This paper examines how strategic corporate social responsibility (CSR) and foreign ownership influence the choice of commodity taxation principle. We show that the destination and origin principles create different CSR incentives: under the destination principle, increased foreign ownership raises CSR in the domestic firm but lowers it in the foreign firm, with the opposite pattern under the origin principle. Departing from Haufer et al. (2005), who support the origin principle and negative taxes under a linear demand, we demonstrate that incorporating foreign ownership and trade costs may justify a positive commodity tax and favor the destination principle.
In this note, assuming team production under the heterogeneous member, we consider the effect of members who prefer to have a positive impact on productivity with the interaction of actions. We demonstrate the bright and dark side of the unilateral desire for impacts on the team performance, depending on the interaction (complements or substitutes) and exogenous variables. Our result implies the importance of the interaction of actions in team production to manage the psychological costs in the organization.
This paper theoretically and experimentally studies first-price and second-price auctions in a complete information setting where one bidder creates a positive or negative externality on the other two bidders. The two bidders subject to externalities can be considered as playing coordination and anti-coordination games under positive and negative externalities, respectively, and the issues of coordination failure and free riding arise. Our experimental data show that coordination failure occurs more frequently than free riding, which suggests that participants react more sensitively to negative externalities than to positive ones. Moreover, the existence of inefficient equilibria increases coordination failure and reduces free riding.
A central prescription of the standard economic model of law enforcement is to couple a maximal sanction with a low probability of detection, called "probability-scaling." This article reformulates the canonical model to more accurately describe the process of detection of offenders. A logical consequence of this reformulation is that both random and "group punishment" can be a part of an optimal enforcement policy. In addition to choosing the level of expenditure on enforcement and the severity of the sanction, the enforcer can also choose the size of the pool of suspects that will be punished. We derive the optimal enforcement policy in this context, and offer several examples of random individual and group punishment methods in modern law enforcement.
Before products are released into a market, regulators require the product's designs to be evaluated for safety standards either by an external or internal evaluator. Failing these standards requires product redesign. This paper theoretically analyzes the effectiveness of internal versus external evaluators in the presence of myopic CEOs who determine the product's safety level. We show that CEOs' first-mover advantage incentivizes them to design products that are suboptimal for firms' owners (profit) and society (welfare). When CEOs are sufficiently myopic, a firm's owners may prefer external evaluators even when they are uninformed and underestimate the costs associated with product redesign.
We study how uncertainty concerning the performance and safety of autonomous vehicles (AV) influences the success of two prototypical strategies governing the producers' timing of the release of new models. Producers can announce the date of the next market introduction or commit to a minimum quality level. Consumers might opt to purchase a new AV, delay the purchasing decision, or resort to purchasing a conventional vehicle. Relying on a calibrated agent-based simulation model, we (i) investigate the competitive advantage of the two strategies and (ii) analyze the impact of consumer attitudes toward uncertainty on the market diffusion of AVs.
The literature on quality choice in vertically differentiated duopoly regularly assumes that either fixed costs or variable unit costs depend on quality. We analyze a generalized model where both types of costs are quality-dependent. Our findings are partially in contrast to the results obtained in the literature so far. In particular, the profit of the low-quality firm increases if variable unit costs increase for any level of quality. Hence, the low-quality firm has an incentive to engage in lobbying for governmental regulations that lead to rising variable costs of quality.
With increasing concerns about the accountability of shareholder-oriented boards, board-level employee representation (BLER) is gaining momentum in public debate. Although BLER is not a new idea, there is little consensus about its economic effects. Using the enactment of the German Codetermination Act of 1976 as a quasi-natural experiment, we document two consequences of BLER. First, labor expenses of firms become less responsive to revenue, specifically in sectors with high labor turnover rates. Second, BLER increases operating leverage of firms. Overall, our findings are consistent with the view that BLER affects risk sharing between shareholders and employees.
In 1837, British authorities used two rules to allocate rights to 999 one-acre parcels in the new town of Adelaide, South Australia. The first 408 acres were allocated by Random Serial Dictator (RSD) rules to British investors who pre-purchased selection rights while the 591 remaining acres were then each sold at auction. Did the allocation rules impact acre development? We find that the institutional shock generated by the rules depressed development on "Preliminary Land Orders" (PLO) acres relative to auction acres of comparable quality in 1850 and 1860. The development gap shrank by more than two thirds in 1880, and had disappeared by 1910.
In this article, I discuss a few recent issues in competition policy which might benefit from further attention from the academic community. The main issues covered are green efficiencies, the rise of the digital economy and labour markets.
Criminology and economics can learn a lot from each other. That is easily said, but usually difficult to implement. All too often, such interdisciplinary exchanges remain fruitless, because the different sides do not speak each other's languages or because one disobeys the dogmas of the other. The target article by Nguyen et al. (2025) is well suited to illustrate these two common issues. With the distinction between stated and revealed preferences, Nguyen et al. borrow two of the most fundamental concepts from economics. However, they apply them in ways that will occur "unorthodox" to economists. I highlight some of these unorthodoxies to illustrate how, at least in my view, criminologists could benefit from trying to immerse themselves (even) more deeply in the decision-theoretical framework on which neoclassical economics is built. Using Nguyen et al.'s setting as an example, I try to sketch out the extra layers of conceptual clarification that such an exercise could entail in Part I of this comment. In Part II, I discuss how economics could learn from criminology in turn. Possibly without noticing, Nguyen et al. use an approach that departs from the traditions of neoclassical microeconomics in several respects, which I spell out in more detail below. All these deviations are very reasonable and have the potential to improve our understanding of human decision-making processes and resulting behaviors, which is what we all are after as social scientists. Nonetheless, economics has an unfortunate tradition of being slow in importing innovations from the outside.
