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on Regulation |
| By: | Schneider, Friedrich |
| Abstract: | Estimations of the shadow economies for 145 countries, including developing, transition and highly developed OECD economies over 1999 to 2003 are presented. The average size of the shadow economy (as a percent of "official" GDP) in 2002/03 in 96 developing countries is 38.7%, in 28 transition countries 40.1% and in 21 OECD countries 16.3%. An increased burden of taxation and social security contributions, combined with a labour market regulation are the driving forces of the shadow economy. Furthermore, the results show that the shadow economy reduces corruption in high income countries, but increases corruption in low income countries. Finally, the various estimation methods are discussed and critically evaluated. |
| Keywords: | shadow economy of 145 countries, tax burden, tax moral, quality of state institutions, regulation, DYMIMIC and other estimation methods |
| JEL: | D78 H11 H2 H26 O17 O5 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:5523&r=reg |
| By: | Javier Coronado; Sergi Jiménez-Martín; Pedro L. Marín |
| Abstract: | The purpose of this paper is to analyze the effect of multimarket contact on the behavior of pharmaceutical firms controlling for different levels of regulatory constraints using IMS MIDAS database. Theoretically, firms that meet in several markets are expected to be capable of sustaining implicitly more profitable outcomes, even if perfect monitoring is not possible. Firms may find it profitable to redistribute their market power among markets where they are operating. We present evidence for nine OECD countries with different degrees of regulation and show that regulation affects the importance of economic forces on firms' price setting behavior. Furthermore, our results confirms the presence of the predictions of the multimarket theory for more market friendly countries (U.S. and Canada) and less regulated ones (U.K., Germany, Netherlands), in contrast, for highly regulated countries (Japan, France, Italy and Spain) the results are less clear with some countries being consistent with the theory while others contradicting it. |
| Keywords: | Pharmaceutical prices, Multimarket Contact, Regulation |
| JEL: | L11 L13 L65 I18 |
| Date: | 2007–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1033&r=reg |
| By: | Winfried Koeniger; Julien Prat |
| Abstract: | Why are firm and job turnover rates so similar across OECD countries? We argue that this may be due to the joint regulation of product and labor markets. For our analysis, we build a stochastic equilibrium model with search frictions and heterogeneous multiple-worker firms. This allows us to distinguish firm entry and exit from hiring and firing in a model with equilibrium unemployment. We show that firing costs, sunk entry costs and bureaucratic flow costs have countervailing effects on firm and job turnover as different types of firms select to operate in the market. |
| Keywords: | Firing Cost, Product Market Regulation, Firm Selection, Firm Turnover, Job Turnover, Unemployment |
| JEL: | E24 J63 J64 J65 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:0703&r=reg |
| By: | Vajjhala, Shalini (Resources for the Future); Gode, Jenny; Torvanger, Asbjørn |
| Abstract: | This essay was prepared as part of a workshop on carbon capture and sequestration held by the International Risk Governance Council (IRGC) in Washington, DC, from March 15–16, 2007. The goal of the workshop was to bring together researchers, practitioners, and regulators from Europe, the United States, and Australia to outline the attributes that an effective regulatory regime for carbon capture and storage should possess. This essay focuses specifically on providing an overview of eight fundamental elements that we believe any effective international and national regulatory structure must address: 1) classification of carbon dioxide (CO2); 2) oversight of CO2 capture and storage; 3) site ownership and storage rights; 4) site operation and management; 5) long-term management and liability; 6) regulatory compliance and enforcement; 7) links to CO2 markets and trading mechanisms; and 8) risk communication and public acceptance. This essay is one of 12 collected for the workshop, and the recommendations herein are the views of the authors and do not reflect the views of their agencies, the IRGC, or specific workshop discussions. |
| Keywords: | carbon sequestration, geologic storage, risk, regulation |
| JEL: | Q38 Q48 |
| Date: | 2007–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-07-13&r=reg |
| By: | Hodges, Ron; Mellett, Howard (Cardiff Business School) |
