nep-law New Economics Papers
on Law and Economics
Issue of 2022‒12‒05
eighteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Expected returns to crime and crime location By Nils Braakmann; Arnaud Chevalier; Tanya Wilson
  2. How Communication Makes the Difference between a Cartel and Tacit Collusion: A Machine Learning Approach By Maximilian Andres; Lisa Bruttel; Jana Friedrichsen
  3. Regulating big tech: From competition policy to sector regulation? By Budzinski, Oliver; Mendelsohn, Juliane
  4. Public Pressure or Peer Influence: What Shapes Police Executives' Views on Civilian Oversight? By Adams, Ian T.; McCrain, Joshua; Schiff, Daniel S.; Schiff, Kaylyn Jackson; Mourtgos, Scott M.
  5. The Impact of the More Economic Approach on EU Merger Decisions By Bernhardt, Lea; Dewenter, Ralf
  6. The civic transformation of data privacy implementation in Europe By Borohovich, Inbar Mizrahi; Newman, Abraham; Sivan-Sevilla, Ido
  7. Security and international crime drops By Tilley, Nick; Farrell, Graham
  8. rcme: A Sensitivity Analysis Tool to Explore the Impact of Measurement Error in Police Recorded Crime Rates By Pina-Sánchez, Jose; brunton-smith, ian; Buil-Gil, David; Cernat, Alexandru
  9. Ethnic Disparities in Sentencing: Warranted or Unwarranted? By Pina-Sánchez, Jose; Geneletti, Sara; Veiga, Ana; Morales, Ana; Guilfoyle, Eoin
  10. Proposal for Policy Change in the procedure of civil asset forfeiture By Tzenios, Nikolaos
  11. Multiplicity, the Corporation and Human Rights in Global Value Chains By Scheper, Christian
  13. 'Law and'...a new perspective By Cati, Matteo Maria
  14. Banning wildlife trade can boost demand for unregulated threatened species By KUBO, Takahiro; Mieno, Taro; Uryu, Shinya; Terada, Saeko; Veríssimo, Diogo
  15. “The CDC Won’t Let Me Be.” The Opinion Dynamics of Support for CDC Regulatory Authority By Motta, Matt; Callaghan, Timothy; Trujillo, Kristin Lunz
  16. Incivility and bullying in the workplace: causes, consequences and corrective actions By Piquette, Dan; Freistadt, Amanda; Perricone, Tina; Zahayko, Deveny
  18. Should We Prevent Off-Label Drug Prescriptions? Empirical Evidence from France By Tuncel, Tuba

  1. By: Nils Braakmann; Arnaud Chevalier; Tanya Wilson
    Abstract: We provide first evidence that temporal variations in the expected returns to crime affect the location of property crime. Our identification strategy relies on the widely-held perception in the UK that households of South Asian descent store gold jewellery at home. Price movements on the international market for gold exogenously affect the expected gains from burgling these households, which become relatively more lucrative targets as the gold price increases. Using a neighbourhood-level panel on reported crime and difference-in-differences, we find that burglaries in South Asian neighbourhoods are more sensitive to variations in the gold price than other neighbourhoods in the same municipality, confirming that burglars react rationally to variations in the expected returns to their activities. We conduct a battery of tests on neighbourhood and individual data to eliminate alternative explanations.
    Keywords: Crime; Gold prices; Returns to crime; Becker model; Optimal Foraging Theory; Criminal Behaviour; Crime Location
    JEL: K42 J19
    Date: 2022–08
  2. By: Maximilian Andres; Lisa Bruttel; Jana Friedrichsen
    Abstract: This paper sheds new light on the role of communication for cartel formation. Using machine learning to evaluate free-form chat communication among firms in a laboratory experiment, we identify typical communication patterns for both explicit cartel formation and indirect attempts to collude tacitly. We document that firms are less likely to communicate explicitly about price fixing and more likely to use indirect messages when sanctioning institutions are present. This effect of sanctions on communication reinforces the direct cartel-deterring effect of sanctions as collusion is more difficult to reach and sustain without an explicit agreement. Indirect messages have no, or even a negative, effect on prices.
