nep-law New Economics Papers
on Law and Economics
Issue of 2023‒01‒02
twelve papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Impact of Economic Opportunity on Criminal Behavior: Evidence from the Fracking Boom By Brittany Street
  2. Frequent audits and honest audits By Jacopo Bizzotto; Alessandro De Chiara
  3. Self-preferencing and foreclosure in digital markets: Theories of harm for abuse cases By Massimo Motta
  4. Mood and the Malleability of Moral Reasoning: The Impact of Irrelevant Factors on Judicial Decisions By Daniel L. Chen; Markus Loecher
  5. Measuring Intergenerational Exposure to the U.S. Justice System: Evidence from Longitudinal Links between Survey and Administrative Data By Keith Finlay; Michael Mueller-Smith; Brittany Street
  6. Criminal Justice Involvement, Self-employment, and Barriers in Recent Public Policy By Keith Finlay; Michael Mueller-Smith; Brittany Street
  7. Evaluating the US pharmaceutical patent policy By Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
  8. Uneven regulation and economic reallocation: Evidence from transparency regulation By Breuer, Matthias; Breuer, Patricia
  9. Regulation of residential tenancies and impacts on investment By Martin, Chris; Hulse, Kath; Ghasri, Milad; Ralston, Liss; Crommelin, Laura; Goodall, Zoë; Parkinson, Sharon; Webb, Eileen O’Brien
  11. Product Market Regulation in Brazil By Cristiana Vitale; Alexis Durand; Pedro Caro de Sousa; Paul Yu
  12. The future of the EU bioenergy sector: economic, environmental, social, and legislative challenges By Santeramo, Fabio Gaetano; Delsignore, Monica; Imbert, Enrica; Lombardi, Mariarosaria

  1. By: Brittany Street (Department of Economics, University of Missouri)
    Abstract: Economic theory suggests crime should decrease as economic opportunities increase the returns to legal activities. However, there are well-documented cases where crime increases in response to areas becoming more prosperous. This paper addresses this puzzle by examining the effects on crime only for residents already living in the area prior to the economic boom. This approach isolates the effect of local economic opportunity from the effect of changing composition due to in-migration during these periods. To identify effects, I exploit withinand across-county variation in exposure to hydraulic fracturing activities in North Dakota using administrative individual-level data on residents, mineral lease records, and criminal charges. Results indicate that the start of economic expansion – as signaled by the signing of leases – leads to a 14 percent reduction in criminal cases filed. Effects continue once the fracking boom escalates into to production period. These results are in contrast to the observed aggregate increase in crime from fracking activities and consistent with improved economic opportunity reducing crime, highlighting the important role of compositional changes.
    Keywords: Crime, Economic Opportunity, Fracking
    JEL: K42 J60 R23
    Date: 2022–12
  2. By: Jacopo Bizzotto (Oslo Business School - OsloMet); Alessandro De Chiara (Central European University (CEU) - Department of Economics; University of Barcelona; University of Barcelona - Barcelona Economic Analysis Team (BEAT))
    Abstract: A regulator hires an auditor to inspect a firm. Audits serve two purposes: to detect violations and to motivate the firm to invest in compliance. Auditor and firm can collude to hide violations. Honest audits require sufficient monetary incentives for the auditor, and more frequent audits call for larger incentives. We link the optimal audit frequency to the budget constraint faced by the regulator, and to the firm's bargaining power in the collusive agreement. We show that (i) the optimal audit frequency need not be monotonic in the regulator's budget size, (ii) tolerating collusion can foster ex-ante investment, and (iii) a regulator that enjoys more flexibility in designing the auditor's compensation scheme might be less willing to deter corruption.
    Keywords: Auditing, corruption, information design, regulation
    JEL: D73 K42 L51
    Date: 2022–02–17
  3. By: Massimo Motta
    Abstract: Antitrust agencies all over the world have been investigating large digital platforms for practices which may constitute an abuse of dominance. Here I discuss practices (including "selfpreferencing" and denial or degradation of interoperability) which can be interpreted as foreclosure in vertically-related or complementary markets. I discuss in particular a few high-profile cases involving Amazon, Apple, Facebook and Google. I focus on possible theories of harm for such cases and show that both original simple models and well-established economic theories (adapted or interpreted) provide a rationale for anti-competitive foreclosure.