| Abstract: | This paper draws on the work of Streeck and Schmitter (1985) and its subsequent use by Puxty, et al (1987) to analyse the development of accounting regulation in the U.K. public sector. It provides an extension to prior literature through the application of a framework, based on modes of social order, to investigate divergence in the approaches to accounting regulation between the public and private sectors within a single nation state. Despite the advent of 'New Public Management', a different balance of the principles of regulation was established and continues to exist in the public sector when compared with that applied in the private sector, reflected by their respective approaches to due process. The conclusion is that the UK public sector accounting regulatory structure remains rooted in the state mode of social order and hence is different from that found in the private sector, despite the rhetoric of modernisation through the adoption of private sector management practices. |
| Keywords: | accounting standard setting; public sector; due process; modes of social order |
| Date: | 2006–01 |
| URL: | http://d.repec.org/n?u=RePEc:cdf:accfin:2006/1&r=reg |
| By: | Philip A. Curry (Simon Fraser University); Steeve Mongrain (Simon Fraser University) |
| Abstract: | This paper provides an efficiency explanation for regulation of sex, drugs and gambling (the so-called ``morality laws''). The argument is motivated by the observation that the design an enforcement of these laws often promotes discretion by the people engaging in such activities. We propose that morality laws can be best explained by considering the proscribed activities to impose a negative externality on others when the activity is observed. In such a case, efficiency requires discretion by the individual who engages in such activities. When discretion is difficult to regulate directly, the activities can instead be proscribed thereby giving individuals incentive to hide their actions from others. We find conditions for the first-best levels of consumption and hiding to be implementable. In addition, since some level of activity is efficient, this paper provides another environment in which the optimal sanctions are not maximal. |
| Keywords: | Crime; Externality; Laws; Morality; Enforcement |
| JEL: | K42 K32 H32 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:sfu:sfudps:dp07-05&r=reg |
| By: | Leitão, João |
| Abstract: | In this paper we present an impact analysis of the regulation associated to the adoption of the Taylor Report, both on business strategy and sportive and financial performances of the Manchester United Football Club. An econometric approach is presented, by using a Cointegrated Vector Autoregressive (CVAR) model. This aims to analyse the impact of the regulation in terms of the national sportive performance, the value added, and the sales of the club, from 1967 to 1997. The importance of the Taylor Report on better national sportive performances of the football club in study is ratified. The growing importance of generating value added as a precedent mechanism that explains the best national sportive performance is confirmed. |
| JEL: | C32 M31 L51 |
| Date: | 2007–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:3244&r=reg |
| By: | Weber Abramo, Claudio |
| Abstract: | Regressions and tests performed on data from Transparency International Global Corruption Barometer 2004 survey show that personal or household experience of bribery is not a good predictor of perceptions held about corruption among the general population. In contrast, perceptions about the effects of corruption correlate consistently among themselves. However, no consistent relationship between opinions about general effects and the assessments of the extent with which corruption affects the institutions where presumably corruption is materialized is found. Countries are sharply divided between those above and below the US$ 10,000 GDP per capita line in the relationships between variables concerning corruption. Among richer countries, opinions about institutions explain very well opinions concerning certain effects of corruption, while among poorer countries the explanatory power of institutions for the effects of corruption falls. Furthermore, tests for dependence applied between the variables in the sets of respondents for each of 60 countries also show that, for most of them, it is likely that experience does not explain perceptions. On the other hand, opinions tend to closely follow the trend of other opinions. Additionally, it is found that in the GCB opinions about general effects of corruption are strongly correlated with opinions about other issues, as much as to justify the hypothesis that it would suffice to measure the average opinion of the general public about human rights, violence etc. to accurately infer what would be the average opinion about least petty and grand corruption. The findings reported here challenge the value of perceptions of corruption as indications of the actual incidence of the phenomenon. |