    Keywords: cartel, collusion, communication, machine learning, experiment
    JEL: C92 D43 L41
    Date: 2022
  3. By: Budzinski, Oliver; Mendelsohn, Juliane
    Abstract: The European Commission has proposed a new regulatory tool for the governance of digital markets. The Digital Markets Act (DMA) intents to limit the market behavior of socalled gatekeeper companies to ensure contestable and fair digital markets. We review the provisions of the DMA both from a legal and from an economic perspective. Notwithstanding a number of benefits, we identify several issues with the current proposal. When looking at the core provisions of the proposal from an economic perspective, several issues of contention arise: many of the provisions seem to be quite narrow in scope and it seems difficult to extrapolate more general rules from them; the economic harm of some of the provisions is both uncertain and in principle debatable; the alleged distinction between different types of obligations cannot be verified; and, in addition, Art. 5-7 DMA seem to contain three distinct regulatory instruments; last but not least, while the DMA seeks to control existing gatekeepers, the 'tipping' of markets and the rise of further gatekeepers is not guaranteed by the proposed regulation, this in turn leads to a larger critical analysis of the gatekeeper as the DMA's norm addressee. While the goals and nature of the DMA have gained in clarity throughout the legislative process, its scope remains somewhat obtuse. On the one hand it seems set on regulating gatekeepers as they exist today, on the other, also wants to bring about systemic change in the digital single market. How it expects to achieve the latter is not entirely clear. In this light and by critically looking at the nature of ex ante and ex post measures in broader competition policy, we conclude that a reform of the competition policy regime would better suit the overalls aims of reining in big tech in future.
    Keywords: big tech,digital economy,digital ecosystems,GAFAM,competition policy,antitrust,Digital Markets Act (DMA),sector-specific regulation,law and economics
    JEL: K21 K23 K24 L40 L50 L81 L86
    Date: 2022
  4. By: Adams, Ian T. (University of South Carolina); McCrain, Joshua; Schiff, Daniel S. (Purdue University); Schiff, Kaylyn Jackson (Emory University); Mourtgos, Scott M.
    Abstract: Demand for democratic accountability in policing is accelerating, yet little is understood about how law enforcement executives engage in policy learning around civilian oversight. This paper shares the results of a novel survey experiment administered to all U.S. police chiefs and sheriffs. We assess whether police executives’ attitudes towards civilian oversight are responsive to 1) state-level public opinion (drawing on an n=16,840 survey) and 2) prior adoption of civilian review boards in large agencies. Results from over 1,300 police executives reveal that law enforcement leaders are responsive to peer adoption but much less to public opinion, despite overwhelming support amongst voters. Further, we find that agencies with an established oversight board are highly supportive of their existence, while elected sheriffs are much less likely to support civilian oversight. Our results indicate that policy learning and reform around civilian oversight are possible, though sources of reform are not themselves primarily democratic.
    Date: 2022–09–08
  5. By: Bernhardt, Lea (Helmut Schmidt University, Hamburg); Dewenter, Ralf (Helmut Schmidt University, Hamburg)
    Abstract: This paper analyses all final merger decisions by the European Commission from the beginning of 1990 up to the end of 2019. We use a novel dataset, containing information about 6245 merger cases from all economic sectors and combining all sorts of decisions, inclusive of withdrawn and prohibited cases. Using text analyses techniques, we first analyse merger decisions documents in order to find trends and differences in language and wording with respect to the 2004 regulation. As a result, we find a shift in favour of terms associated with the More Economic Approach. On the contrary, the concept of dominance has decreased since 2004, indicating a strong decline in structural market parameters for merger reviews. While the tonality is found to be largely positive (especially for cleared cases), again, a change under different merger regimes seems to be evident. Second, accounting for differences in the usage of competition-related terms and by using simple OLS and logit regressions, we find that the duration of the merger review has increased significantly after the 2004 reform. At the same time, the probability of a merger being prohibited has not changed significantly.
    Keywords: Merger policy; Competition policy; Regulatory reform; EU Commission
    JEL: D78 K21 L40
    Date: 2022–08–23
  6. By: Borohovich, Inbar Mizrahi; Newman, Abraham; Sivan-Sevilla, Ido (University of Maryland)
    Abstract: Recent data protection laws in the EU institutionalize NGO engagement with regulators and enable new mechanisms for bottom-up policy implementation. We study thirteen European NGOs and map their contribution to policy implementation based on a novel typology for understanding their scope (national vs. transnational) and goals (direct vs. strategic) of actions. We ask how NGOs vary in their contribution to data privacy implementation in Europe? What are the implications of those variations for differentiated policy implementation and EU problem-solving capacity? Through analyses of NGOs’ news articles and GDPR complaints, we find that NGOs converge toward privileging a transnational strategic civic enforcement model, using pan-European privacy cases to alter policy implementation, over individual citizen advocacy and empowerment at the national level. Civic engagement has served to mitigate cross-border policy implementation disparities, while preserving considerable regulatory discretion nationally. Integrating NGOs into the analysis of differential policy implementation of data protection helps shed light on the evolving nature of civil liberties in Europe.
