nep-law New Economics Papers
on Law and Economics
Issue of 2024‒01‒08
twelve papers chosen by
Yves Oytana, Université de Franche-Comté

  1. Governance and Regulation of Platforms By Martin Peitz
  2. Minimum Wage Non-compliance: The Role of Co-determination By Laszlo Goerke; Markus Pannenberg
  3. In the Light of Dynamic Competition: Should We Make Merger Remedies More Flexible? By Patrice Bougette; Oliver Budzinski; Frédéric Marty
  4. Heterogeneous Impacts of Sentencing Decisions By Andrew Jordan; Ezra Karger; Derek Neal
  5. Was Javert right to be suspicious? Unpacking treatment effect heterogeneity of alternative sentences on time-to-recidivism in Brazil By Santiago Acerenza; Vitor Possebom; Pedro H. C. Sant'Anna
  6. Equal before the (expressive power of) law? By Luise Goerges; Tom Lane; Daniele Nosenzo; Silvia Sonderegger
  7. Occupational Licensing and Occupational Mobility in New England By Osborne Jackson
  9. The Effects of the Dobbs Decision on Fertility By Dench, Daniel; Pineda-Torres, Mayra; Myers, Caitlin Knowles
  10. Investment Treaties and the Replacement of Stranded Investment By Horn, Henrik; Sanctuary, Mark
  11. The erosion of homeownership and minority wealth By Stephen B. Billings; Adam Soliman
  12. Improving the business environment to accelerate convergence in Croatia By Timo Leidecker; Tim Bulman

  1. By: Martin Peitz
    Abstract: In this chapter, we discuss how platforms manage the interaction between various users. First, we discuss and exemplify governance decisions by platforms that affect access and interactions of users regarding a platform service. Here, we investigate the choice of price structure and the choice of non-price strategies. We also address the horizontal and vertical scope of these platforms. Second, we consider platform decisions that generate spillovers to other platforms or channels, and we explore private incentives and welfare effects. Third, we discuss the role of government regulation in a broad sense, that is, the laws and regulations that constrain platforms and shape their incentives regarding their governance decisions. Emphasis is given to interventions against anti-competitive conduct and practices that may lead to consumer harm.
    Keywords: Platform governance, platform regulation, digital ecosystems, digital markets, competition policy, network effects
    JEL: L12 L13 L41 L42 D42 D47 K21 K23 M21
    Date: 2023–12
  2. By: Laszlo Goerke; Markus Pannenberg
    Abstract: We analyse in what way co-determination affects non-compliance with the German minimum wage, which was introduced in 2015. The Works Constitution Act (WCA), the law regulating co-determination at the plant level, provides works councils with indirect means to ensure compliance with the statutory minimum wage. Based on this legal situation, our theoretical model predicts that non-compliance is less likely in co-determined firms because works councils enhance the enforcement of the law. The economic correlates of co-determination, such as higher productivity and wages, affect non-compliance in opposite directions. The empirical analysis, using data from the German Socio-economic Panel (SOEP) for the years 2016 and 2019, demonstrates that non-compliance occurs less often for employees in co-determined establishments, while there is no impact on the difference between the minimum wage and the amount, which was actually paid. Therefore, co-determination helps to secure the payment of minimum wages.
    Keywords: Co-determination, Labour Law, Minimum Wages, Socio-Economic Panel (SOEP), Non-compliance, Works Councils
    JEL: J30 J53 K31 K42 M54
    Date: 2023
  3. By: Patrice Bougette (Université Côte d'Azur; GREDEG CNRS); Oliver Budzinski (Technische Universität Ilmenau); Frédéric Marty (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: Mergers and acquisitions shape industry competition. Effective merger remedies are important for market efficiency and consumer welfare. This paper explores the need for more flexible remedies to address changing markets after mergers. While the EU permits some flexibility with less restrictive remedies, we conceptually advance the design elements of a dual-phase, bifurcated merger control system. This system integrates ex-ante processes with more systematic and comprehensive ex-post measures. Such an approach can address the shortcomings of the current system and, consequently, holds the potential to enhance merger control in dynamic markets.
    Keywords: merger remedies, competition authorities, market dynamics, dynamic competition, oligopolies, innovation effects, European Union
    JEL: L41 K21 L13
    Date: 2023–11
  4. By: Andrew Jordan; Ezra Karger; Derek Neal
    Abstract: We examine 70, 581 felony court cases filed in Chicago, IL, from 1990–2007. We exploit case randomization to assess the impact of judge assignment and sentencing decisions on the arrival of new charges. We find that, in marginal cases, incarceration creates large and lasting reductions in recidivism among first offenders. Yet, among marginal repeat offenders, incarceration creates only short-run incapacitation effects and no lasting reductions in the incidence of new felony charges. These treatment-impact differences inform ongoing legal debates concerning the merits of sentencing rules that recommend leniency for first offenders while encouraging or mandating incarceration sentences for many repeat offenders. We show that methods that fail to estimate separate outcome equations for first versus repeat offenders or fail to model judge-specific sentencing tendencies separately for cases involving first versus repeat offenders produce misleading results for first offenders.
