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on Law and Economics |
| By: | Dills, Angela; Raghav, Manu |
| Abstract: | The use of various controlled and illegal substances, especially by young adults, has been a cause of much concern among policymakers, law enforcement officials, educators, and parents. State-level legalization of recreational marijuana in the United States raised concerns about potential adverse impacts on campus drug use and drug law violations. This paper combines data from three sources for 2001-02 to 2023-24, including college campus drug law violations that are collected under the Clery Act of 1990. We find that state legalization of recreational marijuana substantially reduced the arrests and disciplinary incidents for drug law violations. |
| Keywords: | Marijuana Legalization, Adolescent Risky Behavior, Higher Education, Campus Law Enforcement |
| JEL: | I21 I23 K42 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:glodps:1775 |
| By: | Gehrsitz, Markus (University of Strathclyde); Grant, Sam (University of Strathclyde); McIntyre, Stuart (University of Strathclyde) |
| Abstract: | Many criminal offenders are managed in the community. We combine a natural experiment with administrative data from England and Wales to assess a key community correctional policy: post-release supervision. We find that supervision reduces re-offending in the first four weeks after prison release by 15%, in part due to the incapacitation of prolific offenders who are recalled to prison for violations of their probation terms. Supervision also causes a 5.5% reduction in re-offending three years after release. This effect persistence, which is even stronger for first-time prisoners, suggests that post-release supervision is a cost-efficient way to induces genuine behavioural change. |
| Keywords: | crime, re-offending, probation, supervision |
| JEL: | H50 J18 K14 K42 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18682 |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | European debates on competitiveness increasingly treat corporate law as a lever to help innovative firms scale. The European Commission's Proposal for a new "28th regime" seeks to introduce an optional, EU-wide corporate legal form designed, inter alia, to facilitate the cross-border scaling of innovative firms. A central instrument of the Proposal is the use of model articles of association to be adopted through future implementing acts. This Article argues that, while standardised articles may ease incorporation and lower drafting costs for ordinary unlisted firms, they fall short for VC-backed companies-the very cases that motivated the initiative. Building on prior work on venture capital contracting under mandatory corporate law, we identify four shortcomings. First, the architecture is incomplete: the Proposal omits a model shareholder agreement, even though effective VC contracting depends on the interaction between articles of association and shareholder arrangements. Second, the drafting process is overly generalist and unlikely to yield genuinely VC-specific templates. Third, the Proposal's fairness-oriented logic risks producing terms that clash with the asymmetric, statecontingent structures typical of VC deals. Fourth, the legal protection offered by the template is limited, focusing on formation-stage effects while leaving subsequent judicial intervention unconstrained. We propose four adjustments: introduce a model shareholders' agreement; create a dedicated VC drafting track; abandon fairness as the organising principle for VC templates; and provide a robust safe harbour covering both ex ante design and ex post enforcement. |
| Keywords: | 28th Regime, Entrepreneurship, EU Company Law, EU Inc., Innovation, Private Ordering, Startups, Venture Capital |
| JEL: | G38 K22 L26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:safewp:341394 |
| By: | Amaral, Sofia (World Bank); Chaney, Kim (University at Buffalo); Kaiser, Victoria (Bavarian Ministry of Economic Affairs, Regional Development and Energy); Prakash, Nishith (Northeastern University); Sahay, Abhilasha (The World Bank) |
| Abstract: | Police officers' discretionary handling of gender-based violence (GBV) complaints is a critical barrier to justice in developing countries. We collaborate with the Madhya Pradesh Police in India to conduct a lab-in-the-field experiment with 323 officers, studying the effect of confronting officers with evidence of their biased handling of a fictitious GBV case. We find no average effect, but sharply divergent responses by officer gender. Confronted female officers prioritize the victim's statement by 23 percentage points more than controls, a 27 percent increase relative to the control mean. Male officers exhibit a backlash: they deprioritize the victim's statement, elevate the offender's, and assign more negative stereotypes to GBV victims one week after confrontation. A likely explanation is the stark difference in baseline bias: 72 percent of female officers display only mild bias, while 51 percent of male officers are strongly biased. Because policing is male-dominated, women are more willing to de-bias their case handling while men are not. Interventions targeting officer bias must account for gender-differentiated responses to avoid unintended consequences. |
