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

  1. Regulation relevant to (long-form) audio recordings gathered in Brazil By Korwin-Zmijowski, Marion; Cristia, Alejandrina
  2. Richard A. Posner (1939-) By Jean-Baptiste Fleury; Alain Marciano
  3. Metal 3D Printing: Patent Law, Trade Secrets, and Additive Manufacturing By Rimmer, Matthew
  4. Marijuana Legalization and Mental Health By Borbely, Daniel; Lenhart, Otto; Norris, Jonathan; Romiti, Agnese
  5. We've been here before – New and old in anti-trust regulation for global web platforms and future regulatory policy By Forge, Simon
  6. A Behavioral Theory of Discrimination in Policing By Hübert, Ryan; Little, Andrew T.
  7. CCI and Regulation of Digital Platforms and Blockchain: Will it take a Rule of Reason; Per Se or a Schizophrenic Approach? By Dalvi, Manoj; Gadkari, Ahan
  8. Costly Norm Enforcement through Sanctions and Rewards: An Experiment with Colombian Future Police Officers By Mantilla, Cesar; Gelvez Ferreira, Juan David Gelvez; Nieto, Maria Paula
  9. Methodological Individualism and the Foundations of the "Law and Economics" movement By Jean-Baptiste Fleury; Alain Marciano
  10. The relationship between Competition, Tourism and Sustainable Development: three interdependent topics By Fotis, Panagiotis; Korre, Maria
  11. The Impact of Legal Abortion on Maternal Mortality By Farin, Sherajum Monira; Hoehn-Velasco, Lauren; Pesko, Michael
  12. Entry and Competition of Retail Pharmacies: A Case Study of OTC Drugs Sales and Ownership Deregulation By Matúš Bilka; António Portugal Duarte; Martin Lábaj
  13. Diffusion of crime control benefits: Forced eradication and coca crops in Colombia By Eleonora Dávalos; Leonardo Fabio Morales
  14. Smart Contracts: Myths and Implications for Economics and Financial Regulation By Lehr, William
  15. Aint that a Shame : False Tax Declarations and Fraudulent Benefit Claims By Barile, Lory; Cullis, John; Philip Jones

  1. By: Korwin-Zmijowski, Marion; Cristia, Alejandrina (Centre Nationale de la Recherche Scientifique)
    Abstract: In the context of research using machine-learning tools on audio-recordings gathered in several countries, the LAAC Team sought to systematize regulation relevant to such data. The most important legal issue is data protection. Data protection is an important part of using and operating technology to protect human rights, and both at the international level and at other levels in many countries, a great deal of regulation has been created to address it. In addition, we also considered regulation referencing issues on which there are fewer regulations as of yet: informed consent, machine-learning bias and the possibility of discrimination, duty to report illegal activities, and intellectual property (potentially) emerging from aboriginal resources. In this document, we first provide an overview of international law applicable to the protection of data from Brazilian citizens. We then summarize relevant areal legislation, before turning to national legislation in Brazil specifically. Finally, after briefly describing the organization of legislation within Brazil with respect to local and regional legislation, we summarize these. Whenever possible, we explain in what way a given piece of regulation is relevant to long-form audio-recordings.
    Date: 2022–09–15
  2. By: Jean-Baptiste Fleury (HDEA - Histoire et Dynamique des Espaces Anglophones - SU - Sorbonne Université); Alain Marciano (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)
    Abstract: Richard A. Posner was the most important actor in the transformation from "law and economics" to an "economic analysis of law". Posner applied Chicago price theory to the analysis of law and legal rules. He not only contributed to the field but also structured it. This is what this chapters shows. We also show that Posner's work illustrates the Chicagoan dimension of his economic analysis of law. That Posner, especially later in his career, introduced some elements that might seem to be at odds with Chicago economicspragmatism, notably-or that he claimed having become a Keynesian does not change much to the claim that it was Posner who crafted Chicago's economic analysis of law.
