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on Regulation |
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Issue of 2006‒09‒11
nine papers chosen by Christian Calmes Universite du Quebec en Outaouais, Canada |
| By: | Simon Deakin |
| Abstract: | Capacity may be defined as a status conferred by law for the purpose of empowering persons to participate in the operations of a market economy. This paper argues that because of the confining influence of the classical private law of the nineteenth century, we currently lack a convincing theory of the role of law in enhancing and protecting the substantive contractual capacity of market agents, a notion which resembles the economic concept of 'capability' as developed by Amartya Sen. Re-examining the legal notion of capacity from the perspective of Sen's 'capability approach' is part of a process of understanding the preconditions for a sustainable market order under modern conditions. |
| Keywords: | contract law, capacity, capability approach |
| JEL: | K12 K31 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:cbr:cbrwps:wp325&r=reg |
| By: | Emmanuel Farhi; Mikhail Golosov; Aleh Tsyvinski |
| Date: | 2006–09–02 |
| URL: | http://d.repec.org/n?u=RePEc:cla:levrem:321307000000000326&r=reg |
| By: | Aleix Calveras; Juan-José Ganuza; Gerard Llobet (CEMFI, Centro de Estudios Monetarios y Financieros) |
| Abstract: | This paperanalyzes the current trend towards firms' self-regulation as opposed to the formal regulation of a negative externality. Firms respond to increasing activism in the market (conscious consumers that take into account the external effects of their purchase) by providing more socially responsible goods. However, because regualtion is the outcome of a political process, an increase in activism might imply and inefficiently higher externality level. This may happen when a majority of non-activist consumers collectively free-ride on conscious consumers. By determining a softer than optimal regulation, they benefit from the behavior of firms, yet they have access to cheaper (although less efficient) goods. |
| Keywords: | Activism, corporate social responsability, voting and regulation. |
| JEL: | D72 H42 L51 M14 Q52 |
| Date: | 2005–10 |
| URL: | http://d.repec.org/n?u=RePEc:cmf:wpaper:wp2005_0508&r=reg |
| By: | NIETO, Sebastián |
| Abstract: | In order to analyze the impact of the new banking capital regulation (Basel II) on the business cycle in an emerging economy, I develop a duopoly model composed of domestic and foreign banks. The principal results are: by the conduct of new banking capital regulation, the assessment of credit risk carried out by an international bank in a given country not only affects the total loans in that country but also the total assets supplied in other countries. Second, analyzing risk-averse banks, as portfolio diversification increases, the change in loans allocated in a given country by an international bank as a proportion of the original investment and the total level of loans for that country can be harshly affected by the behavior of a foreign bank following only “news” through the new capital regulation. Finally, even in the case that portfolio diversification increases without limits, the macroeconomic implication of a change of credit risk estimation, via the new capital regulation, is larger when banks are risk-neutral than risk-averse. |
| Date: | 2004–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:col:001065:002651&r=reg |
| By: | Benink, H.A. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University) |
| Keywords: | regulatory;incentives;shadow committee;banking;subordinated debt;deposit insurance;Neo-Austrian finance;internal ratings;market discipline;capital requirements;Basel Committee; |
| Date: | 2001–06–15 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:euriar:3000345&r=reg |
| By: | Guiseppe Dari-Mattiacci (ACLE, Universiteit van Amsterdam, and George Mason University, Arlington, Virginia, USA); Bruno Deffains (Université Nancy 2, BETA-CNRS, Nancy, France) |
| Abstract: | There is extensive literature on whether courts or legislators produce efficient rules, but which of them produces rules efficiently? Is there an optimal mix of litigation and legislation? The law is inevitably subject to a certain degree of uncertainty ex ante; uncertainty makes the outcomes of trials difficult to predict and, hence, prevents parties from settling disputes out of court. Conversely, the law is necessarily certain ex post: litigation fosters the creation of precedents that reduce uncertainty. We postulate that there is a natural balance between the degree of uncertainty of a legal system (kept under control by litigation) and its litigation rate (sustained by uncertainty). We describe such equilibrium rates of litigation and uncertainty in a formal model, study how they are affected by two different policies — litigation fees/subsidies and legislation — and compare the costs and benefits of the legislative and the judicial process of lawmaking. We then extend the analysis to explore the implications of this approach. |
| Keywords: | incompleteness of law; complexity of law; litigation; judgemade law; legislation |
| JEL: | K10 K40 K41 |
| Date: | 2006–06–09 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20060071&r=reg |
| By: | Marcelo Resende |
| Abstract: | The paper investigates the robustness of different efficiency measures that can support the implementation of diverse forms of incentive regulation in the context of U.S. telecommunications. Comparisons, in terms of an output orientation, are considered for efficiency scores obtained from Data Envelopment Analysis (DEA), distance function (with corrected ordinary least squares and a random effects model) and distance function embedded in a stochastic frontier framework (with time invariant, time varying efficiencies or with inefficiency effects). Similarly to the previous empirical literature, one finds, in most cases, only a moderate consistency across the different approaches. In fact, the different spectrum of techniques imposed varied degrees of structure in the error term and indicated non-negligible discrepancies across the different measurement approaches in terms of the ranking structure, degree of persistence and best and worst practices patterns. |
| Keywords: | efficiency measurement, yardstick regulation |
| JEL: | D29 L59 L96 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2006/15&r=reg |
| By: | Markus Poschke |
| Abstract: | The aim of this paper is to contribute to explaining differences in aggregate productivity between similar, industrialized countries such as the US and European Union (EU) member states. By introducing shifts in administrative entry cost and a firm technology adoption decision in a model of heterogeneous firms close to Hopenhayn (1992), it matches the following facts: higher entry cost is associated with (1) both lower labor and total factor productivity, (2) more capital-intensive production, and (3) lower firm turnover. Compared to previous studies of reallocation intensity and aggregate productivity, endogenizing capital intensity through technology choice leads to stronger results; higher equilibrium capital intensity acts as an entry barrier to new firms, and protects low-productivity incumbents. Notably, the very small differences in the administrative cost of entry as documented by Djankov, La Porta, Lopez-de-Silanes and Shleifer (2002) suffice to explain 10 to 20% of differences in TFP and the capital-output ratio between Europe and the US. To obtain this, both heterogeneity of firms and allowing for technology choice are crucial. |
| Keywords: | growth theory, aggregate productivity, technology adoption, firm dynamics, entry and exit, reallocation, selection, regulation of entry |
| JEL: | E22 G38 L11 L16 O33 O40 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:eui:euiwps:eco2006/21&r=reg |
| By: | Marco Realdon |
| Abstract: | This paper presents a tractable structural model whereby controlling equity holders are also among the creditors of the firm. As the firm approaches distress, equity holders can depauperate the firm and expropriate other creditors by repaying their credit before bankruptcy. The bankruptcy court's right to revoke such repayment protects arm's length creditors, reduces the cost of borrowing and induces equity holders to anticipate repayment of their credit. Equity holders decide repayment neither too early nor too late, so as to reduce the risk of repayment revocation by the bankruptcy court. Similar conclusions apply to the preferential repayment of bank loans personally guaranteed by equity holders. The analysis also suggests that callable bearer bonds may be more valuable to equity holders than to other creditors. |
| Keywords: | equity holders's credit, debt repayment, assets liquidation, revocatoria, debt valuation, default, structural model |
| JEL: | G13 G33 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:yor:yorken:06/16&r=reg |