nep-law New Economics Papers
on Law and Economics
Issue of 2023‒01‒23
seven papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. Spontaneous Norms in Law and Economics: A Sketch Typology By Zdybel, Karol B.
  2. The late emerging consensus among American economists on antitrust laws in the 2nd New Deal (1935-1941) By Thierry Kirat; Frédéric Marty
  3. On the determinants of corporate default in the EU-27: Evidence from a large sample of companies By FATICA Serena; OLIVIERO Tommaso; RANCAN Michela
  4. Regulation with Experimentation: Ex Ante Approval, Ex Post Withdrawal, and Liability By Emeric Henry; Marco Loseto; Marco Ottaviani
  5. Deforestation, Institutions, and Property Rights: Evidence from land titling to indigenous peoples and local communities in Ecuador By Tanner, Michael; Ratzke, Leonie
  6. Discrimination in the patent system: Evidence from standard-essential patents By Gaetan de Rassenfosse; Emilio Raiteri; Rudi Bekkers
  7. Consumer Bankrupcty, Mortgage Default and Labor Supply By Wenli Li; Costas Meghir; Florian Oswald

  1. By: Zdybel, Karol B.
    Abstract: This article offers a concise typology of spontaneous norms - i.e., norms that are formed or sustained through decentralized collective behavior in a community. The typology combines three criteria for identifying spontaneous norms: (i) implicit formation of (customary) rules, as opposed to explicit formation; (ii) enforcement through decentralized sanctioning actions, as opposed to enforcement by a special social agent; (iii) private interpretation of compliance with rules, as opposed to the presence of a public interpreter of compliance. The paper also suggests how identified types can be modeled game-theoretically as repeated games. It is argued that structural differences between various types of spontaneous norms can be best understood as differences in the sequence of play in a stage game. Further, the typology is illustrated with examples from legal history and legal anthropology. Supposedly dissimilar systems of norms (e.g., customary international law and primitive law; norms of warfare and domestic social norms) are shown to exhibit structural resemblance.
    Keywords: spontaneous norms, custom, customary law, social norms, comparative legal history, typology
    JEL: B41 K00 N40 O17
    Date: 2023
  2. By: Thierry Kirat (IRISSO - Institut de Recherche Interdisciplinaire en Sciences Sociales - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Frédéric Marty (CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal, GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - COMUE UCA - COMUE Université Côte d'Azur (2015-2019) - CNRS - Centre National de la Recherche Scientifique - UCA - Université Côte d'Azur, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: The article presents the late convergence process from American economists that led them to support a strong antitrust enforcement in the Second New Deal despite their long-standing distrust toward this legislation. It presents the path from which institutionalist economists, on the one side, and members of the First Chicago School, on the other one, have converged on supporting the President F.D. Roosevelt administration towards reinvigorating antitrust law enforcement as of 1938, putting aside their initial preferences for a regulated competition model or for a classical liberalism. The appointment of Thurman Arnold at the head of the Antitrust Division in 1938 gave the impetus to a vigorous antitrust enforcement. The 1945 Alcoa decision crafted by Judge Hand embodied the results of this convergence: in this perspective, the purpose of antitrust law enforcement does consist in preventing improper uses of economic power.
    Keywords: Antitrust, Efficiency, Economic Power, Institutional Economics, Chicago School, New Deal
    Date: 2021–06–16
  3. By: FATICA Serena (European Commission - JRC); OLIVIERO Tommaso; RANCAN Michela
    Abstract: We analyze a large sample of companies operating in the EU-27 in the period 2007-2018 to gain new insights on the determinants of corporate defaults. The sample includes micro, small, medium and large enterprises, both active and defaulting. We document significant differences in the drivers of insolvency across firm size categories. Micro and small firms are significantly more vulnerable to sectoral shocks and to disruptions along the supply chain than larger companies. Instead, the default probability for all firms is significantly larger when companies experience in the previous year negative end-of-the year equity, that is a measure of prolonged financial distress. By exploiting institutional differences in judicial efficiency among EU-27 countries, we find financial distress is more likely to predict default in jurisdictions with more efficient insolvency procedures. Finally, we derive potential implications of our findings, especially with regard to the recent crises hitting European firms and the harmonisation of national insolvency regimes in the EU-27 towards most efficient legal practices, as foreseen under the Capital Markets Union Action Plan.