| Keywords: | prejudice confrontation, gender heterogeneity, gender-based violence, police bias, backlash, stereotype reduction, lab-in-the-field experiment, India |
| JEL: | J16 J45 K42 K14 C93 D91 O12 O15 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18699 |
| By: | Foresta, Alessandra (University of Southampton); Tonei, Valentina (University of Southampton); Vecchi, Martina (University of Southampton) |
| Abstract: | We provide causal evidence that the context in which harmful conduct occurs shapes how it is evaluated. We study this using a vignette-based survey experiment that holds behaviour constant while randomising whether an incident of sexual harassment occurs online or in person. Online settings generate a systematic discount in perceived seriousness (7% of the mean), with larger effects on willingness to report (13% of the mean) and preferred sanctions. The discount is concentrated in image-based harassment and larger among male respondents. In addition, it is not moderated by either direct or vicarious experience of harassment, suggesting that it may reflect normative perceptions of online harm as less serious rather than lack of exposure alone. These context-dependent distortions have implications for the enforcement of emerging legal protections, victim support, and the design of public communication around digital abuse. |
| Keywords: | sexual harassment, misperceptions, perceived harm, social norms, digital environments |
| JEL: | D83 J16 C93 K42 D91 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18715 |
| By: | Matthew Brown; Emily J. Davis; Devin G. Pope |
| Abstract: | The consequences of online regulations depend on the extent to which users can circumvent restrictions or substitute toward noncompliant platforms. Since 2023, 25 U.S. states have implemented age verification laws that caused prominent adult websites (including Pornhub) to restrict local access for all users. We study how these restrictions affected browsing activity using individual-level panel data. Access restrictions reduced overall time spent on adult sites by roughly 10%. Specifically, for every 100 hours spent on top adult sites before restrictions, about 50 hours remained accessible at noncompliant sites that never restricted access, 30 hours persisted through VPN-based circumvention, 10 hours were substituted from compliant sites to noncompliant sites, and 10 hours were no longer spent on adult sites. |
| JEL: | I18 K42 L51 L86 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35322 |
| By: | Paulus, Alexandra |
| Abstract: | Cybersecurity incidents cause harm - for example, when adversarial states paralyse critical infrastructure or steal sensitive data. Many such incidents are only possible because many software products have known vulnerabilities. Software vendors could fix these, but they have little incentive to invest in the security of their products. To date, cybersecurity policy and protective measures have primarily addressed the symptoms of insecure software, rather than the root cause, namely software insecurity itself. This calls for regulation, specifically in the areas of product safety law, product liability regulations, and cybersecurity requirements for providers of software services. The European Union (EU) has already adopted initial rules, but regulatory gaps remain, and it is unclear whether member states will strictly enforce them. The German government should therefore now advocate for comprehensive European product liability regulations for software, and the Federal Office for Information Security (BSI) should impose fines on companies that violate existing rules. |
| Keywords: | Cybersecurity Policy, insecure software, product safety, product liability, liability law, NIS 2 Directive, zero days, Open Source, OSS, critical infrastructure, CrowdStrike, Mythos Preview, On-Premises, Software as a Service, SaaS, EU Product Liability Directive, Cyber Resilience Act, CRA, Federal Office for Information Security, storage security |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:swpcom:341652 |
| By: | Guillaume Pommey (DEF, University of Rome "Tor Vergata") |