    Date: 2022–11–06
  7. By: Tilley, Nick; Farrell, Graham (University of Leeds)
    Abstract: While security devices are sometimes maligned, they offer the most efficient means of reducing crime and criminality. The best security measures activate powerful crime prevention mechanisms and are also elegant, that is, ethical and unobtrusive. A strong body of evidence shows how security measures were responsible for the major and prolonged declines in many crime types internationally. Security improvements that remove crime opportunities offer the best hope for reducing crime, cybercrime, future crime and criminality.
    Date: 2022–06–06
  8. By: Pina-Sánchez, Jose (University of Leeds); brunton-smith, ian; Buil-Gil, David (University of Manchester); Cernat, Alexandru
    Abstract: It has been long known that police recorded crime data is susceptible to substantial measurement error. However, despite its limitations, police data is widely used in regression models exploring the causes and effects of crime. Furthermore, because of the complex error mechanisms affecting police data, attempts to adjust for their impact are rare and tailored to specific settings (crime types, measurement models, outcome models, and precursors or consequences of crime). Here we introduce rcme: Recounting Crime with Measurement error, a new R package to enable sensitivity assessments of the impact of measurement error in analyses using police recorded crime rates across a wide range of settings. Using two real world examples – i) the link from violent crime to disorder, and ii) the role of collective efficacy in mitigating criminal damage – we demonstrate how rcme can be used to summarise the impacts of measurement error in empirical models used in research and practice.
    Date: 2022–06–26
  9. By: Pina-Sánchez, Jose (University of Leeds); Geneletti, Sara; Veiga, Ana; Morales, Ana; Guilfoyle, Eoin
    Abstract: Large research efforts have been directed at the exploration of ethnic disparities in the criminal justice system, documenting harsher treatment of minority ethnic defendants, across offence types, criminal justice decisions, and jurisdictions. However, most studies on the topic have relied on observational data, which can only approximate ‘like with like’ comparisons. As a result, researchers, practitioners and policy-makers have often been wary of interpreting such disparities as evidence of discrimination. We use causal diagrams to lay out explicitly the different ways estimates of ethnic discrimination derived from observational data could be biased. Beyond the commonly acknowledged problem of unobserved case characteristics, we also discuss other less well-known, yet likely more consequential problems: measurement error in the form of racially-determined case characteristics or as a result of high heterogeneity within the ‘Whites’ reference group, and selection bias from non-response and missing offender’s ethnicity data. We apply such causal framework to review findings from two recent studies showing ethnic disparities in custodial sentences imposed at the Crown Court (England and Wales), questioning whether the reported disparities should be interpreted as evidence of discrimination. We also use simulations to recreate the most comprehensive of those studies, and demonstrate how the reported ethnic disparities appear robust to a problem of unobserved case characteristics. We conclude that ethnic disparities observed in the Crown Court are likely reflecting evidence of direct discrimination in sentencing.
    Date: 2022–09–30
  10. By: Tzenios, Nikolaos (Charisma University)
    Abstract: Without the proper due process, the civil asset forfeiture procedure violates the Constitutional rights of citizens. The proposal aims to address the current right granted to the police to seize the property of civilians. The authorizing laws established by the Assets Forfeiture Fund and the Equitable Sharing Program are problematic by offering a loophole for the abuse of the property rights of American citizens. While some states have abolished the practice, federal laws still support their enforcement. The deficiencies in the policies raise discussions on the issue of policies for profit as the major aspect of civil asset forfeiture. The proposal is to outlaw instances of civil asset forfeiture without due process on the federal level. On the state level, the preferred outcome would also include reform by repealing the laws allowing property seizure. The resistance to change in the legislature should be addressed by securing the success of the policy, taking advantage of the current unpopularity of unregulated asset forfeiture, and creating the base for the process integration on the federal level. The proposal calls for identifying stakeholders, analyzing their views, and strengthening their support. The social and political opposition should be addressed by putting emphasis on fundamental American values. The action plan and implementation process are built upon efficient communication by the policy committee to engage stakeholders and the wider public in the process. With clearly defined priorities and budget allocation, the policy will ultimately evolve into a legislative and organizational tool. Using the strategies of ascertainment of stakeholders and reframing issues to ensure appeal to American values, the change on federal and state levels will be achievable. While the change will lead to debate, significant improvement is attainable in due process and the protection of rights.