In this contribution, the challenges that autonomous decision-making (AI) poses for law is approached by a review of the so-called "accountability gap." To get a better understanding of the fundamental problem that economic analysis of law has with autonomous decision-making, different routes for solving the problem are scrutinized. The analysis shows that the toolbox of Law and Economics does not yet provide a clear answer. Doctrinal law can also give no conclusive answers. Instead, this contribution proposes taking a closer look into legal history. The recourse to legal history can neither replace theory, nor can legal rules from the past be transplanted to the present. Yet, a look into legal history can provide fresh ideas on how to deal effectively with the challenges of autonomous decision-making.
Scholars studying crime would do well to remember a fundamental fact of human life: people commonly fail to realize their good intentions, paving "the proverbial road to hell" (Sheeran and Webb, 2016, p. 503). Smokers who intend to quit smoking rarely succeed (Lee and Kahende, 2007). Most overweight individuals intending long-term weight loss fall short (Engber, 2019). New Year's resolvers with intentions of behavioral change often quickly disappoint themselves (Oscarsson et al., 2020). What Nguyen et al.'s (2025) study demonstrates is that hell's road is also paved with unintended criminal offending. Most justice-involved respondents in their sample (young people with past arrests) have good intentions - what Nguyen et al. (2025) call "stated preferences" for conformity - but about half still commit new crimes. There are methodological bones to pick with Nguyen et al.'s (2025) study, which I will discuss later, and it is inadvisable to call behavioral intentions "stated preferences," as they do, given the term's historical association with hypothetical make a major contribution by reminding us why intention-behavior gaps in crime, what they describe as "incongruence," are important and deserve more attention. People can intend to commit crime and not offend, but far more frequently they intend to conform and yet break the law. Criminological theories should (and do) have something to say about such intention-behavior gaps. And whereas previous studies have mostly focused on testing these theories' surface predictions about provide contrasting predictions about how much incongruence should exist between intentions and behavior, how it should change over time, and what factors should explain these changes.
In Mastrobuoni and Owens (2025), the authors exploit a rich set of crime data from Milan to better understand the decision-making of offenders. They apply an econometric analysis of that city's incidents of commercial robbery from 2008 to 2010, examining the weapon choice, number of accomplices, and the type of business targeted by robbers. They further analyze the return from reported robberies (the "take" or "loot") and arrest patterns, while taking into consideration constraints and influences on offenders' decisions imposed by Italian law, which varies punishments based on aspects of the criminal event, e.g., the use of a gun or whether the robbery was conducted by an individual or group of individuals. Throughout the paper, Mastrobuoni and Owens assert that robbers behave strategically if the ratio of marginal return in loot and marginal cost of detection is greater than zero. They claim further that robbers exploit such "arbitrage" opportunities, opting for strategies that increase hauls and reduce risk. In other words, they find that robbers act in accordance with principles of expected utility maximization. This orientation toward criminality is common among economists, who tend to view behavior as driven by an actor's perceptions of costs and benefits. In this comment on their paper, I argue not that such orientations are wrong, but that they are incomplete. At least when it comes to crime, the explanatory power of economic models of behavior could and should be bolstered by the inclusion of well-established principles of criminology.
We propose a new framework to investigate whether criminals exhibit strategic behavior in response to the criminal law and their enforcement. Unique data on commercial robberies in Milan allow us to examine the decisions robbers make regarding weapon choice, number of accomplices, and the type of business targeted. Our analysis explores the relationship between these decisions, the expected return from the robbery, and the probability of arrest, considering the constraints imposed by Italian law, which prescribes differential punishments based on certain criminal choices. We find some evidence that robbers act in accordance with expected utility maximization, particularly when operating in groups.
This paper explores how direct and indirect exposure to law enforcement activities shape deterrent effects. Focusing on experimental and quasi-experimental research from economics (mainly from domains such as tax evasion, traffic violations, and financial crimes), I first summarize evidence showing how personal experiences shape perceptions about enforcement risks and sanctions, and deter future offenses. The paper then turns to the role of vicarious experiences. I discuss the growing body of evidence documenting enforcement spillovers, i.e., cases where individuals learn and adapt based on observations or experiences shared by peers, co-workers, or neighbors. The paper also highlights the importance of better understanding the underlying learning processes for deriving policy implications.
People with criminal histories face many challenges in the labor market. How do the employment outcomes of people with criminal histories compare to those without? Which public policies best promote the reintegration of people with criminal histories into the workforce? Drawing upon data from U.S. household surveys and the extensive body of research exploring the employment challenges faced by people with criminal histories, I first document the employment challenges faced by those most likely to be involved with the criminal justice system. I then review research pertaining to policies intended to improve employment prospects for those with official criminal records.
