nep-law New Economics Papers
on Law and Economics
Issue of 2023‒04‒17
fourteen papers chosen by
Eve-Angeline Lambert, Université de Lorraine

  1. The Right to Health and the Health Effects of Denials By Bhalotra, Sonia; Fernández, Manuel
  2. Does Heat Cause Homicides? A Meta-Analysis By Vojtech Misak
  3. Managing Medical Errors in a University Hospital: How to Handle the Internal Learning–External Protection Paradox? By Julien Cusin; Anne Goujon Belghit
  4. Spite in Litigation By Wladislaw Mill; Jonathan Stäbler
  5. Physics Breakthrough Disproves Fundamental Assumptions of the Chicago School By Cortelyou C. Kenney
  6. Competing for Proposal Rights: Theory and Experimental Evidence By Andrzej Baranski; Ernesto Reuben
  7. The legal and institutional feasibility of an EU Climate and Energy Security Fund By O'Connell, Marguerite; Abraham, Laurent; Oleaga, Iñigo Arruga
  8. Killer Acquisitions: Evidence from EC Merger Cases in Digital Industries By Ivaldi, Marc; Petit, Nicolas; Unekbas, Selçukhan
  9. Environmental citizen complaints By Jonathan Colmer; Mary F. Evans; Jay Shimshack
  10. Economic evaluations of mental health interventions in criminal justice By Knapp, Martin; Wong, Gloria
  11. How to improve tax compliance? Evidence from population-wide experiments in Belgium By De Neve, Jan-Emmanuel; Imbert, Clement; Spinnewijn, Johannes; Tsankova, Teodora; Luts, Maarten
  12. The tragedy of the (anti-)commons: The case of prey-predator fisheries By Guillaume Bataille; Hubert Stahn; Agnes Tomini
  13. Politics and eminent domain: Evidence from the 1879 California Constitution By Mark T. Kanazawa
  14. Dying or Lying? For-Profit Hospices and End of Life Care By Jonathan Gruber; David H. Howard; Jetson Leder-Luis; Theodore L. Caputi

  1. By: Bhalotra, Sonia (University of Warwick, United Kingdom, CEPR, IZA, IEA, CAGE.); Fernández, Manuel (Universidad de los Andes, Colombia, and IZA)
    Abstract: We investigate supply-side barriers to medical care in Colombia, where citizens have a constitutional right to health, but insurance companies impose restrictions. We use administrative data on judicial claims for health as a proxy for unmet demand. We validate this using the health services utilization register, showing that judicial claims map into large, pervasive decreases in medical consultations, procedures, hospitalizations and emergency care. This manifests in population health outcomes. We identify increases in mortality pervasive across cause, age, sex, and income, with larger increases for cancer and individuals over the age of fifty.
    Keywords: Health care, health insurance, mortality, right-to-health, litigation, accountability, universal-health-coverage, Colombia JEL Classification: G22, I11, I13, I18, K38, K42
    Date: 2023
  2. By: Vojtech Misak (Charles University, Faculty of Social Sciences, Prague)
    Abstract: Several studies provide evidence that heat is positively associated with criminal activity. However, the empirical literature does not provide conclusive evidence about the effect of high temperature on homicides. I examine 156 estimates from 20 studies on the relationship between temperature and homicide rates. In particular, in this meta-analysis I study publication bias using linear and nonlinear techniques together with Bayesian model averaging to explain the heterogeneity in the estimates. After correcting estimates from the publication bias, I find no significant effect of temperature on homicide rates. Moreover, monthly data produce larger estimates. Conversely, studies using data from Asia or the OLS estimation method lead to smaller estimates.
