housing market responses to transaction taxes evidence from notches and stimulus in the uk we investigate housing market responses to transaction taxes using administrative data on all property transactions in the u k from 2004 to 2012 combined with quasi experimental variation from tax notches and tax stimulus we present two main findings first transaction taxes are highly distortionary across a range of margins causing large distortions to the price volume and timing of property transactions secondly temporary transaction tax cuts are an enormously effective form of fiscal stimulus a temporary elimination of a 1 transaction tax increased housing market activity by 20 in the short run due to both timing and extensive responses and less than half of the stimulus effect was reversed after the tax was reintroduced due to re timing because of the complementarities between moving house and consumer spending these stimulus effects translate into extra spending per dollar of tax cut equal to about 1 we interpret our empirical findings in the context of a housing model with downpayment constraints in which leverage amplifies the effects of transaction taxes

why organic food in germany is a merit good abstract the conventional view of welfare economics is that subsidies for organic food are inefficient this paper challenges this view and argues that subsidies for organic food may be justified by the concept of individualistic merit goods therefore the concept of individualistic merit goods is briefly reviewed market preferences and reflective preferences for organic food in germany are described it is then shown how they relate to political preferences finally it is argued how economic theory in general and food policy in particular should take account of the existence of merit goods

competition and social influence the diffusion of the sixth generation processor in the global computer industry1 when is a social actor most strongly influenced by its peers this article addresses this question by clarifying when computer firms were most strongly affected by the choices of their structurally equivalent rivals to adopt a well known technology intel s sixth generation processor the core hypothesis is that the effect of adoptions by structurally equivalent firms increases with the competitive pressure that a focal firm faces in its market position the results show that a chosen firm is most strongly influenced by comparable others when it faces scale based competition and is diversified the implications of this study are twofold a social actor s sensitivity to the conduct of others may depend not only on its place in a hierarchy but also on the nature of its ties to an external audience and a contingent theory of social influence may be necessary to characterize diffusion processes correctly particularly when external and time varying nonnetwork factors have significant effects

tying and innovation a dynamic analysis of tying arrangements this paper analyses the effects of tying arrangements on r d incentives it shows that tying is a means through which a firm can commit to more aggressive r d investment in the tied goods market tying also has the strategic effect of reducing rivals incentives to invest in r d the strategy of tying is a profitable one if the gains via an increased share of dynamic rents in the tied goods market exceed the losses that result from intensified price competition in the market the welfare implications of tying and consequently the appropriate antitrust policy are discussed

regulatory reform in britain regulatory reform in britain john kay and john vickers major sectors of the british economy are currently undergoing far reaching regulatory reform deregulation removal of barriers to competition and the introduction of new methods of regulation are occurring notably in financial services some of the professions and in utility industries such as telecommunications gas and electricity this paper gives an economic assessment of these developments the authors examine the root causes of market failure that call for regulation externalities monopoly and information problems and the pros and cons of various regulatory responses a broad distinction is drawn between structural regulation the determination of which firms or types of firms can engage in which activities and conduct regulation the control of how firms behave in their chosen activities recent examples of deregulation plus re regulation in britain are seen in part as a shift from structural to conduct regulation the relative merits of the two modes of regulation are complex to assess but it is argued that some recent regulatory reforms are placing undue reliance on conduct regulation as well as assessing individual industries the authors draw general conclusions about the desirability of regulatory solutions that make full use of market forces

policy intervention in debt renegotiation evidence from the home affordable modification program we evaluate the effects of the 2009 home affordable modification program hamp that provided intermediaries with sizable financial incentives to renegotiate mortgages hamp increased intensity of renegotiations and prevented a substantial number of foreclosures but reached just one third of its targeted indebted households this shortfall was in large part due to low renegotiation intensity of a few large intermediaries and was driven by intermediary specific factors exploiting regional variation in the intensity of program implementation by intermediaries suggests that the program was associated with a lower rate of foreclosures consumer debt delinquencies house price declines and an increase in durable spending

