nep-reg New Economics Papers
on Regulation
Issue of 2007‒07‒20
seven papers chosen by
Christian Calmes
University of Quebec in Ottawa

  1. A Mean-Variance Portfolio Analysis of the Demand and Supply of a Potentially Infectious Service By Levy, Amnon
  2. The design of bank loan syndicates in Emerging Markets Economies By Godlewski, Christophe
  3. Does the Minimum Legal Drinking Age Save Lives? By Jeffrey A. Miron; Elina Tetelbaum
  4. The pirate from Koenigsberg: why closed source software is not worth of copyright protection By Pievatolo, Maria Chiara
  5. The Duration of International Loan Syndication Arrangement By Godlewski, Christophe
  6. Employment Law and the Labor Market By Christine Jolls
  7. Agency Conflicts, Investment, and Asset Pricing By Rui Albuquerque; Neng Wang

  1. By: Levy, Amnon (University of Wollongong)
    Abstract: A health-risking illegal personal service is transacted when the expected extra satisfaction rate exceeds the ratio of the expected extra cost to the legal service price. Its prevalence decreases with the costs of risk bearing for the providers and clients. Law-enforcement effort lowers (raises) the equilibrium price of the illegal and hazardous service when the ratio of the providers’ and the clients’ degrees of absolute risk aversion is greater (smaller) than the ratio of the law-enforcement elasticities of their cost bearing.
    Keywords: Unsafe service; Health risk; Legal risk; Law enforcement
    JEL: D4 D8 I1 K4
    Date: 2007
  2. By: Godlewski, Christophe
    Abstract: We empirically explore the influence of loan characteristics, banking and financial structure, and regulatory and institutional factors on the design of 10,930 bank loan syndicates in emerging market economies from 1990 to 2006. Our results show that the structure of syndicates is adapted to enhance monitoring of the borrower and to increase the efficiency of re-contracting process in case of borrower's distress. Main syndication motives, such as loans portfolio diversification, regulatory pressure and management costs reduction, influence syndicate design in emerging markets economies.
    Keywords: Bank; Loan; Syndication; Syndicate Structure; Emerging Markets; Poisson Regressions.
    JEL: G21 C25
    Date: 2007–07
  3. By: Jeffrey A. Miron; Elina Tetelbaum
    Abstract: The minimum legal drinking age (MLDA) is widely believed to save lives by reducing traffic fatalities among underage drivers. Further, the Federal Uniform Drinking Age Act, which pressured all states to adopt an MLDA of 21, is regarded as having contributed enormously to this life saving effect. This paper challenges both claims. State-level panel data for the past 30 years show that any nationwide impact of the MLDA is driven by states that increased their MLDA prior to any inducement from the federal government. Even in early adopting states, the impact of the MLDA did not persist much past the year of adoption. The MLDA appears to have only a minor impact on teen drinking.
    JEL: H11 K42
    Date: 2007–07
  4. By: Pievatolo, Maria Chiara
    Abstract: According to Kant, property applies only to touchable things, among which he includes the works of art. For the very principle of private property, a legitimate purchaser has the right to replicate and to share them without restrictions. Kant recognizes copyright only on written texts, by conceiving them as speeches that exclusively authorized spokespersons - the publishers - may convey to the public in the name of their authors. The rights of the authorized publishers, however, are justified only if they help the public to get the texts. In a Kantian environment, open source software would be worth of copyright protection, because it can be conceived as a speech meant to human beings. On the contrary, Kant would treat closed source programs as works of art, without according them copyright protection, because, as none is allowed to read and to understand them, they cannot be conceived as a speeches meant to the public. Closed source programs are like sealed books that no one is allowed to read: why do we keep on taking for granted that they are worth of copyright protection?
    Keywords: Kant copyright software
    JEL: K11
    Date: 2007–03
  5. By: Godlewski, Christophe
    Abstract: We investigate the factors that influence the duration of international loan syndication arrangement using individual (loan and syndicate characteristics) and country (information disclosure and legal environment) level data from 68 countries over the period 1992-2006. Employing accelerated failure time models, we find that the duration of a syndicated loan arrangement is influenced by both type of characteristics. Loan, syndicate, legal environment and information disclosure characteristics which reduce agency problems related to syndication reduce the duration. Among the country level characteristics, information disclosure which reduces moral hazard due to informational frictions between syndicate members appears to be the most important driver of a faster deal arrangement, while better creditor rights protection increase the duration of syndication arrangement, consistently with recontracting risk issues.
    Keywords: Syndicated loans arrangement; Duration; Agency problems; Information disclosure; Legal risk; Accelerated failure time models
    JEL: G21 C41
    Date: 2007–05
  6. By: Christine Jolls
    Abstract: Legal rules governing the employer-employee relationship are many and varied. Economic analysis has illuminated both the efficiency and the effects on employee welfare of such rules, as described in this paper. Topics addressed include workplace safety mandates, compensation systems for workplace injuries, privacy protection in the workplace, employee fringe benefits mandates, targeted mandates such as medical and family leave, wrongful discharge laws, unemployment insurance systems, minimum wage rules, and rules requiring that employees receive overtime pay. Both economic theory and empirical evidence are considered.
    JEL: J08 J18 J38 K00 K31 K32
    Date: 2007–07
  7. By: Rui Albuquerque; Neng Wang
    Abstract: The separation of ownership and control allows controlling shareholders to pursue private benefits. We develop an analytically tractable dynamic stochastic general equilibrium model to study asset pricing and welfare implications of imperfect investor protection. Consistent with empirical evidence, the model predicts that countries with weaker investor protection have more incentives to overinvest, lower Tobin's q, higher return volatility, larger risk premium, and higher interest rate. Calibrating the model to the Korean economy reveals that perfecting investor protection increases the stock market's value by 22 percent, a gain for which outside shareholders are willing to pay 11 percent of their capital stock.
    JEL: E44 G1 G3 O4
    Date: 2007–07

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