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on Regulation |
| By: | David de la Croix (Department of Economics and CORE, Université Catholique de Louvain); Clara Delavallade (Panthéon Sorbonne Economie, Université Paris 1, CNRS) |
| Abstract: | Corruption is thought to prevent poor countries from catching-up. We analyze one channel through which corruption hampers growth: public investment can be distorted in favor of specific types of spending for which rent-seeking is easier and better concealed. To study this distortion, we propose an optimal growth model where households vote for the composition of public spending subject to an incentive constraint reflecting individuals’ choice between productive activity and rent-seeking. At equilibrium, the intensity of corruption and the structure of public investment are determined by the predatory technology and the distribution of political power. Among different regimes, the model shows a possible scenario of distortion without corruption in which there is no effective corruption yet still the possibility of corruption distorts the allocation of public investment, thus hampering growth. We test the implications of the model on a panel of countries estimating a system of equations with instrumental variables. We find that countries with a high predatory technology invest more in housing and physical capital in comparison with health and education. For equal initial conditions, such countries grow slower and have higher corruption, in particular when political power is concentrated |
| Keywords: | Public investment, optimal growth, corruption, political power. |
| JEL: | O41 H50 D73 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2007-61&r=reg |
| By: | Evgeny Yakovlev (UC Berkeley); Ekaterina Zhuravskaya (NES, CEFIR. CERP) |
| Abstract: | What determines the enforcement of deregulation reform of business activities? What are the outcomes of deregulation? We address these questions using an episode of a drastic reform in Russia between 2001 and 2004 which liberalized registration, licensing, and inspections. Based on the analysis of micro-level panel data on regulatory burden, we find that: 1) The reform reduced administrative costs of firms, on average; but, the progress of reform had substantial geographical variation. 2) The enforcement of deregulation reform was better in regions with a transparent government,low corruption, strong fiscal incentives (i.e., reliance of local budgets on local taxes rather than fiscal transfers) and a powerful industrial lobby. 3) Using the exogenous variation in regulation generated by the interaction of reform and its institutional determinants, we find a substantial positive effect of deregulation on entry and small business employment and no effect on pollution and morbidity. The results support the “tollbooth” theory of the nature of regulation and are inconsistent with either the public interest theory or the regulatory capture theory. |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cfr:cefirw:w0097&r=reg |
| By: | Rainer Nickel |
| Abstract: | European Governance is more than just a policy instrument without legal significance. Its regulatory sub-divisions, such as Comitology, the Lamfalussy procedure, and the growing number of European administrative agencies, have colonized substantive parts of the law-shaping and law-making processes. This contribution argues that European Governance is a distinct phenomenon that cannot be easily reconciled with traditional notions of legislation and administration, but needs to be theorized differently. Accordingly, its legal shape has to be adjusted to this new situation, too. Neither a - still only vaguely defined - concept of ‘accountability’, nor a non-binding policy concept of ‘good governance’ can fill this gap. A re-definition of European Governance - as an ‘integrating administration’ – has to take the new developments of a distinct European administrative governance sphere seriously. At the same time, it has to address the specific legitimatory problématique of the new governance structures in a sufficient manner. The specific character of these structures calls for an institutionalization of participatory patterns within the governance structures: by ensuring the involvement of civil society actors, stakeholders and the public in the arguing, bargaining, and reasoning processes of both European governance and European regulation, the odd position of European governance, which oscillates between legislative and administrative functions, can be targeted more adequately. |
| Keywords: | accountability; comitology; multilevel governance; regulation; European law |
| Date: | 2006–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0060&r=reg |
| By: | Fabrizio Cafaggi |
| Abstract: | This paper addresses self-regulation as a complementary means to harmonize and regulate European Contract Law. In the context of the paper SR is conceived as a complementary device to legislation and as a monitoring device to verify ECL implementation. Within self-regulation different players and forms of rule.making are examined. In relation to players different private organizations are considered: independent organizations and self-interested organizations, which will be further differentiated according to the nature of the represented interests. In relation to the institutional environment a distinction is assumed between market and private non market rule-making. In the market environment private organizations provide rules, including standard contract forms for a price or more generally for remuneration, in the non market environment private organizations provide contract rules for free. The main aims of the paper are (1) to demonstrate the necessity to consider self-regulation (hereinafter SR) as a significant component of the debate concerning the definition of Common Frame of References (hereinafter CFR), (2) to identify the role and the limits of self-regulation in the formation of European Contract Law particularly associated with competition law and fairness, and (3) to show the strong correlation between the governance of self-regulatory bodies and the substance of European Contract Law (hereinafter ECL) |