interconnectivity of communications networks and international trade in this study a multi country model of trade is developed that captures the role of country specific communications network interconnectivity which enhances trade in intermediate business services the number of countries connected to inter nationally interconnected networks is found to determine the structure of comparative advantage that is countries with interconnected networks have a comparative advan tage in the good that requires business services provided via networks in connected countries producers of that good benefit from the efficient transmission of business services this research also demonstrates that countries whose country specific net works are not connected to the interconnected networks may become worse off as the

network externalities discrete demand shifts and submarginal cost pricing the introduction of a new product often causes a massive discrete demand shift to the new product this study demonstrates that if a large scale demand shift to a new product is accompanied by network externalities it may result in submarginal cost pricing by which the seller sets its price below the marginal cost this finding casts new light on dumping and safeguard issues in the real world jel classification d42 externalites de reseaux deplacements discrets de la demande et tarification en deca du cout marginal l introduction d un nouveau produit engendre souvent un deplacement massif discret de la demande vers le nouveau produit cette etude montre que si un tel deplacement de la demande est accompagne d externalites de reseaux il peut s ensuivre une tarification en deca du cout marginal ou le vendeur fixe son prix en dessous du cout marginal ce resultat jette une lumiere nouvelle sur les problemes de dumping et de protection dans le monde reel

tax evasion and inequality this paper attempts to estimate the size and distribution of tax evasion in rich countries we combine random audits the key source used to study tax evasion so far with new micro data leaked from large offshore financial institutions hsbc switzerland swiss leaks and mossack fonseca panama papers matched to population wide wealth records in norway sweden and denmark we find that tax evasion rises sharply with wealth a phenomenon random audits fail to capture on average about 3 of personal taxes are evaded in scandinavia but this figure rises to close to 30 in the top 0 01 of the wealth distribution a group that includes households with more than 45 million in net wealth a simple model of the supply of tax evasion services can explain why evasion rises steeply with wealth taking tax evasion into account increases the rise in inequality seen in tax data since the 1970s markedly highlighting the need to move beyond tax data to capture income and wealth at the top even in countries where tax compliance is generally high we also find that after reducing tax evasion by using tax amnesties tax evaders do not legally avoid taxes more this result suggests that fighting tax evasion can be an effective way to collect more tax revenue from the very wealthy

attack defence and contagion in networks sanjeev goyal acknowledges support from a keynes fellowship cambridge inet institute and european research area complexity net resilience and interaction of networks in ecology and economics adrien vigier acknowledges support from a gates cambridge fellowship as well as a core fellowship from universite catholique de louvain

grabber holder dynamics and network effects in technology innovation abstract economists and marketing researchers have examined how network effects can have an impact on the adoption of technology and products and how an intrinsic inferior product or technology may dominate the market however their studies have not explained how a producer could create network effect for a new product and how after successfully creating the network effect for this product the producer could lose it in a short period of time while these studies provide insight into technology innovation after it happened they fail to shed light on understanding many of the surprises that we experience in the process the objective of this paper is to present a fundamental framework that helps us understand most of the surprising outcomes that we have seen in technology innovation processes especially the winners and losers in an innovation process the framework is built on a grabber holder dynamic model that captures how all the intelligent agents involved in an innovation shape the forces that either induce a strong network effect or destroy a network effect that is already in place the model can be used to explain many surprising events that have happened in technology innovation in this paper i apply the model to the personal computer innovation

business to business bargaining in two sided markets abstract bargaining regularly takes place on the business to business side of two sided markets however little is known about the consequences of these negotiations in this paper we allow the platform or a policy maker to choose between a standard design offering posted prices to both sides or a design with bargaining offering a posted price to consumers and negotiating with at least some firms we find that the platform pursues negotiations when it has a strong bargaining position and does so by targeting firms with the largest network effects while this behavior may appear exploitive we show that profits and welfare often align across platform designs this alignment stems from how bargaining incentivizes the platform greater platform bargaining power allows the platform to extract more of the network surpluses since it can convert more of the firm surplus into profits and this incentivizes the platform to draw in greater participation generating greater welfare these results suggest that platform and policy maker preferences often align in this setting