    Keywords: self-preferencing, abuse of dominance, monopolization, exclusionary practices, digital platforms, two-sided markets, vertical foreclosure
    JEL: D40 K21 L10 L40
    Date: 2022–12
  4. By: Daniel L. Chen (TSE-R - Toulouse School of Economics - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Markus Loecher (Berlin School of Economics and Law)
    Abstract: We detect intra-judge variation spanning three decades in 1.5 million judicial decisions driven by factors unrelated to case merits. U.S. immigration judges deny an additional 1.4% of asylum petitions–and U.S. district judges assign 0.6% longer prison sentences and 5% shorter probation sentences—on the day after their city's NFL team lost. Bad weather has a similar effect as a team loss. Unrepresented parties in asylum bear the brunt of NFL effects, and the effect on district judges appears larger for those likely to be following the NFL team. We employ double residualization for a "causal" importance score.
    Date: 2022–11–22
  5. By: Keith Finlay (U.S. Census Bureau, Washington, D.C.); Michael Mueller-Smith (Department of Economics, University of Michigan); Brittany Street (Department of Economics, University of Missouri)
    Abstract: Intergenerational exposure to the justice system is both a marker of vulnerability among children and a measurement of the potential unintended externalities of crime policy in the U.S. Estimating the size of this population has been hampered by inadequate data resources, including the inability to (1) observe non-incarceration sources of exposure, (2) follow children throughout their childhood, and (3) measure multiple adult influences in increasingly dynamic households. To overcome these challenges, we leverage billions of restricted administrative and survey records linked with the Criminal Justice Administrative Records System (CJARS). We find substantially larger prevalences of intergenerational exposure to the criminal justice system than previously reported: 9% of children born between 1999–2005 were intergenerationally exposed to prison, 18% to a felony conviction, and 39% to any criminal charge; charge exposure rates reach as high as 62% for Black children. We regress these newly quantified types of exposure on measures of child well-being to gauge their importance and find that all types of exposure (parent vs. non-parent, prison vs. charges, current vs. previous) are strongly negatively correlated with development outcomes, suggesting substantially more U.S. children are harmed by crime and criminal justice than previously thought.
    Keywords: criminal justice, intergenerationality, economic mobility
    JEL: K14 K42 J12 I32
    Date: 2022–12
  6. By: Keith Finlay (U.S. Census Bureau, Washington, D.C.); Michael Mueller-Smith (Department of Economics, University of Michigan); Brittany Street (Department of Economics, University of Missouri)
    Abstract: This study provides the first empirical evidence on the extent of self-employment within the U.S. justice-involved population. Using linked tax return and Criminal Justice Administrative Records System data, we find that 28 percent of individuals with criminal records are self-employed. Justice-involved individuals are 22 percent more likely to rely solely on selfemployment. The Paycheck Protection Program, passed to support small business during the COVID-19 pandemic, initially disqualified those with a broad range of criminal histories. We find that close to three percent of recent sole-proprietors had observable PPP disqualifying events based on initial eligibility criteria, with a disparate impact on Black and Hispanic business owners.
    Keywords: self-employment, criminal histories, federal support programs, Paycheck Protection Program, COVID-19
    JEL: H81 J24 K42
    Date: 2022–12
  7. By: Izhak, Olena; Saxell, Tanja; Takalo, Tuomas
    Abstract: The debate on whether COVID-19 vaccine patents are slowing down the pace of vaccination and the recovery from the crisis has brought the optimal design of pharmaceutical patent policy to the fore. In this paper we evaluate patent policy in the US pharmaceutical industry. We estimate the effect of patent length and scope on generic entry prior to the expiration of new drug patents using two quasi-experimental approaches: one based on changes in patent laws and another on the allocation of patent applications to examiners. We find that extending effective patent length increases generic entry whereas broadening protection reduces it. To assess the welfare effects of patent policy, we match these empirical results with a model of new drug development, generic entry, and patent length and scope. Optimal policy calls for shorter but broader pharmaceutical patents.
    Keywords: Patent policy,pharmaceuticals,generic entry,innovation,imitation
    JEL: I18 K20 L13 O34 O31
    Date: 2021
  8. By: Breuer, Matthias; Breuer, Patricia
    Abstract: We investigate the impact of uneven transparency regulation across countries and industries on the location of economic activity. Using two distinct sources of regulatory variation-the varying extent of financial-reporting requirements and the staggered introduction of electronic business registers in Europe-, we consistently document that direct exposure to transparency regulation is negatively associated with the focal industry's economic activity in terms of inputs (e.g., employment) and outputs (e.g., production). By contrast, we find that indirect exposure to supplier and customer industries' transparency regulation is positively associated with the focal industry's economic activity. Our evidence suggests uneven transparency regulation can reallocate economic activity from regulated toward unregulated countries and industries, distorting the location of economic activity.
