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Do Patents Matter for Commercialization?

admin — Tue, 01 Nov 2011 19:38:40 +0000

Journal of Law and Economics, Volume 54, Issue 2, Page 431-453, May 2011.

Long-Term Effects of Minimum Legal Drinking Age Laws on Adult Alcohol Use and Driving Fatalities

admin — Tue, 01 Nov 2011 19:38:39 +0000

Journal of Law and Economics, Volume 54, Issue 2, Page 365-388, May 2011.

Breaking Up Is Hard to Do: Determinants of Cartel Duration

admin — Tue, 01 Nov 2011 19:36:48 +0000

Journal of Law and Economics, Volume 54, Issue 2, Page 455-492, May 2011.

Risk-Based Pricing and Risk-Reducing Effort: Does the Private Insurance Market Reduce Environmental Accidents?

admin — Tue, 01 Nov 2011 19:35:18 +0000

Journal of Law and Economics, Volume 54, Issue 2, Page 325-363, May 2011.

Intended and Unintended Consequences of Youth Bicycle Helmet Laws

admin — Tue, 01 Nov 2011 19:34:36 +0000

Journal of Law and Economics, Volume 54, Issue 2, Page 305-324, May 2011.

Ownership Dynamics after Partial Privatization: Evidence from China

admin — Tue, 01 Nov 2011 19:34:22 +0000

Journal of Law and Economics, Volume 54, Issue 2, Page 389-429, May 2011.

Property Rights and Parliament in Industrializing Britain

admin — Tue, 01 Nov 2011 19:33:24 +0000

Journal of Law and Economics, Volume 54, Issue 2, Page 241-274, May 2011.

Long-Run Effects of Mergers: The Case of U.S. Western Railroads

admin — Tue, 01 Nov 2011 19:32:26 +0000

Journal of Law and Economics, Volume 54, Issue 2, Page 275-304, May 2011.

Sex Offender Registries: Fear without Function?

admin — Mon, 08 Aug 2011 18:30:08 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 207-239, February 2011.

Sex Offender Registries: Fear without Function?

admin — Mon, 08 Aug 2011 18:30:08 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 207-239, February 2011.

Do Sex Offender Registration and Notification Laws Affect Criminal Behavior?

admin — Mon, 08 Aug 2011 18:29:02 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 161-206, February 2011.

Do Sex Offender Registration and Notification Laws Affect Criminal Behavior?

admin — Mon, 08 Aug 2011 18:29:02 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 161-206, February 2011.

Regulator Heterogeneity and Endogenous Efforts to Close the Information Asymmetry Gap

admin — Mon, 08 Aug 2011 18:28:16 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 25-54, February 2011.

Regulator Heterogeneity and Endogenous Efforts to Close the Information Asymmetry Gap

admin — Mon, 08 Aug 2011 18:28:16 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 25-54, February 2011.

Eat, Drink, Firms, Government: An Investigation of Corruption from the Entertainment and Travel Costs of Chinese Firms

admin — Mon, 08 Aug 2011 18:27:05 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 55-78, February 2011.

Eat, Drink, Firms, Government: An Investigation of Corruption from the Entertainment and Travel Costs of Chinese Firms

admin — Mon, 08 Aug 2011 18:27:05 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 55-78, February 2011.

Cointegrating Institutions: The Time-Series Properties of Country Institutional Measures

admin — Mon, 08 Aug 2011 18:25:06 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 111-134, February 2011.

Cointegrating Institutions: The Time-Series Properties of Country Institutional Measures

admin — Mon, 08 Aug 2011 18:25:06 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 111-134, February 2011.

An Evaluation of Interpol’s Cooperative-Based Counterterrorism Linkages

admin — Mon, 08 Aug 2011 18:24:56 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 79-110, February 2011.

An Evaluation of Interpol’s Cooperative-Based Counterterrorism Linkages

admin — Mon, 08 Aug 2011 18:24:56 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 79-110, February 2011.

Combating Corruption: On the Interplay between Institutional Quality and Social Trust

admin — Mon, 08 Aug 2011 18:24:10 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 135-159, February 2011.

Combating Corruption: On the Interplay between Institutional Quality and Social Trust

admin — Mon, 08 Aug 2011 18:24:10 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 135-159, February 2011.