| Keywords: | European law; regulation; competition policy |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0072&r=reg |
| By: | Antonio Ciccone; Elias Papaioannou |
| Abstract: | Does cutting red tape foster entrepreneurship in industries with the potential to expand? We address this question by combining the time needed to comply with government entry procedures in 45 countries with industry-level data on employment growth and growth in the number of establishments during the 1980s. Our main empirical finding is that countries where it takes less time to register new businesses have seen more entry in industries that experienced expansionary global demand and technology shifts. Our estimates take into account that proxying global industry shifts using data from only one country–or group of countries with similar entry regulations–will in general yield biased results. |
| Keywords: | Entry regulation, entry, globally expanding industries |
| JEL: | E6 F43 L5 L60 L16 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:985&r=reg |
| By: | Djumashev, Ratbek |
| Abstract: | In this paper, we analyze implications of corruption on growth. We extend existing growth models by incorporating ubiquitous corruption as a by-product of the public sector. Corruption affects both taxation and public good provision, and therefore causes income redistribution and inefficiencies in the public sector. These effects of corruption lead to lower growth through distortions of investment incentives and resources allocation. |
| Keywords: | Corruption; growth; public goods; tax evasion |
| JEL: | H40 D92 O17 E60 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:2082&r=reg |
| By: | Eduardo Salcedo-Albarán; María-Margarita Zuleta; Isaac de León-Beltrán; Mauricio Rubio |
| Abstract: | In this paper we propose an answer for the question: why, sometimes, people don’t perceive corruption as a crime? To answer this question we use a neurological and a psychological concept: Mirror Neurons and Theory of other Minds. |
| Date: | 2007–01–15 |
| URL: | http://d.repec.org/n?u=RePEc:col:001071:002847&r=reg |
| By: | Marcel Boyer; Philippe Mahenc; Michel Moreaux |
| Abstract: | We investigate the behavior of a polluting monopolist whose production causes a global damage affecting consumers and non-consumers alike while consumption causes a specific damage affecting consumers only. The monopolist anticipates strategically how her decisions on product variant, price and pollution affect the purchasing decisions in a Hotelling market. We compare a standard unregulated monopolist and a monopolist subject to environmental regulation. We show that both monopolists choose the same product variant, that the regulated monopolist pollutes less, produces as much or more, and charges a higher price than the unregulated one. Hence, environmental regulation always lead to an increase in price but never to a reduction in production. <P>Nous étudions le comportement d'un monopole dont la production cause un dommage global de pollution pour les consommateurs et les non-consommateurs de son produit et un dommage spécifique additionnel pour les consommateurs. Le monopole anticipe de manière stratégique l'impact des caractéristiques et du prix du produit et celui du niveau de pollution sur les décisions d'achat des consommateurs. Nous comparons le monopole standard non réglementé et le monopole sujet à une réglementation environnementale. Nous montrons que les deux monopoles choisissent la même variété de produit, que le monopole réglementé pollue moins, produit autant sinon plus, et demande un prix plus élevé que le monopole non-réglementé. Ainsi, la réglementation environnementale dans ce contexte entraîne toujours une hausse de prix mais ne mène jamais à une baisse de production. |
| Keywords: | environmental protection, consumer awareness, product characteristics, market power, protection environnementale, consommateurs verts, caractéristiques des produits, pouvoir de marché |
| Date: | 2007–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2007s-05&r=reg |
| By: | Iván Moreno Torres; Jaume Puig; Joan-Ramon Borrell-Arqué |
| Abstract: | The aim of this paper is to analyse empirically entry decisions by generic firms into markets with tough regulation. Generic drugs might be a key driver of competition and cost containment in pharmaceutical markets. The dynamics of reforms of patents and pricing across drug markets in Spain are useful to identify the impact of regulations on generic entry. Estimates from a count data model using a panel of 86 active ingredients during the 1999–2005 period show that the drivers of generic entry in markets with price regulations are similar to less regulated markets: generic firms entries are positively affected by the market size and time trend, and negatively affected by the number of incumbent laboratories and the number of substitutes active ingredients. We also find that contrary to what policy makers expected, the system of reference pricing restrains considerably the generic entry. Short run brand name drug price reductions are obtained by governments at the cost of long run benefits from fostering generic entry and post-patent competition into the markets. |
| Keywords: | Entry; Generic Drugs; Pharmaceutical industry; Reference pricing |
