|
on Law and Economics |
| By: | OECD |
| Abstract: | This paper examines the challenges faced by competition authorities in Latin America and the Caribbean (LAC) when enforcing competition law in markets affected by informality. Informal markets represent a significant share of economic activity in the region and may influence competitive dynamics both where informal firms compete with formal firms and where competition occurs within informal markets. The paper focusses on competition enforcement issues related to informality including the definition of relevant markets, the investigation of informal firms and the calculation of fines. Although informality can create substantial evidentiary and procedural difficulties, the paper identifies opportunities for competition authorities to mitigate those challenges, including the use of official datasets, market studies and institutional co-operation with organisations addressing informality. The paper argues that competition authorities in LAC should be mindful of informal markets when enforcing competition law, and can apply proportionate, pragmatic and targeted enforcement to address competitive harm involving informal markets, while supporting better market functioning and the transition towards formality. |
| Keywords: | competition law enforcement, informal economy, informal markets, Latin America and the Caribbean (LAC) |
| JEL: | K21 K42 L40 L41 |
| Date: | 2026–09–14 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:337-en |
| By: | OECD |
| Abstract: | This paper provides an overview of the state of play of early resolution of cartel cases in Latin America and the Caribbean (LAC) jurisdictions, covering the legal framework, enforcement experiences, as well as challenges and particularities. Competition authorities may benefit from the early resolution of cartel cases by saving on time and the resources that the case would require in an adversarial procedure, allocating them more efficiently to the detection and prosecution of other cartels and providing for a greater deterrence and wider impact of their enforcement actions. The paper highlights that LAC competition authorities may consider designing and using these tools as a way to achieve procedural expediency. The design and implementation of early resolution programmes requires consideration of the incentives of parties to resolve cases early and the interplay with leniency programmes, damages and the pursuit of other policy objectives. |
| Keywords: | cartel enforcement, competition law enforcement, early case resolution, Latin America and the Caribbean (LAC), settlements |
| JEL: | K21 K40 |
| Date: | 2026–09–14 |
| URL: | https://d.repec.org/n?u=RePEc:oec:dafaac:338-en |
| By: | Juan Carlos Angulo (Department of Economics, Universidad Iberoamericana Ciudad de Mexico) |
| Abstract: | This article examines how positive economic shocks to legal agricultural production affect non-lethal crime in conflict-affected settings. I focus on Mexico’s avocado sector, which has experienced substantial growth in production and export value over the past two decades. Using municipal-level data from 2011 to 2024, I combine administrative crime records with survey-based victimization data to examine the effects of avocado production on extortion, threats, and kidnappings. To address potential reverse causality, I instrument municipal avocado production using international avocado production interacted with municipality-level geographic characteristics that determine suitability for avocado cultivation. I find that increases in avocado production are associated with higher levels of extortion across both data sources. The evidence for threats and kidnappings is less consistent across data sources. These results are robust to alternative samples and specifications and remain for extortion when restricting the analysis to municipalities with documented organized crime presence prior to the study period. The findings are consistent with a rent-seeking mechanism in which organized crime groups exploit high-value legal markets to generate recurring revenue. Avocado production is particularly suited to this form of extraction because orchards are geographically fixed, require substantial investment, and generate income repeatedly over many years. The results also suggest that the expansion of legal economic activity can create new opportunities for criminal rent extraction where state capacity is limited. More broadly, the study shows that the consequences of economic booms in conflict-affected regions extend beyond lethal violence and can include systematic forms of non-lethal crime that directly facilitate the appropriation of legal economic rents. |
| JEL: | D7 O13 Q3 |
| Date: | 2026–09–03 |
| URL: | https://d.repec.org/n?u=RePEc:smx:wpaper:2026011 |
| By: | Cesar Velazquez (Department of Economics, Universidad Iberoamericana Ciudad de Mexico); Isidro Soloaga (Department of Economics, Universidad Iberoamericana Ciudad de Mexico); Monserrat Zuñiga Loreto (Department of Economics, Universidad Iberoamericana Ciudad de Mexico) |
