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on Law and Economics |
| By: | Cronin, Alison |
| Abstract: | Given the high economic costs of fraud, the Economic Crime and Corporate Transparency Act 2023 aims to address the well-known deficiencies of the common law's approach to corporate criminal liability with the introduction of a corporate failure-to-prevent fraud offence (s.199, not yet in force) and the statutory extension to the common law's identification principle that attributes the criminal liability of senior officers to the corporate body (s.196, in force). Although the new failure-to-prevent fraud is disappointing in its limited application to just large companies, the extension of the range of officers whose guilt can be attributed to the corporation, for fraud and other specified offences, has real potential to serve as a powerful corporate deterrent that will undoubtedly extend responsibility to significantly increased numbers of individual managers. However, economic analysis demonstrates that the success of substantive law reform depends upon a radical change in the policy on corporate criminal enforcement such that large corporations should no longer be effectively guaranteed a disposal by way of a deferred prosecution agreement (DPA). Although DPAs seek to address both the problem of detection and to mitigate collateral damage to otherwise innocent stakeholders, by offering leniency for self-disclosure bargains, this leads to a dramatic deficit in corporate deterrence and can incentivise unlawful corporate activity. For an effective anti-fraud law and therefore greater market efficiency, the currently flawed notion of collateral damage must be corrected; not least, it should include the costs of the demonstrably ineffective DPA enforcement regime and the consequent preservation of corporations that prosper through criminal activities. Economic analysis evidences the need for a credible threat of traditional prosecution of corporations and, to this end, for the use of a well-designed whistleblower reward scheme as the cornerstone to ensuring fair competition. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ieadps:314029 |
| By: | Jinkins, David Carson (Copenhagen Business School); Kuka, Elira (George Washington University); Labanca, Claudio (Monash University) |
| Abstract: | Research on the social safety net examines its effects on recipients and their families. We show that these effects extend beyond recipients’ families. Using a regression discontinuity design and administrative data, we study a Danish policy that cut welfare benefits for refugees, increasing crime among affected individuals. Linking refugees to neighbors, we find increased crime among non-Danish neighbors, with spillovers persisting even after direct effects stabilize. Accounting for these spillovers raises the marginal value of public funds by 20%. We explore several mechanisms and find evidence consistent with peer effects among young individuals from the same country of origin. |
| Keywords: | welfare programs, crime, spillovers |
| JEL: | I38 K42 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17958 |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | A vast literature has examined the contractual technology that venture capital (VC) funds and entrepreneurs deploy in the U.S. to define an agency cost-minimising structure of their relationship, leading many to conclude that U.S. VC contracts are the best real-world solution to the challenges bedeviling the financing of high-tech innovative startups and a model for VC transactional practice worldwide. Yet, whether VC funds and entrepreneurs can replicate the allocation of cash-flow and control rights resulting from U.S. VC contracts in non-U.S. jurisdictions has long been open to discussion. Research by financial economists and legal scholars have reached diverging conclusions. The existing literature exhibits three limitations, though. First, it has generally investigated at most only how a subset of the individual components of U.S. VC contracts fare under non-U.S. corporate laws. Second, it has typically considered the law on the books as opposed to the law in action. Third, it has relied on a loose definition of what qualifies as an effective substitute. This article examines how U.S. VC contracts fare under the corporate law regimes in force in two important European jurisdictions: Germany and Italy. It does so by taking a new approach to the matter. First, it considers the entire set of arrangements included in U.S. VC contracts rather than a sample. Second, it assesses the legality of those arrangements in the light of the applicable corporate law in action rather than the law on the books. Third, in assessing arrangements that deviate from U.S. private ordering solutions due to restrictive corporate law, it focuses on contract functionality rather than contract design. The results of the inquiry are straightforward: German and Italian corporate laws literally crash contracting parties' ambition to transplant U.S. VC contracts into their own jurisdictions and only allow for alternative arrangements that, if available at all, are costlier and/or less functional. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Entrepreneurship, Financial Contracting, Private ordering, Start-ups, Venture Capital |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:lawfin:319632 |
| By: | Dhaval M. Dave; Christine Durrance; Bilge Erten; Yang Wang; Barbara L. Wolfe |
| Abstract: | In overturning Roe v. Wade and triggering laws in many states that ban or severely restrict abortions, the Supreme Court’s landmark 2022 Dobbs decision dramatically altered the landscape for reproductive health in the U.S. Prior research has highlighted the far-reaching impact of abortion restrictions for women and families, which extend beyond their proximate effects on abortions, births, and fertility. We provide some of the first causal evidence on how abortion restrictions in the post-Dobbs era have impacted women’s risk of exposure to intimate partner violence (IPV). IPV is the most common form of violence experienced by women, and changes in access to abortion may generate unintended effects on various inputs (economic resources, stress, intra-household bargaining) that could affect relationship dynamics and raise the risk of IPV. Leveraging information on IPV incidents reported to law enforcement from 2017-2023 combined with post-Dobbs changes in county-level travel distance to abortion facilities, analyses are based on a generalized difference-in-differences approach. We find that abortion restrictions – alternately measured by the increase in travel distance and by the presence of a near-total ban – significantly increased the rate of IPV for reproductive-aged women in treated counties on the order of about seven to 10 percent. These estimates imply at least 9, 000 additional incidents of IPV among women in the treated “trigger ban” states, which would be predicted to add over $1.24 billion in social costs. |
