nep-law New Economics Papers
on Law and Economics
Issue of 2023‒09‒04
eight papers chosen by
Yves Oytana, Université de Franche-Comté

  1. Antitrust Law Enforcement in Primary And Aftermarkets By Stavniychuk, Anna (Ставнийчук, Анна); Meleshkina, Anna (Мелешкина, Анна)
  2. Intrinsic Motivation vs. Corruption? Experimental Evidence on the Performance of Officials By Lambsdorff, Johann Graf; Grubiak, Kevin; Werner, Katharina
  3. The Impact of Business Improvement Districts on Crime By Faggio, G.
  4. Property Rights to the World’s (Linear) Ocean Fisheries in Customary International Law By Scott Barrett
  5. Divorce and Property Division Laws Shape Human Capital Investment By Peter Blair; Elijah Neilson
  6. Denial of Interoperability and Future First-Party Entry By Massimo Motta; Martin Peitz
  7. Hold Your Fire! Influence of Female Legislators on Gun Legislation in the US By Rajeev K. Goel; Michael A. Nelson
  8. Information-Forcing Effects of Non-Disclosure Rules By Giuseppe Dari-Mattiacci Author-Workplace-Name :University of Amsterdam; Sander Onderstal Author-Workplace-Name :University of Amsterdam; Francesco Parisi Author-Workplace-Name :University of Minnesota; Ram Singh

