Bergh, R.J. van den

An Introduction to the Law and Economics of Regulation (In Book)

2011-08-31T00:00:00Z

Abstract This chapter provides a general framework to analyze regulation with a law and economics approach. It introduces the volume “Regulation and Economics” of the second edition of the Encyclopedia of Law and Economics. This study intends to provide a state-of-the-art overview of regulatory economics. The editors review the traditional classifications and theories of social and economic regulation, emphasizing the limitations of these distinctions particularly in the perspective of the choice between liability and regulation. The chapter discusses both the public and the private interest theories of regulation and how they interact in various regulatory domains. The latter are divided in four categories: social regulation; regulation of public utilities; regulation of non-natural-monopolies, and regulation of professions. This introduction also summarizes the main findings of the 17 chapters on regulation included in the volume. The overall conclusion is that regulation involves a number of sector-specific issues. It is no longer possible to distinguish forms of regulation depending on the kind of market failure they are supposed to address, because in virtually every field regulation has to cope simultaneously with multiple market failures. The implication of this finding is twofold. On the one hand, the ability of regulation to effectively improve on market failure is impaired by the vested interests created by regulation. On the other hand, the actual outcomes of regulated markets depart significantly from the idealized world of perfect competition. The ‘Nirvana fallacy’ that still pervades the academic and the policy debate depends on the failure to acknowledge these circumstances.

Screening: Should more biopsies be taken in larger prostates? (Article)

2009-10-01T00:00:00Z

Objective: To assess the number of missed prostate cancers and the frequency of aggressive disease when taking lateralized sextant prostate biopsies, irrespective of the total prostate volume (Pvol), during screening for prostate cancer. Subjects and Methods: Men participating in the European Randomized Study of Screening for Prostate Cancer, Rotterdam section, aged 55-74 years, with a prostate-specific antigen (PSA) level of ≥3.0 ng/mL, and a negative sextant biopsy result at the initial screening round, were followed for 8 years. Cases of prostate cancer detected during the follow-up by screening, or detected clinically as interval cancers, were assessed. Pvol at the initial screening round was related to the number of cancers found during the follow-up. Furthermore, the frequency of aggressive cancer (N1 or M1, PSA >20 ng/mL, Gleason >7) was evaluated using multivariate logistic regression analysis, including age, PSA level and Pvol. Results: In the total of 1305 men, 152 prostate cancers were detected during 8 years of follow-up (11.6%); 23 were classified as aggressive (15.1%), and 50 (32.9%) were detected as interval cancers. There was a significant relation between a larger Pvol at the initial screening round and fewer cancers (odds ratio 0.1, P < 0.001). In multivariate logistic regression, the initial PSA level (odds ratio 3.21, 95% confidence interval, CI 1.2-8.3) and smaller Pvol (0.08, 95% CI 0.03-0.26) were statistically significant predictors for all cancers and aggressive cancers (PSA odds ratio 70.37, 95% CI 13.5-366.2; Pvol odds ratio 0.03, 95% CI 0.01-0.35). Conclusions: Men with a smaller Pvol and an initially high PSA level were at greater risk of cancer detection and of an aggressive cancer during the follow-up. The use in clinical practice of volume-adjusted biopsy schemes should not be implemented automatically in screening programmes with repeated screening.

Consumer Sales Law from an Economic Perspective (In Book)

2009-05-20T00:00:00Z

Introduction: In the European internal market consumers have a wide choice of products that become increasingly available through cross-border shopping. Sometimes sellers frustrate consumers‟ contractual expectations by delivering goods that are not of satisfactory quality. To guarantee a minimum level of consumer protection, EC Directive 1999/44 requires that goods must be in conformity with the contract of sale.1 This rule applies regardless of whether the seller behaved negligently. In cases of non conformity consumers have a choice of different remedies for breach of contract by the seller, such as repair or replacement or price reduction. The Directive has been presented as a significant step towards creating an internal consumer market, which would be impeded by fragmented and heterogeneous consumer protection rules. It may be followed in the future by further harmonization initiatives in the field of consumer sales law. From an economic perspective, two sets of questions arise. First, it may be asked whether legal intervention is necessary to guarantee quality in markets for consumer goods. The standard economic answer to this question is that legal rules may cure market failures, in particular problems of asymmetric information. However, any legal intervention must be justified by a benefit-cost analysis to enhance economic efficiency and avoid counterproductive effects. Consumer protection should be increased only up to the point where its marginal cost equals its marginal benefit. Moreover, market failures should not be replaced by government failures, which lead to outcomes that are worse than those of imperfect markets. Second, Law and Economics scholars have critically analyzed the question relating to the best level of government for designing regulatory responses to market failures. Should rules of consumer protection be enacted at the European level or should regulatory action be taken by the Member States? The economic analysis of federalism and regulatory competition provides several useful insights that are also relevant for discussing the desirability of harmonization of consumer sales law to further market integration.