    Keywords: Regulation,Reallocation,Transparency,Disclosure,Supply Chain
    JEL: K22 L51 M21 M41 M48
    Date: 2022
  9. By: Martin, Chris; Hulse, Kath; Ghasri, Milad; Ralston, Liss; Crommelin, Laura; Goodall, Zoë; Parkinson, Sharon; Webb, Eileen O’Brien
    Abstract: This research reviews the evidence-base about factors impacting and shaping rental investment; reviews the state of residential tenancies laws across Australia; and presents options for a renewed reform agenda. The regulation of the Australian private rental sector (PRS) directly affects about 40 per cent of Australian households: the 26 per cent who live in private rental housing as tenants, and the 14 per cent who own it as landlords. Reform of regulation of residential tenancies processes are underway or have recently concluded in different jurisdictions. These processes, however, have mostly been uncoordinated at a national level and significant divergences and gaps have opened up in the laws. The research finds little evidence that Australian residential tenancies law has impacted investment in private rental housing. On the contrary, Australian residential tenancies law has accommodated, even facilitated, the long-term growth of the PRS and of its particular structure and dynamic character. However, the small-holding, frequently-transferring character of the PRS presents basic problems for tenants trying to make homes in it. The research also presents a number of issues that could be considered as part of a national agenda for residential tenancy law reform.
    Date: 2022–11–27
  10. By: Levashenko Antonina (Russian Presidential Academy of National Economy and Public Administration); Girich Maria (Russian Presidential Academy of National Economy and Public Administration)
    Abstract: As part of this work, aspects of legal regulation of the listed types of online platforms were analyzed, in particular, regulatory standards within international organizations, including OECD, WTO, UNCITRAL, ILO, as well as practices of countries, including the USA, EU countries (France, Netherlands), Australia, Canada.
    Keywords: online platforms that create infrastructure for equal participants in the digital economy, p2p platforms, OECD, competition, labor legislation, investment platforms, provision of taxi services through online platforms.
    Date: 2021–01
  11. By: Cristiana Vitale; Alexis Durand; Pedro Caro de Sousa; Paul Yu
    Abstract: Appropriately designed and implemented regulations are powerful tools for enhancing economic performance. A strong and sound regulatory framework can mitigate threats to health, safety, and the environment and address market imperfections. However, regulation can also create barriers to the entry and expansion of firms, which may limit and distort competition. Some of these barriers are necessary, but others may go beyond what is needed to address the policy objectives and the market failure(s) regulation is intended to remedy. The OECD developed in the late 1990s a set of Product Market Regulation (PMR) Indicators to assess how competition-friendly the regulatory framework of a country is across a range of sectors and regulatory areas. A regulatory framework that facilitates competition, for example, can stimulate productivity by encouraging the efficient allocation of resources and promoting innovation and growth. This paper examines a range of product markets, services, and network industries in Brazil, relying on the results of the PMR indicators, and identifies areas where country’s regulations could be brought more in line with international best practices. These include the governance of state-owned enterprises, interaction between policy makers and interest groups, network sectors, and professional services.
    Keywords: Brazil, Competition, Governance of State-Owned Enterprises, Network Sectors, Product Market Regulation, Productivity, Professional Services, Public Procurement, Regulation
    JEL: D4 K23 L1 L2 L3 L5 L8 L9
    Date: 2022–12–08
  12. By: Santeramo, Fabio Gaetano; Delsignore, Monica; Imbert, Enrica; Lombardi, Mariarosaria
    Abstract: The bioenergy sector is becoming of increasing interest: the European Union (EU) is not an exception, as, indeed, is in need of solutions to face one of the worst energy crises of the last century. The sector’s growth faces numerous challenges. The main use of energy crops, as feedstock, generates stiff competition on the use of land for food and energy purposes. The production of bioenergy has relevant environmental implications in terms greenhouse gas emissions. The social aspects related to the bioenergy sector are also potential obstacles to its development. These pressing issues for policymakers call for a better understanding on how national and international laws should regulate the growth of the bioenergy sector. Flying over the economic, environmental, social, and legislative aspects faced by the bioenergy sector, we conclude on threads, opportunities and priorities that should be considered for its development and propose directions for future studies.
    Keywords: Bioenergy, European Union, Impact, Land use, Law, Sustainability
    JEL: K32 Q18 Q42
    Date: 2022

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