| Keywords: | corruption, perceptions, corruption indicators |
| JEL: | D73 H11 K42 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:5566&r=reg |
| By: | Johnston, A.; Amalia, A.; Neuhoff, K. |
| Abstract: | Renewables require support policies to deliver the European 20% target. We discuss the requirements for least cost development and efficient operation and quantify how different schemes (i) allow for the development of a renewable energy technology portfolio; (ii) reduce rent transfers to infra-marginal technologies or better than marginal resource bases; and (iii) minimise regulatory risk and thus capital costs for new projects. Long-term take or pay contracts minimise regulatory uncertainty, create appropriate incentives for location and operation, allow for efficient system operation and seem compatible with European state aid. We discuss how property rights legislation protects existing renewables investors, and thus can ensure ongoing investment during a transition towards the new scheme. |
| Keywords: | Renewable support policy, Property rights, Transition, Regulatory risk. |
| JEL: | L50 L94 O31 P14 |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0723&r=reg |
| By: | Quiroga, Miguel; Sterner, Thomas; Persson, Martin |
| Abstract: | We aim to study whether lax environmental regulations induce comparative advantages, causing the least-regulated countries to specialize in polluting industries. The study is based on Trefler and Zhu’s (2005) definition of the factor content of trade. For the econometrical analysis, we use a cross-section of 71 countries in 2000 to examine the net exports in the most polluting industries. We try to overcome three weaknesses in the empirical literature: the measurement of environmental endowments or environmental stringency, the possible endogeneity of the explanatory variables, and the influence of the industrial level of aggregation. As a result, we do find some evidence in favor of the pollution-haven effect. The exogeneity of the environmental endowments was rejected in several industries, and we also find that industrial aggregation matters. |
| Keywords: | comparative advantage, environmental regulation, trade, pollution haven, Porter hypothesis |
| JEL: | F18 Q56 |
| Date: | 2007–04–24 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-07-08&r=reg |
| By: | Natália Pimenta Monteiro (Universidade do Minho - NIPE) |
| Abstract: | this study exemines changes union contracts and wage structure during and after the introduction of regukatory reforms (deregulation and privatisation) in the Portuguese banking sector. The main finding is that, despite a relative wage erosion detected in the contract dada, banking workers were able to enjoy an increasing wage premium in the period 1985-2000, probably reflecting the increasing profitability of the industry and the rise in labour productivity. The evidence also shows that some specific groups benefited relatively more than others: the least skilled and educated workforce and male workers gained more from the regulatory reforms. However, this unequal sharing of the wage premium did not raise wage inequality across ownership groups in the industry. |
| Keywords: | Deregulation, privatisation, wage structure, Portuguese banking industry |
| JEL: | J31 J45 L33 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:nip:nipewp:7/2007&r=reg |
| By: | Thomas Miceli (University of Connecticut); Kathleen Segerson (University of Connecticut) |
| Abstract: | The eminent domain clause of the U.S. Constitution concerns the limits of the governmentÇs right to take private property for public use. The economic literature on this issue has examined (1) the proper scope of this power as embodied by the 'public use' requirement, (2) the appropriate definition, and implications, of 'just compensation,' and (3) the impact of eminent domain on land use incentives of owners whose land is subject to a taking risk. This essay reviews this literature and draws implications for our understanding of eminent domain law. |
| Keywords: | Eminent domain, just compensation, land use incentives, public use |
| JEL: | K11 R52 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:uct:uconnp:2007-12&r=reg |
| By: | Régis Blazy (CREFI-LSF, Luxembourg University, Luxembourg School of Finance, Luxembourg.); Laurent Weill (LARGE, Université Robert SchumanInstitut d’Etudes Politiques,Strasbourg.) |
