nep-law New Economics Papers
on Law and Economics
Issue of 2023‒07‒17
ten papers chosen by
Yves Oytana, Université de Franche-Comté

  1. Corporate criminals in a market context: enforcement and optimal sanctions By Auriol, Emmanuelle; Hjelmeng, Erling; Søreide, Tina
  2. Neighbourhood Gangs, Crime Spillovers, and Teenage Motherhood By Dustmann, Christian; Mertz, Mikkel; Okatenko, Anna
  3. Cooperation, Bribery, and the Rule of Law By Esteban Freidin; Katrin Schmelz; Urs Fischbacher
  4. Marijuana Legalization and Mental Health By Daniel Borbely; Otto Lenhart; Jonathan Norris; Agnese Romiti
  5. Intermediary Liability and Trade in Follow-on Innovation By Alexander Cuntz; Matthias Sahli
  6. Bribery, Reneging, and Competition Among Bureaucrats By Soham Baksi; Pinaki Bose
  7. An Empirical Study of Obstacle Preemption in the Supreme Court By Gregory M. Dickinson
  8. How costly are cartels? By Flavien Moreau; Ludovic Panon
  9. The Impact of Repealing Sunday Blue Laws on Alcohol Sales and Retail Competition By Connolly, Cristina; Graziano, Marcello; McDonnell, Alyssa; Steinbach, Sandro
  10. The impacts of counterfeiting on corporate investment By Alexander Cuntz; Yi Qian