    Keywords: environmental law and economics, economic analysis of crime, meta-analysis, Bayesian model averaging, publication bias
    JEL: K10 K14 K32 Q54
    Date: 2023–03
  3. By: Julien Cusin (IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux); Anne Goujon Belghit (IRGO - Institut de Recherche en Gestion des Organisations - UB - Université de Bordeaux - Institut d'Administration des Entreprises (IAE) - Bordeaux)
    Abstract: Hospitals are looking to strengthen their safety culture by learning internally from medical errors that occur to prevent them from happening again. This implies creating an atmosphere of psychological safety that encourages errors to be reported. Only open communication from teams can help to improve practices. Also, many establishments have implemented no-punishment charters, creating a policy of tolerance of errors. However, a medical error can become a legal issue. The fact that a court of law can use anything hospital staff have said or written after an adverse event has occurred encourages defensive communication to protect oneself from outside stakeholders. To date, the literature on medical errors has not studied how hospitals overcome this contradiction. In this qualitative research, we use paradox theory in the case of a single university hospital to understand how a hospital confronted with medical errors can effectively manage the internal learning–external protection paradox. A deeper study of this specific context also allows us to supplement the literature on organizational paradoxes. We demonstrate how the interactions between different levels of analysis contribute to operationalizing paradox management in a dynamic and characteristic way, on the one hand, and what makes it effective, on the other hand.
    Date: 2022–03–15
  4. By: Wladislaw Mill; Jonathan Stäbler
    Abstract: This paper studies how litigation and settlement behavior is affected by agents motivated by spiteful preferences under the American and the English fee-shifting rule. We conduct an experiment and find that litigation expenditures and settlement requests are higher for more spiteful participants. The relative increase in litigation expenditures due to spite is more pronounced under the American fee-shifting rule. We further find that the expected payoff for more spiteful societies is lower than for less spiteful societies. This effect is particularly pronounced for low-merit cases under the English rule compared to a constant cost under the American rule.
    Keywords: spite, litigation, settlement, experiment, English rule, American rule
    JEL: K41 C72 C91 D91
    Date: 2023
  5. By: Cortelyou C. Kenney
    Abstract: Classical law and economics is foundational to the American legal system. Centered at the University of Chicago, its assumptions, most especially that humans act both rationally and selfishly, informs the thinking of legislatures, judges, and government lawyers, and has shaped nearly every aspect of the way commercial transactions are conducted. But what if the Chicago School, as I refer to this line of thinking, is wrong? Alternative approaches such as behavioral law and economics or law and political economy contend that human decisionmaking is based on emotions or should not be regulated as a social geometry of bargains. This Article proposes a different and wholly novel reason that the Chicago School is wrong: a fundamental assumption central to many of its game theory models has been disproven. This Article shows that a 2012 breakthrough from world famous physicist Freeman Dyson shocked the world of game theory. This Article shows that Chicago School game theorists are wrong on their own terms because these 2 x 2 games such as the Prisoner's Dilemma, Chicken, and Snowdrift, ostensibly based on mutual defection and corrective justice, in fact yield to an insight of pure cooperation. These new game theory solutions can be scaled to design whole institutions and systems that honor the pure cooperation insight, holding out the possibility of cracking large scale social dilemmas like the tragedy of the commons. It demonstrates that, in such systems, pure cooperation is the best answer in the right environment and in the long run. It ends by calling for a new legal field to redesign the structures based on the outdated assumptions of the Chicago School game theorists.
    Date: 2023–03
  6. By: Andrzej Baranski; Ernesto Reuben (Division of Social Science)
    Abstract: Competition for positions of power is a common practice in most organizations where decisions are reached through negotiations. We study theoretically and experimentally how different voting rules affect the incentives to compete for the right to propose a distribution of benefits in a sequential bargaining game. Under the majority rule, players with a high chance of proposing are also more likely to be excluded from a coalition when not proposing, which dampens incentives to compete for proposal rights relative to the unanimity case where no one can be excluded from a coalition. However, when rent-seeking efforts affect proposal rights only in the first bargaining round, equilibrium efforts to secure proposal rights are higher under the majority rule because they no longer affect the likelihood of coalition exclusion. Our experimental findings uncover a novel efficiency trade-off absent in theory: While gridlock is stronger under unanimity, majoritarian bargaining elicits higher competition costs regardless of the durability of efforts in affecting proposal rights, rendering both rules equally efficient. The distribution of benefits is affected by the endogeneity of proposal rights contrary to behavioral expectations as subjects gravitate towards equitable sharing and proposers often do not keep the lion’s share. Further experiments reveal that subject behavior is consistent with myopic reasoning and that our results hold robustly in distinct subject samples.