    Date: 2022–11–17
  11. By: Scheper, Christian
    Abstract: Human rights in global value chains have become a key field of study in international law and corporate governance. The analysis often starts with a gap – a ‘governance gap’ in human rights protection. This pragmatic starting point calls for pragmatic solutions: better corporate compliance and more accountability. While this goes a long way in addressing corporate misconduct, the global corporate form, its power and legitimation in transnationally generating and appropriating value tend to become naturalized phenomena. Moreover, the effects of accountability agendas on corporate power and legitimation are hardly considered. Instead, I propose to address the ‘human rights problem’ by understanding the corporation and its networks as consequences of international politics – conceptualized as inter-societal multiplicity. The multiplicity lens offers a possibility to replace the governance gap with a productive conception of inter-societal conditions and can complement the focus on accountability and compliance. I conclude the article by tentatively sketching three important consequences of such a starting point for defining the problem of human rights in global value chains: the international dimensions of the division of labour under competitive conditions, the legitimation of corporate practices and the production of knowledge for their regulation.
    Date: 2022–07–31
  12. By: Atkinson, Nathan
    Abstract: Financial penalties imposed on malfeasant corporations can produce “collateral consequences,” or unintended negative impacts on employees, customers, and society more broadly. I show that the vast majority of government bodies that assess organizational penalties have adopted policies to reduce corporate liability where collateral consequences might otherwise result. Moreover, I demonstrate that officials do re- duce penalties in line with these policies, undermining deterrence, and compensation. However, evidence from reductions given to publicly-traded firms suggests that officials are often wrong in their assessment of firms’ financial health, thereby awarding reductions to healthy firms where collateral consequences are unlikely to occur. I discuss how officials should approach imposing penalties when they are concerned about prospective collateral consequences.
    Date: 2022–07–29
  13. By: Cati, Matteo Maria
    Abstract: This paper reinterprets, differently from the existing literature, the relationship between law and economics not from the point of view of a lawyer-economist but rather from the point of view of an economist-mathematician, and it raises a methodological issue. To do so, some of the elements of the theory of sets are borrowed to argue that behavioral economics, its application to behavioral law and economics, and behavioral economists have generalized the pioneering work of Judge Calabresi, with reference to the famous books ‘Tragic Choices’ and ‘The Future of Law and Economics – Essays in Reform and Recollection’. Even if the usage of the theory of sets made in this paper is intuitive, some of its basics are reviewed in the appendix.
    Date: 2022–09–22
  14. By: KUBO, Takahiro; Mieno, Taro; Uryu, Shinya; Terada, Saeko; Veríssimo, Diogo
    Abstract: Regulation of natural resource use might have unintended spillover impacts beyond the policy targets. Overexploitation is a major cause of species extinction and banning wildlife trade is a common and immediate measure to tackle it. However, few rigorous studies have investigated consequences of wildlife trade bans, and those few studies have focused only on the policy target species. This means governments and researchers may have overlooked side effects of trade bans on unregulated threatened species. This study explores whether trade ban regulations on three threatened species (i.e., giant water bugs Kirkaldyia deyrolli, Tokyo salamanders Hynobius tokyoensis and golden venus chub Hemigrammocypris neglectus) have spillover impacts on the demand for non-banned species considered as substitutes. We draw on a 10-year online auction dataset and the recently developed causal inference approach—synthetic difference-in-differences—to analyze the trade ban regulation implemented in February 2020 in Japan, one of the largest wildlife trade markets. The results show that bans on the giant water bugs and Tokyo salamanders led to an increase in the trade of non-banned species, whereas there was no such evidence concerning the golden venus chub. The findings suggest that policy evaluations ignoring spillover effects might overstate the benefits of trade bans. Our findings raise concerns about the unintended consequences caused by trade bans and restate the importance of further efforts around consumer research, monitoring and enforcement beyond the species targeted by policies, while minimizing the costs by applying modern technologies and enhancing international cooperation.