| Abstract: | This research investigates how bankruptcy law influences the design of debt contracts and the investment choice through the sanction of faulty managers. We model a lending relationship between a small firm and a monopolistic bank which decides the loan rate. The firm may perform asset substitution, which is punished by the Law through legal sanctions. These sanctions are implemented in case of costly bankruptcy only. This way of resolving financial distress can be avoided yet, if a private agreement is achieved. First, – when sanctions are high – we show that costly bankruptcy may be preferred by honest firms over private negotiation. Thus costly bankruptcy cannot be avoided under a severe legal environment. However, as the bank internalizes the rules of default, debt contracts are designed so that this situation never happens at equilibrium (“legal efficiency”). Second, a peculiar legislation may incite banks to accept generalized moral hazard (“economic inefficiency”). Then, the legislator can indirectly enforce economic efficiency. However he must consider effects beyond the simple comparison between legal sanctions and bankruptcy costs, and focus on the impact of such legal sanctions on the design of the debt contract. Simulated results show that even small changes of legal sanctions may have drastic effects on the firm’s investment policy. Besides, it appears that extreme severity (i.e. 100% of the manager’s wealth is subject to legal sanctions) is not needed to ensure economic efficiency. Last, in some cases, the legislator may have the choice between several levels of legal sanctions all leading to economic efficiency: when choosing between them, the legislator affects the profit sharing only. |
| Keywords: | Bankruptcy, Credit Lending, Moral Hazard, Sanctions |
| JEL: | G33 D82 D21 |
| Date: | 2007–05 |
| URL: | http://d.repec.org/n?u=RePEc:dul:wpaper:07-06rs&r=reg |
| By: | Vajjhala, Shalini (Resources for the Future) |
| Abstract: | More than a decade after the first environmental justice (EJ) regulations were put in place with Executive Order 12898, the programs and initiatives associated with this mandate remain extremely broad in scope and intent. Compared to more traditional regulations that establish environmental performance criteria or standards, EJ regulations address both the process of making equitable decisions and their desired outcomes. In this respect, EJ regulations are both unusual and understudied. Because the regulatory requirements are so general in nature (e.g., building community capacity, improving public awareness and environmental education, and expanding public participation), their implementation has been piecemeal and few systematic evaluations have been done of the implementation process or the major outcomes of federal EJ programs. As states like California move forward with newer state-level EJ initiatives, there are important lessons to be learned from one of the earliest federal programs, the Environmental Protection Agency’s (EPA) Environmental Justice Small Grants (EJSG) Program. Since 1994, more than 1,000 of these grants have been awarded to support communities in developing solutions to local environmental and public health problems. However, the collective impact of these investments has never been evaluated. By using Geographic Information Systems (GIS) to map the locations of grants made through this program, this paper documents patterns of investment and social and environmental change in the low-income and minority communities supported by the program. Major results reveal that EJ small grants are only in part being awarded to the types of communities intended to be served by the program, and only counties in certain EPA regions show improvement or reductions in toxic releases, while others show significant increases in total TRI releases before and after receiving EJ small grants. This assessment provides an important baseline from which to evaluate both federal and state EJ regulations and their implementation more broadly. |
| Keywords: | environmental justice, regulatory evaluation, GIS, spatial analysis, grants |
| JEL: | Y80 |
| Date: | 2007–04–25 |
| URL: | http://d.repec.org/n?u=RePEc:rff:dpaper:dp-07-15&r=reg |
| By: | Christopher F. Baum (Boston College; DIW Berlin); James G. Bohn (UHY Advisors); Atreya Chakraborty (University of Massachusetts-Boston) |
| Abstract: | We examine the relationship between outcomes of securities fraud class action lawsuits and board turnover rates. Our results indicate that the outcome of a class action is a good indicator of the underlying, unobservable merit of the action. Consistent with the merit hypothesis, board turnover rates are higher in the period following the filing of a lawsuit that is ultimately settled than one that is dismissed. Turnover propensities are more sensitive to outcome for CEOs and for individuals named as defendants in the lawsuits. Turnover rates of both inside and outside directors are higher when external equity ownership is more concentrated. |
| Keywords: | Securities fraud class actions, board turnover, corporate governance |
| JEL: | G32 K22 |
| Date: | 2007–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:664&r=reg |