    Keywords: Posner,Chicago,law and economics,economic analysis of law,wealth maximization,efficiency,common law,judges,Kaldor-Hicks,justice
    Date: 2022
  3. By: Rimmer, Matthew (Queensland University of Technology)
    Abstract: Refereed article - Matthew Rimmer. "Metal 3D Printing: Patent Law, Trade Secrets, and Additive Manufacturing" Frontiers in Research Metrics and Analytics (2022) Available at: Abstract There has been significant investment in research and development in respect of metal 3D printing in the United States (as well as a number of other jurisdictions). There has been growing conflict over the ownership of intellectual property in respect of metal 3D printing (involving not only patents but also trade secrets and confidential information, as well as contract law and unfair competition). In 2018, Desktop Metal Inc. launched litigation against Markforged Inc. and Matiu Parangi in relation to intellectual property and metal 3D printing in the United States. As well as complaints of patent infringement, Desktop Metal Inc. has alleged that the defendants had engaged in acts of trade secret misappropriation, unfair and deceptive business practices, and breach of contract. Markforged Inc. made various counter-claims of its own. In July 2018, a Federal Jury found that Markforged Inc. did not infringe two patents held by its rival Desktop Metal Inc. Claims of further violations of trade secrets and contract law were also considered. In the end, the dispute was settled, with neither party obtaining an advantage in the litigation. There was further conflict over whether the terms of the settlement in respect of non-disparagement were honoured. The parties have also faced further intellectual property conflict. In 2021, Continuous Composites has filed a patent infringement lawsuit against Markforged Inc. In 2021, Desktop Metal Inc. brought legal action against SprintRay in Germany. Drawing upon this case study, this paper considers whether metal 3D printing will disrupt patent law, policy, and practice. It also explores the tension between the use of trade secrets in commercial 3D printing (such as in metal 3D Printing), and the open source ethos of the Maker Movement. This paper considers the larger implications of this intellectual property dispute over metal 3D printing for scarcity, regulation, and the abundance society.
    Date: 2022–09–01
  4. By: Borbely, Daniel (University of Dundee); Lenhart, Otto (University of Strathclyde); Norris, Jonathan (University of Strathclyde); Romiti, Agnese (University of Strathclyde)
    Abstract: This study examines the effects of U.S. state-level marijuana policies on mental health. Using data from three nationally representative data sets and estimating difference-in-differences models that account for the staggered implementation of both medical and recreational marijuana legislation, we evaluate the impact on marijuana use as well as two measures of mental distress. We show that marijuana laws have positive effects on marijuana use, but find no evidence for any effect on mental health on average. Nonetheless, null aggregate effects mask sharp heterogeneities across the age distribution. Our findings show that elderly individuals (age 60 and older) benefit from medical marijuana legalization in terms of better mental health, whereas legalizing recreational marijuana produces negative mental health effects for younger individuals (below age 35). The effects of medical marijuana legislation are driven by elderly people with pre-existing chronic health conditions, whereas those of recreational marijuana legislation are driven by younger and relatively healthy individuals. Furthermore, results are stronger for women than for men.
    Keywords: marijuana legalization, recreational marijuana, medical marijuana, mental health
    JEL: I18 I10 K32
    Date: 2022–11
  5. By: Forge, Simon
    Abstract: The global scale web platforms coming to dominate key parts of the world economy seem to be a phenomenon that is less than a decade old, or perhaps slightly more, really starting from 2000-2005. In reality their origins in terms of their business models can be traced to the evolution of the software and computing industries more generally, over the three preceding decades1 2 3. But it does not stop there. Going further back to the late 1890's, useful regulatory models can be drawn today from the prior anti-trust regulation against what was "big tech" then - and was used throughout the first parts of the twentieth century. For example, the concept of reversing acquisitions in the past has been standard practice under the USA's original anti-trust law and has been proposed in the USA Senate recently, by Senator Elizabeth Warren. The paper briefly sketches the relevant directions in anti-trust regulation today, today with the return to the earlier views of terminating abuses of significant market power (SMP) in oligopoly and monopoly. It contrasts today's perspective with the regulatory climate that the "digital tech giants" grew up in, shaped by the monetarist Chicago School (of Friedman's 1970 paper and Judge Bork's 1978 thesis) that USA anti-trust principles should consider large (dominant) enterprises as beneficial for consumer price protection. Essentially it is a regulatory theory which argues for preserving monopolies. Combined with corporate lobbying and its politics, it has reduced anti-trust use over 1998 - 2018 to effectively screen the USA's web platform owners from regulatory oversight, preserving global market dominance. So the new problems are to some extent old problems often with some new malpractices for an online marketplace. However, unfortunately