| JEL: | I11 I12 I18 J13 K23 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33916 |
| By: | Gaetan de Rassenfosse |
| Abstract: | Patent systems vary widely in how rigorously they define and enforce inventors' rights. On one hand, formal statutes ("law on the books") set the scope of what can be patented and outline procedural safeguards. On the other hand, actual enforcement ("law in practice") determines whether those rights hold up in practice. To capture these dimensions, researchers have developed simple indices of legal provisions and more nuanced proxies for enforcement effectiveness, along with metrics of how applicant-friendly each office's procedures are. Comparative studies of "twin patents" -- identical inventions filed in multiple jurisdictions -- reveal systematic differences in grant rates and bar heights across major offices. By combining these approaches, we gain a multifaceted view of patent-system strength that balances statutory design, administrative practice, and actual enforcement. This perspective is crucial for understanding how different regimes support innovation and shape global knowledge flows. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.07121 |
| By: | Chris Briggs (University of Cambridge) |
| Abstract: | This article investigates the degree to which England’s royal courts of common law were used by the masses (peasants, craftsmen, wage-earners) to prosecute lawsuits of small value. It argues that this issue is important for understanding the institutional framework that supported England’s developing market economy, and for investigating claims about state formation in this period. Using a case study of one particular provincial session of royal justice - the Derbyshire eyre of 1330-31 – the article presents quantitative evidence on the social status and subject matter of debt and trespass business heard before the king’s justices. It is argued that the Derbyshire evidence shows that there were limits to the social reach of the common law courts. If we wish to grasp the framework of civil justice we must aim at a more comprehensive analysis of medieval England’s multifarious jurisdictions (royal, communal, urban, seigniorial, and ecclesiastical). |
| JEL: | N43 K36 |
| Date: | 2025–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:cmh:wpaper:38 |
| By: | Jens-Uwe Franck; Mauro Hartl |
| Abstract: | The Digital Markets Act (DMA) accepts certain negative short-term effects on the welfare of users of core platform services in order to achieve fairness and contestability in the long run. In this paper, we illustrate and analyse the more critical case where the regulatory rigidity of the DMA leads to side effects that clearly run counter to these regulatory objectives, as the implementation of the DMA by one platform consolidates the entrenched position of another core platform service. We develop four theses in this regard: (i) such side effects are undesirable but do not justify a limited enforcement of a particular obligation; (ii) adopting specifying measures to prevent such effects would exceed the regulatory leeway granted to the Commission under Article 8(2) of the DMA; (iii) there may be indirect effects on the scope of other DMA provisions that mitigate undesirable effects; (iv) undesirable side effects need to be addressed through anttitrust and other regulatory instruments. As a paradigmatic example, we analyse how the ban on self-preferencing has been implemented by Google with regard to hotel search queries. In doing so, we consider several open questions regarding the ban on self-preferencing and show how the status quo of Google’s display of hotel search results (still) violates Article 6(5) of the DMA. |
| Keywords: | Digital Markets Act; Google Search; self-preferencing; specifying procedure; implementing acts; disintermediation; Booking.com |
| JEL: | K21 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_692 |
| By: | Roberto Galbiati (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Nicolas Jacquemet (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | What actions other people judge appropriate drives pro-social behavior. We show that such judgments depend on whether the observers previously faced the situation they judge (active observers) or not (passive observers). In an online giving experiment, active observers make more polarized judgments than passive ones -those who acted pro-socially judge selfish behavior more harshly and praise pro-social actions more. Moreover, active observers persistently avoid payoff-relevant information, both as dictators, likely to maintain their self-image, and then as observers. Our results imply a new link between descriptive (what most people do) and injunctive norms (what groups deem appropriate). |
| Keywords: | Observers, Injunctive norms, Descriptive norms, Polarization, Observers Injunctive norms Descriptive norms Polarization |
| Date: | 2025–06–16 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cesptp:halshs-05115226 |
| By: | Akira IGARASHI; Hatsuru MORITA; Yoshikuni ONO |
| Abstract: | Ethno-racial majority jurors often issue discriminatory sentences against minority perpetrators, particularly when the victim is co-ethnic. Despite extensive research, the mechanisms and non-Western contexts remain understudied. We propose that the mechanisms driving interethnic discriminatory sentencing may be either punitive, reflecting a motivation to punish out-group members, or sympathetic, indicating a tendency to favor in-group members. Our survey experiment involved 4, 000 Japanese citizens acting as jurors in a hypothetical criminal case. Contrary to our initial hypotheses, we found no significant differences in sentencing based on the ethnicity of the perpetrator or victim. However, sentences were significantly longer when the perpetrator was Chinese and the victim was Japanese. Further analysis revealed that respondents who viewed immigrants as more threatening were more punitive toward foreign perpetrators, regardless of the victim’s ethnicity. These findings suggest that punitive mechanisms, driven by perceived threats, predominantly influence discriminatory sentencing, whereas sympathetic mechanisms play a lesser role. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25052 |