| Abstract: | This paper examines the relationship between neighborhood crime and firm employment in Mexico City. Using a balanced panel of 2, 354 Basic Geostatistical Areas (AGEBs) for 2017--2022, we estimate Spatial Durbin Models with AGEB fixed effects, lagged and winsorized crime variables, and differential trends by dominant firm-size stratum, decomposing total effects into direct and indirect components. At the aggregate level, robberies are negatively associated with employment in the AGEBs where they occur, alongside positive spillovers toward neighboring areas. This aggregate pattern conceals substantial heterogeneity: large firms (101 or more employees) are the only stratum with a negative and significant direct effect, whereas small firms (0--10 employees) show a positive direct effect, consistent with structural immobility and the local reallocation of displaced demand. Medium-sized firms show negative but imprecisely estimated effects. A dynamic specification preserves these signs but is weakly identified once persistence is absorbed. Crime appears to reallocate employment across the firm-size distribution and across space rather than uniformly contracting local labor demand. |
| JEL: | C33 J23 K42 R12 |
| Date: | 2026–09–03 |
| URL: | https://d.repec.org/n?u=RePEc:smx:wpaper:2026012 |
| By: | Lagrotta, Luiz Carlos Nacif |
| Abstract: | Transnational legal cooperation is usually examined through the languages of sovereignty, recognition, international comity, jurisdiction, and mutual legal assistance. These categories remain indispensable, yet they leave a consequential problem undertheorized. A legal act validly produced within one jurisdiction may travel abroad, become embedded in foreign institutions, trigger investigative or judicial measures, and generate consequences no longer controlled by the authority that originally produced it. If the originating act is subsequently annulled, validity, effectiveness, control, and reversibility may cease to coincide. This Article conceptualizes that phenomenon as the transnational dissociation between the power to invalidate and the capacity to reverse. Using the 2026 English Crown Court decision in Serious Fraud Office v Miranda as a case study, it argues that cross-border legal circulation should be understood as a process of progressive institutional embedding rather than mere transmission. Drawing upon administrative law, international comity, global administrative law, legitimate expectations, institutional theory, and Law and Economics, the Article develops the concept of a gradient of transnational reversibility. It then advances a Principle of Preservation of Reversibility, under which institutions facing credible legal uncertainty should, at reasonable and proportionate cost, avoid unnecessarily transforming corrigible situations into states that are difficult or impossible to restore. The broader claim is institutional: transnational legal systems should be assessed not only by their capacity to cooperate efficiently, but also by their capacity to remain corrigible after cooperation has occurred. |
| Date: | 2026–08–28 |
| URL: | https://d.repec.org/n?u=RePEc:osf:lawarc:dfnmw_v1 |
| By: | Pierri, Gastón; Fontenele, Marcelo; Nunes, Jose Luiz |
| Abstract: | This paper presents preliminary results from a pilot study conducted in the courts of Ceará, Brazil. The study evaluates the impact of introducing a tool that uses natural language processing and machine learning techniques to cluster judicial acts by textual similarity on clerk productivity, measured as the number of case files a clerk can produce in a day. Estimates indicate that treatment-group clerks produced approximately 10 more case files per day than control-group clerks, a statistically significant difference equivalent to a 37% increase relative to the control group mean. The results are robust to the exclusion of outlier observations and exceptionally productive clerks. |
| Keywords: | artificial intelligence;Judicial Productivity;Natural Language Processing;Court Administration;Public Sector Automation;machine learning;Field experiment;access to justice |
| JEL: | O33 H83 K40 C93 J24 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:14700 |
| By: | Ricardo Perez-Truglia; Jeffrey Yusof |
| Abstract: | The rise of superstar firms has made dominant companies central to modern economic life, and antitrust enforcement is one of the main policy tools for regulating their market power. Public opinion can shape the political and regulatory environment in which antitrust enforcement takes place, yet there is little direct evidence on what drives these preferences. We conduct a pre-registered information-provision experiment with 4, 000 American households. Respondents were told about one of five real antitrust cases and randomly assigned to information treatments designed to study four potential drivers of support for antitrust enforcement: perceived market share, perceived consumer harm, perceived unfair competition, and perceived negative image. All four treatments moved the beliefs they were designed to affect, but their effects on demand for antitrust differed sharply. Information about consumer harm had the most systematic effects: it increased plaintiff support and support for break-up and conduct remedies, with effects remaining visible one month later, and also spilled over to broader support for antitrust policies. By contrast, and contrary to expert forecasts, information about market share had no meaningful effect on demand for antitrust enforcement. The findings suggest that the public thinks like economists in one key respect: they do not care about market share per se, but respond instead to consumer harm. One factor outside the core economic framework, perceived unfair competition, also matters, though its effects are more limited in scope. We discuss implications for policymakers and regulators. |
