nep-law New Economics Papers
on Law and Economics
Issue of 2022‒10‒24
fifteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Public interest or policy diffusion: Analyzing the effects of massage therapist municipal licensing By Darwyyn Deyo; Kofi Ampaabeng; Conor Norris; Edward Timmons
  2. Localised effects of re-allocated real estate mafia assets By Boeri, Filippo; Di Cataldo, Marco; Pietrostefani, Elisabetta
  3. The Sociology of Cartels By Justus Haucap; Christina Heldman
  4. Principles for Effective Insolvency and Creditor/Debtor Regimes, 2021 Edition By World Bank
  5. Unilateral Sanctions in International Law and the Enforcement of Human Rights By Bogdanova, Iryna
  6. The Emergence of Enforcement By Anderlini, L.; Felli, L.; Piccone, M.;
  7. Insecure property rights and the housing market: explaining India's housing vacancy paradox By Gandhi, Sahil; Green, Richard K.; Patranabis, Shaonlee
  8. Nautical Patrol and Illegal Fishing Practices By Kastoryano, Stephen; Vollaard, Ben
  9. Should organizing premier-level European football be a monopoly? And who should run it? - An economists' perspective By Budzinski, Oliver; Feddersen, Arne
  10. Legal Dimensions of Sea Level Rise By David Freestone; Duygu Cicek
  11. The Environment and corruption: Monetary vs. Non-monetary Incentives and the first best By Rupayan Pal; Preksha Jain; Prasenjit Banerjee
  12. Examining the Factors That Affect the Loss of Tax Disputes in the Tax Court By Mega Nurmala Sari
  13. The Economics behind the Directive on Adequate Minimum Wages in the EU: A Critical Assessment By Skedinger, Per
  14. Does gender equality bargaining reduce child penalty? Evidence from France By Pierre-Jean Messe; Jeremy Tanguy
  15. Common Ownership: Europe vs. the US By Nuria Boot; Jo Seldeslachts; Albert Banal Estanol

  1. By: Darwyyn Deyo (San Jose State University); Kofi Ampaabeng (George Mason University); Conor Norris (West Virginia University); Edward Timmons (West Virginia University)
    Abstract: Massage therapy is widely licensed by the states. However, municipalities also often passed massage therapist licensing, motivated by preventing prostitution. Using a novel dataset on municipal licensing and crime data from the FBI, we test if local massage therapist licensing reduced prostitution. We also test a policy diffusion hypothesis, in which cities pass responsive massage therapist licensing. We find that municipal massage therapist licensing does not lead to a reduction in prostitution, but we find support for the policy diffusion hypothesis, with municipalities up to 65% more likely to pass responsive licensing within three years of their neighbor doing so.
    Keywords: Economics of crime, occupational licensing, policing
    JEL: J44 K29 K42
    Date: 2022–09
  2. By: Boeri, Filippo; Di Cataldo, Marco; Pietrostefani, Elisabetta
    Abstract: In an effort to tackle organised crime, the Italian State implements a policy stipulating that properties confiscated to individuals convicted of mafia-related crimes are reallocated to a new use. The policy is meant to act as both an anti-mafia measure and a way to compensate local communities by converting real-estate assets into public amenities. We assess whether this scheme has an effect on the regeneration of local areas by assessing its impact on the value of properties in the vicinity of re-allocated assets and crime activity. The results unveil a positive effect of re-allocated real estate assets on house prices, driven by mafia strongholds, more deprived neighbourhoods, and areas with more inelastic housing supply. The findings suggest declining effects with distance from the re-allocation site, indicating that the policy impact is highly localised. Part of this effect appears due to a decrease in organised crime activity in the streets where re-allocations have taken place. These findings have implications for the effectiveness of policies aiming to improve the quality of neighbourhoods where mafia presence is more pronounced.
    Keywords: organised crime; confiscation; hedonic analysis; urban regeneration policy; Italy
    JEL: K42 R32 H23
    Date: 2022–09
  3. By: Justus Haucap; Christina Heldman
    Abstract: Traditional economic theory of collusion assumed that cartels are inherently unstable, and yet some manage to operate for years or even decades. While the literature has presented several determinants of cartel stability, the vast majority focuses on firms as entities, even though cartels are typically formed between individuals who need to develop structures that allow them to establish trust and ensure cooperation. We analyze 15 German cartels, focusing on the individual participants, the communication and internal structures within the cartels as well as their breakup. Our results indicate that cartel members are highly homogeneous and often rely on existing networks within the industry. Most impressively, only two of the 156 individuals involved in these 15 cartels were female, suggesting that gender also plays a role for cartel formation. We further identify various forms of communication and divisions of responsibilities and show that leniency programs are a powerful tool in breaking up cartels. Based on these results we discuss implications for competition policy and further research.