diffusion of a new product under network effects the us dvd market we formulate a model that captures the inter dependence between hardware demand and software supply indirect network effect in the dvd industry the identification of the network effect comes from the difference in software availability across two different formats vhs and dvd we find that a 1 increase in the number of dvd titles raises the demand for dvd players by 0 87 simultaneously a 1 increase in video player ownership leads to a 0 14 increase in the variety of video titles our simulations show that hardware manufacturers might be able to internalize the network externality to increase total industry revenues

adoption of agricultural innovations in developing countries a survey this paper reviews various studies which have provided a description and possible explanation to patterns of innovation adoption in the agricultural sector the survey points out that the tendency of many studies to consider innovation adoption in dichotomous terms adoption nonadoption may not be appropriate in many cases where the actual decisions are defined over a more continuous range more attention needs to be given to the socio cultural and institutional environment in area studies so that their interrelation with economic factors affecting adoption can be inferred the presence of several interrelated innovations is another aspect that needs to be considered more carefully in future research since a number of simultaneous decisions may be involved furthermore the possibility of regular sequential patterns in adopting components of a new technological package should be specifically addressed in future studies finally the impact of differential adoption rates on land holding distribution merits attention in future research

the missing wealth of nations are europe and the u s net debtors or net creditors this paper shows that official statistics substantially underestimate the net foreign asset positions of rich countries because they fail to capture most of the assets held by households in offshore tax havens drawing on systematic anomalies in portfolio investment positions and a unique swiss dataset i find that 8 of the global financial wealth of households is held in tax havens 6 of which goes unrecorded on the basis of plausible assumptions accounting for unrecorded assets turns the eurozone officially the world s second largest net debtor into a net creditor it also reduces the u s net debt significantly the results shed new light on global imbalances and challenge the widespread view that after a decade of poor to rich capital flows external assets are now in poor countries and debts in rich countries i provide concrete proposals to improve international investment statistics

price relationships between qualitatively differentiated agricultural products organic and conventional wheat in germany organic agriculture which produces commodities that can be qualitatively differentiated from conventional food products has grown into an important market in many countries the dynamics of commodity prices in both sectors are partly interdependent but are also shaped by independent determinants and have rarely been studied we analyze organic food markets and their interdependencies with conventional markets in the context of wheat markets in germany which have been subject to a number of fundamental changes during the last two decades based on institutional market characteristics we suggest a flexible markov switching asymmetric time series model we find a pronounced temporal sequence of market phases that differ in their asymmetric dynamics and the extent to which the organic price is influenced by the conventional price organic wheat prices tend to be increasingly connected to prices of conventional wheat

competing by restricting choice the case of search platforms we show that a two sided matching platform can successfully compete by limiting the number of choices it offers to its customers while charging higher prices than platforms with unrestricted choice we develop a stylized model of online dating where agents with different outside options match based on how much they like each other starting from these microfoundations we derive the strength and direction of indirect network effects and show that increasing the number of potential matches has a positive effect due to larger choice but also a negative effect due to competition between agents on the same side agents resolve the trade off between these competing effects differently depending on their outside options for agents with high outside options the choice effect is stronger than the competition effect leading them to prefer an unrestricted choice platform the opposite is the case for agents with low outside options who then have higher willingness to pay for a platform restricting choice as

international outsourcing and factor prices with multistage production we develop a dual representation of the technology of international fragmentation for an industry using 2 factors in a continuum of stages we then derive a generalised factor price frontier which incorporates an endogenous adjustment of the margin of fragmentation using this frontier in a 2 2 general equilibrium model we investigate the role of outsourcing in the adjustment to a decline in the final output price of the multistage industry and the attendant factor price effects we also explore the implications of an improved technology of international fragmentation on the margin of fragmentation and on domestic factor prices

capital accumulation private property and rising inequality in china 1978 2015 this paper combines national accounts survey wealth and fiscal data including recently released tax data on high income taxpayers in order to provide consistent series on the accumulation and distribution of income and wealth in china over the 1978 2015 period we find that the aggregate national wealth income ratio has increased from 350 in 1978 to 700 in 2015 this can be accounted for by a combination of high saving and investment rates and a gradual rise in relative asset prices reflecting changes in the legal system of property the share of public property in national wealth has declined from about 70 in 1978 to 30 in 2015 which is still a lot higher than in rich countries close to 0 or negative next we provide sharp upward revision of official inequality estimates the top 10 income share rose from 27 to 41 of national income between 1978 and 2015 while the bottom 50 shar e dropped from 27 to 15 china s inequality levels used to be close to nordic countries and are now approaching u s levels

