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on Law and Economics |
| By: | Adriana Alventosa (ERI-CES, Universitat de València); José Manuel Ordóñez-de-Haro (Departamento de Teoría e Historia Económica. Universidad de Málaga.); Javier Rodero Cosano (Smart Decision Lab, Departamento de Teoría e Historia Económica. Universidad de Málaga.) |
| Abstract: | This paper develops a dynamic discrete-time model of collusive behaviour in which firms can apply for leniency to reduce fines. We propose a sequential-move game inspired by the centipede game, capturing firms' incentives to be the first to self-report a cartel. The model examines cartel formation, stability, and recidivism, assuming that fines apply to the undiscovered record of collusion, not just current conduct. We find that when collusion is attractive but the leniency programme is not sufficiently generous, firms form a single cartel without self-reporting. However, when collusion is highly attractive and the leniency programme sufficiently generous, it can destabilize cartels but also foster recidivism: firms use leniency to ``clean the slate'' and restart collusion at a lower expected cost. This equilibrium behaviour may help explain the empirically observed prevalence of short-lived cartels and repeat offenders under existing leniency regimes. |
| Keywords: | Antitrust; Cartels; Recidivism; Leniency; Dynamic Games |
| JEL: | D43 K21 K42 L40 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:mal:wpaper:2025-2 |
| By: | Brianna Alderman (Harvard University); Roger Blair (University of Florida); Javier Donna (University of Miami) |
| Abstract: | We study the Microsoft-Activision acquisition through the lens of a complementary-product merger. When two complementary good producers consolidate, the merger is not horizontal because the two firms do not produce substitutable goods. Nor is the merger vertical, as neither firm supplies the other. We develop an economic model to study these types of mergers that allows for the possibility of rivals exiting the market. Three main conclusions flow from our analysis. (1) The welfare effects of the Microsoft-Activision acquisition are ambiguous; they depend on several industry factors. (2) One will not obtain the correct welfare effects using an incorrect vertical structure; harm to consumers will typically be larger in a complementary-product merger relative to a vertical one. (3) Consumer harm associated with rivals’ exit due to the merger might substantially reduce welfare even if it is a welfare-enhancing merger absent exit. Our analysis provides an analytical roadmap for the antitrust enforcement authorities regarding the theories of harm in complementary-good mergers. |
| Keywords: | Antitrust, Competition Policy, Regulation, Complementary Mergers, Vertical Mergers, Merger Identification. |
| JEL: | K21 K41 L13 L42 L44 L52 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:aoz:wpaper:359 |
| By: | Bruno Deffains (CRED - Université-Paris-Panthéon-Assas); Frédéric Marty (CNRS GREDEG, Université Côte d'Azur) |
| Abstract: | The implementation of generative artificial intelligence in legal services offers undeniable efficiency gains, but also raises fundamental issues for law firms. These challenges can be categorised along a broad continuum, ranging from changes in business lines to changes in the competitive environment and the internal organisation of law firms. This paper considers the risks that law firms face in terms of both the quality of the services they provide and perceived competition, both horizontally and vertically, considering possible relationships of dependency on suppliers of large language models and cloud infrastructures. |
| Keywords: | Generative artificial intelligence, legal services, accountability, competition, vertical relationships |
| JEL: | L42 L86 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:afd:wpaper:2503 |
| By: | Cécile Bourreau-Dubois (Bureau d'Economie Théorique et Appliquée (BETA) UMR 7522, CNRS, University of Lorraine); Myriam Doriat-Duban (Bureau d'Economie Théorique et Appliquée (BETA) UMR 7522, CNRS, University of Lorraine); Agnès Gramain (Bureau d'Economie Théorique et Appliquée (BETA) UMR 7522, CNRS, University of Lorraine); Bruno Jeandidier (Bureau d'Economie Théorique et Appliquée (BETA) UMR 7522, CNRS, University of Lorraine); Jean-Claude Ray (Bureau d'Economie Théorique et Appliquée (BETA) UMR 7522, CNRS, University of Lorraine) |
| Abstract: | Drawing upon an exhaustive dataset of French court decisions involving a claim for alimony, this paper presents new findings on the determinants of the level of alimony set by judges in divorce cases. In particular, we show that the amount of alimony can be explained as the result of a twofold logic of compromise. The first is a compromise between the amount of alimony that peers would have set in this specific case and the proposal of the ex-spouses. The second is a compromise between the debtor’s proposal and the creditor’s proposal, with greater weight given to the debtor’s proposal. In this way, our results shed light on the mechanisms by which judges’ decisions have little effect on reducing postdivorce economic gender inequalities, even though the main function of alimony is to reduce the differences in couples’ living standards after divorce. This weak corrective effect can be explained by the overemphasis on the proposal of the debtor and by the fact that judges incorporate the peer norm, which is itself dragged down by the proposals of the debtors. |
| Keywords: | divorce, alimony, inequality, judge |
| JEL: | D13 K36 J12 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:afd:wpaper:2501 |
| By: | Weißmüller, Kristina Sabrina (Vrije Universiteit Amsterdam); van den Broek, Tijs; Krawinkel, Jana S.; Watson, Steven James (University of Twente) |