| JEL: | C90 D83 K21 L40 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35503 |
| By: | Emily Cuddy; Janet Currie; Elisa Jácome; Lucy Manly |
| Abstract: | By age 17, a quarter of U.S. students have experienced a peer suicide. Using linked administrative data from South Carolina and a matched difference-in-differences design, we find that exposure to a peer's self-harm death increases the probability of a self-harm diagnosis by nearly 50% and both the incidence and frequency of mental health visits. Effects on care use and criminal behavior are concentrated among white boys, and responses diverge by prior mental health history: students without a prior diagnosis increase felony offending rather than care-seeking. Deaths from assault and transportation accidents produce no comparable rise in self-harm, consistent with contagion. |
| JEL: | I12 J13 K42 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35603 |
| By: | Jerg Gutmann; Anna Lewczuk-Czerwi\'nska; Jacek Lewkowicz; Stefan Voigt |
| Abstract: | Constitutions as the formal foundation of a country's legal and political system have important economic and political effects. Yet, we still know little about why constitutions set effective constraints on politicians in some societies, while being largely disregarded in others. Here, we ask if national culture matters for constitutional compliance. We study a cross-section of 115 countries, making use of novel indicators of constitutional compliance. We find that societies with a more individualistic population exhibit higher levels of compliance. These results are robust and extend to instrumental variables estimations. They imply a novel transmission channel from cultural traits to long-term economic development: individualistic national culture increases the credibility of constitutional self-commitments. Our analysis also supports the more general idea that the effects of formal institutions depend on the informal institutional environment in which they are embedded. Regarding religion, our results are consistent with past research that attributes the lack of development in the modern Muslim world to deficient institutional quality. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.23369 |
| By: | Aduda, Levke; Aduda, Annette Adhiambo |
| Abstract: | Sand is the second-most exploited natural resource after water, with global demand for it steadily increasing. Yet the societal and conflict-related impacts of sand mining remain understudied. This Working Paper examines the conditions under which sand mining generates violent conflict. We argue that violence is most likely to occur where local authorities and law enforcement are corrupt or embedded in the sand economy, and where communities strongly depend on related incomes. Under these conditions, competition between mining groups, conflicts with local communities over environmental damage, and stricter enforcement measures can escalate into violence. An in-depth case study of Makueni County, Kenya, based on fieldwork and media reports supports these expectations. Our findings highlight the need to systematically integrate sand extraction into resource-governance frameworks to protect both the environment and peace. |
| Keywords: | Kenya, sand mining, violent conflict, corruption, competition, grievances, enforcement equilibrium |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:gigawp:343074 |
| By: | Constantine Sorokin; Alexander Nesterov; Alexei Savvateev |
| Abstract: | In organized crime, membership moves fastest, deterrence capacity moves more slowly, and division norms move slowest. We model this as a three-stage game: division norms fix how every possible coalition divides its proceeds; the authority then attaches deterrence capacity to named members, before knowing which coalition will form; membership adjusts last, around whoever remains undeterred. Under population-monotone division, the minimum deterrence budget is the cost of a shortest dismantling path, removing one member at a time. When the Shapley value is population monotone, it uniquely maximizes this budget by making every path equally costly. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.13327 |
| By: | Stéphane Dees, Eve Hanoune, Oriane Wegner |
| Abstract: | This paper investigates the financial materiality of nature-related legal disputes, focusing on biodiversity loss, pollution, and ecosystem degradation. We analyze whether firms targeted by nature litigation experience statistically significant declines in market valuation using a dataset of 48 litigation (123 event dates) against 22 major companies in North America and Europe (1996–2025). Employing an event study methodology with the Fama-French three-factor model, we calculate Cumulative Abnormal Returns (CAR) over a [-5, +5] day window. Our results demonstrate that markets price in the impact of these events, leading to significant valuation declines following litigation decisions. In Europe, stock corrections occur immediately upon the filing of a complaint, suggesting a 'reputational premium' driven by investor ESG sensitivity. In North America, however, ruling/settlement dates yield larger market shocks, reflecting heavier financial penalties. Furthermore, we find evidence of sectoral spillover effects, where litigation against a single firm triggers negative contagion across the industry. The findings emphasize the necessity for financial institutions to integrate nature-related legal liabilities into their risk management frameworks. |