| JEL: | I11 L11 L65 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1014&r=reg |
| By: | Hanns Ullrich |
| Abstract: | The completion of a Community system of unitary intellectual property protection has come to a halt when the Commission’s proposal for a Community Patent Regulation was shelved by the Council on political grounds in late 2004. By contrast, under the auspices of the European Patent Organization a draft European Patent Litigation Agreement has been set up with a view to have it adopted by those Contracting States of the European Patent Convention ( EPC ), which would volunteer for it. Given that conceptually both the Community patent project and the European Patent Convention date back to the mid of the last century, and that due to economic and technological change there is a good case to be made for a broad reform effort, it is proposed to benefit from the present crisis of unification of patent law by undertaking a review of the entire system with a view to establish a fundamentally modernized system of protection. This should include the recognition of the role national patents have to play in an integrated system of patent protection in Europe. |
| Keywords: | European law; economic law; RTD policy; international agreements; Single Market |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0070&r=reg |
| By: | Germán coloma |
| Abstract: | This article analyzes the basic characteristics of the Argentine competition law and the way in which it has been enforced in several important antitrust cases. We begin with a section that introduces the evolution of the law, followed by another section about the basic economic and legal principles underlying that law. The rest of the article describes the enforcement of the law, in a number of cases that involve collusive practices, exclusionary practices, vertical restraints, abuses of dominant position, and mergers. |
| Keywords: | Competition law, antitrust, Argentina |
| JEL: | K21 L40 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:cem:doctra:342&r=reg |
| By: | AFReC; BEES; MCA (AFReC, BEES, MCA) |
| Abstract: | Abstract: The regulatory impact of municipalities on small enterprise is inextricably linked to their developmental and service delivery roles. A general lack of information about municipal regulations and their enforcement was also discerned among the small businesses interviewed. The most significant distinctions of four categories of micro, very small, small and medium enterprise are as follows: – Micro survivalist and micro non-survivalist businesses also classified as the informal sector. This category requires a specialised focus through standardised regulations and transparent and predictable service delivery arrangements. Where possible, targeted support for certain, highly viable micro businesses could assist them in becoming formalised and graduate to the very small status. – Very small businesses are on the threshold of becoming more established, small or medium enterprises. They are already formalised which means that the initial regulatory barrier posed through licensing and zoning applications has been crossed. This category requires municipal support in the form of business advice, training and reliable provision of utilities. – Small and medium enterprises stand to gain significantly from effective supply chain management policies of municipalities that rely on unbundling of larger projects, capacity building of businesses and regular monitoring and evaluation of the regulatory environment. A range of recommendations to enhance municipal regulatory role is offered in this paper. |
| Keywords: | small enterprises, regulatory impact, municipal regulations |
| JEL: | A1 |
| Date: | 2006–05 |
| URL: | http://d.repec.org/n?u=RePEc:ctw:wpaper:9611&r=reg |
| By: | Giovanni B. Concu (Risk and Sustainable Management Group, University of Queensland) |
| Abstract: | The size of a jurisdiction is crucial in determining the efficiency, equity or efficacy of environmental regulations. However, jurisdictions are usually taken to coincide with political boundaries even if environmental externalities may transcend them. This paper illustrates the design and implementation of a Choice Modelling experiment to determine the spatial distribution of environmental benefits of Kings Park (Western Australia). The objective is to understand if federal, state or local resources are the appropriate form of funding a conservation policy. Results indicate that there are interstate spillovers of benefits, hence justifying federal contributions to Kings Park. They also show that some benefits are homogeneously spread within Western Australia, and this is an indication that state funding is also appropriate. Other benefits are distance-dependent; some level of local/council funding is warranted |
| Keywords: | federal regulation, decentralised policies, benefits spillovers, environmental valuation, choice modelling, distance |
| JEL: | H77 Q51 Q58 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:rsm:murray:m06_8&r=reg |
| By: | Francisco J. André (Department of Economics, Universidad Pablo de Olavide); Paula González (Department of Economics, Universidad Pablo de Olavide); Nicolás Porteiro (Department of Economics, Universidad Pablo de Olavide) |
| Abstract: | In this paper we provide a theoretical foundation for the Porter hypothesis in a context of quality competition. We use a duopoly model of vertical product differentiation where firms simultaneously choose the environmental quality of the good they produce (which can be either high or low) and, afterwards, engage in price competition. In this simple setting, we show that a Nash equilibrium of the game with low quality could be Pareto dominated by another strategy profile in which both firms produce the high environmental quality good. We then show how, in this case, the introduction of a penalty to any firm that produces the low environmental quality can result in an increase in both firms' profits. The impact of the policy on consumers depends on the effect of a quality shift on the cost structure of firms. |