    Keywords: cartels, collusion, social networks, trust, antitrust
    JEL: L41 K21 Z13
    Date: 2022
  4. By: World Bank
    Keywords: Social Development Law and Development Governance Private Sector Development Public Sector Development Finance and Financial Sector Development International Economics and Trade Bankruptcy and Resolution of Financial Distress Law Finance and Growth Legislation Legal Products Regulatory Regimes Judicial System Reform Financial Law Financial Regulation and Supervision Legal Reform Social Policy Financial Sector Policy Capital Markets and Capital Flows Multinational and Corporate Governance Capital Flows Corporate Governance Civic Participation and Corporate Governance
    Date: 2021–04
  5. By: Bogdanova, Iryna
    Abstract: WTI researcher, Iryna Bogdanova, published a new book titled "Unilateral Sanctions in International Law and the Enforcement of Human Rights. The Impact of the Principle of Common Concern of Humankind". The book is available for download for free (Open Access) thanks to the support of the Swiss National Science Foundation. Abstract Are unilateral economic sanctions legal under public international law? How do they relate to the existing international legal principles and norms? Can unilateral economic sanctions imposed to redress grave human rights violations be subjected to the same legal contestations as other unilateral sanctions? What potential contribution can the recently formulated doctrine of Common Concern of Humankind make by introducing substantive and procedural prerequisites to legitimise unilateral human rights sanctions? Unilateral Sanctions in International Law and the Enforcement of Human Rights by Iryna Bogdanova addresses these complex questions while taking account of the burgeoning state practice of employing unilateral economic sanctions. The author Iryna Bogdanova. She holds a Ph.D. degree (2020) from the World Trade Institute, University of Berne. She has published contributions analysing various aspects of economic statecraft, legality of economic sanctions, national security exceptions in international economic law and regulation of emerging technologies.
    Date: 2022–10–07
  6. By: Anderlini, L.; Felli, L.; Piccone, M.;
    Abstract: We ask how enforcement can endogenously emerge in a landscape in which only raw power, iron ï¬ sts, govern the interaction of agents. If two agents are ranked in terms of power, the more powerful one can expropriate, at a cost, the less powerful one. Alternatively, both agents can engage in surplus-augmenting cooperation (e.g. trade). If expropriation is not too costly and cooperation is not overwhelmingly productive, for any pair of ranked agents the possibility of expropriation prevents cooperation. The more powerful agent ï¬ nds it proï¬ table to expropriate the less powerful one. However, if expropriating agents who are net expropriators of others is cheaper, then a more powerful agent may endogenously become an “enforcer†for lower ranked agents. In equilibrium, the more powerful agent expropriates the less powerful ones by smaller amounts, and the less powerful ones cooperate and refrain from expropriating agents below them. This is because if they do not the more powerful agent will ï¬ nd it cheaper to expropriate only them by a larger amount. Surprisingly, the details of the power structure are irrelevant for enforcement to emerge as an equilibrium phenomenon provided that the original jungle is inhabited by a sufficiently large number of agents and by one that dominates all others.
    Keywords: Enforcement, Jungle, Power Structures, Rule of Law
    JEL: C79 D00 D01 D31 K19 K40 K49
    Date: 2022–08–30
  7. By: Gandhi, Sahil; Green, Richard K.; Patranabis, Shaonlee
    Abstract: One housing paradox in many markets is the simultaneous presence of high costs and high vacancy rates. India has expensive housing relative to incomes and an urban housing vacancy rate of 12.4%. We show how insecure property rights in India, as a result of rent control and weak contract enforcement, increases vacancy rates. Using a two-way linear fixed effects panel regression, we exploit changes in rent control laws in the states of West Bengal, Karnataka, Gujarat, and Maharashtra to find that pro-tenant laws are positively related to vacancy rates. A pro-landlord policy change liberalizing rent adjustments could potentially reduce vacancy rates by 2.8 to 3.1 percentage points. Contract enforcement measured by density of judges is negatively related to vacancy. We estimate that a policy change in rent control laws would have a net welfare benefit and could reduce India's housing shortage by 7.5%.