Is Antitrust Too Complicated for Generalist Judges? The Impact of Economic Complexity and Judicial Training on Appeals

admin — Mon, 08 Aug 2011 18:23:38 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 1-24, February 2011.

Is Antitrust Too Complicated for Generalist Judges? The Impact of Economic Complexity and Judicial Training on Appeals

admin — Mon, 08 Aug 2011 18:23:38 +0000

Journal of Law and Economics, Volume 54, Issue 1, Page 1-24, February 2011.

Striking at the Roots of Crime: The Impact of Welfare Spending on Crime during the Great Depression

admin — Wed, 01 Jun 2011 18:32:10 +0000

Journal of Law and Economics, Volume 53, Issue 4, Page 715-740, November 2010.

Criminal Prosecution and Human Immunodeficiency Virus–Related Risky Behavior

admin — Wed, 01 Jun 2011 18:31:33 +0000

Journal of Law and Economics, Volume 53, Issue 4, Page 741-782, November 2010.

The Litigation of Financial Innovations

admin — Wed, 01 Jun 2011 18:30:37 +0000

Journal of Law and Economics, Volume 53, Issue 4, Page 807-831, November 2010.

Do Reorganization Costs Matter for Efficiency? Evidence from a Bankruptcy Reform in Colombia

admin — Wed, 01 Jun 2011 18:29:20 +0000

Journal of Law and Economics, Volume 53, Issue 4, Page 833-864, November 2010.

Does the Rights Hypothesis Apply to China?

admin — Wed, 01 Jun 2011 18:28:48 +0000

Journal of Law and Economics, Volume 53, Issue 4, Page 629-650, November 2010.

Institutions and Casinos on American Indian Reservations: An Empirical Analysis of the Location of Indian Casinos

admin — Wed, 01 Jun 2011 18:28:05 +0000

Journal of Law and Economics, Volume 53, Issue 4, Page 651-687, November 2010.

Holding onto Your Horses: Conflicts of Interest in Asset Management

admin — Wed, 01 Jun 2011 18:25:44 +0000

Journal of Law and Economics, Volume 53, Issue 4, Page 689-713, November 2010.

Moral Hazard in Leasing Contracts: Evidence from the New York City Taxi Industry

admin — Wed, 01 Jun 2011 18:25:20 +0000

Journal of Law and Economics, Volume 53, Issue 4, Page 783-805, November 2010.

Vertical Integration during the Hollywood Studio Era

admin — Tue, 05 Apr 2011 14:35:24 +0000

Journal of Law and Economics, Volume 53, Issue 3, Page 519-543, August 2010.

Industrial Policy Cuts Two Ways: Evidence from Cotton-Spinning Firms in Japan, 1956–1964

admin — Tue, 05 Apr 2011 14:34:01 +0000

Journal of Law and Economics, Volume 53, Issue 3, Page 587-609, August 2010.

Limited Access to Airport Facilities and Market Power in the Airline Industry

admin — Tue, 05 Apr 2011 14:32:47 +0000

Journal of Law and Economics, Volume 53, Issue 3, Page 467-495, August 2010.

Redistricting and Polarization: Who Draws the Lines in California?

admin — Tue, 05 Apr 2011 14:31:49 +0000

Journal of Law and Economics, Volume 53, Issue 3, Page 545-567, August 2010.

Did the Airline Tariff Publishing Case Reduce Collusion?

admin — Tue, 05 Apr 2011 14:30:34 +0000

Journal of Law and Economics, Volume 53, Issue 3, Page 569-586, August 2010.

Altruism and Innovation in Health Care

admin — Tue, 05 Apr 2011 14:29:48 +0000

Journal of Law and Economics, Volume 53, Issue 3, Page 497-518, August 2010.

The Effect of Mergers on Consumer Prices: Evidence from Five Mergers on the Enforcement Margin

admin — Tue, 05 Apr 2011 14:27:44 +0000

Journal of Law and Economics, Volume 53, Issue 3, Page 417-466, August 2010.

Video Games and Adolescent Fighting

admin — Tue, 05 Apr 2011 14:27:36 +0000

Journal of Law and Economics, Volume 53, Issue 3, Page 611-628, August 2010.