| Keywords: | environmental quality, vertical differentiation, prisoner's dilemma, environmental regulation, Porter hypothesis. |
| JEL: | L13 L51 Q55 Q58 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:pab:wpaper:07.03&r=reg |
| By: | Daniel Pérez (Banco de España); Vicente Salas-Fumás (Banco de España; Universidad de Zaragoza); Jesús Saurina (Banco de España) |
| Abstract: | The paper sets an accounting and behavioral framework from which we derive a reduced form equation to test income smoothing and capital management practices through loan loss provisions (PLL) by Spanish banks. Spain offers a unique environment to perform those tests because there are very detailed rules to set aside loan loss provisions and they are not counted as regulatory capital. Using panel data econometric techniques, we find evidence of income smoothing through PLL but not of capital management. The paper draws some lessons for accounting rule setters and banking regulators regarding the current changes in the accounting framework (introduction of IFRS/IAS in Europe) as well as the new capital framework (Basel II). In particular, a very detailed set of rules to set aside loan loss provisions does not prevent managers from decreasing earnings volatility, similarly to what happens in a more principles oriented accounting framework. |
| Keywords: | income smoothing, capital management, ifrs/ias, basel ii |
| JEL: | G18 G21 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:0614&r=reg |
| By: | Jorrit Rijpma; Marise Cremona |
| Abstract: | This paper takes a closer look at one of the EU’s foundational values, the rule of law, and relates it to the external dimension of the EU’s migration policy. It examines how the EU’s powers in migration management have been put to use in order to project EU migration policies beyond the EU legal order, or more precisely to locate the physical control of migration outside EU territory. It categorises different types of extra-territorialisation, ranging from autonomous action by the Community, including Community action which requires third country cooperation, to action by way of international agreements and cases where third countries undertake to align their domestic law with the Community acquis. Starting from the prominence accorded to the rule of law in the EU’s external policy, this paper examines an external dimension of the rule of law which goes beyond the desire to promote this value outside EU territory, and its application to the external dimension of the EU’s migration policy. It highlights challenges for the rule of law posed by the increasing phenomenon of extraterritorialisation in EU migration policy. Practical examples taken from the EU’s visa policy and operational cooperation in the field of external border control serve to support the argument that if the EU is to continue the use of extra-territorialisation as an instrument of its migration policy it must address seriously the issue of ensuring a concomitant extra-territorialisation of the rule of law, in particular the effective judicial review of administrative action. |
| Keywords: | European law; fundamental/human rights; rule of law; judicial review; immigration policy; security/internal; Schengen |
| Date: | 2007–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0077&r=reg |
| By: | Fabiano Schivardi (Universita' di Cagliari); Eliana Viviano (Banca d’Italia) |
| Abstract: | The 1998 reform of the Italian retail trade sector delegated to the regional governments the regulation of entry of large retail shops. We use the local variation in regulation to determine the effects of entry barriers on firm performance for a representative sample of medium and large retail outlets. Using a diff-in-diff approach, we find that entry barriers are associated with substantially higher profit margins and substantially lower productivity of incumbent firms. We also find that liberalizing entry has a positive effect on investment in ICT, which the recent literature has shown to be the main driver of the remarkable sectoral productivity growth in the US. Finally, in the most liberal regions yearly inflation in the CPI component “food and beverages” was approximately half a percentage point lower than in the other regions: higher productivity coupled with lower margins resulted in lower consumer prices. |
| Keywords: | entry barriers, productivity growth, technology adoption, retail trade |
| JEL: | L5 L11 L81 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_616_07&r=reg |
| By: | Jordi Perramon; Oriol Amat |
| Abstract: | From the beginning of January 2005 publicly traded companies in the European Union have to comply with the International Financial Reporting Standards (IFRS) for their consolidated accounts, as required by 1606/2002 European Commission Regulation. It had been suggested that the new accounting rules will facilitate not only the process of international harmonization of financial statements, but also efficient performance of financial markets and capital flows worldwide. This study analyzes the first results of IFRS implementation by Spanish non-financial listed companies. |
| Keywords: | IFRS, IAS, Accounting harmonization |
| JEL: | M41 N24 |
| Date: | 2006–07 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:975&r=reg |
| By: | Ernst-Ulrich Petersmann |