    Date: 2023–03
  7. By: O'Connell, Marguerite; Abraham, Laurent; Oleaga, Iñigo Arruga
    Abstract: In recent years, several proposals have emerged from the policy and academic spheres to address climate and energy-related public investment needs in the European Union (EU) with an EU-level instrument. This paper provides an analytical contribution to the discussion by examining the rationale for an EU Climate and Energy Security Fund, with a focus on its legal and institutional feasibility.
    Keywords: climate crisis, climate emergency, energy security, European public goods, Next Generation EU (NGEU), public investment, REPowerEU
    Date: 2023–03
  8. By: Ivaldi, Marc; Petit, Nicolas; Unekbas, Selçukhan
    Abstract: Do established firms buy new businesses to take out future competition? Recent works in economics literature use “killer acquisitions” as a graphic concept to describe these transactions. How concerned should competition policy be? The answer to this question hinges on how much the “theory” of killer acquisitions explains. To gain insights on this, the paper studies a sample of past cases composed of all merger transactions reviewed by the European Commission (“EC”) in ICT industries. In line with the predictions of the theory, some of these cases might constitute “killer acquisitions”. Hence, the paper asks: did they lead to a reduction of competition? By focusing on perceptions of the competitors of the acquired entity as reported in financial disclosures, the paper shows that one could not observe a disappearance of the target’s products, a weakening of competing firms, and/or a post-merger lowering or absence of entry and innovation. In other words, the paper finds no factual evidence supporting the killer acquisition theory. Whilst based on small number of observations, the paper’s findings are strong. Indeed the paper’s methodology overcomes the inherent problem of lack of observing the post-merger activities of the target, and addresses the inference problem that stems from the fact that even if the target’s products are discontinued in the buyer’s firm, it is non sequitur to infer from this a post-merger weakening of competition.
    Keywords: Killer Acquisition; Dynamic Competition; Mergers and Acquisitions; Innovation
    JEL: G34 L41 L86 O31
    Date: 2023–03
  9. By: Jonathan Colmer; Mary F. Evans; Jay Shimshack
    Abstract: Citizen complaints feature prominently in public oversight contexts. The nature and effects of complaints, however, are poorly understood. Here, we investigate attitudes about citizen complaints using a nationally representative survey. We then exploit novel administrative data on over 130, 000 complaints in Texas to investigate their dynamic effects on regulator behavior. We document that the public believes that citizen complaints promote open, efficient, and equitable governance. Empirically, complaints are associated with sharp increases in regulator monitoring and enforcement. Citizen complaints uncover more, and more severe violations, than more standard monitoring approaches. Overall, our findings are consistent with complaints enhancing regulatory efficiency.
    Keywords: citizen complaints, environmental regulation, compliance, monitoring and enforcement, pollution
    Date: 2023–03–09
  10. By: Knapp, Martin; Wong, Gloria
    Abstract: Background Mental health interventions targeting crime perpetrators are available. An overview of the current scenario of their economic benefits will help policy decisions. Aim To provide an update on economic evidence for mental health interventions in criminal justice, and to identify challenges and responses in using economic evidence to inform policy. Method Narrative review with an analysis frame that organises evidence around four points on the criminal justice system pathway: (a) point of contact; (b) post-arrest; (c) incarceration/punishment and (d) post-incarceration. Results There is a paucity of high-quality economic evidence, especially from cost-benefit analyses. However, there is some evidence of cost-effectiveness in support of interventions at the point of incarceration, such as cognitive behavioural therapy, multisystemic therapy for juvenile delinquents, therapeutic communities, electronic monitoring and telepsychiatry in forensic psychiatry settings. There is also evidence that post-incarceration interventions such as assertive community treatment can be cost-effective. Conclusion There remain large evidence gaps. There are also challenges in turning economic evidence on mental health interventions in criminal justice into policy changes and improved practice, such as hidden costs, silo budgeting and delayed pay-off. Research incorporating multi-sectoral costs and benefits recommended by health economics and health technology assessment groups should be prioritised to support difficult resource allocation decisions faced by policy makers.