    Keywords: vacant housing; housing markets; property rights; rent control; India
    JEL: J1
    Date: 2022–09–01
  8. By: Kastoryano, Stephen (University of Reading); Vollaard, Ben (Tilburg University)
    Abstract: We uncover a hidden illegal fishing practice: the use of fishing nets with illegally small mesh size. The small mesh prevents nearly all fish of saleable size from escaping the net, but also traps a large number of fish which are too small to be sold on the market and are therefore discarded at sea. Our approach relies on readily available data on reported fish landings rather than on data from inspections, which are rare, and which tend to be anticipated by fishermen. We focus on bottom trawling, the world's most widely used fishing method. We exploit the fact that using illegally small mesh size strongly increases the share of small fish in the catch. Using quasi-random variation in nautical patrol as a source of variation in the incentive to comply, we show that in weeks without patrol the share of small fish in the landed catch is systematically larger than in adjacent weeks with patrol. Our results are in line with widespread use of illegally small mesh.
    Keywords: enforcement, regulation, environmental economics, fisheries
    JEL: D22 K42 Q22
    Date: 2022–09
  9. By: Budzinski, Oliver; Feddersen, Arne
    Abstract: The controversy around the breakaway European Super League, set to conquer the UEFA Champions League, and the surrounding antitrust proceedings revive the academic discussion about the monopoly power of sport-internal governing bodies (like the UEFA), the justification for and limits of their powers, and potential abuses of their power. Against this background, we discuss how much monopoly is unavoidable in premier-level European football and how its powers can be limited and, thus, scope and incentives for power abuse may be reduced. We particularly find that championship management can be periodically assigned to third-parties (like the Super League organizers) by tender procedures, thus, creating a periodical competition for the market, fueling innovation incentives and strengthening the influence of fans' preferences.
    Keywords: sports economics,Super League,UEFA Champions League,monopoly,marketpower,sport associations,rival leagues
    JEL: D02 D42 D47 K21 L12 L30 L40 L83 Z20
    Date: 2022
  10. By: David Freestone; Duygu Cicek
    Keywords: Environment - Climate Change Impacts Environment - Climate Change and Environment Environment - Coastal and Marine Environment Environment - Environmental Disasters & Degradation Law and Development - International Law
    Date: 2021–06
  11. By: Rupayan Pal (Indira Gandhi Institute of Development Research); Preksha Jain (Indira Gandhi Institute of Development Research); Prasenjit Banerjee (University of Manchester)
    Abstract: This paper analyses environmental regulation under corruption and explores the possibility to attain the first best - `no corruption and no pollution', with a special focus on implications of non-monetary incentives for firms to adapt green technology. It first demonstrates that (a) the effect of corruption control policies on the environment is not always positive, and (b) stricter environmental regulation intensifies the problem of corruption - implying a trade-off between environmental protection and corruption control. Next, it characterizes the `minimum environmental regulation', involving least-subsidy to green technology seller and minimum-tax on brown production, which implements the first best outcome in the equilibrium. Interestingly, by allowing for firm heterogeneity in terms of preferences for social reputation, it demonstrates that introduction of non-monetary incentives in a corrupt environment increases the burden on the government's exchequer, unlike as in absence of corruption possibilities. These results are robust, regardless of (a) whether corrupt transaction is initiated by bribee or briber and (b) whether bribe rate is exogenous or endogenous.
    Keywords: Green Technology Subsidy, Brown Tax, Social Status, Non-monetary Incentives, Reputation, Bribe, The first best
    JEL: H23 Q52 D73 Q58 K42
    Date: 2022–08
  12. By: Mega Nurmala Sari (Faculty of Economics and Business, Universitas Indonesia, Indonesia Author-2-Name: Riatu Mariatul Qibthiyyah Author-2-Workplace-Name: Faculty of Economics and Business, Universitas Indonesia, Indonesia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:)
    Abstract: " Objective - The high tax administration loss rate sparked various speculations in Society. This study aims to determine the factors that led to the defeat of the tax administration in the Indonesian Tax Court. Methodology/Technique - Simple random sampling is used to obtain 1,000 samples of decisions on appeal disputes which is three times the minimum sample size. The logit model is used to find out whether the independent variable affects the dependent variable. The linear probability model is also used to test whether the Logit Model is robust. Findings - The estimation of results shows that the interaction between the tax dispute resolution period and the type of tax, as well as the number of representatives of the tax authorities, had a positive and significant impact on the loss of the tax administration in the prosecution. Novelty - No economic study has comprehensively analyzed the determinants of administrative defeat in the Indonesian Tax Court. This study uses data that have not been used in previous studies. The information includes evidence at audits/objections and appeals, types of taxes, tax dispute resolution periods, interactions between dispute resolution periods and evidence at audits/objections and requests, interactions between dispute resolution periods and types of taxes, interactions between periods dispute resolution, types of taxes and evidence at examination/objection and appeal, initial value, gender of judges, representatives of taxpayers and representatives of tax authorities in court. Type of Paper - Empirical."