regulators and especially governments have been slow to recognise this and so shape effective action. This raises two key research questions in this area. The first question is practical - what do recent major tech platform anti-trust cases indicate on which legal arguments and approaches are successful and what fails today in recent judgements. Many cases have not been successful and so reasons and context for any positive results are of vital interest. If there is a failure, where does the problem lie - is it with the regulation itself, confusion over the defendant's market position or infringement of consumer or competitor rights and /or with the relevant court's interpretation of that, including a flawed presentation of arguments. Key areas in forming a successful action need to be identified, especially for the more recent cases over the last year or so, to provide guidance in the current climate in which much uncertainty reigns. Analysis here would also anticipate the possible impacts of new legislation, especially that from the EU in the DMA and DSA and the possibilities presented by six different proposals before the USA Congress. The second key question draws on how to form a reasonable solution for reducing SMP abuse through spin-offs, and/or demergers, both vertically and horizontally - ie just how to shape future regulation today. However there are some significant new factors with the march of globalisation since 2000 that were not present in previous decades. They are especially challenging for the effectiveness of the current and proposed regulation in the EU and the USA. Thus, the latest crop of dominant firms harvest and depend on success from what may be termed a 'trialogue' of more novel economic factors. These feed the phenomenal financial and market success for the half dozen main players across today's major economic vertical sectors, leading to Apple's breakthrough to the level of a US$3 Trillion market capitalisation in early 2022. How these platforms may be treated in terms of regulatory ex ante, or ex post, legislation is of key interest. It is in this direction that solutions for SMP abuse lie, with the new generation of European antitrust Acts. Hopefully the paper will offer practical inputs on the fundamental question of the comparative chances of long term success for a regulatory action at all and thus in increasing competition in the subject market. The methodology used is based on drawing together evidence from the markets and judicial procedures to produce the analysis for the two research questions, with insights, including those economic factors in reconfiguration of the firm for increasing digital markets competition.
    Date: 2022
  6. By: Hübert, Ryan (University of California, Davis); Little, Andrew T.
    Abstract: A large economic literature studies whether racial disparities in policing are explained by animus or by beliefs about group crime rates. But what if these beliefs are incorrect? We analyze a model where officers form beliefs using crime statistics, but don’t properly account for the fact that they will detect more crime in more heavily policed communities. This creates a feedback loop where officers over-police groups that they (incorrectly) believe exhibit high crime rates. This inferential mistake can exacerbate discrimination even among officers with no animus and who sincerely believe disparities are driven by real differences in crime rates.
    Date: 2022–08–01
  7. By: Dalvi, Manoj; Gadkari, Ahan
    Abstract: India's choice to control its markets was executed in two stages: one for each phase of the country's industrial strategy and philosophy towards resource allocation and market functioning. Between 1950 and 1991, the first phase was defined by a socialist ideology exhibited via a mixed economy and a propensity for government engagement in economic activities. During this time, policymakers were more concerned with avoiding economic power concentration than with stimulating competition. As the Indian economy modernised policymakers moved from preventing concentration of economic power as symbolised by the Monopolies and Restrictive Trade Practices Act (MRTP) of 1969 to the Competition Act 2002 ("Act"), to regulate anti-competitive agreements that have the potential to have a material adverse effect on competition in the Indian economy. In the modern Indian economy, the Competition Commission of India (CCI) has shown inconsistency in its enforcement on platform dominance; this inconsistency may now extend to blockchain as well. The purpose of this paper is to evaluate the necessity of new antitrust tools in the evolving economy of an emergent market and to push for more certainty in the CCI's enforcement of anti-competition laws in India. The increasing digitization of global and Indian markets in recent years, facilitated by the emergence of platforms such as Amazon, Apple, Google, and Facebook have raised questions about the Act's appropriateness and its applications. The CCI has received several complaints over the past few years about creative, technology-driven, two-sided marketplaces that have become a vital element of the Indian economy. In such situations, it becomes easier for certain platforms to practice deep discounting, cash-back offers and other schemes to constantly attract newer users. There is widespread agreement that CCI's reaction to these dynamic markets leaves much to be desired. Since technology has now evolved from the "platform" to "blockchain"; new challenges arise and it has also raised questions if the Act itself needs to be suitably updated to meet the challenges unique to these markets.
