Indigenous land demarcation conflicts in Brazil: Has the Supreme Court’s decision brought (in)stability? Abstract We investigate judiciary decision-making patterns regarding property rights conflicts between native Brazilians and rural farmers in the Midwest region of Brazil. Our main contribution is the use of the qualitative comparative analysis (QCA) method for the evaluation of the issue. We use QCA to examine a unique database composed of cases heard by a regional federal court in Brazil between 1999 and 2013. Our empirical analysis is based on the outcomes of the individual judicial procedures along with the specific laws and jurisprudences evoked by the federal judges in making their decisions. We find evidence that a major case settled by the Brazilian Supreme Court in 2009, celebrated as a landmark in national jurisprudence and expected to bring stability to the conflicts, did not have this effect on lower courts’ judgments. In fact, the 2009 decision triggered a proliferation of different interpretations among judges about how to analyze the land conflicts, thus changing the structure of the judges’ decisions. Based on these findings, we can shed new light on the dynamics of judicial decision-making regarding property rights conflicts of indigenous lands in Brazil.

On the choice of legal standards: a positive theory for comparative analysis Abstract In contrast to existing economic theory on the choice of legal standards in the enforcement of Competition Law, we develop a modelling framework that accounts explicitly for (a) Courts’ choices, given the substantive standard adopted and (b) Competition Authorities (CAs) setting legal standards anticipating Courts’ choices, recognizing that CAs place at least some weight on the implications of their choices for the outcome of the judicial review process and, hence, for their reputation. We then show why CAs may favor Per Se type standards (even when an error-minimising or welfare maximization approach would suggest the choice of an effects-based standard), with sub-optimal utilization of economic analysis, how this choice is affected by the Courts’ substantive standards, why the legal standards for any given conduct may differ between countries, why there may be a U-shaped empirical relationship between legal standards and the probability that the CA’s decisions are annuled and how the choice of standards affects other aspects of enforcement, such as the number of investigations undertaken.

Compensation in personal injury cases: mean or median income? Abstract Courts typically base compensation for loss of income in personal injury cases on either mean or median work income. Yet, quantitatively, mean and median incomes are typically very different. For example, in the US, median income is 65% of mean income. In this paper we use economic theory to determine the relation between the appropriate make-whole (full) compensation and mean and median work incomes. Given that consumption uncertainty associated with compensation generally exceeds that associated with work income, we show that the appropriate make-whole compensation exceeds mean (and therefore median) work income. Hence, if the compensation must be either the mean or the median work income, then mean work income should generally be selected.

Political competition in judge and prosecutor elections Abstract The United States is unique in that important actors within the criminal justice system, namely judges and prosecutors, are selected in popular election. Several states are currently adjusting whether political party affiliation is listed on the ballot. Additionally, states differ by how easy it is for candidates from non-dominant parties to gain access to the ballot. We use a laboratory experiment to investigate how these two important policy changes to political competition affect campaign spending and outcomes. Using asymmetric contests designed to capture the institutional change, we find that subjects spend beyond both the socially optimal level and the amount predicted by theory. This over-competition is not uniform, but rather concentrated in those subjects who have the strategic advantage (either dominant-party affiliation or restricted ballot access of competitors). Opening up the election process, therefore, leads to reductions in the wasteful, rent-seeking spending (contrary to theory). Disadvantaged subjects are less likely to exit the race when the election process is opened, as well. Thus, a level playing field promotes participation. Furthermore, we explore heterogeneous treatment effects, finding less campaign spending for risk-loving, non-ambiguity averse, strategically sophisticated, and pro-social subjects. Therefore, elections disproportionately select individuals without these characteristics. Additionally, the mix of those who win the election adjust with changes in the electoral rules as well.

How many patents are truly valid? Extent, causes, and remedies for latent patent invalidity Abstract A substantial number of patents tested in court for validity are invalidated. If a similar portion of all patents was deemed invalid in hypothetical validity tests, then this would indicate a seriously flawed patent system due to restrictions unduly imposed by these erroneously granted patents on users and follow-on innovators. Thus, we ask, if a randomly picked patent underwent revocation proceedings, what are the odds of its invalidation? We address this question by analyzing the various selection effects through which patents become subject to validity decisions. Empirically, we focus on Germany, where revocation proceedings are separate from infringement suits and where, in court decisions during the period of 2010–2012, 45% of patents were determined to be fully invalid and 33% to be partially invalid. Based on data gleaned through expert interviews, a survey among lawyers, and an econometric analysis of court judgments, we find the likelihood of (hypothetical) invalidation of a randomly picked patent to be in the same range as that for actually adjudicated patents. As the main cause of patent invalidity we identify incomplete searches for prior art during examination. Our arguments carry over to other legislations. To remedy this situation, we suggest a significant increase of the inventive step required for patent grant combined with a smaller increase of the inventive-step standard in litigation.