    Date: 2022–05–29
  15. By: Motta, Matt (Oklahoma State University); Callaghan, Timothy; Trujillo, Kristin Lunz
    Abstract: The Centers for Disease Control and Prevention (CDC) play a central role in responding to communicable disease threats. Its authority to do so, however, has recently met significant political and legal opposition. Unpacking the dynamics of public support for CDC authority is an important question, as doing so can provide insight into whether policymakers might have an incentive to expand (or curtail) the agency’s regulatory powers. In a demographically representative survey of 5,483 US adults, we find that most Americans support the CDC’s role in responding to health crises, although self-identified conservatives are less likely to do so. Consistent with the idea that opposition to CDC-authority may result (in part) from receptivity to elite anti-CDC rhetoric, the effect of ideology holds when accounting for respondents’ limited government and anti-expert attitudes; an effect we replicate in nationally representative data from the American National Election Study (ANES). Encouragingly, though, we find via a novel survey experiment that emphasizing the CDC’s central role in combating the spread of COVID-19 is associated with significantly stronger levels of support on the ideological right. We conclude by discussing how these findings might influence effective health communication in the face of mounting political and legal challenges to CDC regulatory authority.
    Date: 2022–09–07
  16. By: Piquette, Dan; Freistadt, Amanda; Perricone, Tina; Zahayko, Deveny
    Abstract: Workplace incivility and bullying are common and are on the rise in Canada. Workplace incivility has a contextual definition that can include more minor behaviours such as disrespect, taking credit from others, and belittling; it can also include major behaviours such as dehumanizing, bullying, violating basic rights, and engaging in corrupt or criminal actions. Bullying and harassment in the workplace are defined in legislation and carry criminal, civil, and regulatory consequences when they occur. Workplace bullying has a significant impact on workers that includes reduced work effort, decreased performance, absenteeism, and high attrition. The effects are even more significant on women workers, who experience a loss of self after workplace bullying occurs. Workplace leaders have an important role in discouraging incivility and taking appropriate corrective action when it occurs. Leaders set the tone of the workplace. Therefore, our objective is to comprehensively explore the causes and consequences of workplace incivility, the role of leadership in causing and mitigating incivility, and strategies that leaders and followers can employ to prevent incivility.
    Date: 2022–10–21
  17. By: Atkinson, Nathan
    Abstract: To deter a profit-maximizing corporation from breaking the law, the expected costs from noncompliance must be greater than the expected costs from compliance. In this paper, I examine the costs of corporate compliance and noncompliance with the Clean Air Act. Using the universe of civil Clean Air Act environmental violations by stationary emitters of pollution, I estimate that 37.5% of civil violations are profitable net of penalties imposed. The profitability of noncompliance is increasing in the size of the violation. In aggregate, I estimate that penalties imposed by the EPA would have to be five times greater than those imposed in order to achieve the EPA's stated policy goal of removing the economic benefits of noncompliance. I further show that the firms that profit the most from violations are also the largest emitters of pollution.
    Date: 2022–07–29
  18. By: Tuncel, Tuba
    Abstract: After a drug obtains marketing authorization, the usage depends on the regulation of off-label pre-scriptions for unapproved indications. We investigate the impact of off-label prescription regulation on physicians’ behavior, patients’ health, treatment costs, and pharmaceutical firms’ pricing with a structural demand and supply model. Exploiting rich panel data on physicians’ activities and office visits in France over nine years, we use a model of prescription choice and health outcomes with unobserved patient-level heterogeneity. We identify the demand for on-label and off-label drugs and the effect of prescription choice on health outcomes. On the supply side, we use a Nash-in-Nash bargaining model between the government and the pharmaceutical companies that allows the partial identification of the marginal costs of drugs. Counterfactual simulations show that when we remove off-label drugs from the choice set of physicians, substitution to on-label drugs at constant prices would lead to an increase of 15% in the expenditure on prescription drugs. If we allow bargaining adjustment on drug prices under a ban on off-label prescriptions, the ban would further increase the treatment cost, by 26%, without improving health outcomes.
    JEL: I10 D12 C25
    Date: 2022–09

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