    JEL: K0
    Date: 2023–12
  5. By: Santiago Acerenza; Vitor Possebom; Pedro H. C. Sant'Anna
    Abstract: This paper presents new econometric tools to unpack the treatment effect heterogeneity of punishing misdemeanor offenses on time-to-recidivism. We show how one can identify, estimate, and make inferences on the distributional, quantile, and average marginal treatment effects in setups where the treatment selection is endogenous and the outcome of interest, usually a duration variable, is potentially right-censored. We explore our proposed econometric methodology to evaluate the effect of fines and community service sentences as a form of punishment on time-to-recidivism in the State of S\~ao Paulo, Brazil, between 2010 and 2019, leveraging the as-if random assignment of judges to cases. Our results highlight substantial treatment effect heterogeneity that other tools are not meant to capture. For instance, we find that people whom most judges would punish take longer to recidivate as a consequence of the punishment, while people who would be punished only by strict judges recidivate at an earlier date than if they were not punished. This result suggests that designing sentencing guidelines that encourage strict judges to become more lenient could reduce recidivism.
    Date: 2023–11
  6. By: Luise Goerges (Leuphana University Lüneburg); Tom Lane (Newcastle University); Daniele Nosenzo (Aarhus University); Silvia Sonderegger (University of Nottingham)
    Abstract: Building on findings showing that laws exert a causal effect on social norms, this paper investigates whether this “expressive power of law” differs by gender or race. We develop a model to show that such differences are theoretically plausible. We then use an incentivized vignette experiment to test whether these differences are empirically relevant. Results from an online sample of around 4000 subjects confirm that laws causally influence social norms. However, we find little evidence of a differential effect across gender or race, suggesting that gender and race biases in the legal system are driven by other mechanisms than differences in the expressive power of law.
    Keywords: Social Norms; Law; Expressive Function of Law; Gender Gap; Racial Bias
    Date: 2023–12
  7. By: Osborne Jackson
    Abstract: Occupational licensing—mandatory credentialing that allows a worker to practice a particular profession—varies greatly throughout New England and the United States in terms of which occupations require a license in a given state and the scope of the necessary qualifications. Given a growing share of US workers who are licensed, it is increasingly important to understand how these differences in licensing policy affect markets. Such knowledge can then be used to guide how occupational licensing regulations are structured. The research in this report shows that a labor market implication of licensing policy existence is a 24 percent reduction in occupational mobility, and that effect is driven by licensing qualifications that stipulate fees and minimum thresholds for education and age. These qualifications likely differ in their connection to worker skills, which may help explain mixed findings in research on how licensing affects the safety and quality of goods and services. Policymakers considering occupational licensing to facilitate such product market benefits may also wish to assess labor market costs, such as reduced occupational mobility, using a joint evaluation of those markets to determine the form of licensing regulation, if any, that is most likely to improve societal welfare. More specifically regarding policy recommendations, this report’s findings have multiple implications for future occupational licensing policy in New England. For instance, for occupations in which labor market costs are likely high and product market benefits are likely low, policymakers should consider potentially eliminating licensing altogether and perhaps replacing it with less restrictive forms of regulation such as certification or public inspections. More nuanced assessment is required for occupations in which the labor market costs of licensure are likely low (or high) but the product market benefits of licensure are also likely low (or high). In these cases, policymakers should consider an arrangement of licensing qualifications that better amplifies product market benefits and mitigates labor market costs. Lastly, for occupations in which labor market costs are likely low and product market benefits are likely high, policymakers should consider retaining existing licensing policy or, absent a policy, remain open to establishing licensure or less restrictive policy alternatives if the case for improved consumer protection is sufficiently compelling.
    Keywords: New England; NEPPC; mobility; Current Population Survey
    JEL: J63 J24
    Date: 2023–12–01
  8. By: Giuseppe Rose (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy)); Francesco Mazzulla (Department of Economics, Statistics and Finance 'Giovanni Anania', University of Calabria, Rende (Italy))
    Abstract: This paper examines the effects of a policy implemented in Italy in 2012, deregulating the market of pharmacies, in order to reduce barriers to entry and improve competition. Drawing municipal-level data from Aida for the following years 2011-2019, we assess the impact of the reform on revenues and net profits of pharmacies located in municipalities where there have been new openings. In order to properly examine the policy that adopts a staggered implementation we propose an evaluation method that include three different estimation steps, using some recently developed methods to deal with staggered adoption, and an event study to compare our final results. Our findings show that relaxing occupational licensing decreased both revenues and net profits for treated pharmacies across all different specifications of the dependent variables.
