria; Gerrell, Manne
  3. Disclosure Policy Design and Regulatory Agent Behavior By Makofske, Matthew
  4. An Economic Defense of Multiple Antitrust Goals: Reversing Income Inequality and Promoting Political Democracy By Mark Glick
  5. Traffic safety and norms of compliance with rules: An exploratory study By Hélène Laurent; Marc Sangnier; Carole Treibich
  6. Cryptocurrency – Nascent Regulation and Challenges for Romania By Bogdan Radu
  7. Industry Contracts, New Data Act and Digital Green Transition By Mattila, Juri; Seppälä, Timo; Bützow, Alexander; Hynönen, Kalle; Puittinen, Mika
  8. Policy guidance on consumer product safety pledges By OECD
  9. A Dynamic Model of Predation By Patrick Rey; Yossi Spiegel; Konrad O. Stahl
  10. Institutions and Cohesion Policy in the European Union By Arnaoutoglou, Nikolaos-Boleslav
  11. Litigating Barbie: Trade Mark Infringement, Parody and Free Speech By Ram Mohan, M.P.; Gupta, Aditya
  12. Can prohibitions of non‐audit services and an expanded auditor liability improve audit quality? By Quick, Reiner
  13. Bridging America's Divide on Abortion, Guns and Immigration: An Experimental Study By Michele Belot; Guglielmo Briscese
  14. Research joint ventures: The role of financial constraints By Philipp Brunner; Igor Letina; Armin Schmutzler

  1. By: Wolfgang Bretschneider (CiviS\Econ – Economic Analysis of Civil Security); Andreas Freytag (Friedrich Schiller University Jena, University of Stellenbosch, CESifo-Research Network, STIAS Stellenbosch); Johannes P. Rieckmann (Brandenburg Institute for Society and Security (BIGS), Potsdam); Tim H. Stuchtey (Brandenburg Institute for Society and Security (BIGS), Potsdam)
    Abstract: The issue of internal security has become increasingly complex over the past decades. As there is an increasing overlap between private and public provision of security, the question of how to allocate responsibility for security between the public sphere (state) and the pri- vate sphere has become important. The literature suggests that this question cannot be an- swered based on a simple private vs. public binarity. Concepts that can provide both clarity and sufficient complexity are much needed. This article offers an institutional economics concept based on the difference between provision and production, and discusses selection criteria for public vs. private provision, and production of protection services at three differ- ent stages: punishment as deterrence; patrol services; and self-defence. What stands out is that a unique characteristic of the economic good ‘protection service’ is of particular rele- vance for the level of provision as well as of production: the potential repressivity.
    Keywords: protection, privatisation of security, homeland security, civil security, economics of security, public good, publicly provided good, security industry
    JEL: H41 H42 K42 L33 L51
    Date: 2022–07–19
  2. By: Perrotta Berlin, Maria (Stockholm Institute of Transition Economics); Gerrell, Manne (Malmo University)
    Abstract: We document an increase in intimate partner violence (IPV) against women in Sweden during the first wave of the Covid-19 pandemic, notwithstanding the famously lasseiz-faire approach taken by the country. We investigate the role of different mediating factors, affected by the pandemic, by the containment policies, or by their economic consequences, and spilling over to violence incidence, connecting to established theories of violence. We find support for the importance of time spent at home and female unemployment. We also find a positive correlation with alcohol sales.
    Keywords: COVID-19; domestic violence; unemployment; self-incapacitation
    JEL: J12 J16 K14
    Date: 2022–06–23
  3. By: Makofske, Matthew
    Abstract: Mandatory disclosure promotes self-regulation of product quality, but may also provide incentives for firms to manipulate disclosed information. Collection of quality information by inspectors protects against direct manipulation, but firms may attempt to unduly influence inspectors. In Las Vegas, Nevada, food-service health inspections are numerically scored, with health code violations from three categories carrying prescribed demerit amounts. For disclosure however, numeric scores are coarsened into letter grades, which may encourage lobbying of inspectors to under-report violations near threshold scores. Beginning in 2013, the demerit amount prescribed for each good-practices violation was reduced from 1 to 0; while the letter-grade scale and penalties prescribed for major and critical violations (3 and 5 demerits each) remained unchanged. Exploiting this removal of scoring implications from good-practices violations, coupled with the discontinuous punishment severity inherent in letter-grade disclosure, I find that inspectors significantly under-reported good-practices violations prior to 2013—by 31 to 90 percent in some cases—when those violations were likely to affect letter grades. Without careful design, disclosure policies supplementing inspection programs may inadvertently undermine the regulatory efforts they were meant to support.