Environmental Liability and Redevelopment of Old Industrial Land

admin — Mon, 23 Aug 2010 20:18:14 +0000

The Journal of Law and Economics, Volume 53, Issue 2, Page 289-306, May 2010.

Abstract Many communities are concerned about the reuse of potentially contaminated land (brownfields) and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. This article studies state liability rules—specifically, strict liability and joint and several liability—that affect the level and distribution of expected costs of private cleanup. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. The results suggest that liability is at least partly capitalized but does still deter redevelopment.

When Do Applicants Search for Prior Art?

admin — Mon, 23 Aug 2010 20:18:12 +0000

The Journal of Law and Economics, Volume 53, Issue 2, Page 399-416, May 2010.

Abstract There is concern that patent examiners lack the resources, capabilities, and incentives to properly identify the prior art against which patent applications are evaluated and that, as a result, they issue a large number of low‐quality patents. In this context, the extent to which applicants have incentives to contribute prior art is an important question. This paper uses data on examiner and applicant citations in U.S. patents to examine this question. The data show that applicants contribute a surprisingly low share of citations to previous patents and routinely fail to identify even their own previous patents. However, there are also stark differences across fields. Within fields, and even within firms, there is self‐sorting: applicants contribute more prior art for their more important inventions. The results suggest that incentives to search for prior art vary across industries and inventions, which reflects underlying differences in the strategic reasons for obtaining patent protection.

Analyzing the Effects of Temporary Antitrust Immunity: The Aloha‐Hawaiian Immunity Agreement

admin — Mon, 23 Aug 2010 20:18:07 +0000

The Journal of Law and Economics, Volume 53, Issue 2, Page 239-261, May 2010.

Abstract While several studies have examined the effects of cartels, in few instances are data available that allow us to examine postcartel behavior. In this paper, I use data on interisland airfares to examine the effects of an antitrust immunity agreement that allowed two airlines to coordinate capacity for a limited period of time. I find not only that prices rose during the period of coordination but that they remained high until the entry of a new competitor, 2$\frac{1}{2}$ years after immunity expired. That the incumbent airlines were able to sustain supracompetitive fares well past the end of immunity suggests that even short‐lived grants of immunity can have persistent effects. Policymakers should view even temporary grants of immunity with great skepticism, particularly in markets that already exhibit characteristics that may facilitate coordination.

Fairness in an Embedded Ultimatum Game

admin — Mon, 23 Aug 2010 20:18:02 +0000

The Journal of Law and Economics, Volume 53, Issue 2, Page 263-287, May 2010.

Abstract We embed an ultimatum game in a stylized legal bargaining framework. This changes the framing of the standard ultimatum game in several ways but also moves the bargaining closer to what is found in some naturally occurring settings. In this context, the ultimatum game is played over the joint surplus, which is achieved from settlement rather than a dispute. In our embedded ultimatum game, the median offer contains only 8 percent of the joint surplus from settlement. When we replicate the simple ultimatum game, we find that 50 percent of the joint surplus is contained in the median offer.

Centralization versus Decentralization as a Risk‐Return Trade‐Off

admin — Mon, 23 Aug 2010 20:17:40 +0000

The Journal of Law and Economics, Volume 53, Issue 2, Page 359-378, May 2010.

Abstract This paper characterizes the choice between centralization and decentralization as a risk‐return trade‐off and examines it in a model that integrates ideas from committee decision‐making and portfolio theories. Centralization, by pooling expertise, rarely yields erroneous decisions; however, when it fails, the consequences are global. In contrast, in a decentralized system, erroneous decisions are more frequent, but their consequences are locally confined. We assess the relative desirability of (de‐)centralization in various scenarios with independent versus interdependent risks. We further discuss the robustness of the model and the relevance of our results for policymaking.

The Roles of Freedom, Growth, and Religion in the Taste for Revolution

admin — Mon, 23 Aug 2010 20:17:36 +0000

The Journal of Law and Economics, Volume 53, Issue 2, Page 329-358, May 2010.

