International Review of Law and Economics最新文献

Is the evolution of China’s patent litigation courts from a scattered expansion to a shrinking concentration spontaneous or is it a rational construction? Understanding the motivation for the adjustment of China’s patent court system is important for judging whether the system change is appropriate and for choosing the optimal patent litigation system. After addressing the endogeneity between the number of patents and the adjustment of the patent court system using patent incentives as an instrumental variable for the number of patents, responding to the need to protect the growing number of patents appears to be the underlying reason for the expansion of the number of patent courts in China until 2014. The number of patents directly contributed to the growth of the number of patent courts as patent cases proliferated. The downsizing of the patent court after 2014 was, in contrast, a targeted reform initiative in response to the decline in the quality of cases heard due to the increase in the number of patent courts. The adjustment of China’s patent court system thus appears to be the result of rational constructions in response to a changing reality.

We study the market for AI systems that are used to help to diagnose and treat diseases, reducing the risk of medical error. Based on a two-firm vertical product differentiation model, we examine how, in the event of patient harm, the amount of the compensation payment, and the division of this compensation between physicians and AI system producers affects both price competition between firms, and the accuracy (quality) of AI systems. One producer sells products with the best-available accuracy. The other sells a system with strictly lower accuracy at a lower price. Specifically, we show that both producers enjoy a positive market share, so long as some patients are diagnosed by physicians who do not use an AI system. Any transfer in compensation payment from the physician to the AI producer in the case of a diagnostic error will be passed on in full to the physician via the price of the AI system. The quality of the AI diagnosis system is independent of how any compensation payment to the patient is divided between physicians and producers. However, the magnitude of the compensation payment matters. An increase in compensation increases demand for both AI systems. In addition, the higher the compensation paid to the harmed patient, the higher the quality of the low-quality AI system. As the other firm continues to offer the highest accuracy level, any increase in compensation will decrease vertical differentiation, thereby increasing price competition between firms.

This work studies for the first time the effect on crime deterrence of variability in punishment under different assumptions on criminals risk preferences. We show that when criminals are risk averse, greater variability in punishment reduces the incentive to commit crimes, and that the opposite holds in the case of risk loving. The linkages between certainty of punishment, initial wealth and the incentive to commit crimes are also analyzed. We then analyze the effects of greater variability in punishment on deterrence policies founded on punishment severity, showing that this effect is positive if criminals are prudent and negative if they are imprudent. Lastly, we analyze for the first time variability in punishment as an instrument of deterrence policy. This analysis determines the optimal level of variability in the two cases of homogeneity and heterogeneity in risk preference.

Borrower-friendly laws, such as recourse restrictions and judicial foreclosures, impose higher costs and risks to lenders. Yet, there is little evidence on how lenders transfer them to borrowers at the mortgage origination. By exploiting the mortgage law heterogeneity across U.S. states, I show that recourse restrictions trigger a collateral channel, through which lenders require a 1.6 to 1.9 percentage points lower loan-to-value ratio to compensate for worse recovery opportunities and respective higher expected loss. This effect holds both before and after the Great Recession, and is robust to a regression discontinuity design approach. I also find that lenders do not penalize strategic defaults when recourse is not allowed. Regarding the impact of judicial requirements, the findings are mixed.

Unrestricted publication of judicial opinions and full transparency of judicial action are often considered a means to increase information relevant for future litigants and public discourse. In this paper, we analyze a model that captures the potential for unintended consequences of such policies. Under certain conditions, unrestricted publication of judicial opinions, full transparency of judicial behavior at trial and oral argument enabled by telecasting, and other forms of surveillance of judicial behavior may induce judges to obscure their opinions and actions leading to less information for the public over time. Unrestricted publication and full transparency of judicial action should be carefully considered as a policy preference.

In this article, we perform sensible robustness checks and estimation techniques that are broadly applicable to researchers studying the effects of concealed carry laws and apply them to recent work by Moody and Lott (2022). While Moody and Lott claim to have found that shall-issue and permitless-carry laws reduce homicide using data ending in 2014, our event-study analysis demonstrates that their model violates the conditional parallel-trends assumption. Additionally, applying methodology from Broderick et al. (2021), we show Moody and Lott’s results are highly sensitive to the removal of a small number of observations. We examine and reject Moody and Lott’s hypothesis that early- and late-adopting “shall-issue” states experienced different outcomes through sensitivity testing of their early–late threshold and applying the Goodman-Bacon (2021) decomposition. Following De Chaisemartin and d’Haultfoeuille (2020), we show Moody and Lott’s results are biased by heterogeneous treatment effects. Overall, our results highlight the importance of conducting principled validity and sensitivity checks before introducing outlier estimates into the empirical literature.

Institutional quality is crucial for innovation and economic growth. In this article, we exploit historical linguistic differences across Slovenian municipalities between the Italian, German, and Slovenian-speaking population prior to World War 1, as a plausible exogenous source of variation in firm-level innovation to estimate the effect of institutional quality on innovation. Employing a set of limited dependent variable and instrumental variable models, we show that greater historical exposure to multilingualism is associated with markedly better quality of government and provision of public goods, more impartial local government administration, and lower prevalence of corruption, which in turn predicts systematically more vibrant economic activity, greater economic complexity, and higher rates of firm-level innovation at the local level. The estimated effects are robust to a variety of specification checks and do not appear to be sensitive to the choice of ethnic and linguistic diversity measures.

Although the demand for corporate legal services has grown significantly, so has the pressure on companies to reduce legal costs, thereby necessitating a “data-and-metrics” driven approach to legal fees. Accordingly, we exploit the availability of a unique dataset comprising legal fees that Indian corporations have spent over a 30-year period from 1990 to 2020. We undertake the first cross-sectional analysis of legal fees across various exploratory variables over a long period of time. The results show an increasing trend in the quantum of legal fees incurred by Indian companies during the period. They overwhelmingly suggest that large companies (measured along the lines of total assets, industry segmentation, export and import orientation) spend a higher quantum in legal fees than do small companies. Legal costs are higher for companies that undertake capital raising or mergers and acquisitions transactions in a given financial year than those that do not experience such events. Finally, legal fees tend to be higher in certain industry sectors such as technology and energy where significant contracting, regulatory or other form of legal work is pervasive. It is our expectation that the results and accompanying data analysis will aid purchasers of legal services (being corporations and their in-house legal departments) as well as providers (being law firms and legal professionals) in planning and budgeting for legal fees, and also in devising and implementing appropriate fee arrangements.

Why do some legal disputes fail to settle? From a bird’s eye view, the literature offers two categories of reasons. One consists of arguments based on informational disparities. The other consists of psychological arguments. This paper explores the psychological theory. It presents a model of litigation driven by risk preferences and examines the model’s implications for trials and settlements. The model suggests a foundation in Prospect Theory for the Mutual Optimism model of litigation. The model’s implications for plaintiff win rates, settlement patterns, and informational asymmetry with respect to the degree of risk aversion are examined.

The literature on legal traditions focuses on the comparative macroeconomic effects of legal systems, concentrating on efficiency alone and leaving distributive issues to taxation. However, a country’s legal structure also conditions the primary distribution of income and may have a comparative advantage over taxation as a distributive instrument. We use cross-section and panel estimates to show that the level of income inequality in a country is correlated with its legal system. By several measures of inequality, common law countries are on average more unequal than civil law countries. We explain these results by the nature of the systems. The looser regulation in common law countries limits their capacity to achieve social objectives such as combating income inequality.