    Keywords: occupational licensing, deregulation, staggered difference-in-differences, event-study, csdid, did_imputation, generalized difference-in-differences
    JEL: J01 L43 D45
    Date: 2023–12
  9. By: Dench, Daniel (Georgia Institute of Technology); Pineda-Torres, Mayra (Georgia Institute of Technology); Myers, Caitlin Knowles (Middlebury College)
    Abstract: The U.S. Supreme Court decision in Dobbs v. Jackson Women's Health Organization sparked the most profound transformation of the landscape of abortion access in 50 years. We provide the first estimates of the effects of this decision on fertility using a pre-registered synthetic difference-in-differences design applied to newly released provisional natality data for the first half of 2023. The results indicate that states with abortion bans experienced an average increase in births of 2.3 percent relative to states where abortion was not restricted.
    Keywords: abortion, Dobbs, fertility, power analysis
    JEL: I11 I12 I18 J13 K23
    Date: 2023–11
  10. By: Horn, Henrik (Research Institute of Industrial Economics (IFN)); Sanctuary, Mark (IVL Swedish Environmental Research Institute, Stockholm)
    Abstract: Halting the ongoing global loss of biodiversity will require extensive phase-out of harmful production. A significant share of the affected production will be foreign-owned, and can therefore potentially be covered by investment treaties. These treaties are sometimes alleged to dissuade host countries from phasing out harmful investments, while other observers argue that the treaties are needed to provide incentives for the replacement investments that are required to prevent large income losses. To examine the impact of investment treaties on biodiversity protection, this paper studies a setting with both a stranded and a replacement investment. Among other findings, the paper shows how the dissuading effect of the agreement on host country regulation of the replacement investment, induces the investor to choose a replacement investment that is harmful to biodiversity, and how this in turn reduces the host country's willingness to phase out the stranded investment. The framework also sheds light on fundamental legal notions such as investor "legitimate expectations, " "full compensation, " and "investment."
    Keywords: International investment agreement; Biodiversity protection; Regulatory chill; Legitimate expectations
    JEL: F21 F23 F53 K33
    Date: 2023–11–22
  11. By: Stephen B. Billings; Adam Soliman
    Abstract: Since the Great Recession, the traditional path to wealth creation through home ownership has stalled and worsened for many minority households. One potential and largely unexplored driver of this trend is the growing presence of institutional investors that purchase single-family homes and convert them to permanent rentals. We find that large institutional investors alone have decreased homeownership rates in Black neighborhoods in high growth southern cities like Charlotte, North Carolina by 4 percentage points. Using a granular spatial difference-in-differences estimator, we show that an institutional investor purchase leads to a 2% decline in neighboring property values. This effect is almost exclusively limited to majority Black suburban neighborhoods. These property value declines are also associated with commonly hypothesized social spillovers from the loss of homeownership, namely increases in crime and decreases in property maintenance and political participation.
    Keywords: homeownership, racial wealth gap, institutional investors
    Date: 2023–12–12
  12. By: Timo Leidecker; Tim Bulman
    Abstract: Raising productivity growth is central to closing the gap with the incomes and well-being enjoyed in many OECD countries. Croatia has internationally competitive firms, and a dynamic economy with many young and potentially productive firms. However, overall performance has been limited by the presence of many less productive firms and more productive firms that often fail to grow. This likely reflects a business environment that weakens competitive pressures and makes investments more costly and risky. Reducing the burdens of lengthy and unpredictable regulatory procedures, resolving legal disputes faster with a more efficient judicial system, and improving public sector integrity, will be key for boosting productivity growth. Developing public equity markets and expanding R&D support would improve access to finance for young and innovative firms. State-owned enterprises play a comparatively large role in Croatia’s economy but tend to underperform financially and in delivering goods and services. Improving their governance, by strengthening the state’s oversight and governance arrangements, can improve outcomes. This Working Paper relates to the 2023 OECD Economic Survey of Croatia.
    Keywords: access to finance, insolvency policies, law use, productivity analysis, public sector integrity, research & development policies, rule of law, state-owned enterprises
    JEL: D24 D25 D31 D4 G2 K2 K4 L11
    Date: 2023–12–12

This nep-law issue is ©2024 by Yves Oytana. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.