Abstract Property rights, whose security may be threatened by terrorism and civil conflict, are a necessary condition for a market economy. Yet a fundamental and unresolved empirical question is whether the lack of political and civil freedoms is a cause of greater insecurity. This paper takes a new approach to an answer by using microdata on 106,170 people in 61 nations for 1981–97. Controlling for country and year fixed effects, we find that freedom has strong and robust negative effects on revolutionary support. A 1‐standard‐deviation rise in freedom, equivalent to a shift from Argentina to the United States, decreases support by 3 percentage points, or 37 percent of the standard deviation of the proportion of people who want to revolt. Greater growth in the gross domestic product can buy off part of the increase in support when freedoms are constrained. Being religious reduces revolutionary tastes.

Leasing, Lemons, and Moral Hazard

admin — Mon, 23 Aug 2010 20:17:27 +0000

The Journal of Law and Economics, Volume 53, Issue 2, Page 307-328, May 2010.

Abstract A number of recent papers have analyzed leasing in the new‐car market as a response to the adverse‐selection problem in the used‐car market originally explored in the seminal 1970 paper by George Akerlof. In this paper we consider a model characterized by both adverse selection, as in these earlier papers, and moral hazard concerning the maintenance choices of new‐car drivers. We show that this approach provides explanations for a number of empirical findings concerning real‐world new‐ and used‐car markets, including that leasing has become more popular over time, very high income new‐car drivers lease more, and used cars that were leased when new sell for more than used cars that were purchased when new. We also compare and contrast our approach to new‐car leasing with alternative approaches.

Federal Policy and the Rise in Disability Enrollment: Evidence for the Veterans Affairs’ Disability Compensation Program

admin — Mon, 23 Aug 2010 20:17:20 +0000

The Journal of Law and Economics, Volume 53, Issue 2, Page 379-398, May 2010.

Abstract The U.S. Department of Veterans Affairs compensates 13 percent of the nation’s military veterans for service‐related disabilities through the Disability Compensation (DC) program. In 2001, a legislative change made it easier for Vietnam veterans to receive benefits for diabetes associated with military service. In this paper, we investigate this policy’s effect on DC enrollment and expenditures as well as the behavioral response of potential beneficiaries. Our findings demonstrate that the policy increased DC enrollment by 6 percentage points among Vietnam veterans and that an additional 1.7 percent experienced an increase in their DC benefits, which increased annual program expenditures by $2.85 billion in 2007. Using individual‐level data from the Veterans Supplement to the Current Population Survey, we find that the induced increase in DC enrollment had little average impact on the labor supply or health status of Vietnam veterans but did reduce labor supply among their spouses.

The Evolution of Citizenship: Economic and Institutional Determinants

admin — Wed, 30 Jun 2010 14:13:41 +0000

The Journal of Law and Economics, Volume 53, Issue 1, Page 95-136, February 2010.

Abstract We investigate the evolution of the legal institution of citizenship from a political economy perspective. We first present a median‐voter model of the determination of citizenship laws. Next we test the implications of the model on a new set of data on citizenship laws across countries. We show that citizenship laws respond to economic and institutional determinants endogenously. When facing increasing immigration, countries with a jus soli regime tend to restrict their legislation, whereas countries with a jus sanguinis regime resist innovation. The welfare burden does not prove to be an obstacle to jus soli legislation, but demographic stagnation encourages it. A high degree of democracy promotes the adoption of jus soli elements, whereas instability of state borders determined by decolonization impedes it. Religion and ethnic diversity have no residual effect.

Owning versus Renting: Do Courts Matter?

admin — Wed, 30 Jun 2010 14:11:56 +0000

The Journal of Law and Economics, Volume 53, Issue 1, Page 137-165, February 2010.

Abstract We develop a legal contract enforcement theory of the decision to own or lease. The allocation of ownership rights will minimize enforcement costs when the legal system is inefficient. In particular, when legal enforcement of contracts is costly, there will be a shift from arrangements that rely on such enforcement (such as a rental agreement) toward other forms that do not (such as direct ownership). We then test this prediction and show that costly enforcement of rental contracts hampers the development of the rental housing market in a cross section of countries. We argue that this association is not the result of reverse causation from a developed rental market to more investor protective enforcement and is not driven by alternative institutional channels. The results provide supportive evidence for the importance of legal contract enforcement for market development and the optimal allocation of property rights.

Unmarried Fertility, Crime, and Social Stigma

admin — Wed, 30 Jun 2010 14:11:28 +0000

The Journal of Law and Economics, Volume 53, Issue 1, Page 185-221, February 2010.