| Abstract: | The fragmented nature of national and international legal and dispute settlement regimes, and the formalistic nature of the customary international law rules on treaty interpretation and conflicts of laws, offer little guidance on how national and international judges should respond to the proliferation of competing jurisdictions and the resultant incentives for forum shopping and rule shopping by governments and non-governmental actors in international economic law. Due to their different jurisdictions, procedures and different rules of applicable laws, national and international judges often interpret international trade law from different (inter)national, (inter)governmental, constitutional and judicial perspectives. This paper explores the judicial functions of national and international judges to reach justified decisions based on positive law, on the basis of transparent, predictable and fair procedures, and to interpret international treaties in conformity with principles of justice. Chapters I to III explain some of the principles of justice underlying international trade law and argue that international rules for a mutually beneficial division of labour among private citizens should be construed with due regard to the human rights obligations of governments. Chapters III and IV propose to strengthen international cooperation among national and international courts, for instance by negotiating additional WTO commitments to interpret domestic trade laws in conformity with the WTO obligations of the countries concerned and to settle WTO disputes over private rights primarily in domestic courts, without transforming essentially private disputes into disputes among governments. |
| Keywords: | WTO; governance; international trade; dispute resolution; European Court of Justice |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0073&r=reg |
| By: | Michelle Everson; Christian Joerges |
| Abstract: | It is perhaps a truism to note that ‘the consumer’ is but a role that is played by human subjects. This insight leaves us, as lawyers, with one vital question: how can or does the legal system meaningfully rationalise its encounters with the consumer? Can it, and if so to what way, shape the act of consumption? Can it even ensure that the ‘fact’ of consumption translates into ‘good’ normative institutions. In a summarizing account of legal encounters with the consumer since the era of laissez-faire liberalism we seek to show that this potential does exist within the constitutional state. However, as markets, political systems and consumers have broken free from national communities we need to ask: will the achievements of constitutional democracies survive Europeanisation and Gliobalisation? In our assessment of current trends in the EU we diagnose a seemingly paradoxical alliance between a new orthodoxy of neo-liberalism within market relations and a de-legalisation of regulatory policies. At international level, our analysis is restricted to a single case (namely, the recent report of a WTO Panel on the controversy over Genetically Modified Organisms (GMOs). It has become increasingly clear that the notion of a international consumer interest has been reduced to one of health and safety that is identified and secured with simple recourse to ‘scientific expertise’. ‘Sound science’ has become transnationally binding yardstick that both orients and limits consumer policy. The vision of a ‘consumer citizen’, who would actively participate in the transformation of consumption into a normative ‘good’, has become a matter of utopian history. |
| Keywords: | governance; WTO; risk regulation; international trade |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0076&r=reg |
| By: | Michel Petite |
| Abstract: | This paper is based on a lecture delivered during the Academy of European Law Summer School 2006. It provides an examination from a legal perspective of three current themes in the external relations of the European Union. First, the legal implications of the pillar structure for external relations, including recent case law and practical issues arising from the application of Article 47 TEU, the borderline between Community external policies and the Union’s common foreign and security policy, and practical interpillar cooperation. It concludes that it is easier to combine the pillars by means of pragmatic solutions, whereas it is much more difficult in the case of a strictly legal construction which takes into account the requirements of Union coherence and the separate character of each pillar. Second, the paper turns to the balance between Member States and the European Union/Community in external policy and in particular the application of the AETR test in recent case law including the Open Skies cases, the Lugano Convention Opinion and the Mox Plant case. It concludes that a proper application of the AETR remains a practical challenge that transcends the narrow issue of pure legal deduction as to whether Community competence is affected or not. And third, the paper considers the position of the EU within, and participation in the work of, international organisations such as the United Nations, the WHO and the WTO. The paper concludes by emphasising the need for collaboration between the institutions and for pragmatic solutions to the problems that are inevitable while the Union retains its current complex structure. |
| Keywords: | CFSP/ESDP; international relations; common commercial policy; European Court of Justice |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0067&r=reg |
| By: | Doubell Chamberlain; Anja Smith (Genesis Analytics) |