| Keywords: | Nature-Related Risks, Litigation Risks, Corporate Valuation, Environmental Complaints |
| JEL: | G12 K32 K41 Q54 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:banfra:1060 |
| By: | Andreas Bauer |
| Abstract: | Problem definition. When generative AI produces expert artifacts clients cannot distinguish from a competent provider's, the classical cost-based quality signal collapses and only outcome-contingent commitments can separate types. Such a commitment certifies an endogenous, perishable asset: the human fallback capability a firm builds by keeping staff engaged with cases the AI handles, eroding otherwise. Prior work is silent on where that mechanism holds. We ask where, across occupations and liability institutions, it remains informative. Methodology/results. We introduce an institutional wedge between the liability cap a firm posts and the retained exposure that carries information, generated by four legal primitives: the cost rule, the enforceability of penalty clauses, the displacement of private liability by state liability or pooled indemnity, and mandatory limits on contractual liability. The wedge compresses the separating type space into a signaling window, bounded above by solvency and the penalty doctrine and below where standard-terms control voids caps beneath a threshold. We calibrate five occupations and seven jurisdictions on published evidence. In common-law agreed-damages channels the provability gross-up is unavailable whenever verifiability falls below 1/m, turning a contracting problem into an operational one. Verifiability investment widens the window where the ceiling binds but narrows it where the cap floor binds. In an agent-based market, within the tested policy class, every empty-window cell converges to zero engagement and skill collapse. Managerial implications. Liability institutions are a workforce-capability instrument, not merely a risk-allocation device. Firms should target the binding margin in each jurisdiction; cap floors and pooled indemnity each suppress the signal sustaining fallback capacity. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.05969 |
| By: | Joshua S. Gans |
| Abstract: | How should regulators combine staged access to a dual-use AI model with developer liability? I model a defender and an adversary searching for the same software flaws. After release, liability induces more defensive search but also makes the adversary search harder, limiting its effect on harm. Exclusive access removes this strategic response, so staged access and liability are complements in protection. Defensive effort rises towards the release date, making additional delay progressively less productive. Optimal evaluation windows are therefore bounded, and their response to greater harm saturates. Because defensive search uses real resources, the efficient liability rate can be below full internalisation of harm. That rate generally cannot induce the developer to choose the regulator's preferred release date, leaving a distinct role for a timing mandate. |
| JEL: | D74 K13 L51 O33 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35586 |
| By: | Rui Mao; Tingliang Huang; Houcai Shen |
| Abstract: | Artificial intelligence (AI) is increasingly integrated into medical decision-making, yet its liability implications remain complex, particularly when physicians differ in diagnostic skills and their quality is unobservable. This paper develops a principal-agent model in which a social planner designs medical liability to regulate a physician with private quality information who chooses between a standard treatment, a personalized judgment-based treatment, or following an imperfect AI recommendation. Our analysis yields several novel insights. First, we show that the optimal mechanism under asymmetric information is surprisingly simple: a uniform, one-size-fits-all liability level for all physician types who deviate from the standard of care. Despite physician heterogeneity, this simple policy often achieves the full-information first-best outcome, particularly when standard care is reliable or AI is highly accurate. Second, the relationship between AI accuracy and optimal liability is non-monotonic. Contrary to common intuition, better AI does not always imply more relaxed liability. As AI accuracy increases, the optimal liability either decreases monotonically or follows an inverted-U pattern, depending on the uncertainty of the standard treatment. Third, asymmetric information does not universally reduce social welfare. Welfare loss arises only when standard care is unreliable and AI accuracy is too low; even then, its magnitude follows an inverted U-shape, initially increasing as AI complicates the regulatory problem, but declining as more accurate AI helps mitigate it. Finally, we find that information asymmetry is a double-edged sword in the presence of AI, and greater transparency does not benefit all stakeholders equally. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.03114 |