Abstract Children born to unmarried parents may receive lower human capital investments, leading to higher levels of criminal activity as adults. Therefore, unmarried fertility may be positively associated with future crime. Alternatively, in an environment in which social stigma attached to nonmarital fertility is high, many low‐match‐quality parents will marry, and children reared in these families may actually be worse off than if their parents had not married. We explore these effects empirically, finding that over the long run unmarried fertility is positively associated with murder and property crime but that the degree of social stigma has affected this relationship. For instance, our results suggest that some marriages in the 1940s and 1950s were of such low quality that the children involved would have been better off in single‐parent households; however, this finding is reversed for marriages in the 1960s and thereafter—many marriages that would have benefited children were forgone.

Eminent Domain versus Government Purchase of Land Given Imperfect Information about Owners’ Valuations

admin — Wed, 30 Jun 2010 14:11:20 +0000

The Journal of Law and Economics, Volume 53, Issue 1, Page 1-27, February 2010.

Abstract Governments employ two basic policies for acquiring land: taking it through the exercise of their power of eminent domain, and purchasing it. The social desirability of these policies is compared in a model in which the government’s information about landowners’ valuations is imperfect. Under this assumption, the policy of purchase possesses the market test advantage that the government obtains land from an owner only if its offer exceeds the owner’s valuation. However, the policy suffers from a drawback when the land that the government needs is owned by many parties. In that case, the government’s acquisition will fail if any of the owners refuses to sell. Hence, eminent domain becomes appealing if the number of landowners is large. This conclusion holds regardless of whether the land that the government seeks is a parcel at a fixed location or instead is a contiguous parcel that may be located anywhere in a region.

Understanding the Effects of Antiprofiling Policies

admin — Wed, 30 Jun 2010 14:11:03 +0000

The Journal of Law and Economics, Volume 53, Issue 1, Page 29-64, February 2010.

Abstract Many police agencies have enacted measures designed to reduce racial profiling, yet little empirical evidence exists regarding the effects of such programs. This article uses the occurrence of a racial profiling scandal in New Jersey to quantify the effect of a move toward race‐neutral policing. The scandal and subsequent reforms led to an estimated 16–33 percent decrease in annual arrests of minorities for motor vehicle theft. I also present evidence that, as policing against minorities decreased, motor vehicle theft increased in areas populated by minorities. My implied elasticities do not suggest that minorities respond to policing intensity differently than the general population. New Jersey data generate little strong evidence of additional adverse responses by minorities to lessened police scrutiny. The findings are robust to a number of specification checks, and similar patterns are observable in Maryland, a state that experienced a profiling scandal several years before New Jersey.

Conspiracy at the Pump

admin — Wed, 30 Jun 2010 14:10:45 +0000

The Journal of Law and Economics, Volume 53, Issue 1, Page 223-237, February 2010.

Abstract On the basis of evidence of price‐fixing, in May 2006 the Canadian Competition Bureau targeted retail gasoline outlets in some local markets in the province of Quebec. In June 2008, criminal charges were filed against many individuals and companies operating in those local markets. We employ a differences‐in‐differences approach to determine whether the public announcement of the antitrust investigation triggered a reaction in one of the targeted markets. We find that the price of gasoline in the targeted market fell by 1.75 cents per liter after the public announcement of the investigation. We also briefly discuss how well the Stiglerian theory of collusion performs in this real‐world conspiracy.

Does Terrorism Threaten Human Rights? Evidence from Panel Data

admin — Wed, 30 Jun 2010 14:10:41 +0000

The Journal of Law and Economics, Volume 53, Issue 1, Page 65-93, February 2010.

Abstract Using panel data for 111 countries over the period 1982–2002, we employ two indexes that cover a wide range of human rights to empirically analyze whether and to what extent terrorism affects human rights. According to our results, terrorism significantly, but not dramatically, diminishes governments’ respect for basic human rights such as the absence of extrajudicial killings, political imprisonment, and torture. The result is robust to how we measure terrorist attacks, to the method of estimation, and to the choice of countries in our sample. However, we find no effect of terrorism on empowerment rights.

