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We analyze corporate fraud in a model in which managers have superior information but are biased against liquidation, because of their private benefits from empire building. This may induce them to misreport information and even bribe auditors when liquidation would be value-increasing. To curb...
Persistent link: https://www.econbiz.de/10012719439
We build an equilibrium model of prostitution where clients and sex workers choose to demand and supply sex under three legal regimes: prohibition, regulation and laissez-faire. The key feature is the endogenous evolution of the risk as a consequence of policy changes. We calibrate the model to...
Persistent link: https://www.econbiz.de/10011190985
Stricter laws require more incisive and costlier enforcement. Since enforcement activity depends both on available tax revenue and the honesty of officials, the optimal legal standard of a benevolent government is increasing in per-capita income and decreasing in officials' corruption. In...
Persistent link: https://www.econbiz.de/10005504469
We study the opinions on prostitution that emerged from the World Value Survey. We show that individuals tends to justify prostitution more in countries where it is legal or regulated and less in countries where it is prohibited, even after controlling for religious, cultural and sociological...
Persistent link: https://www.econbiz.de/10011163241
occurs under flexible legal regimes.
Persistent link: https://www.econbiz.de/10011081130
We develop an agency model of organized crime accounting for the main trade-offs involved by the introduction of an accomplice-witness program. We characterize the optimal policy and identify its main determinants in a framework where public officials can be dishonest. Our predictions are tested...
Persistent link: https://www.econbiz.de/10011083808
Persistent link: https://www.econbiz.de/10011085253
In this chapter, we review some recent work on public intervention in economic environments where firms undertake investments in research or in physical assets, and then select appropriate business practices to extract profits from the outcomes of the investment process. Public policies may take...
Persistent link: https://www.econbiz.de/10011122730
In this paper we review some recent work on public intervention in economic environments where ?firms undertake investments in research or in physical assets, and then choose appropriate business practices to extract pro?ts from the outcomes of the investment process. Public policies may take...
Persistent link: https://www.econbiz.de/10010734596
This paper introduces time inconsistent preferences into a moral hazard setting where the agent is risk-averse. We derive a necessary optimality condition on the consumption allocation that is different from the so-called Inverse Euler Equation of Rogerson (1985). Specifically, inverse marginal...
Persistent link: https://www.econbiz.de/10010801006