Optimal Enforcement of Safety Law (Research Paper)

2008-03-10T00:00:00Z

Given the threats of our current 'risk society', there is an ever-increasing demand for safety regulation to counter the harmful effects of an equally growing number of dangerous activities. Claims for more safety and security abound, ranging from concerns about people killed in traffic accidents and consumers harmed by unsafe products to anxiety about environmental disasters (global warming) and terrorism. This state of affairs poses difficult issues for policy makers. While government resources are necessarily limited, demands for safety and security are in principle without bounds. It is thus unavoidable that difficult choices must be made and priorities must be set. The Law and Economics literature has developed a comprehensive normative framework to prescribe optimal legal policies when individuals behave rationally. It is well established that enforcement agents should not aim at a minimum level of violations of legal norms but at an optimal level. The main goal of this paper is to apply the insights from the Law and Economics literature on optimal law enforcement to the area of safety regulation. Our paper distinguishes between the form of the sanctions (monetary versus non-monetary), the role of private parties versus public agents in enforcement (e.g. group actions), the timing of the enforcement measures (preclusion, act-based sanctions and harm-based sanctions) and the division of competencies between central enforcement authorities and decentralized enforcement agencies. Furthermore, we discuss several criticisms on the rational choice model (especially related to terrorism) and briefly discuss compliance strategies as alternative approach to deterrence strategies.

The preventive function of collective actions for damages inconsumer law (Article)

2008-02-21T00:00:00Z

From a deterrence perspective, private enforcement of consumer law can be insufficient for several reasons. Individual consumers may find it too costly to start a lawsuit (‘rational apathy’) or they may not even know that an infringement has occurred (‘information asymmetry’). If public enforcement is not available, or if the budget of public authorities is limited and used for other purposes, the problem of under-enforcement will persist. Collective actions may be able to mitigate these problems. If many consumers can join their claims, the costs per claim decrease so that the rational apathy problem might be overcome. If consumer associations have standing, they might be able to acquire better information regarding infringements than individual consumers are able to do. However, collective actions pose problems of their own. The leading plaintiff or the organisation issuing the collective action could try to advance its own interests, rather than furthering overall consumer interests. Moreover, a large-scale lawsuit might harm the reputation of the defendant and thus create the possibility of ‘frivolous suits’. The paper discusses a number of possibilities to overcome these problems. Ultimately, private and public enforcement will need to co-exist, since collective actions are not a perfect instrument to achieve optimal deterrence.

Introduction: The Impact of Guido Calabresi on Law and Economics Scholarship (Article)

2008-01-01T00:00:00Z

On November 7, 2008, the Erasmus University Rotterdam conferred the title of Doctor honoris causa upon Guido Calabresi, Judge of the US Court of Appeals for the Second Circuit, Sterling Professor Emeritus, and former Dean of Yale Law School. With the awarding of this doctorate, the Erasmus School of Law wanted to honour Guido Calabresi for his extraordinary intellectual achievements in the field of Law and Economics. This special issue of the Erasmus Law Review is published on the occasion of the award of the honorary doctorate to Guido Calabresi. The issue contains four contributions, all written by European authors, which show how Calabresi’s writings have had a profound impact on legal scholarship and judicial decision-making not only in the US but also in Europe.

Towards Better Regulation of the Legal Professions in the European Union (Research Paper)

2007-12-30T00:00:00Z

This article starts by discussing a number of public interest explanations for regulating the markets of legal services: information asymmetries, negative externalities and public goods. Since professional associations of lawyers meet the requirements for acting as effective lobbyists, the article subsequently investigates private interest explanations. Empirical work to test alternative theories of professional regulation so far remains limited and the results are ambiguous. Even if empirical studies are able to show that there exists a correlation between levels of professional regulation and profits earned, firm policy conclusions cannot be drawn as long as quality is not adequately assessed. After an overview of the theoretical and empirical literature, the article suggests a number of best practices for policy making. The two most important guidelines seem to be the following. Regulation should not be profession-focused but targeted at market failures in particular segments of the legal services markets. Changes of the regulatory infrastructure that create scope for competitive self-regulation may be the best way for coping with market failures and at the same time reducing the scope for rent-seeking.

The Law and Economics of Insurance: Catastrophic Risks, Competition on Insurance Markets and Insights from History (Article)

2004-04-01T00:00:00Z

Achilles Uncovered - Revisiting the European Commission's 1997 Market Definition Notice (Article)

2002-01-01T00:00:00Z

Competition on the European Market for Liability Insurance and Efficient Accident Law (Article)

2002-01-01T00:00:00Z

Towards an Institutional Legal Framework for Regulatory Competition in Europe (Article)

2000-11-01T00:00:00Z

Aansprakelijkheidsverzekering, concurrentie en ongevallenpreventie (In Book)

2000-01-01T00:00:00Z