    Keywords: Tax dispute; appeal decision; influencing factors; Tax Authorities defeat; Tax Court.
    JEL: G18 K41
    Date: 2022–09–30
  13. By: Skedinger, Per (Research Institute of Industrial Economics (IFN))
    Abstract: The European Commission’s Directive on minimum wages aims to ensure an adequate minimum wage for all workers in the Union and thereby counteract poverty among the low paid. This article examines the underlying economic analysis on which the Directive is based. The conclusion is that job losses associated with sharply raised minimum wages are underestimated while the reduction in poverty is exaggerated, which is why the Commission should have considered other and more effective policy measures. Furthermore, wage developments for low-paid workers in the Union do not seem to be as adverse as suggested by the Commission.
    Keywords: Minimum wages; European Union; Employment; Poverty
    JEL: J31 J38 J88 K31 K33
    Date: 2022–09–20
  14. By: Pierre-Jean Messe (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - Nantes Univ - IAE Nantes - Nantes Université - Institut d'Administration des Entreprises - Nantes - Nantes Université - pôle Sociétés - Nantes Univ - Nantes Université - IUML - FR 3473 Institut universitaire Mer et Littoral - UM - Le Mans Université - UA - Université d'Angers - UBS - Université de Bretagne Sud - IFREMER - Institut Français de Recherche pour l'Exploitation de la Mer - CNRS - Centre National de la Recherche Scientifique - Nantes Université - pôle Sciences et technologie - Nantes Univ - Nantes Université - Nantes Univ - ECN - Nantes Université - École Centrale de Nantes - Nantes Univ - Nantes Université, GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique); Jeremy Tanguy (IREGE - Institut de Recherche en Gestion et en Economie - USMB [Université de Savoie] [Université de Chambéry] - Université Savoie Mont Blanc)
    Abstract: This paper investigates the effects of firm-level gender equality bargaining on the motherhood penalty using French administrative data. To tackle the endogeneity issue, we exploit the 2010 reform that introduced financial penalties for firms with 50 employees or more not complying with their obligation of negotiating on gender equality. This change led to a strong acceleration of gender equality bargaining after 2010 but only for firms with 50 employees or more. As a consequence, women who had their first child in concerned firms after 2010 are more likely to be employed in firms covered by a text related to gender equality. Controlling for firms' size effect and time trends as well as a set of other individuals' and firms' characteristics, we identify the causal effect of gender equality bargaining on earnings impact of motherhood. Our estimates show that forcing firms to promote measures related to gender equality has reinforced the motherhood penalty. While the causal effect of this reform is close to zero just after the first child birth, it turns out to be significantly negative 5 years after. Our results suggest that some measures mentioned in GE texts, especially those favouring work-life balance, may act as an indirect discrimination towards mothers.
    Keywords: gender inequalities,motherhood penalty,collective bargaining
    Date: 2022–09–19
  15. By: Nuria Boot; Jo Seldeslachts; Albert Banal Estanol
    Abstract: Common ownership - when an investor holds shares in two or more companies - has recently attracted significant attention from policy-makers and researchers, studying mainly US firms. European firms, however, are different as top investors with large stakes, like governments, founding families and foundations are much more prevalent. This paper takes a well-known common ownership with micro-economic foundations, lambda, capturing managerial incentives, and compares its implications for S&P Europe 350 firms to those of the S&P 500 for the period 2004-2015 by looking at within, across and global lambda patterns of the European and US S&P companies. We find that US companies have a higher lambda, but European firms’ lambda become both faster connected within Europe and across with their US counterpart where the latter is even more pronounced. Both patterns can be traced back to US investment managers’ increasing global reach.
    Keywords: Ownership structure, S&P 500, S&P 350
    JEL: G23 G32 K15
    Date: 2022

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