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Abstract: Abstract How should we think about crime deterrence in times of pandemics' The economic analysis of crime tells us that potential offenders will compare the costs and the benefits from crime and from innocence and then choose whichever option is more profitable. We must therefore ask ourselves how this comparison is affected by the outbreak of a pandemic and the policy changes which may accompany it, such as governmental restrictions, social distancing, and responses to economic crises. Using insights from law and economics, this paper investigates how the various components in the cost-benefit analysis of crime might change during a pandemic, focusing on Covid-19 as a test case. Building on classical theoretical models, existing empirical evidence, and behavioral aspects, the analysis reveals that there are many potentially countervailing effects on crime deterrence. The paper thus highlights the need to carefully consider which aspects are applicable given the circumstances of the pandemic, as whether crime deterrence will increase or decrease should depend on the strength of the effects at play. PubDate: 2022-10-01
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Abstract: Abstract We investigate the impact of sanctions in the presence of abusive contract terms in a litigation model under asymmetric information on consumers’ ability to litigate. A firm may decide to write an abusive clause to extract part of a consumer’s surplus. Facing such a clause, consumers can seek compensation at a cost, but only a fraction of them are ready to go to court to obtain this compensation. If the case is brought to court, the abusive clause is unenforceable. We then explore the consequences of introducing an additional sanction to this unenforceability. Our results show that the mere non-enforcement of abusive clauses has no deterrent effect. However, the introduction of an additional sanction has to be done carefully because under certain conditions, it leads to more deterrence but may also worsen the utilities of some consumers and generate mixed effects on welfare. PubDate: 2022-10-01
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Abstract: Abstract Can competition law consider effects on privacy, or should privacy concerns of data-collecting behaviour only be dealt with by data protection law' In this paper, we analyse the German Facebook case, in which the requirement of giving consent to the combination of personal data from different sources was prohibited as exploitative abuse by a dominant firm. We show, from an economic perspective, that due to the simultaneous existence of two market failures (market dominance, information and behavioural problems) and complex interaction effects between both market failures and both policies in digital markets, a new, much more complex relationship emerges. Since the traditional approach of a strict separation of both policies is no longer feasible, a more integrative and collaborative policy approach for competition law and data protection law might be necessary. With respect to the substantive issue in the Facebook case, i.e. protecting a minimum standard of choice for consumers regarding their personal data vis-a-vis dominant digital platform firms, the recent decision by the German Federal Court of Justice in this case and the proposed Digital Markets Act have led to new perspectives for dealing with privacy concerns in competition law and new forms of ex-ante regulation. PubDate: 2022-10-01
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Abstract: Abstract The treatment of a patient often implies consultations with different health care professionals. This complex health care pathway raises the issue of the regulation of health care quality. In this study, we explore how teamwork among health care professionals affects the precaution behavior of each one depending on the liability regime. To this end, we develop a theoretical model that is tested in a controlled laboratory experiment. Each health care professional chooses the precaution level invested to treat the patient. His decisions have real consequences outside the lab for charities dealing with real patients. Experimental conditions vary the number of involved health care professionals and the liability regime. Contrary to theory, we show that the negligence rule and strict liability do not provide optimal incentives to take care. The negligence rule is more efficient than strict liability to reduce the absolute deviations from optimal precaution level. Moreover, under both liability rules, teamwork decreases the health care professionals’ precaution levels. PubDate: 2022-10-01
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Abstract: Abstract Much political conflict in the world revolves around the issue of how much freedom to accord people. Liberal democracies are characterized by, e.g., the rule of law and a strong protection of civil rights, giving individuals a great deal of legally guaranteed freedom to lead their lives as they see fit. However, it is not known whether legal freedom suffices to make people satisfied with freedom. Our study explores that issue by relating seven indicators of legal freedom to the satisfaction people express with their freedom of choice. Using a sample of 133 countries over the period 2008–2018, and taking a panel-data approach, we find no robust baseline relationship. However, when exploring conditional associations by interacting the indicators with social trust, the rule of law is positively and increasingly related to satisfaction with freedom above and below a threshold level. Freedom of assembly is more positive for satisfaction with freedom the higher the GDP per capita and in democracies. Thus, for some types of legal freedom, formal legal institutions are complementary with culture, income and the political system in generating satisfaction with freedom. PubDate: 2022-09-26
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Please help us test our new pre-print finding feature by giving the pre-print link a rating. A 5 star rating indicates the linked pre-print has the exact same content as the published article.