    Date: 2022
  8. By: Mantilla, Cesar; Gelvez Ferreira, Juan David Gelvez; Nieto, Maria Paula
    Abstract: The increasing lack of trust in the police around the globe reduces their indirect benefits, related to citizens' feelings of safety and beliefs that the police are "doing something'' to fight crime. We explore whether this generalized lack of trust among citizens correlates with their beliefs' accuracy regarding fairness norm enforcement in a lab-in-the-field experiment conducted with future police officers. Two hundred nine police students played a dictator-like game with costly third-party reallocation. Participants acting as a third party could use one-fourth of their endowment to either decrease (i.e., sanction) or increase (i.e., reward) the highest payoff among the two other players, the initial allocator and the transfer's recipient. We randomized whether a police student or a civilian was the recipient. Police students transfer roughly 40% of their endowment, regardless of the recipient's identity. They are likely to incur costly reallocations between 55 and 75 percent of the time, especially when initial allocations are more inegalitarian and the recipient is also a police student. Moreover, when police students interact only with in-group members, they are more likely to reward, whereas they are more likely to sanction if the transfer's recipient is a civilian. The subsequent prediction survey, conducted with over 200 civilians, reveals that respondents expected some in-group favoritism in the transfer and in the likelihood to reward. Although the probability of sanctioning was high, respondents overestimated the likelihood that police students engage in costly sanctions. Incentives and reporting a higher trust in the police are correlated with higher predictive accuracy.
    Date: 2022–08–31
  9. By: Jean-Baptiste Fleury (HDEA - Histoire et Dynamique des Espaces Anglophones - SU - Sorbonne Université); Alain Marciano (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)
    Abstract: The purpose of this paper is to discuss the methodological foundations of the law and economics movement, with a special emphasis on the role and place of individuals within their framework. Reviewing the works of the main contributors-the founders, indeed-to the law and economics movement, we show that all of them considered that the analysis of legal phenomena had to start from individual behavior, even as these very behaviors were embedded, to various degrees, though not determined, in legal and institutional frameworks. The all use social, systemic, institutional and anti-reductionist individualistic methodology. This is not inconsistent or contradictory. Indeed, methodological individualism does not imply to conceive human beings as (isolated) atoms living as if they were suspended in a social vacuum.
    Keywords: Law and economics,economic analysis of law,methodological individualism
    Date: 2022
  10. By: Fotis, Panagiotis; Korre, Maria
    Abstract: In recent years, there has been considerable interest in examining the relationship between tourism and sustainable development. For firms to act friendly against the environment, competition authorities (CA’s) must provide them with the appropriate legal certainty they need to make the necessary investments towards sustainability. Policy implications should be strengthened towards more installation of renewable energy and a convergence of environmental policies towards more efficient energy use among EU countries. Energy intensity flows must be kept up more closely since the empirical results point out its substantially positive contribution in terms of air pollution.
    Keywords: Competition (Antitrust) policy; Sustainable Development; Tourism
    JEL: K21 L83 Q01
    Date: 2022–11–06
  11. By: Farin, Sherajum Monira (Georgia State University); Hoehn-Velasco, Lauren (Georgia State University); Pesko, Michael (Georgia State University)
    Abstract: Legal abortion has recently been suggested as an essential healthcare service. In this study, we consider whether abortion legalization over 1969-1973 improved women's health, measured by maternal mortality. Our event-study results indicate that legal abortion substantially lowered non-white maternal mortality by 30-40%, with 113 non-white maternal deaths averted nationally in the first year abortion became legal. We also find that early state-level legalizations were crucial, and more influential than the Roe v. Wade decision itself.
    Keywords: abortion, legal abortion, maternal mortality, Roe v. Wade, maternal health
    JEL: I18 J13 K38 H75
    Date: 2022–10
  12. By: Matúš Bilka (University of Economics in Bratislava, Faculty of Economics, Department of National Economy); António Portugal Duarte (Univ of Coimbra, CeBER, Faculty of Economics); Martin Lábaj (University of Economics in Bratislava, Faculty of Economics, Department of National Economy)
    Abstract: This paper provides new empirical evidence on entry and competition in the Portuguese market of retail pharmacies after its deregulation in 2004. We estimate the market-size thresholds required for pharmacies to enter the market and analyse the toughness of competition in the market. There are three main findings in the paper. First, entry thresholds decreased over the years, which led to better coverage and availability of pharmaceutical services. Second, the toughness of competition among pharmacies increased and the deregulation of over-the-counter drug sales contributed to the expansion of services provided by pharmacies. Third, population restrictions that prevailed in the market were too restrictive and should be reconsidered by regulation authorities..