  1. By: Auriol, Emmanuelle; Hjelmeng, Erling; Søreide, Tina
    Abstract: By combining approaches from the economic theory of crime and of industrial organization, this paper analyzes optimal enforcement for three different forms of corporate misconduct that harm competition. The analysis shows why corporate crime is more harmful in large markets, why governments have a disinclination to sanction firms whose crime materializes abroad, and why leniency for those who self-report their crime is a complement, and not a substitute, to independent investigation and enforcement. As public authorities rely increasingly on self-reporting by companies to detect cartels, the number of leniency applications is likely to decline, and this is borne out by data. Upon a review of 50 cases of corporate liability from five European countries, competition law enforcement, governed by a unified legal regime, is more efficient than enforcement in bribery and money laundering cases, governed by disparate criminal law regimes. Sanction predictability and transparency are higher when governments cooperate closely with each other in law enforcement, when there are elements of supra-national authority, and when the offense is regulated by a separate legal instrument. Given our results, Europe would benefit from stronger supra-national cooperation in regulation and enforcement of transnational corporate crime, especially for the sake of deterrent penalties against crime committed abroad.
    Keywords: Corporate liability; Corruption; Collusion; Antitrust; Money Laundering; Deterrence; Sanctions; Litigation
    JEL: K14 K21 K23 K42 L13 L41 H57
    Date: 2023–06–06
  2. By: Dustmann, Christian (University College London); Mertz, Mikkel (Queen Mary, University of London); Okatenko, Anna (University College London)
    Abstract: Using an identification strategy based on random assignment of refugees to different municipalities in Denmark between 1986 and 1998, we find strong evidence that gang crime rates in the neighbourhood at assignment increase the probability of boys to commit crimes before the age of 19, and that gang crime (but not other crime) increases the likelihood of teenage motherhood for girls. Higher levels of gang crime also have detrimental and long-lasting effects, with men experiencing significantly higher levels of inactivity and women experiencing lower earnings and higher levels of welfare benefit claims at ages 19 to 28.
    Keywords: crime spillovers, gang crime, teenage motherhood
    JEL: J1 K4 I3
    Date: 2023–05
  3. By: Esteban Freidin; Katrin Schmelz; Urs Fischbacher
    Abstract: Corruption is a severe impediment to economic development and societal cooperation. Fighting corruption is challenging, not least as it is intertwined with the rule of law. Thus, causal evidence on institutional conditions that amplify or protect from its negative externalities is hard to identify. In a laboratory experiment, we investigate how the effect of corruption on cooperation interacts with the rule of law, i.e., whether punishment rules protect cooperators. In a repeated public goods game, citizens can contribute, and an official can punish. We vary whether bribery is possible and whether high contributors are protected from punishment (strong rule of law) or not (weak rule of law). Bribery deteriorates cooperation only under a weak rule of law, but not when punishment rules protect high contributors from harassment bribery -- even if citizen-driven (collusive) bribery persists. Strong institutions limiting officials' power are crucial to protect from the societal costs of corruption.
    Keywords: bribery, cooperation, corruption, institutions, punishment, rule of law, development economics
    Date: 2023
  4. By: Daniel Borbely (Department of Economics, University of Strathclyde); Otto Lenhart (Department of Economics, University of Strathclyde); Jonathan Norris (Department of Economics, University of Strathclyde); Agnese Romiti (Department of Economics, University of Strathclyde)
    Abstract: This study examines the effects of marijuana legalization on mental health. We use a difference-in-differences approach that leverages the staggered implementation of both medical and recreational marijuana legislation across U.S. states. We find that marijuana laws have a positive effect on marijuana use but have no effect on mental health overall. Nonetheless, null aggregate effects mask sharp heterogeneities across the age distribution. We show that elderly individuals, especially those with pre-existing health conditions, benefit from medical marijuana legalization in terms of better mental health, whereas legalizing recreational marijuana produces the opposite effect for younger individuals, especially if relatively healthy.
    Keywords: marijuana legalization, recreational marijuana, medical marijuana, mental health
    JEL: I18 I10 K32
    Date: 2023–03
  5. By: Alexander Cuntz; Matthias Sahli
    Abstract: TLiability rules affect the incentives of intermediaries to disseminate and curate creative works, in particular when works build on the work of predecessors and they are potentially infringing copyright. In an application to the visual arts, we show that appropriation artists borrow images from different sources and incorporate them into new, derivative works of art. By doing so, they risk infringing copyright but also put commercial trade and availability of the work at litigation risk as liability can extend to intermediaries in markets (auction houses) or in public exhibitions (museums). Using a differences-in-differences model and unique data on the level of the individual art work, we empirically investigate the impact of the prominent 2013 Cariou v. Prince U.S. court decision on trade and availability in Appropriation Art.
    Keywords: Copyright, Intermediary Liability, Reuse, Appropriation Art, Auctions
    JEL: O31 O34 Z11
    Date: 2021–10
  6. By: Soham Baksi; Pinaki Bose
    Abstract: The paper examines the efficiency of competition among corrupt bureaucrats for the provision of a homogeneous public good, such as permits for projects. In an environment where bribe contracts suffer from enforcement problems, and bureaucrats have to expend effort to process applications and issue permits, a monopolist authority can be the more efficient form of bureaucratic organization compared to multiple competing bureaucrats. We argue that bribe transactions are covert and illegal, and not usually conducted as spot exchanges. Corrupt officials charge advance payments before processing applications, and sometimes renege on the delivery of permits. Incorporating these empirically-relevant features in a model with endogenous reneging by bureaucrats, we find that bureaucratic competition increases the incentive to renege on providing permits, thus lowering the number of productive enterprises in operation. While a monopolist bureaucrat charges a higher bribe, he also clears more projects. Consequently, social welfare can be higher in the absence of Bertrand competition among corrupt officials.
    JEL: D73 H11 K42 O17
    Date: 2023–06
  7. By: Gregory M. Dickinson
    Abstract: The Supreme Court's federal preemption decisions are notoriously unpredictable. Traditional left-right voting alignments break down in the face of competing ideological pulls. The breakdown of predictable voting blocs leaves the business interests most affected by federal preemption uncertain of the scope of potential liability to injured third parties and unsure even of whether state or federal law will be applied to future claims. This empirical analysis of the Court's decisions over the last fifteen years sheds light on the Court's unique voting alignments in obstacle preemption cases. A surprising anti-obstacle preemption coalition is forming as Justice Thomas gradually positions himself alongside the Court's liberals to form a five-justice voting bloc opposing obstacle preemption.
    Date: 2023–06
  8. By: Flavien Moreau (IMF); Ludovic Panon (Bank of Italy)
    Abstract: We study the cost of cartels in an oligopoly model with heterogeneous firms, endogenous markups, and collusion. Cartels can amplify or dampen misallocation, by charging supracompetitive markups and reallocating demand towards non-colluding firms. We find that standard competitive oligopoly models understate the cost of markups under reasonable values for the intensity of collusion and cartel composition configurations. Using French micro data, our baseline calibration suggests that breaking down cartels would increase aggregate productivity by 1.1% and welfare by 2%. These numbers shed light on the aggregate importance of collusion.
    Keywords: competition, cartels, collusion, productivity, welfare, misallocation
    JEL: D43 K21 L13 L41 O47
    Date: 2023–06
  9. By: Connolly, Cristina; Graziano, Marcello; McDonnell, Alyssa; Steinbach, Sandro
    Keywords: Marketing, Food Consumption/Nutrition/Food Safety, Agribusiness
    Date: 2023
  10. By: Alexander Cuntz; Yi Qian
    Abstract: This study uses a unique international database on customs seizures between the years 2011 to 2013 and matches global corporate statistics to study the impacts of counterfeiting on authentic corporations’ investment and revenues. Applying the matched sampling combined with panel analyses, we attempt to estimate the effects counterfeit incidences have on corporate research investment and on firm sales and revenues (“sales displacement†) in various industries. We find an overall negative effects on the R&D and net sales across various regression specifications, except for the broad sector of tools, materials, and vehicles (HS code 8).
    Keywords: Counterfeiting, International Customs Data, R&D Investments, Crossindustry
    JEL: F61 O34 K42
    Date: 2021–12

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