| Abstract: | Abstract: Regulatory compliance costs impose a deadweight burden on firms and therefore should be minimised. In achieving this goal, it is necessary to embrace a process of smart regulation, rather than focus on deregulation. Tax compliance cost is one type of regulatory costs that is often viewed to have a large negative impact on SMMEs. To gauge the impact of this cost on small business in South Africa, this document reviews three available studies on the impact of tax compliance costs on South African SMMEs. The three studies reviewed are: • Counting the Cost of Red Tape for Business in South Africa by SBP (2005); • Measurement of Value Added Tax Act and Regional Services Councils Act-induced Administrative Burdens for South African Small Businesses by Upstart Business Strategies (2004), commissioned by the Department of Trade and Industry (dti); and • SMME Facilitation Program (Report Version) by the South African Revenue Services (SARS) to be released in 2005. South African tax compliance costs cannot be judged in isolation. Available information on South African tax compliance costs and their impact on SMMEs are captured in the three reviewed studies. The SBP (2005) study estimates total regulatory compliance costs for formal firms in South Africa to have been approximately R79 billion in 2004, 6.5 per cent of GDP, and total tax compliance costs to have been roughly R20 billion in the same year. Due to the nature of the report, it makes no tax-specific recommendations and only focuses on broad regulatory compliance recommendations. The Upstart Business Strategies (2004) study focuses on two specific taxes, Value-Added Tax (VAT) and Regional Service Council Levies (not administered by SARS, but by regional service councils). The study employs Mistral®, a proprietary “bottom-up” technique to quantify tax compliance costs. The study finds that the average SMME spends approximately R6 027 on two compliance activities associated with VAT – recordkeeping and completion tax returns. The total VAT compliance cost for an average SMME is estimated to range between R6 000 and R8 000 annually. The recommendations of the study are of a broad practical nature and focused on reducing the time spent on specific tax compliance activities. It does not specify the how of its recommendations, for example, it suggests that the internal reliability of SARS logistics needs to be improved and that queing time spent at SARS needs to be reduced, but does not explain how these outcomes should be achieved. The SARS (2005) study does not generate its own empirical data. It reviews the empirical findings of the above two studies and findings of other studies broadly or specifically focused on SMMEs and the formal/informal economic divide. In addition, it draws on a number of qualitative insights gained during interaction with a range of individuals and organisations aware of small business concerns. A number of recommendations with regards to SARS structures (for example, creation of a Small Business Centre and Small Business help desks), SARS communication channels and SARS products (specifically VAT) are made. Rather than simply focusing on small “cosmetic” tax changes, what is required is intensive co-ordination of SMME policy across different government departments. The narrow focus of the reviewed studies, excluding the SARS report, strengthen the idea that relevant policy considerations do not extend beyond the implementation of technical changes to tax legislation. However, a strong case can be made for a number of other SMME policy-related issues to receive greater emphasis than tax compliance costs. Conclusions relative to tax compliance cost include the fact that a large component of tax compliance costs can be ascribed to firm-level inefficiencies. While a reduction in the tax compliance burden can help to create a more enabling environment for business, a special tax regime for small businesses might not be the best way to achieve lower compliance costs. Far more than simply tax changes will be required to unlock the South African SMME market. |
| Keywords: | SMMEs, Regulatory compliance costs, tax compliance costs |
| JEL: | A1 |
| Date: | 2006–03 |
| URL: | http://d.repec.org/n?u=RePEc:ctw:wpaper:9612&r=reg |
| By: | Keefer, Philip |
| Abstract: | The existing literature emphasizes and contrasts the role of political checks and balances and legal origin in determining the pace of financial sector development. This paper expands substantially on one aspect of this debate: the fact that government actions that promote financial sector development, whether prudent financial regulation or secure property and contract rights, are public goods and sensitive to political incentives to provide public goods. Tests of hypotheses emanating from this argument yield four new conclusions. First, two key determinants of those incentives-the credibility of pre-electoral political promises and citizen information about politician decisions-systematically promote financial sector development. Second, these political factors, along with political checks and balances, operate in part through their influence on the security of property rights, an argument asserted but not previously tested. Third, contrary to findings elsewhere in the literature, the political determinants of financial sector development are significant even in the presence of controls for legal origin. Finally, and again in contrast to the literature, the evidence here suggests that legal origin primarily proxies for political phenomena. Legal origin is a largely insignificant determinant of financial sector development when those phenomena are fully taken into account. |
| Keywords: | Economic Theory & Research,Privatization,Political Economy,Inequality,Legal Products |
| Date: | 2007–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4154&r=reg |
| By: | María Teresa Ruiz-Tagle (Department of Land Economy, University of Cambridge, UK) |