Abstract: Abstract Measures of access to justice mainly use indicators from judicial statistics or legislation whereas subjective perceptions or attitudes are often measured by survey questions related to judicial services. Using Turkey’s Life Satisfaction Survey, we consider reluctance to report an experienced criminal incident, which is a factual statement, as an objective indicator affecting demand for and access to justice. We identify correlates of reluctance to report and find that poor socio-economic status is negatively associated with the probability of reporting a criminal incident, and that the impact is greater for women. Perceived social pressures related to gender and level of income adversely affect their probability of reporting, whereas men are not affected by social pressure in their decision to report criminal incidents. We then relate the probability of reluctance to report to the probability of giving a no opinion response to questions on perceptions of satisfaction with judicial services. We find that the two are correlated, providing evidence for the relationship between exclusion from access to justice and voice. PubDate: 2022-09-08
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Abstract: Abstract In this article, we study the decision-making of judges in an experimental setting resembling real world judicial decision-making in order to measure the impact of advisory guidelines on judges’ decisions in divorce cases. We gave 312 French future judges 48 case vignettes, built from real data related to divorce cases involving children. We compared two different subject pools: judges who were asked to set child support awards with an advisory guideline and judges who were asked to set child support awards without any guidelines. We find that guidelines help to reduce the disparity between judges: the variance in similar cases is lower when the subjects have the opportunity to use guidelines. On the other hand, this effect is not systematic since we observe an increase in heterogeneity in some particular cases. We interpret this result by considering that the guidelines may generate a conflict of norms: the judge may be torn between the social norm represented by the guidelines and based on the child’s interest and the legal norm that limits her decisions which need to stay within the parties’ proposals. An increase of heterogeneity would result from different trade-offs between judges. PubDate: 2022-09-06
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Abstract: Abstract The effect of digital piracy is often framed as a creator having to compete against unauthorized copies of their own creation, despite intellectual property rights laws. This framing has empirical and theoretical support, but the empirical findings often suggest that the magnitude and even sign of piracy effects depend on the characteristics of the software and the market. For example, piracy seems to have a larger negative effect on sales of high-profile works, but a smaller and perhaps even positive effect on lesser-known works. This paper seeks a theoretical explanation of differential piracy effects. It is unique in that it gives considerable focus to the market size, and also to budgetary limitations of the consumer base, motivated by high piracy rates in developing countries. The models imply that piracy is more likely to help developers when the market for the software is smaller; when network effects are neither too weak nor too strong; when piracy is neither to accessible nor too inaccessible; when the cost of piracy is relatively homogeneous; and when the consumer base is not too poor. All things considered, the inclusion of market size, consumer budgets, and heterogeneous piracy costs suggest that piracy is less likely to be beneficial to developers than previous literature suggest. Developer profit may be higher or lower with piracy, but buyer welfare is no worse, and is sometimes better, with piracy. PubDate: 2022-08-27
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Abstract: Abstract Empirical studies on the economic theory of crime have extensively analyzed the importance of the probability of punishment with regard to premeditated criminal activities. Unplanned crimes also occur, however, and this paper will focus on a very serious and widespread example: the hit-and-run road accident. Using police records for every road accident with injuries or mortalities that took place in Italy in the period 1996–2016, we rely on changes in daylight, both when switching between daylight saving time and winter time and across seasons, as an exogenous source of variation affecting the probability of apprehension and find that the likelihood of hit-and-run conditional on an accident taking place increases by around 20% with darkness. Our results suggest that policies increasing the likelihood of apprehension could be effective in reducing hit-and-run. PubDate: 2022-08-21
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Abstract: Abstract We argue that institutions are bundles that involve trade-offs in the government’s ability to provide public goods that affect public health. We hypothesize that the institutions underlying economic freedom affect the mix of diseases by reducing diseases of poverty relative to diseases of commerce (those associated with free movement of people, such as smallpox or COVID-19). We focus on smallpox and typhoid fever in the late nineteenth century and early twentieth century in order to build on recent work that make arguments similar to ours, especially the framework Werner Troesken sets forth in The Pox of Liberty. Our evidence shows that economic freedom, in multiple periods of time and settings prior to the eradication of smallpox in the second half of the twentieth century, reduced typhoid mortality but had no effect on smallpox deaths. The implication for COVID-19 is that the trade-off between fighting the pandemic and preserving economic freedom may not be too severe in the short run. However, in the long run, the wealth benefits from economic freedom are likely to be crucial in reducing vulnerability to diseases of commerce primarily from their impact on comorbidities (such as diabetes and heart disease). Thus, economic freedom is on balance good for public health, which suggests that it, while requiring trade-offs, might be the best institutional bundle for dealing with pandemics. PubDate: 2022-08-01
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Abstract: Abstract Commercial and social entrepreneurs are likely to help communities combat public health crises. Research on responses to pandemics has underappreciated the critical role of entrepreneurs. In the context of post-disaster response and recovery, entrepreneurs provide needed goods and services, repair and rebuild disrupted social networks, and can act as focal points for disaster survivors as they develop their plans to rebuild. During a pandemic, entrepreneurs perform similarly important economic and social functions. This article highlights these functions, including (1) providing the goods needed to survive and combat the pandemic, (2) performing the services needed so that people can stay productive and connected during the pandemic, and (3) acting as a source of community support and leadership. It also discusses how entrepreneurs are able to perform these roles despite operating in an environment that constricts the range and nature of entrepreneurial activity. Finally, this article describes a legal regime that will promote entrepreneurship during a pandemic. PubDate: 2022-08-01