the incidence of transaction taxes evidence from a stamp duty holiday this paper exploits the 2008 09 stamp duty holiday in the united kingdom to estimate the incidence of a transaction tax on housing the average reduction in the after tax sale price is found to be around 900 against the backdrop of an average tax reduction of about 1500 while we estimate an increase in transactions of properties affected by the tax holiday around 8 most of this effect appears to have reversed rapidly after the policy was withdrawn suggesting mostly a short term retiming of transactions the findings are calibrated to a simple bargaining model to show they imply that about sixty percent of the surplus generated by the holiday accrued to buyers

competing technologies the learning curve and rational expectations abstract the problem of choice between several variants of a technology subject to dynamic learning economies is examined in a rational expectations model with overlapping adopters it is shown that even with rational expectations the long term market outcome depends sensitively on the pattern of early chance events and that only one variant of the technology will come to dominate the market in the long run this variant need not be the one which is socially optimal or most promising technically

government intervention in the housing market who wins who loses abstract many u s government policies aim to encourage homeownership we use a general equilibrium model with heterogeneous agents to consider the effects of temporary homebuyer tax credits and the asymmetric tax treatment of owner occupied and rental housing on prices quantities allocations and welfare the model suggests that homebuyer tax credits temporarily raise house prices and transaction volumes but have negative effects on welfare removing the asymmetric tax treatment of owner occupied and rental housing can generate welfare gains for a majority of agents across steady states but welfare impacts are substantially more varied along the transitions between steady states

the development of and prospects for organic farming in the uk abstract the organic sector in the uk is booming with the largest ever wave of farm conversions underway consumer demand is currently growing faster than supply the evidence regarding the factors that have been critical now and in the past in causing producers to establish organic systems is reviewed this review draws on the authors own work as well as that of other researchers in europe and the usa in the second part of the paper we report on a recent study of the factors that prompt organic producers to abandon registered organic production this analysis is based on a survey of producers formerly registered with the soil association who have left the scheme since 1990 finally the paper considers the current policy regime with respect to organic farming the scope for the continued growth of the sector and the debate regarding the design of future policy

taxes informality and income shifting evidence from a recent pakistani tax reform abstract this paper examines firm behavior to taxation in a low enforcement and large informality setting using quasi experimental variation created by a tax reform which increased taxation of partnerships substantially relative to firms of other legal form and the population of income tax returns filed in pakistan in 2006 11 i document that treated firms report significantly lower earnings migrate into informality and switch business form in response to the increase in tax rate the revenue loss caused by these behavioral responses is so large that by the third year after the reform the government was collecting less revenue than it would have without the tax increase this implies that the new tax rate was on the wrong side of the laffer curve and would not have been optimal under any social preferences the richness of the data and tax variation permits me to decompose the observed responses into real and evasion margins and to identify fiscal externalities created by the reform on other tax bases the welfare cost of the reform increases by around 40 once these externalities are taken into account

housing taxation and capital accumulation this paper studies the impact of the preferential tax treatment of housing capital in a dynamic general equilibrium life cycle economy populated by heterogeneous individuals the model includes the main housing tax provisions currently in place in the u s and a minimum downpayment requirement upon purchasing non divisible houses the tax code makes the return on housing capital larger than that on business capital which distorts the lifetime profile and composition of individuals savings the wedge between the two rates of return emanates from the failure to tax imputed rents and is amplified by the presence of mortgage interest deductibility simulations show that individuals at all income levels would rather live in a world where imputed rents are taxed or one where mortgage interest payments are not deductible furthermore distributional effects are much smaller than conventionally believed

stimulating housing markets we study temporary fiscal stimulus designed to support distressed housing markets by inducing demand from buyers in the private market using difference in differences and regression kink research designs we find that the first time homebuyer credit increased home sales by 490 000 9 8 median home prices by 2 400 1 1 per standard deviation increase in program exposure and the transition rate into homeownership by 53 the policy response did not reverse immediately instead demand comes from several years in the future induced buyers were three years younger in 2009 than typical first time buyers the program s market stabilizing benefits likely exceeded its direct stimulus effects