| Abstract: | While economic and contractual incentives encourage firms to respond to environmental issues, additional contributing factors also provide incentives for them to deal with corporate environmental issues. That is, formal regulation (government monitoring and enforcement) can promote firms’ environmental improvements, but so can informal regulation (consumer pressure, shareholders, employees and local communities). Environmental regulation, in the broadest sense, may affect firms’ decision to implement an Environmental Plan and the attitude of firms towards the environment. However, other characteristics of plants and firms are also relevant elements when taking these decisions. But which are those factors, and how can we assess their impact? The purpose of this paper is to develop a framework that can be used to test empirically the importance of several possible sources of influence on the level of environmental responsiveness of a firm. This paper uses new data from a survey carried out in Chile in year 2001. |
| Keywords: | plants; investment; environment; monitoring; enforcement; consumer; Chile; incentive; corporate; regulation; impact; responsiveness; 2001 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:lnd:wpaper:200620&r=reg |
| By: | Yael V. Hochberg; Paola Sapienza; Annette Vissing-Jorgensen |
| Abstract: | We evaluate the net benefits of the Sarbanes-Oxley Act (SOX) for shareholders by studying the lobbying behavior of investors and corporate insiders to affect the final implemented rules under the Act. Investors lobbied overwhelmingly in favor of strict implementation of SOX, while corporate insiders and business groups lobbied against strict implementation. We identify the firms most affected by the law as those whose insiders lobbied against strict implementation, and compare their returns to the returns of less affected firms. Cumulative returns during the four and a half months leading up to passage of SOX were approximately 10 percent higher for corporations whose insiders lobbied against one or more of the SOX disclosure-related provisions than for similar non-lobbying firms. Analysis of returns in the post-passage implementation period indicates that investors' positive expectations with regards to the effects of the law were warranted for the enhanced disclosure provisions of SOX. |
| JEL: | G3 G34 K22 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12952&r=reg |
| By: | Ernst-Ulrich Petersmann |
| Abstract: | This paper discusses the basic constitutional problem of modern international law since the UN Charter: How can the power-oriented international legal system based on sovereign equality of states be reconciled with the universal recognition of inalienable human rights deriving from respect for human dignity and popular sovereignty? State representatives, intergovernmental organizations, international judges and non-governmental organizations often express different views on how far the universal recognition of human rights has changed the subjects, structures, general principles, interpretative methods and object and purpose of international law (e.g. by the emergence of erga omnes obligations and jus cogens limiting state sovereignty to renounce human rights treaties, to refuse diplomatic protection of individuals abroad, or domestic implementation of international obligations for the benefit of domestic citizens). The paper explains why effective protection of human rights at home and abroad requires multilevel constitutional protection of individual rights as well as multilevel constitutional restraints of national, regional and worldwide governance powers and procedures. While all European states have accepted that the European Convention on Human Rights and EC law have evolved into international constitutional law, the prevailing paradigm for most states outside Europe remains constitutional nationalism rather than multilevel constitutional pluralism. Consequently, European proposals for reforms of international economic law often aim at constitutional reforms (e.g. of worldwide governance institutions) rather than only administrative reforms, as they are frequently favoured by non-European governments defending state sovereignty and popular sovereignty within a more power-oriented international law among states. |
| Keywords: | multilevel governance; international trade; fundamental/human rights |
| Date: | 2006–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:erp:euilaw:p0074&r=reg |
| By: | Lourdes Trujillo (Department of Economics, City University, London and DAEA, Universidad de Las Palmas de Gran Canaria); Beatriz Tovar |
| Abstract: | Because of their critical strategic role, ports have all traditionally been subject to some form of government control even if the legal form and the intensity of this control have varied across countries. The member countries of the European Union have not been different from the rest of the world in this respect. A significant difference however is the recurrent effort to integrate, in a coordinated way, the port sector in a transeuropean transport network (TEN-T) through the adoption of a common legal framework. In this context, if the objective of the reforms is to ensure that port networks, integrated in combined transport networks, become competitors of the road network, the concept of port efficiency becomes central. This paper provides an overview of the evolution of the European Port Legislation and shows how comparative economic measures can be used to highlight the scope for port efficiency improvements, essential to allow short sea shipping transport to compete with road transport in Europe. To our knowledge, this paper is also the first effort of estimating technical efficiency of European Port Authorities. The average port efficiency in 2002 was estimated to be around 60%, denoting that ports could have handled 40% more traffic with the same resources. |