    Keywords: regulatory inspection, mandatory disclosure, restaurant hygiene, manipulation
    JEL: D82 I18 K32 L15
    Date: 2022–06–30
  4. By: Mark Glick (University of Utah)
    Abstract: Two recent papers by prominent antitrust scholars argue that a revived antitrust movement can help reverse the dramatic rise in economic inequality and the erosion of political democracy in the United States. Both papers rely on the legislative history of the key antitrust statutes to support their case. Not surprisingly, their recommendations have been met with alarm in some quarters and with skepticism in others. Such proposals by antitrust reformers are often contrasted with the Consumer Welfare Standard that pervades antitrust policy today. The Consumer Welfare Standard suffers from several defects: (1) It employs a narrow, unworkable measure of welfare; (2) It excludes important sources of welfare based on the assumption that antitrust seeks only to maximize wealth; (3) It assumes a constant and equal individual marginal utility of money; and (4) It is often combined with extraneous ideological goals. Even with these defects, however, if applied consistent with its theoretical underpinnings, the consideration of the transfer of labor rents resulting from a merger or dominant firm conduct is supported by the Consumer Welfare Standard. Moreover, even when only consumers (and not producers) are deemed relevant, the welfare of labor still should consistently be considered part of consumer welfare. In contrast, fostering political democracy—a prominent traditional antitrust goal that was jettisoned by the Chicago School—falls outside the Consumer Welfare Standard in any of its constructs. To undergird such important broader goals requires that the Consumer Welfare Standard be replaced with the General Welfare Standard. The General Welfare Standard consists of modern welfare economics modified to accommodate objective analyses of human welfare and purged of inconsistencies.
    Keywords: New Brandeis School, Antitrust economics, Antitrust law, Neoliberal Economic Theory, Chicago School Economics, History of Antitrust law; market concentration; corporation size.
    JEL: K21 L40 N12
    Date: 2022–03–21
  5. By: Hélène Laurent; Marc Sangnier; Carole Treibich (GAEL - Laboratoire d'Economie Appliquée de Grenoble - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - UGA - Université Grenoble Alpes - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - UGA - Université Grenoble Alpes)
    Abstract: We use a simple model of drivers' vigilance effort choice to show that drivers' propensity to follow traffic rules has two opposite effects on road safety. On the one hand, it lowers the frequency of dangerous situations. On the other hand, it also reduces drivers' vigilance effort as each driver anticipates that dangerous situations will be less frequent. These two opposite effects may lead to a non-monotonic relationship between compliance with road rules and the incidence of road traffic accidents. We present crosscountry estimates that support the existence of a bell-shaped relationship between norms of compliance with rules and traffic fatalities.
    Date: 2021–12–29
  6. By: Bogdan Radu (Dimitrie Cantemir Christian University, Bucharest, Romania)
    Abstract: This article aims at presenting the strengths and weaknesses of the Romanian legislation towards cryptocurrencies. While starting from legal acceptances of cryptocurrencies from the US and EU, the article moves on to an analysis of Romanian legislation that treats cryptocurrency fiscally and criminally. Concluding, legislators around the world are falling behind regulation the mysterious new digital age of finance and cryptography-and-distributed-ledger-based assets. Also, one can remark that non-fungible tokens and cryptocurrency are the basis of a more complex and prominent legal construct that is smart contract.
    Keywords: Cryptocurrency, fintech, non-fungible tokens, digital ledger, blockchain
    Date: 2022–03
  7. By: Mattila, Juri; Seppälä, Timo; Bützow, Alexander; Hynönen, Kalle; Puittinen, Mika
    Abstract: Abstract In this brief, we analyze the implications of the new European Commission’s data act from the perspective of both industry agreements and the digital green transition. In addition, we ask whether the new regulation of data will contribute to the emergence of data sharing practices and the digital green transition. It is worth noting that the new data regulation in its current form does not consider the specificities of the industry.
    Keywords: Data Act, Data, Industrial data, Contacts, Data sharing, Digitalization, Digital green transition
    JEL: K1 K12 K2 L89
    Date: 2022–07–06
  8. By: OECD
    Abstract: In recent years, a number of consumer product safety authorities have established product safety pledges with online marketplaces as a new way to better protect consumers from the risk of purchasing unsafe products that may be available on those platforms. Product safety pledges involve online marketplaces committing to actions to better protect consumers that go beyond their existing legal obligations (e.g. removing unsafe product listings within a specified timeframe upon notification).This policy guidance builds on a 2021 Communiqué from the OECD Working Party on Consumer Product Safety calling for the development of further such pledges globally and outlining key commitments for greater consistency. It provides practical examples on how each of the Communiqué’s four key commitments can be implemented and highlights strategies to ensure that pledges are successful in both the short and long term.
    Date: 2022–07–07
  9. By: Patrick Rey; Yossi Spiegel; Konrad O. Stahl
    Abstract: We study the feasibility and profitability of predation in a parsimonious infinite-horizon, complete information setting where an incumbent may face an entrant, in which case it needs to decide whether to accommodate or predate it. If the entrant exits, a new entrant is born with positive probability. We show that there always exists a Markov perfect equilibrium, which can be of three types: accommodation, predation with no future entry, and predation with hit-and-run entry. We use the model to study alternative antitrust policies, derive the best rules for these policies, and compare their welfare effects.