| Abstract: | I characterize the optimal regulation of a firm constituted by potential judgment-proof agents. I investigate two cases: (i) A principal hires an agent to undertake a prevention effort on their behalf; (ii) Two agents are jointly responsible of undertaking a prevention effort. In both cases, agents are in charge of exerting an unobservable level of safety care to reduce the probability of an accident that may occur due to the firm risky activity. Agents are called judgment proof when their final wealth is not enough to pay for the monetary penalties imposed by the regulator. I show that the standard Equivalence Theorem, stating that the distribution of penalties among injurers is irrelevant, does not hold in this context. Instead, in a principal-agent firm, the optimal regulation requires to fully target the principal if the agent can be subject to judgment proofness. In a two-agent firm, the optimal regulation consists in an almost equal sharing of penalties among agents. |
| Keywords: | Moral Hazard, Regulation, Limited liability, Judgment Proofness |
| JEL: | K13 K32 G33 D86 |
| Date: | 2026–06–16 |
| URL: | https://d.repec.org/n?u=RePEc:rtv:ceisrp:622 |
| By: | Volker Nocke; Martin Peitz; Nicolas Schutz |
| Abstract: | The European Commission’s 2026 draft merger guidelines make merger review more forward-looking but leave open how anticipated and uncertain cost and demand shifts should affect the merger approval standard. Economic theory can fill this gap. Anticipated adverse cost or demand shifts tend to raise concentration but compress margins, so the required synergy threshold should fall, and merger control should ease. Favourable cost or demand shifts have the opposite implication and call for stricter scrutiny. When future shifts are uncertain, the appropriate merger policy response depends on how the authority accounts for uncertainty in its welfare assessment, yet the guidelines are silent on that choice. |
| Keywords: | horizontal mergers, EU merger control, EU Merger Guidelines, cost shocks, uncertainty, merger approval standard |
| JEL: | K21 L40 L41 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_755 |
| By: | Sofi, Irfan (Head, Department of Econ, Islamic University of Science & Technology, Kashmir, India); Mehrotra, Santosh (Higher School of Economics) |
| Abstract: | This study examines the relationship between employment protection legislation (EPL), measured through pro-worker judicial outcomes (PWCJ), and firm performance in India's formal manufacturing sector. We construct a novel state-level indicator of EP based on 1, 471 high court judgments covering 18 states from 1999 to 2022. Using plant-level panel data from the Annual Survey of Industries, we analyse the impact of EP on labour productivity growth, employment growth, and wage growth. The results indicate a non-linear (inverted Ushaped) relationship. A 1% increase in PWCJ is associated with a 3% rise in labour productivity, 2.59% increase in employment, and 2.95% increase in wages. However, beyond a threshold, further increases in PWCJ negatively affect all three outcomes. The results are robust to alternative specifications and controls. Our findings highlight the importance of balancing job security with flexibility to foster industrial performance. The study contributes new empirical insights to the debate on labour laws and firm outcomes in India. |
| Keywords: | employment protection, labour disputes, court judgements, productivity, employment, wages, India |
| JEL: | K31 L51 L60 D24 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18687 |
| By: | Payal Malik (Indian Council for Research on International Economic Relations (ICRIER)); Gaurav Jakhu |
| Abstract: | Digitalisation has reshaped market structures by enabling large-scale data extraction and crossmarket use of consumer information. In data-driven markets, data generated in one market can be combined and deployed in unrelated markets, allowing firms to reduce costs, improve targeting, and extend competitive advantages across digital ecosystems. While such practices can generate efficiency gains and improve service quality, they can also reinforce data-driven market power, raise entry barriers, and generate privacy harms especially in markets characterised by strong network effects, economies of scale and scope in data, and user lock-in. This policy brief examines the economic mechanisms through which cross-market data use by large digital platforms affects competition and privacy, drawing on recent academic literature and selected competition cases. It analyses the trade-offs among proposed regulatory approaches to address privacy and anti-competitive concerns arising from digital platforms’ use of consumer data from one market to another market. At the end, the brief argues for a calibrated approach: combining ex-post enforcement with targeted ex-ante obligations, continuously reviewed to avoid unintended innovation harms. |