    Keywords: cost-benefit; cost-effectiveness; health technology assessment; implementation challenges; mental health economics; societal costs; Wiley deal
    JEL: J1
    Date: 2023–03–16
  11. By: De Neve, Jan-Emmanuel; Imbert, Clement; Spinnewijn, Johannes; Tsankova, Teodora; Luts, Maarten
    Abstract: We study the impact of simplification, deterrence and tax morale on tax compliance. We ran four natural field experiments varying the communication of the tax administration with the universe of income taxpayers in Belgium throughout the tax process. A consistent picture emerges across experiments: (i) simplifying communi- cation substantially increases compliance, (ii) deterrence messages have an additional positive effect, (iii) invoking tax morale is not effective, and often backfires. A discon- tinuity in enforcement intensity, combined with the experimental variation, allows us to compare simplification with standard enforcement measures. We find that simpli- fication is far more cost-effective, allowing for substantial savings on enforcement costs.
    Keywords: tax compliance; field experiments; simplification; enforcement
    JEL: C93 D91 H20
    Date: 2021–05–01
  12. By: Guillaume Bataille (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Hubert Stahn (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Agnes Tomini (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We examine the efficiency and environmental consequences of assigning species-specific common-property rights, considering a Lotka-Volterra model in which fisheries are specialized in the harvesting of a single species. We show that the fragmentation of the ecosystem implies the tragedy of the anticommons even when fisheries compete for the resource. Indeed, contrasting the private exploitation equilibrium with the socially optimal solution, we demonstrate that the predator stock is too high while the prey stock is too low under private property rights. A puzzling result is that the "abundant" species is actually underused because of insufficient economic incentives; however, the scarce and high-priced species does not necessarily suffer from overexploitation. Biological interactions are consequently the main driver of stock depletion. Finally, we investigate how to simultaneously solve both the tragedy of the commons and that of the anticommons and analyze the economic costs of regulating only the tragedy of the commons.
    Keywords: Exclusive property rights, Common-pool resource, Anticommons, Fisheries, Prey-predator relationship, Optimal control, Exclusive property rights Common-pool resource Anticommons Fisheries
    Date: 2023–02
  13. By: Mark T. Kanazawa (Carleton College)
    Abstract: This paper explores the politics of eminent domain, using a specific historical episode: the enactment of the new California constitution in 1879. It presents evidence that the failure of a constitutional provision that would have codified eminent domain powers for water development resulted from a complex interchange of economic interests among farmers, miners, and urban residents. This evidence was manifested in delegate behavior on the floor of the constitutional convention in 1878, including various roll-call votes, which are subjected to an econometric analysis. The results have implications for the interpretation of legislative eminent domain decisions, and the degree to which economic development processes are shaped by the institutional environment in which they occur.
    JEL: K4 N5 O1 Q1
    Date: 2023–03
  14. By: Jonathan Gruber; David H. Howard; Jetson Leder-Luis; Theodore L. Caputi
    Abstract: The Medicare hospice program is intended to provide palliative care to terminal patients, but patients with long stays in hospice are highly profitable, motivating concerns about overuse among the Alzheimer’s and Dementia (ADRD) population in the rapidly growing for-profit sector. We provide the first causal estimates of the effect of for-profit hospice on patient spending using the entry of for-profit hospices over twenty years. We find hospice has saved money for Medicare by offsetting other expensive care among ADRD patients. As a result, policies limiting hospice use including revenue caps and anti-fraud lawsuits are distortionary and deter cost-saving admissions.
    JEL: H51 I13 K4
    Date: 2023–03

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