Patent Pools as a Solution to Efficient Licensing of Complementary Patents? Some Experimental Evidence

admin — Wed, 30 Jun 2010 14:10:29 +0000

The Journal of Law and Economics, Volume 53, Issue 1, Page 167-183, February 2010.

Abstract Production requiring licensing groups of complementary patents implements a coordination game among patent holders, who can price patents by choosing among combinations of fixed and royalty fees. Summed across patents, these fees become the total producer cost of the package of patents. Royalties, because they function as excise taxes, add to marginal costs, resulting in higher prices and reduced quantities of the downstream product and lower payoffs to the patent holders. Using fixed fees eliminates this inefficiency but yields a more complex coordination game in which there are multiple equilibria, which are very fragile in that small mistakes can lead the downstream firm to not license the technology, resulting in inefficient outcomes. We report on a laboratory market investigation of the efficiency effects of coordinated pricing of patents in a patent pool. We find that pool‐like pricing agreements can yield fewer coordination failures in the pricing of complementary patents.

Political Influence behind the Veil of Peer Review: An Analysis of Public Biomedical Research Funding in the United States

admin — Tue, 12 Jan 2010 22:44:36 +0000

The Journal of Law and Economics, Volume 52, Issue 4, Page 665-690, November 2009.

Abstract The U.S. public biomedical research system is renowned for its peer review process that awards federal funds to meritorious research performers. Although congressional appropriators do not earmark federal funds for biomedical research performers, I argue that they support allocations for those research fields that are most likely to benefit performers in their constituencies. Such disguised transfers mitigate the reputational penalties to appropriators of interfering with a merit‐driven system. I use data on all peer‐reviewed grants by the National Institutes of Health during the years 1984–2003 and find that performers in the states of certain House Appropriations Committee members receive 5.9–10.3 percent more research funds than those at unrepresented institutions. The returns to representation are concentrated in state universities and small businesses. Members support funding for the projects of represented performers in fields in which they are relatively weak and counteract the distributive effect of the peer review process.

Creditor Protection Laws and the Cost of Debt

admin — Tue, 12 Jan 2010 22:44:06 +0000

The Journal of Law and Economics, Volume 52, Issue 4, Page 701-717, November 2009.

Abstract We examine the impact of state payout restrictions on firms’ credit ratings and bond yields. Using publicly traded bond data for a sample of large firms, we find that firms incorporated in states with more restrictive payout statutes (for example, New York and California) have better credit ratings and significantly lower yield spreads (about 8.7 percent) than do firms incorporated in less restrictive states (for example, Delaware). These results suggest that incorporation in a more restrictive state provides a credible commitment mechanism for avoiding some of the moral hazard problems associated with long‐term debt. This commitment corresponds to an economically and statistically significant difference in market yields and firm‐financing costs and is robust to controls for ownership, governance, debt type, Delaware or non‐Delaware incorporation, and covenant usage. Overall, our results are consistent with the notion that Delaware incorporation has hidden costs for some firms.

Experimental Tests of Core Theory and the Coase Theorem: Inefficiency and Cycling

admin — Tue, 12 Jan 2010 22:43:45 +0000

The Journal of Law and Economics, Volume 52, Issue 4, Page 745-759, November 2009.

Abstract We examine experimentally the bargaining process and the final allocation of payoffs in games that differ in terms of whether the core exists and in the initial allocation of property rights among the players. This paper highlights the interaction among property rights, transaction costs, and the empty core. Our experimental results indicate that the existence of the core is an important determinant of bargaining generally and the Coase theorem in particular. They confirm our conjecture that when the core is empty and property rights are ill defined, Coasean efficiency breaks down. Among other results, our experiments show that the number of inefficient (non‐Pareto‐optimal) agreements and bargaining rounds with cycling are significantly greater when the core is empty than when the core exists, especially when property rights are ill defined. Our results suggest an economic role for specific property right arrangements to resolve the empty core.

Quality and the Commons: The Surf Gangs of California

admin — Tue, 12 Jan 2010 22:43:12 +0000

The Journal of Law and Economics, Volume 52, Issue 4, Page 727-743, November 2009.

