Volume 20, Issue 3

The European Association of Law and Economics at some intervals grants a Lifetime Achievement Award and Honorary Membership to a scholar “for his or her significant contributions to the field of Law and Economics, in particular to the development of this scientific movement in Europe.” This paper is the award lecture delivered by Christoph Engel at the Annual Meeting of the European Association of Law and Economics, held in Torino on September, 12, 2024.

Various anti-corruption tools have been proposed in the literature. In this article, we focus on deregulation. By removing red tape, the opportunities for bribery are reduced. At the same time, however, social costs can increase due to reemergence of inefficiencies that the regulation was intended to target in the first place. We analyze data from Mexico City, where a driving test was abolished to combat petty corruption prevalent in testing centers. A natural concern is that roads would become more dangerous. We find that this concern appears to be unwarranted; if anything, roads seem to have become safer.

This paper aims to analyze how the decriminalization of homosexuality contributes to the reduction of stigma against homosexuals in Africa in a context characterized by trust in religious and traditional leaders. Methodologically, we used a basic ordered probit regression with endogenous covariates and instruments variables, exploiting the Afrobarometer database (2023). The results show that trust in traditional and religious leaders increases the stigmatization of homosexuals. However, in countries that have decriminalized homosexuality, the stigmatization of homosexuals decreases, even when trust in religious and traditional leaders increases. This confirms the role of the rule of law in combating stigma and other forms of discrimination.

The deterrence function of criminal punishment relies on the credibility of enforcers to carry out threatened sanctions. That credibility may be suspect when enforcers face budgetary constraints, especially if the realized crime rate is high. This leads to the potential for multiple equilibria in the “crime commission game” – one involving a low crime rate, and one involving a high crime rate. The latter potentially arises because a high rate of crimes may overwhelm the ability of enforcers to apprehend offenders, thus leading to a self-fulfilling outcome. When multiple equilibria are possible, the question of which one is “selected” has practical as well as theoretical relevance. The paper assesses the implications of various selection criteria, including payoff dominance, risk dominance, and the global games approach. The conclusions highlight the role of the credibility of punishment in deterring crime, and also shed light on the interpretation of data on crime and punishment.

This paper examines a simple and old question: should innovators receive a patent or a prize? The answer I provide is equally simple: they should receive both. The literature on patents versus prizes has proceeded mostly under the assumption that there should be a choice between a regime of patents and a regime of prizes in which patents fall into the public domain upon award of the prize. There are significant “public choice costs” under the prize plans. By this I mean there are risks of inappropriate transfers to patentees – that is, looting – and of confiscation of patentees, through the conduct of or through the omissions of government agents. The innovation regime I propose is a patent-plus-prize scheme. The patentee would receive the patent and a prize that approximates consumer surplus. Public choice costs are considerably lower than under prize schemes: there would be no looting and no risk of confiscation under patent-plus-prize. In addition, private and social incentives to innovate are aligned.

In this paper, we revisit the invariance result of liability rules established by Polinsky (1980. “Strict Liability vs. Negligence in a Market Setting.” The American Economic Review 70: 363–7) and Shavell (1980. “Strict Liability Versus Negligence.” Journal of Legal Studies 9: 1–25) in oligopoly. We show that in the case of linear demand functions, symmetric duopoly firms produce less than the efficient quantity levels under all of the no liability rule, the strict liability rule and the negligence rule but they take the efficient level of care under the strict liability rule and the negligence rule whereas they take no care under no liability rule. Thus, the invariance result does not hold in the case of duopoly. So, contrary to the invariance result, our result has an important implication that the liability rule in addition to the price plays a crucial role in providing a proper incentive to duopoly firms. Instead, we establish a weaker version of invariance result between the strict liability rule and the negligence rule in oligopoly with general demand functions.