  1. By: Stavniychuk, Anna (Ставнийчук, Анна) (The Russian Presidential Academy of National Economy and Public Administration); Meleshkina, Anna (Мелешкина, Анна) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The aftermarkets occupy a dependent position in relation to the primary product market. The textbook examples of this kind of dependence are the car market and the service market, the printer market and the cartridge market, the shaving stick market and razor cartridge market, the markets for software products and their updates. In such cases, manufacturers in so-called primary markets may restrict competition in the aftermarkets through dealer licensing or through consumer contract terms related to warranty service. The study is relevant due to the emergence of new scenarios of anti-competitive behaviors and agreements (for example, restricting access to personal data of primary product owners – to the Big Data of a car engine’s control sensors – limits the possibility to enter the aftersales service market for new players). In this context, the Internet of Things and the digitalization of production chains give primary market participants the opportunity to control data flows and access conditions, which determines exclusive access to aftermarkets associated with the risk of monopolization. The purpose of the study is to identify the sources of anti-competitive behavior in the markets for the primary product and after-sales service (including consumables and components). The objectives of the study include: identifying the sources of antitrust law violations in the markets for the primary product and after-sales service; analyzing international and Russian antitrust practice in relation to the markets for the primary product and aftermarkets. The research methodology includes models of market analysis for various industries, quantitative methods of antitrust analysis, tools of the new institutional economic theory. The conclusions of the study describe the properties of the markets for the primary product and aftermarkets, which are significant for the antitrust regulation of such markets, and provide a theoretical justification of the need to use refined methods of quantitative analysis for the purposes of antitrust law enforcement, taking into account the specifics of the primary markets and aftermarkets.
    Keywords: aftermarket, competition, antitrust regulation, market monopolization, secondary product, switching costs, relevant product market, relevant geographic market
    JEL: K21 L22
    Date: 2022–08
  2. By: Lambsdorff, Johann Graf; Grubiak, Kevin; Werner, Katharina
    Abstract: There are conflicting views as to whether corruption or intrinsic motivation plays a greater role in determining the performance of public officials. We run an experiment that incorporates both viewpoints and assess the relative strength and interplay of these respective factors. The design introduces some realism into an everyday exchange between an Estimator (businessperson) and an Auditor (public official) and induces a gray area between intrinsic motivation, extortion and bribery. The Estimator can make a large transfer in the hope of avoiding unfair treatment (extortion) or obtaining an undeserved benefit (bribery). The Auditor may be intrinsically motivated to fulfill her duty or may be corrupted by transfers. We find that intrinsic motivation has a much higher impact on the performance of Auditors than corruption. In a treatment with punishment, Auditors are significantly less likely to accept a large transfer. But punishment fails to bring about favorable welfare effects due to two forces offsetting each other on the individual level. Intrinsic motivation increases for some subjects, supporting the “expressive law” literature, while it decreases for others, supporting the “crowding-out” literature. We infer that punishing officials is an unproblematic tool for fighting corruption, but its effectiveness is called into question. Policies should focus more on preserving officials’ intrinsic motivation and worry less about their corruptibility.
    Keywords: Bribery; crowding-out; expressive law; extortion; intrinsic motivation
    JEL: C92 D73 K42
    Date: 2023–05–24
  3. By: Faggio, G.
    Abstract: This study evaluates the impact of Business Improvement Districts (BIDs) on crime using a novel data set on the total number of BIDs established in England and Wales between 2012-2017. Results indicate that BID areas are, on average, affected by higher levels of crime than other commercial areas, but they experience a drop of 10-11 crimes per quarter following BID formation. The reduction in crime is stronger for shoplifting, anti-social behaviour and public order-related crimes. Effects depends on the intensity of the approach adopted as well as on the amount of resources devoted to crime prevention. The study also provides evidence of diversion effects. As crime declines in BID areas, criminal activity diverts in neighboring commercial areas. Diversion effects are smaller than deterrence effects so that aggregated crime declines.
    Keywords: urban regeneration policy; local government policy; crime
    Date: 2022–07–27
  4. By: Scott Barrett
    Abstract: I model the ocean as an array of lines set within a two-dimensional frame, and show how the Exclusive Economic Zone emerged as an equilibrium in customary international law. I find that custom codifies the efficient Nash equilibrium of enclosure for nearshore fisheries. For highly migratory and offshore fisheries, enclosure is inefficient, and customary law supports a more efficient “free sea” regime. The model also identifies the trigger for changes in property rights and the reason choice of a particular limit, like the current 200-mile zone, is arbitrary. In an asymmetric, regional sea, I find that the scope of the EEZ is determined by the relative power of coastal and distant water states, and need not be efficient. Finally, I find that proposals to nationalize the seas or ban fishing on the high seas are neither efficient nor supportable as equilibria in customary law.
    Keywords: customary international law, exclusive economic zone, ocean fisheries, closure of high seas
    JEL: K33 F55 Q22
    Date: 2023
  5. By: Peter Blair (Harvard Graduate School of Education); Elijah Neilson (Southern Utah University)
    Abstract: In theory, unilateral divorce laws alter the private incentive to invest in human capital by permitting either spouse to initiate the division of the marital assets. Using several causal research designs we show that both men and women are less likely to attain a bachelor’s degree in states with unilateral divorce laws—-especially individuals who were exposed to the laws when making educational choices and who live in states requiring an even split of assets upon divorce. Unilateral divorce laws do not distort human capital investment generically—but rather in contexts where the property division laws invite moral hazard.
    Keywords: unilateral divorce, property rights, racial differences, labor market distortions
    JEL: D13 J12 J15 J16 J24 K11 K12 K36
    Date: 2023–08
  6. By: Massimo Motta; Martin Peitz
    Abstract: Motivated by a recent antitrust case involving Google, we develop a rationale for foreclosure when the owner of an essential input is not yet integrated downstream. Our theory rests on data-enabled network effects across periods. If a platform considers offering a first-party app in the future, by not allowing a third-party app to be hosted on its platform, it ensures that the third-party app would be a weaker competitor to its own app in the future. This makes denial of access attractive as a full or partial foreclosure strategy, which is costly in the short term but may be beneficial in the long term. We also study the effects of policies such as compulsory access or data-sharing, showing under which conditions they might be beneficial to consumers or backfire.
    Keywords: Exclusionary practices, vertical interoperability, refusal to deal, digital platforms, vertical foreclosure, data-enabled networks effects, compulsory access, data-sharing policies
    JEL: L10 L40 K21
    Date: 2023–08
  7. By: Rajeev K. Goel; Michael A. Nelson
    Abstract: Objective This paper considers the influence of female legislators on gun legislation across US states. Females have behavioral differences from males and likely different exposure to gun-related violence. Method Using data from 1991-2020, we econometrically estimate the drivers of gun legislation across US states. The dependent variables are alternately the total number of gun laws enacted, and 5-year differences in gun laws. Results We find that female legislators in state houses significantly increase the supply of gun laws. Female senators, on the other hand, were no different from their male counterparts. In other results, states with greater population density had more gun laws, while economic prosperity, race, and the elderly population did not generally have significant effects. Finally, when special interest groups, involving gun ownership, mass shooting episodes, and states with a uniform executive are considered, mass shootings and a uniform executive increase laws, while gun owners have the opposite effect. These findings show significance when 5-year differences in gun laws are used. Conclusions Our findings suggest that, when it comes to gun legislation and female legislator representation, it matters which chamber of the legislature females are elected to. Furthermore, different interest groups can significantly bear upon gun legislation.
    Keywords: gun control, gun laws, gender, firearms, legislatures, mass shootings, gun ownership
    JEL: J16 K10
    Date: 2023
  8. By: Giuseppe Dari-Mattiacci Author-Workplace-Name :University of Amsterdam; Sander Onderstal Author-Workplace-Name :University of Amsterdam; Francesco Parisi Author-Workplace-Name :University of Minnesota; Ram Singh (Department of Economics, Delhi School of Economicss, University of Delhi)
    Abstract: Contract law traditionally applies different disclosure duties on buyers and sellers. Sellers are generally required to disclose “negative” information about hidden defects of the products they sell. Failure to disclose can make the contract voidable and can give rise to liability. By contrast, buyers are generally under no comparable duties to disclose “positive” information about hidden qualities of the products they buy. The leading explanation for the law’s disparate treatment of buyers and sellers in these two asymmetric information problems is that imposing disclosure duties on buyers would undermine their incentives to acquire costly (but socially useful) information prior to forming a contract (Kronman, 1978). This explanation lacks a key step—the failure to correct asymmetric information problems would cause the inverse adverse selection problem (identified by Burckart and Lee (2016) and Dari-Mattiacci et al. (2021)) to arise. Uninformed sellers would withdraw from the market and resources would not move to higher-valuing users. In this paper, we develop a model to study the incentives created by disclosure and non-disclosure rules. We show that when parties can contract around defaults, the choice of alternative disclosure rules (duty to disclose vs. no duty to disclose) makes a difference. Unlike disclosure rules, non-disclosure default rules yield partially separating equilibria that preserve the buyers’ incentives to acquire information. They also foster trade opportunities between expert buyers and uninformed sellers. Our results add to the existing literature by providing an additional rationale for the different treatment of buyers and sellers in asymmetric information problems. JEL Codes : D44, D82, D86, K12.
    Keywords: asymmetric information, penalty default rules, inverse adverse selection
    Date: 2023–08

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