    Keywords: predation, accommodation, entry, legal rules, Markov perfect equilibrium
    JEL: D43 L41
    Date: 2022
  10. By: Arnaoutoglou, Nikolaos-Boleslav
    Abstract: This paper examines one of the most significant policies of the European Union, namely the cohesion policy, focusing on the institutions which shaped it and are responsible for its implementation. With this in mind, first, the appropriate literature is reviewed. Second, using scatterplots, the correlation between the quality of regional institutions and the absorption of funds from the European Regional Development Fund for the operational period 2014-2020 is tested. The findings of this dual assessment demonstrate that institutions, especially regional, are one of the most vital cogs for a region’s ability to absorb cohesion policy’s funds. In turn, this observation is of great importance as the member-states are bound to use the European Recovery and Resilience Fund to overcome the effects of the COVID-19 subsequent economic crisis.
    Keywords: European Union, Cohesion Policy, ERDF, Institutions, Rule of law, COVID-19
    JEL: K0
    Date: 2022–06–24
  11. By: Ram Mohan, M.P.; Gupta, Aditya
    Abstract: In the contemporary marketplace, trade marks are not mere monikers of origin. While often regarded as commercial symbols, trade marks sometimes become part of the commonplace vocabulary and are indelibly linked to expressing ideas and thoughts. In recent years, the dichotomy of expansive protection offered through the trade mark law and use of marks as part of expressive vocabulary has become increasingly controversial. One such trade mark which has amassed immense communicative strength is Mattel Incs Barbie. The mark has assumed an enduring prominence in contemporary language and has assumed the status of a cultural icon. The present study examines the regulation of expressive secondary uses of trade marks by employing Barbie as a case study. Comparatively analysing the treatment of the Barbie mark in India, the USA, and Canada, the authors underline an imperative need to adopt a legislative framework to protect the expressive and artistic secondary use of popular trade marks.
    Date: 2022–07–15
  12. By: Quick, Reiner
    Abstract: Law entrusts auditors to conduct statutory audits. They fulfil a societal role in providing an opinion on the truth and fairness of the financial statements of audited entities and reducing the risk of misstatement. The purpose of an audit is to enhance the credibility of financial reports prepared by management (Watts & Zimmerman, 1986). Thereby, audits contribute to financial stability, trust and market confidence in the economy by protecting investors from agency risk, which in turn reduces the cost of capital for companies (European Commission, 2010). To fulfil this function, auditors need to provide an adequate service quality. According to the generally accepted definition of DeAngelo (1981), audit quality is the market-assessed joint probability that an auditor will discover material misstatements (auditor competence) and report them (auditor independence). This definition stresses that providing a high factual audit quality is insufficient but that users must also perceive audit quality as appropriate. Accounting scandals like Carillion, a UK construction and facility services company, or Wirecard, a German fintech company, raise public suspicion of auditing failures and result in regulatory initiatives, which seek to improve audit quality.
    Date: 2022
  13. By: Michele Belot; Guglielmo Briscese
    Abstract: Americans appear increasingly polarized and unable to bridge ideological divides. We study individuals' willingness to engage with others who hold opposite views on polarizing policies. Two thousand five hundred Americans are given the opportunity to listen to recordings of fellow countrymen and women expressing their views on immigration, abortion laws and gun ownership laws. We find that most Americans (more than two-thirds) are willing to listen to a view opposite to theirs, and a small fraction (ten percent) reports changing their views as a result. We also test whether emphasizing common grounds with those who think differently helps bridging views. We identify principles the vast majority of people agree upon: (1) a set of fundamental human rights, and (2) a set of simple behavioral etiquette rules. A random subsample of people are made explicitly aware they share common views, either on human rights or etiquette rules, before they have the opportunity to listen to different views. We find that the treatments induce people to adjust their views towards the center on abortion and immigration, relative to a control group, thus potentially reducing polarization.
    Date: 2022–06
  14. By: Philipp Brunner; Igor Letina; Armin Schmutzler
    Abstract: This paper provides a novel theory of research joint ventures for financially constrained firms. When firms choose R&D portfolios, an RJV can help to coordinate research efforts, reducing investments in duplicate projects. This can free up resources, increase the variety of pursued projects and thereby increase the probability of discovering the innovation. RJVs improve innovation outcomes when market competition is weak and external financing conditions are bad. An RJV may increase the innovation probability and nevertheless lower total R&D costs. RJVs that increase innovation tend to be profitable, but innovation-reducing RJVs also exist. Finally, we compare RJVs to innovation-enhancing mergers.
    Keywords: Innovation, research joint ventures, financial constraints, mergers, intensity of competition, licensing
    JEL: L13 L24 O31
    Date: 2022–07

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