| Abstract: | This study explores the legitimation strategies employed by organizations engaging in criminal activities to influence public opinion about the legitimacy of these criminal activities. These discursive strategies are used to justify criminal actions, such as corruption, fraud, or violence, within broader organizational and cultural contexts. Often involving moral neutralization and moral licensing techniques, these strategies allow organizations engaged in criminal activities to present themselves and their actions as virtuous or justified. Although these strategies can result in societal harm by undermining public support for law enforcement, little is known about what types of legitimation strategies exist, how they differ, and how they influence public opinion. Hence, this scoping review identifies and categorizes the legitimation strategies used by organizations engaged in criminal activities. By conducting a scoping review of 21 empirical studies, a four-dimensional typology of 10 legitimation strategies is developed, clustered by their association with distinct types of legitimacy. The findings propose five mechanisms whereby legitimation strategies impact public opinion. Understanding these strategies and mechanisms is crucial for developing effective counter-strategies to delegitimize criminal actions and enhance societal resilience. This study advances the fragmented discourse on legitimation processes of specifically criminal actions employed by organizations, integrating findings from various disciplines to inform theory and practice. |
| Date: | 2025–03–26 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:pxt5r_v1 |
| By: | Wagenaar, Homer |
| Abstract: | This paper is an institutional study of the patent systems of the United Kingdom of the Netherlands and its successor states Belgium and the Netherlands in the nineteenth century. The patent law of 1817 gave the state wide discretion to accept or refuse patents and to customise their duration, fees, and terms on a case-by-case basis. Through an indepth reconstruction of the patent system's administrative process, I demonstrate (1) how this system developed informal rules of procedure in its initial years, and (2) how the law after Belgium's independence from 1830 fared differently in each successor state. While in Belgium the patent system became widely used and increasingly codified, culminating in an 1850s reform, in the Netherlands the neglect of the patent system led in 1869 to its abolition. |
| Keywords: | institutions, patents, economic history, nineteenth century, industrial revolution, the Netherlands, Belgium |
| JEL: | K22 L43 N43 O31 O34 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:qucehw:315205 |
| By: | Nikita Melnikov; Carlos Schmidt-Padilla; Maria Micaela Sviatschi |
| Abstract: | We study how criminal organizations affect economic development. We exploit a natural experiment in El Salvador, where these criminal organizations emerged due to an exogenous shift in American immigration policy that led to the deportation of gang leaders from the United States to El Salvador. Using a spatial regression discontinuity design that focuses on the gang-created system of borders, we find that individuals in gang-controlled neighborhoods have less material well-being, income, and education than individuals living only 50 meters away but outside of gang territory. None of these discontinuities existed before the arrival of the gangs. A key mechanism behind the results is that gangs restrict individuals’ mobility, affecting their labor-market options by preventing them from commuting to other parts of the city. The results are not determined by high rates of selective migration, differential exposure to extortion and violence, or differences in public goods provision. |
| Keywords: | Gangs, Development, Mobility, Crime |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:unl:unlfep:wp672 |
| By: | Frédéric Marty (CNRS GREDEG, Université Côte d'Azur) |
| Abstract: | La loi du 21 mai 2024 visant à sécuriser et à réguler l’espace numérique a intégré en droit français les règlements européens sur les marchés numériques et sur les services numériques. Elle a distribué les responsabilités nouvelles liées à l’application de ces textes entre des autorités de régulation à compétence horizontale (telle l’Autorité de la concurrence) et des autorités de régulation à compétence verticale (à l’instar de l’Arcom et de la CNIL). Ce chapitre se propose d’analyser ce nouveau cadre institutionnel et pour éclairer les dynamiques qui peuvent en résulter pour la garantie de l’ordre concurrentiel et de l’ordre public économique face aux enjeux posés par les grands écosystèmes numériques et les manipulations dont ils peuvent être les vecteurs. |
| Keywords: | Digital ecosystems, competition, personal data protection, platforms regulation |
| JEL: | K21 K23 K42 L40 L50 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:afd:wpaper:2502 |
| By: | Adachi, Daisuke; Kambayashi, Ryo (Musashi University); Kawaguchi, Kohei |
| Abstract: | A legally binding unilateral settlement option for dismissal disputes could streamline the dismissal process, but concerns persist about the potential overuse of dismissals. To assess this claim, we develop a model of employment adjustment followed by negotiation under litigation threat, and show that, contrary to conventional wisdom, unilateral settlement can enhance total surplus and benefit workers with relatively high productivity when employment adjustment does not significantly hurt productivity. These results stem from a fundamental trade-off: employers must forgo potential worker output to avoid litigation costs, which alters the threat points of wage negotiations and dismissal decisions in favor of workers. Our findings suggest that properly designed unilateral settlement institutions can contribute to both stable employment, efficiency and distributional equity in labor markets beyond merely reducing litigation costs, particularly in contexts with high productivity retention rates. |
| Date: | 2025–03–26 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:89xgj_v1 |
| By: | Gagnepain, Philippe; Martimort, David |
| Abstract: | We explore empirically the impact of the market sharing collusive practices that were implemented in the French public transportation industry between 1994 and 1999. We build a structural model of bidding markets where innovating firms compete for the market and have the ability to spread the benefits of their innovation through all markets on which they are active. Each local competitive environment shapes the distribution of the prices (the bids) paid by public authorities to transport operators. We recover empirically the distribution of prices and innovation shocks and we show that collusive practices had overall a limited impact on prices. Firms were in reality more interested in avoiding significant financial risks inherent to the activity, as well as the high cost of preparing a tender proposal. As a by-product, we perform a counterfactual analysis that allows us to simulate how an increase in firms’ innovation reduces prices significantly. |
| Keywords: | Bidding Markets; Market Sharing; Collusion; Innovation; Public Transport |
| JEL: | D22 D44 K21 L9 |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:130478 |