Abstract
The cost of starting a business in Italy is relatively high as compared with other EU member states. One reason is the cost of notarization, which is mandatory under the Italian law. In order to reduce this cost, in 2012 a new type of limited liability company was created—the simplified limited liability company—for which notarization should be provided free-of-charge. In this paper we explore the reasons behind the requirement of notarization and review the evidence from a few cases where notarization was made optional. Subsequently, we describe the results of an ad hoc experiment in order to evaluate the design of the policy. We performed a randomized control trial involving almost 350 notaries in Rome, Italy. We find that the majority of the notaries in our sample do not fulfill the obligation by asking a greater-than-zero fee, therefore suggesting the policy is not fully effective. We conclude that obliging notaries to perform specific tasks below-costs (or even free-of-charge) may not be an effective policy, leading to suboptimal results.
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Notes
Latin (or civil law) notaries are different from notary public (or common law) notaries; whereas the latter exist in the United Kingdom, Ireland and Scandinavian countries, their documents do not have a special status before courts. In what follows, we will use the general term “notary” referring to Latin notary.
A previous version, Lavecchia and Stagnaro (2017), is available (in Italian).
Country specific recommendation to Italy No. 2 (2017): “Promptly adopt and implement the pending law on competition and address the remaining restrictions to competition” (European Commission 2017).
Although anecdotal evidence suggests that this type of incorporation is very limited in its scope, and lack flexibility, we argue that two startuppers might prefer the cheapest, albeit imperfect, solution, at least in the short run. The argument goes, if the venture succeds, they might switch to a more sophisticated solution later on.
There is no public information about fines and the number of sanctions. We requested detailed information to the Roman Consiglio under the Italian FOIA without success.
In theory, the higher the number of notaries, the stronger the case for competition. However, some recent provisions from the Italian antitrust authorities against the local body of notaries in Rome (Case I797, June 22th, 2017) and Milan (Case I803, May 3rd, 2018) suggests that even the largest communities of notaries are easy to engage in anti competitive behavior. We do not have any evidence from smaller districts, which sometimes can group less than 20 notaries, but we can safely imagine it’s far easier in this situation to coordinate and engage in anti competitive practices.
For some we recover later the address or find that it wasnt working. This led to a slight over-representation of the control group (+ 9 notaries).
Angus Deaton (2009) criticizes this approach on the ground that alphabetical order might be used to prioritize access to resources; however, not only this is not the case, but apart from sorting data by alphabetical order, our assignment is based on the position, whether odd or even. Moreover, the use of random number generator is bound to the fact that they generate pseudo random numbers.
The text sent is “Gentile Notaio, mi chiamo Giovanni Percoco; sono un neo laureato in Ingegneria biomedica e, insieme al collega Luca Scilabra, ingegnere informatico, abbiamo un’idea per la creazione di un applicativo che favorirebbe il controllo in remoto dei pazienti dimessi. Abbiamo già preso dei contatti informali con una banca per il finanziamento della nostra attività ma ci è stato risposto che è un pre-requisito fondamentale per ottenere il finanziamento è la costituzione di una società. Dopo esserci consultati con vari professori e amici, abbiamo identificato il profilo della [srl] OR [srl semplificata] come quello piu confacente le nostre esigenze.Vorremmo chiederle un appuntamento per definire i dettagli. Inoltre, se possibile, potrebbe farci avere un preventivo?
Speed is defined as the % of answers received within 48 h.
The dependent variable is a binary variable assuming value 1 if the notary answered to our email (0 otherwise).
Given the high level of coordination and communication among the Italian notaries it’s not possible to carry on another wave of experiments without significant changes, which, in turn would impair comparability with the original experiment.
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We would like to thank five anonymous referee, Carlo Amenta, Luigi Biagini, Raffaello Bronzini, Sandro Brusco, Domenico Chiofalo, Luca Enriques, Silvia Giacomelli, Cesare Licini, Giovanni Liotta, Alfredo Macchiati, Enrico Martini, Thomas Manfredi, Simone Mezzacapo, Silvio Schinaia, Roberta Serafini and participants to the “Notaries and efficiency: a cost or a value?” seminar, Milan, Jan. 12th, 2018. The views expressed in the article are those of the authors. Responsibility for the information and views set out lies entirely with them.
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Lavecchia, L., Stagnaro, C. There ain’t no such thing as a free deed: the case of Italian notaries. Eur J Law Econ 47, 277–290 (2019). https://doi.org/10.1007/s10657-019-09612-x
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DOI: https://doi.org/10.1007/s10657-019-09612-x