    Keywords: Entry model, market competition, regulation, retail pharmacy.
    Date: 2022–11
  13. By: Eleonora Dávalos; Leonardo Fabio Morales
    Abstract: One explanation for the increasing number of hectares with coca cultivation is that eradication strategies displace coca crops but fail to completely clear affected areas. In the drug policy literature, that dynamic shifting is commonly known as the balloon effect. This study integrates georeferenced agricultural data through spatially explicit econometric models to test the hypothesis that forced eradication displace coca crops. Using annual data for 1,116 contiguous municipalities in Colombia between 2001 and 2015, we estimate a spatial Durbin model with municipal and time fixed effects. Our results suggest that, on average, aerial fumigation in a municipality diffuses the benefits of this crime control strategy to neighboring municipalities. **** RESUMEN: Una posible razón del crecimiento del número de hectáreas de coca en Colombia es que las estrategias de erradicación desplazan los cultivos de coca, pero no logran despejar por completo las áreas afectadas. En la literatura sobre políticas de drogas, ese cambio dinámico se conoce comúnmente como el efecto globo. Este estudio integra datos agrícolas georreferenciados a través de modelos econométricos espaciales para evaluar la hipótesis de que la erradicación forzada desplaza los cultivos de coca. Utilizando datos anuales de 1.116 municipios contiguos en Colombia, estimamos un modelo espacial Durbin. Nuestros resultados sugieren que, en promedio, la fumigación aérea en un municipio difunde los beneficios de esta estrategia de control del crimen a los municipios vecinos.
    Keywords: Spatial dependence, Spatial Durbin model, Drug policy, Spillover, Dependencia espacial, Modelo espacial Durbin; Erradicación; Políticas de drogas
    JEL: K42 R12 R14
    Date: 2022–11–29
  14. By: Lehr, William
    Abstract: This paper seeks to situate an understanding of the long-term implications of Smart Contract (SC) technologies as a cluster of technologies that together with AI (shorthand for software applications) and 5G (shorthand for networked ICTs) will prove important for enabling a future wherein any task may be automated. Although the "any task can be automated" future is far off and AI, 5G, and SC technologies are still evolving rapidly, this paper argues for timely consideration of the policy implications for SCs. Like those other technologies and to a perhaps even greater extent, SC technologies (which include cryptocurrencies, blockchain, and smart contracts as distinct elements) have been the focus of excessive hype that has given rise in the academic and mass media press to misconceptions about what is important about SCs that this paper seeks to identify and dispel. In an effort to start to understand the challenges and likely trajectory for SC regulation, this paper focuses on FINTECH and the policy challenges that are emerging there related to SCs. The overall conclusion is that lots more needs to be done, and while it is clear that SCs will play an important role in FINTECH's future and the regulation of that future will require significant focused research attention, it is unclear how useful such research will be as a template for addressing the challenges that will emerge as SCs migrate to other sectors where the economic implications are expected to be much larger. The paper concludes with speculations about where key trends in SC technologies seem to be going.
    Keywords: Blockchain,5G,Smart Contracts,Digital Markets,Cryptocurrencies,Regulation,FINTECH
    JEL: D86 K12 L14 O3 D51 D52 D4 G2 P00 P48
    Date: 2022
  15. By: Barile, Lory (Department of Economics, University of Warwick); Cullis, John (Department of Economics, University of Bath); Philip Jones (Department of Economics, University of Bath)
    Abstract: This paper begins by listing three uncomfortable implications of the standard expected utility model of individual decision-making concerning participation in fiscal crimes : that tax evasion and benefit fraud can be treated identically; fiscal crimes should be endemic; and that all individuals, depending on parameter values, should be either honest or dishonest. Levitt and List’s (2007) utility function relating to decisions with a moral dimension is adapted to offer insight into these implications involving an individuals optimal honesty and moral hinterland. Predictions are developed that include moral costs as a determinant of dishonest intentions and are tested with reference to some 2,942 questionnaire responses to a 2016 national (UK) survey. This paper offers insight into the way moral costs inform perceptions of the intrinsic value of doing the right thing thereby providing a richer analysis of fiscal crimes. The account has particular relevance for policy prescriptions that involve aspects of shame.
    Keywords: benefit fraud ; tax evasion ; optimal honesty ; moral costs JEL Codes: D01 ; H2 ; K42
    Date: 2022

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