| Keywords: | Technical efficiency, European ports regulation, Trans-European transport networks, motorways of the sea |
| JEL: | C6 L9 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:cty:dpaper:0705&r=reg |
| By: | Francisco Martínez-Sánchez (Universidad de Alicante) |
| Abstract: | We analyze the roles of the government and the incumbent in preventing piracy, and the reasons and incentives why a pirate would want to be a leader in prices. The framework of analysis used is a duopoly model of vertical product differentiation with price competition, where both incumbent and pirate are committed to keep their prices. We find that both government and incumbent have a key role in avoiding the entry of the pirate. We show that the government will not help the incumbent to become a monopolist, even if he installs an antipiracy system, because a monopoly provides the lowest social welfare. However, he will let the pirate enters as a follower or as a leader, or encourage the incumbent to deter the entry of the pirate, which depends on the technology of the government for monitoring piracy. The pirate decides to become a leader to avoid being brought down by the incumbent and the government, although the leader's profit is lower than the follower's profit. Finally, we find that high-income countries with cheaper monitoring technology have lower piracy rates. |
| Keywords: | Pirate, Incumbent, Government, Price Leadership, Copy, Monitoring Piracy, Income |
| JEL: | K42 L13 L86 |
| Date: | 2007–03 |
| URL: | http://d.repec.org/n?u=RePEc:ivi:wpasad:2007-01&r=reg |
| By: | Knut Einar Rosendahl (Statistics Norway) |
| Abstract: | Emission trading schemes where allocations are based on updated baseline emissions give firms less incentives to reduce emissions. Nevertheless, according to Böhringer and Lange (2005a), such allocation schemes are cost-effective if the system is closed and allocation rules are equal across firms. In this paper we show that the cost-effective solution may be infeasible if the marginal abatement costs grow too fast. Moreover, if a price cap or banking/borrowing are introduced, the abatement profile is no longer the same as in the case with lump sum allocation. In addition, we show that with allocation based on updated emissions, the quota price will always exceed the marginal abatement costs. Numerical simulations indicate that the quota price most likely will be several times higher than the marginal abatement costs, unless a significant share of allowances are either auctioned or lump sum distributed. |
| Keywords: | Emission trading; Allocation of quotas; Quota prices. |
| JEL: | H21 Q28 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:ssb:dispap:495&r=reg |
| By: | Rick Harbaugh (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); John W. Maxwell (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Beatrice Roussillon |
| Abstract: | Consumers are rarely sure of the exact standard that product labels and other certificates of quality represent. We show that any such uncertainty creates a “Groucho effect” in which seeing that a product has a label leads consumers to infer that the standard for the label itself is not very demanding. Label adoption is therefore always less likely to be an equilibrium than without uncertainty over the standard, and if it is an equilibrium it is always less informative than without such uncertainty. The Groucho effect leads to an information externality so better firms are reluctant to adopt labels if worse firms adopt them. Applying the model to eco-labels, we find that industry groups, governments, and NGOs can increase label adoption by publicizing labeling criteria, by encouraging consumers to expect label adoption when there are multiple equilibria, and by setting high standards that are less likely to be devalued by low quality firms. |
| Keywords: | Eco-labels, disclosure, certification, persuasion, standards |
| JEL: | L15 L21 D82 Q00 |
| Date: | 2006–11 |
| URL: | http://d.repec.org/n?u=RePEc:iuk:wpaper:2006-09&r=reg |
| By: | Tito Boeri; Pietro Garibaldi |
| Abstract: | Labor market reforms increasing flexibility at the margin have been recently paying out in terms of employment growth. This paper argues that two-tier labor market reforms have a transitional honeymoon, job creating effect. In a dynamic model of labor demand under uncertainty, the paper predicts that in the aftermath of reforms, beyond an increase in employment, there should be a reduction in employment inaction and in the mean and cross sectional variance of labor productivity. Based on a variety of firm-level data on Italy in the period 1995-2000, we find evidence of our empirical implications. |
| Keywords: | Labour demand, firing costs, employment protection reform. |
| JEL: | J30 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:37&r=reg |
| By: | Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo |
| Abstract: | The Worldwide Governance Indicators, reporting estimates of six dimensions of governance for over 200 countries between 1996 and 2005, have become widely used among policymakers and academics. They have also attracted some explicit written criticisms. In this short paper the authors synthesize 11 critiques offered by four recent papers. They then refute them as either conceptually incorrect or empirically unsubstantiated. |
| Keywords: | Governance Indicators,National Governance,Statistical & Mathematical Sciences,Economic Policy, Institutions and Governance,Public Sector Corruption & Anticorruption Measures |
| Date: | 2007–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4149&r=reg |