    Keywords: bankruptcy, financial distress, SMEs, EU-27, judicial efficiency
    Date: 2022–12
  4. By: Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Marco Loseto (University of Chicago); Marco Ottaviani (Bocconi University [Milan, Italy], BIDSA - Bocconi Institute for Data Science and Analytics - Bocconi University [Milan, Italy], CEPR - Center for Economic Policy Research - CEPR, IGIER)
    Abstract: We analyze the optimal mix of ex ante experimentation and ex post learning for the dynamic adoption of activities with uncertain payoffs in a two-phase model of information diffusion. In a first preintroduction phase, costly experimentation is undertaken to decide whether to adopt an activity or abandon experimentation. In a second stage following adoption, learning can continue possibly at a different pace while the activity remains in place; the withdrawal option is exercised following the accumulation of sufficiently bad news. We compare from a law and economics perspective the performance of three regulatory frameworks commonly adopted to govern private experimentation and adoption incentives: liability, withdrawal, and authorization regulation. Liability should be preempted to avoid chilling of activities that generate large positive externalities consistent with the preemption doctrine. Liability should be used to discourage excessive experimentation for activities that generate small positive externalities. Authorization regulation should be lenient whenever it is used consistent with the organization of regulation in a number of areas, ranging from product safety to antitrust.
    Keywords: Authorization regulation, Liability, Withdrawal, Experimentation, Preemption doctrine
    Date: 2022–07
  5. By: Tanner, Michael; Ratzke, Leonie
    Abstract: Deforestation is a matter of pressing global concern, contributing to declining ecosystem services, biodiversity loss, and ultimately climate change through growing emissions. We evaluate the effect of assigning property rights to indigenous peoples and local communities (IPLCs) in coastal Ecuador on deforestation and the role polycentric institutions play in policy effectiveness. Informed by a theoretical model, we employ causal methods to 1) evaluate changes in forest coverage for the first 12 years of policy adoption, and 2) evaluate the effect of the presence of non-governmental organizations (NGOs) on policy permanence. We find that assigning property rights to IPLCs significantly decreases mangrove deforestation and that the presence of NGOs funded by foreign aid significantly increases the probability of policy adoption and permanence. We assess the positive development implications of the policy concerning local fisheries provisioning and the role of international aid in achieving environmental outcomes. Our work highlights the importance of IPLCs and civil society as actors for sustainable land stewardship in future climate policy.
    Keywords: Ambiente, Políticas públicas, Pueblos nativos,
    Date: 2022
  6. By: Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne); Emilio Raiteri (Eindhoven University of Technology); Rudi Bekkers (Eindhoven University of Technology)
    Abstract: This paper tests for traces of discrimination against foreigners in the patent system. It focuses on patent applications filed in China, and for which the owner has made a public disclosure that they are or may become essential to the implementation of a technical standard. Such potentially standard-essential patents are of particularly high importance to their owner. We use the timing of disclosure to a leading standard-setting organization as a source of econometric identification and carry out extensive tests to ensure the exogeneity of timing. We find that foreign patent applications are significantly less likely to be granted by the Chinese patent office if their owners disclose them to be potentially essential to a standard before the substantive examination starts. Furthermore, the patent office spends, on average, one more year on the examination of such patents, and the scope of the patents are also more extensively reduced. Our findings contribute to the emerging discussion on technology protectionism.
    Keywords: discrimination; indigenous innovation; national treatment principle; standard-essential patent; technology protectionism
    JEL: F53 F68 K39 L52 L63
    Date: 2023–01
  7. By: Wenli Li (Federal Reserve Bank Philadelphia); Costas Meghir (Yale University [New Haven], CEPR - Center for Economic Policy Research - CEPR); Florian Oswald (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We specify and estimate a lifecycle model of consumption, housing demand and labor supply in an environment where individuals may file for bankruptcy or default on their mortgage. Uncertainty in the model is driven by house price shocks, {education specific} productivity shocks, and catastrophic consumption events, while bankruptcy is governed by the basic institutional framework in the US as implied by Chapter 7 and Chapter 13. The model is estimated using micro data on credit reports and mortgages combined with data from the American Community Survey. We use the model to understand the relative importance of the two chapters (7 and 13) for each of our two education groups that differ in both preferences and wage profiles. We also provide an evaluation of the BACPCA reform. Our paper demonstrates importance of distributional effects of Bankruptcy policy.
    Keywords: Lifecycle, Bankruptcy, Mortgage Default, Housing, Labor Supply, Consumption, Education, Insurance, Moral hazard
    Date: 2022–03–17

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