Abstract In open‐access settings, high‐quality resources are lucrative, yet fencing out potential entrants may be very costly. I examine the endogenous creation of property rights, focusing on the incentives that resource quality provides to close the commons. Analytical examples explore the incentives of locals to increase or decrease the strength of property rights conditional on how locals and nonlocals value the quality of the resource. The empirical analysis looks at a unique resource—surf breaks—and estimates the relationship between the exogenous quality of the resource (waves at the surf break) and local attempts to seize the common surf break. Using cross‐sectional data on 86 surf breaks along the southern California coast, this paper finds that a 10 percent increase in quality leads to a 7–17 percent increase in the strength of property rights.

Juvenile Jails: A Path to the Straight and Narrow or to Hardened Criminality?

admin — Tue, 12 Jan 2010 22:42:45 +0000

The Journal of Law and Economics, Volume 52, Issue 4, Page 779-809, November 2009.

Abstract Juvenile justice systems throughout the United States have become increasingly punitive since the 1970s. Most states have passed legislation making it easier to transfer juveniles to the criminal courts. Supporters of this “get tough” movement argue, in part, that juvenile courts are ineffective in deterring young offenders. This claim, however, is based primarily on poorly designed evaluations that do not account for the nonrandom nature of sentencing. This paper demonstrates how the institutional features of the justice system can be exploited to identify causality when true random assignment is not feasible. In particular, I capitalize on discontinuities in punishment that arise in Washington State’s juvenile sentencing guidelines to identify the effect of incarceration on the postrelease criminal behavior of juveniles. The results indicate that incarcerated individuals have lower propensities to be reconvicted of a crime. This deterrent effect is also observed for older, criminally experienced, and/or violent youths.

The Impact of Liability on the Physician Labor Market

admin — Tue, 12 Jan 2010 22:42:34 +0000

The Journal of Law and Economics, Volume 52, Issue 4, Page 635-663, November 2009.

Abstract This study examines the impact of malpractice reforms on physician behavior using a new measure of liability risk and a nationally representative, individual‐level data set on physician behavior. We match our liability measure to data on physician behavior from the Physician Practice Costs and Income Survey (PPCIS). Data from the PPCIS bracket a period of substantial state‐level legal reform between 1983 and 1988, which provides identifying variation in our liability measure. We estimate the impact of liability reform on hours worked. We find an estimated elasticity of hours worked to liability exposure of −.285 for the full sample of physicians. The effect for physicians ages 55 or older is much larger: we find an elasticity of −1.224 for this category. We find that an increase in $1 of expected liability is associated with a $.70–$1.05 increase in malpractice premiums.

Vertical Restraints and the Law: Evidence from Automobile Franchising

admin — Tue, 12 Jan 2010 22:42:15 +0000

The Journal of Law and Economics, Volume 52, Issue 4, Page 691-700, November 2009.

Abstract After a 2002 European Commission regulation prohibited the use of dealer‐exclusive territories, automobile franchise contracts in Italy introduced price ceilings and standards on verifiable marketing and service inputs, such as advertising and salespeople. The contracts also imposed quantity floors, a practice already in use before the regulatory change. The introduction of standards suggests that, consistent with a view of vertical restraints as coordination mechanisms, manufacturers used exclusive territories to induce desired dealer services, and, once the use of exclusive territories was prohibited, they switched to alternative contractual devices to achieve this goal. The introduction of price ceilings despite free intrabrand competition also suggests that car manufacturers tried to prevent some dealers from gaming the quantity floors by selling to other dealers’ customers while charging monopolistic prices at their own locations.

Social Insurance, Commitment, and the Origin of Law: Interest Bans in Early Christianity

admin — Tue, 12 Jan 2010 22:41:39 +0000

The Journal of Law and Economics, Volume 52, Issue 4, Page 761-786, November 2009.

Abstract Despite the historical importance of ideology‐based, economically inhibitive laws, we know little about the economic factors underlying their origin. This paper accounts for the historical emergence of one such law: the Christian ban on taking interest—a doctrine that shaped the evolution of numerous financial contracts and related organizational forms. A game‐theoretic analysis and historical evidence suggest that the Church’s commitment to providing social insurance for its poorest constituents encouraged risky borrowing, which the Church attempted to limit by banning interest. The analysis highlights the applicability of the rational choice framework to seemingly irrational actions and laws, the role of nonmonetary sanctions in circumventing commitment problems, and the importance of economic forces vis‐à‐vis ideology.