Individual dismissals for personal and economic reasons in French firms: One or two models? Abstract Most OECD countries divide dismissals into different types, depending on their grounds, as either disciplinary or economic. Restricted to individual dismissals, this article seeks to better understand how the differences between these two grounds with regard to statutory provisions result in the dismissal behavior of employers. Do employers choose this designation to minimize termination costs (severance payment and damages)? Using an original database of French establishments from 1999 to 2009, this article aims to analyze the factors influencing employers’ use of economic and personal dismissals, providing insights into the enforcement capability of legal dismissal rules and the part played by strategic behavior. In our view, strategic behaviors should be reflected in the factors influencing both types of dismissal decisions identically, whereas compliance with legal provisions induces contrasting influences. Thus, the hypothesis tested—called the uniqueness of the model of dismissal—is the absence of specificity of the determinants, especially regarding the economic conditions of the firm and related human resource management characteristics, between the two types of dismissal. The results highlight the existence of two quite different models of dismissal even though the personal dismissal determinants are not orthogonal to the economic conditions of the firm. Economic dismissals are essentially explained by the economic conditions of firms, whereas personal dismissals are linked to the propensity of human resource management to retain employees.

How to turn crowding-out into crowding-in? An innovative instrument and some law-related examples Abstract Using a simple decision-theoretic approach, we formalize how agents with different kinds of intrinsic motivations react to the introduction of monetary incentives. We contend that empirical results supporting the existence of a crowding-out effect under various legal procedures hide a more complex reality, where some individuals contribute thanks to these additional monetary incentives while others reduce their contributions. Our approach allows us to study the theoretical ability of the self selection mechanism(Mellström and Johannesson in J Eur Econ Assoc 6:845–863, 2008; Beretti et al. in Kyklos 66(1):63–77, 2013) to reduce the likelihood to backfire against the cause it is meant to promote. This mechanism consists of a monetary payment for the pro-social behavior and it offers agents the choice to either keep the money for themselves or to direct it to a charity. We show that this legal procedure dominates others more classical procedures because it taps wisely into the motivational heterogeneity of individuals. It uses a self-selection mechanism to match adequate monetary incentives with individuals’ types regarding intrinsic motivations. It may even turn a situation subject to crowding-out into a crowding-in outcome.

The efficiency of bankruptcy law: evidence of creditor protection in Poland Abstract A debt does not function as a liquid asset in an ineffective enforcement environment. In this study, we investigated the efficiency of creditor protection in insolvency. We approached efficiency in three dimensions: ex ante, ex post, and interim. This paper presents the differences between Polish and Spanish ex ante efficiency, the factors influencing the interim recovery rate and efficiency, and the differences between ex ante and ex post efficiency in Polish proceedings. We studied 17,494 financial statements of Polish companies and the finalized proceedings of 784 court cases from the period 2004–2012. We applied regression analysis, combined with classification and robustness tests. Our evidence supports the conclusion that Polish insolvency proceedings are inefficient. The interim efficiency oscillates at 12% per annum. The duration of the proceeding from filing until resolution takes an average of 853 days. These results have policy implications, as creditor protection is a major aspect in attracting investment for net foreign debtors.

Law, economics and Calabresi on the future of law and economics Abstract There exists a distinction between ‘law and economics’ and the ‘economic analysis of law’. The former, corresponding to Coase’s approach, consists in taking legal rules into account insofar as they influence economic activities. The latter, associated to Posner’s name, consists in using economics to analyze legal problems. Methodologically speaking, if one admits that the economic analysis of law consists in using economic tools to analyze legal problems, Calabresi’s own work must be classified as such. However, Calabresi has always insisted that his own approach differs from Posner’s economic analysis of law. In this paper, we take the opportunity of Calabresi’s new book—The Future of Law and Economics—to revisit Calabresi’s approach to law and economics. In his book, Calabresi explains that the economic analysis of law is unsatisfactory because economics is too narrow. He insists on the need to amplify economic analysis by: first, adopting a more realistic approach à la Coase; second, taking merit goods into account; and third, including individuals’ propensity to be altruistic. We analyze these three aspects and show that it leads to a certain ambiguity in terms of the distinction between ‘law and economics’ and the ‘economic analysis of law’.

Law and economics and the role of explanation: A comment of Guido Calabresi, The Future of Law and Economics Abstract A central theme of Guido Calabresi’s The Future of Law and Economics is the way that economic analysis of law tends to reject as irrational whatever aspects of law or life do not fit its approach. Calabresi argues instead for a different approach he labels “law and economics,” which includes a greater willingness to modify economic analysis to allow it better to fit law and life. This Review Essay elaborates Calabresi’s argument, supplementing it with ideas from other sources, including Arthur Leff’s parallel response to economic analysis, “Some Realism about Nominalism,” and an earlier Calabresi article, “Supereditor or Translator.” Among the topics discussed are the role of historical/causal analysis, and the different sorts of explanation that we do expect, or should expect, from theories of law.