| Keywords: | privacy violations, Data Combination, Harm Theory, IPCIDE, icrier |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:bdc:ppaper:ipcide-9 |
| By: | Nocke, Volker; Peitz, Martin; Schutz, Nicolas |
| Abstract: | How should merger control account for future changes in market conditions? We study horizontal merger policy in the presence of industry-wide cost or demand shocks, using both a homogeneous-goods Cournot model and a multiproduct-firm model of price competition with constant elasticity of substitution (CES) or multinomial logit (MNL) demand. We derive two main sets of results. First, regarding deterministic shocks: under both Cournot competition with incomplete pass-through and multiproduct-firm price competition, an adverse shock increases industry concentration but calls for softer merger control. Second, regarding cost or demand uncertainty: under a cautious maxmin approach, aggregate cost uncertainty calls for softer merger control under the same assumptions. By contrast, under a risk-neutral expected-consumer-surplus standard, greater cost uncertainty demands tougher merger control in the Cournot model with log-concave demand, and in the multiproduct-firm price competition model when the outside option is sufficiently attractive. |
| JEL: | L13 L40 L41 K21 D43 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21598 |
| By: | Biglaiser, Gary; Crémer, Jacques; de Cornière, Alexandre; Mantovani, Andrea |
| Abstract: | As cloud computing continues to expand, it has drawn significant attention from policymakers due to concerns over market concentration and potentially controversial practices employed by dominant providers. In this paper, we examine the impact of egress fees, which are imposed on users when switching providers. Using a two-period horizontal differentiated duopoly model, we analyze their effects on firms and society. Our findings reveal that cloud providers have strong incentives to implement egress fees, yet these fees harm users. Regulating egress fees has often been evoked as a solution, ranging from banning them to capping them at the cost of transfer. We find that regulation improves user surplus, but excessive regulation, such as banning such fees, may harm total welfare when providers’ data-transfer costs or users’ operational switching costs are high. We also find that regulation can have opposing effects on societal outcomes: while it may incentivize cloud providers to increase switching costs for users, thereby harming society, it may also stimulate cloud usage, a consideration that may matter in policy environments where increasing cloud adoption is itself an objective. |
| Keywords: | cloud computing; egress fees; anti-competitive practices |
| JEL: | K21 L13 L51 L86 O33 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:tse:wpaper:131868 |
| By: | Salustri, Andrea; De Bonis, Valeria |
| Abstract: | This paper examines the allocation of the family home under Italian law (Art. 337-sexies of the Civil Code) through a multidisciplinary lens that integrates civil law, sociology, and Law & Economics. While formally aimed at preserving the child’s domestic habitat and ensuring the best interest of the child, the analysis reveals that this measure functions as an indirect redistribution of economic value, significantly impacting parental income capacity and the practical implementation of co-parenting principles. By applying the theory of regulatory takings and the ECHR proportionality tests, the article highlights the shortcomings of the current allocation system which, in scenarios of inverse income asymmetry, can lead to deadweight losses in social welfare and drive the excluded owner toward poverty. The research develops an original economic analysis, introducing a child welfare function where the minor’s utility depends both on residential stability and on the economic and relational balance between parents. The findings demonstrate that excessive imbalances can lower the quality of co-parenting, making rent-free allocation counterproductive even for the child’s best interest. Finally, the study addresses the ISEE paradox, proposing the introduction of imputed rent as a flexible compensation mechanism and a reform of asset calculation criteria to treat the allocated property as temporary bare ownership, thereby harmonizing allocative efficiency with distributive justice. |
| Keywords: | allocation of the family home, regulatory taking, best interest of the child, co-parenting |
| JEL: | D61 D63 K36 K41 |
| Date: | 2026–06–20 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:129640 |