Essays in law and economics

Abstract

The thesis consists of four chapters concerning different topics of Law and Economics.

The first chapter deals with economic issues in competition law. In order to distinguish predatory pricing from competition on the merits, the courts in the United States and in the European Union have established cost-based tests that also include an assessment of the market structure. The tests miss a causal connection between conduct and foreclosure. In contrast, Australia and New Zealand make use of a counterfactual analysis that establishes causality. However, the causal connection there relates to the market power and the conduct, and does not answer whether the conduct has only been done because of the foreclosure effects. A counterfactual test could be useful in predation cases if it establishes a causal link between the profitability of the conduct and the foreclosure effect.

The second chapter explores the effect of excluding tort law for workplace accidents. In countries with workers’ compensation schemes, employees receive compensation for injuries at work regardless of fault, while private law liability of employers is either limited or fully excluded. The degree of liability matters for workplace safety, and different legal arrangements influence incentives of employers and employees to take care. An empirical analysis of several jurisdictions reveals a consistent pattern. The combination of arrangements that increase private law liability and mitigate moral hazard seems to be important for safety at work. No-fault workers’ compensation with the benefit of effective compensation comes with a cost: more injuries of those, which it seeks to protect.

The third chapter assesses the effect of no-fault automobile insurances on safety incentives. In order to examine how no-fault motor vehicle insurance affects accident rates, insurance regimes in various countries are compared. A random effects model on fatality data of 29 countries reveals that some motor vehicle insurance systems increase moral hazard. The incentive to take care seems not to be negatively affected by no-fault rules, but by moral hazard due to limited experience rating. Restrictions on experience rating lower the level of care taken by motorists. A combination of no-fault insurance and flat-rate premiums, as found in New Zealand or the Northern Territory in Australia, has a detrimental effect on the safety of roads.

The fourth chapter primarily builds on the finding of the second chapter that the exclusion of tort law for workplace injuries results in higher accident rates. In this respect, the question arises whether health and safety regulation can counteract the detrimental effect by providing deterrence from criminal sanctions. This is particularly relevant for New Zealand where a tendency of the law towards a reliance on regulation and criminal law can be observed. In practice, however, criminal law cannot fully replace common law in establishing incentives to take care, and is not as effective as private law actions.