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Abstract: Abstract The COVID-19 pandemic has not only caused millions to die and even more to lose their jobs, it has also prompted more governments to simultaneously declare a state of emergency than ever before enabling us to compare their decisions more directly. States of emergency usually imply the extension of executive powers that diminishes the powers of other branches of government, as well as to the civil liberties of individuals. Here, we analyze the use of emergency provisions during the first wave of the COVID-19 pandemic and find that it can be largely explained by drawing on political economy. It does, hence, not constitute an exception. We show that many governments have (mis-)used the pandemic as a pretext to curtail media freedom. We further show that executive decrees are considered as a substitute for states of emergency by many governments. PubDate: 2022-08-01
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Abstract: Abstract We analyse the legal and economic background and implications of the destandardisation of digital contracts, with a focus on consumer protection and overall efficiency. We argue that firms can exploit destandardisation paired with asymmetric information to extract rents. We propose the introduction of a numerus clausus principle in the digital licensing realm (a limit to the contractual freedom of parties to create proprietary rights) as a way of reducing rent extraction by firms and increasing consumer surplus. With a simple economic model, we account for the tradeoff between the benefit from reduced market power and the social cost of legally enforced standardisation, and show that some degree of enforced standardisation can be optimal. PubDate: 2022-07-18 DOI: 10.1007/s10657-022-09745-6
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Abstract: Abstract We analyse the recent policy decisions made by the European Central Bank and the national authorities related to capital and shareholders’ remuneration aimed at promoting banking credit supply in COVID-19-afflicted economies. We forecast the impact of the regulatory decisions based on the empirical literature and discuss the factors that reduce the banks’ incentives to expand their loan portfolios. We argue that the introduction of the dividend ban caused a surge in regulatory uncertainty and undermined banks’ market valuation raising the expected funding costs and contributing to the banks’ reluctance to make use of the capital buffers. We develop policy suggestions intended to mitigate this effect. PubDate: 2022-07-18 DOI: 10.1007/s10657-022-09734-9
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Abstract: Abstract By a laboratory experiment, we investigate the incentives of potential tortfeasors to make investments in order to reduce the probability of a given harm occurring. In our experiment, paired players make their decisions sequentially, i.e., a la Stackelberg and in case of a harm, they share liability, either symmetrically or asymmetrically. We vary their level of endowments so that one can become insolvent in case of harm, and show that subjects do not behave as predicted, due to considerations such as inequity aversion or reciprocity. We find that the first-acting tortfeasor does not exploit their advantage fully and invests much more than predicted. Our results also show that the second-acting tortfeasor acts reciprocally with the other, rather than rationally opting for their best response. Finally, we show that asymmetric liability apportionment may restore the incentives to invest for the first tortfeasor, and that insolvency of the second one pushes the first to overinvest in order to avoid harm. PubDate: 2022-06-09 DOI: 10.1007/s10657-022-09740-x
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Abstract: Abstract This paper seeks to answer two main questions: whether restaurants using a national brand to capture customers in fact use original national ingredients for producing food and, in cases where original ingredients are not used, what is the economic rationale behind this choice' Specifically, the study focuses on Japanese restaurants in three Southeast Asian countries, using a theoretical model and an empirical investigation based on interviews and survey data collected through field research. Considering restaurants, their suppliers, and their customers, we show how a dual asymmetric-information problem exists, between suppliers and restaurants and between restaurants and their customers. The results indicate that a first reason for buying non-original ingredients—important especially for cheaper restaurants—is a desire to reduce costs. That said, the use of non-original ingredients occurs among all types of Japanese restaurants in the three studied countries. It does not depend on the presence of a Japanese chef or owner, nor on the share of Japanese customers. By contrast it does significantly depend on the reliability of the wholesale channel, and the resultant difficulties that restaurants encounter when buying original ingredients. PubDate: 2022-06-04 DOI: 10.1007/s10657-022-09742-9
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Abstract: Abstract From an epidemiological perspective, the COVID-19 pandemic is a public health crisis. From an economic perspective, it is an externality and a social cost. Strikingly, almost all economic policy to address the infection externality has been formulated within a Pigovian analysis of implicit taxes and subsidies directed by a social planner drawing on social cost-benefit analysis. In this paper we examine the alternative economic methodology of the externality. We seek to understand how an exchange-focused and institutional analysis provides a better understanding of how to minimise social cost. Our Coasean framework allows us to further develop a comparative institutional analysis of the pandemic response. PubDate: 2022-05-19 DOI: 10.1007/s10657-022-09741-w
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Abstract: Abstract What is the tenet upon which the public policy of lockdown by fiat experienced during the COVID-19 pandemic is based on' The work approaches this question about the rationale of the mandatory shelter-in-place policy as an interpersonal exchange of rights, but where the exchange occurs coercively instead of voluntarily. It compares, in positive political economy terms, the normative principles of utilitarianism and Rawlsianism, and shows that lockdown by fiat is a policy that is closer to a maximin equity criterion rather than to a utilitarian one. The work moreover shows, also with the aid of a thought experiment and with factual applications, that the fiat redistribution of rights to liberty in favor of rights to health—from those least affected to those most affected by COVID-19—is, in the main, a policy choice that is to be expected under certain constraints. PubDate: 2022-04-05 DOI: 10.1007/s10657-022-09732-x
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