tax rates and tax evasion evidence from missing imports in china tax evasion by its very nature is difficult to observe we quantify the effects of tax rates on tax evasion by examining the relationship in china between the tariff schedule and the evasion gap which we define as the difference between hong kong s reported exports to china at the product level and china s reported imports from hong kong our results imply that a one percentage point increase in the tax rate is associated with a 3 percent increase in evasion furthermore the evasion gap is negatively correlated with tax rates on closely related products suggesting that evasion takes place partly through misclassification of imports from higher taxed categories to lower taxed ones in addition to underreporting the value of imports

farmers objectives as determinants of organic farming adoption the case of catalonian vineyard production this article assesses the decision to adopt organic farming practices we use duration analysis da to determine why farmers adopt organic farming practices and what influences the timing of adoption we extend previous studies by including farmers objectives risk preferences and agricultural policies as covariates in the da model the analytical hierarchy process is used as a multicriteria decision making methodology to measure farmers objectives the empirical analysis uses farm level data from a sample of vineyard farms in the spanish region of catalonia farmers objectives are found to influence the conversion decision moreover farmers who are not risk averse are more likely to adopt organic farming results point to the policy changes that have been most relevant in motivating adoption of organic practices

speeding up the internet regulation and investment in european fiber optic infrastructure in this paper we study how the coexistence of access regulations for legacy copper and fiber networks shapes the incentives to invest in network infrastructure to this end we develop a theoretical model explaining investment incentives by incumbent telecom operators and heterogeneous entrants and test its main predictions using panel data from 27 eu member states over the last decade our theoretical model extends the existing literature by among other things allowing for heterogeneous entrants in internet access markets as we consider both other telecom and cable tv operators as entrants in the empirical part we use a novel data set including information on physical fiber network investments legacy network access regulation and recently imposed fiber access regulations our main finding is that more stringent access regulations for both the legacy and the fiber networks harm investments by incumbent telecom operators but in line with our theoretical model do not affect cable tv operators

unwilling or unable to cheat evidence from a tax audit experiment in denmark this paper analyzes a tax enforcement field experiment in denmark in the base year a stratified and representative sample of over 40 000 individual income tax filers was selected for the experiment half of the tax filers were randomly selected to be thoroughly audited while the rest were deliberately not audited the following year threat of audit letters were randomly assigned and sent to tax filers in both groups we present three main empirical findings first using baseline audit data we find that the tax evasion rate is close to zero for income subject to third party reporting but substantial for self reported income since most income is subject to third party reporting the overall evasion rate is modest second using quasi experimental variation created by large kinks in the income tax schedule we find that marginal tax rates have a positive impact on tax evasion for self reported income but that this effect is small in comparison to legal avoidance and behavioral responses third using the randomization of enforcement we find that prior audits and threat of audit letters have significant effects on self reported income but no effect on third party reported income all these empirical results can be explained by extending the standard model of rational tax evasion to allow for the key distinction between self reported and third party reported income

technology adoption in the presence of network externalities we analyze technology adoption in industries where network externalities are significant the pattern of adoption depends on whether technologies are sponsored a sponsor is an entity that has property rights to the technology and hence is willing to make investments to promote it key findings include the following 1 compatibility tends to be undersupplied by the market but excessive standardization can occur 2 in the absence of sponsors the technology superior today has a strategic advantage and is likely to dominate the market 3 when one of two rival technologies is sponsored that technology has a strategic advantage and may be adopted even if it is inferior 4 when two competing technologies both are sponsored the technology that will be superior tomorrow has a strategic advantage

trade and communication costs two models in which communication costs are a cost to trade are investigated one model looks at the role of communication in determining the firms geographic extent in the use of local factor services communication costs are modelled as a quasi public good network in which communication services are provided by an average cost pricing monopolist the network technology is subject to increasing returns congestion effects and network externalities the second model focuses on communication for the purposes of international trade in goods with similar assumptions on the technology of communication as in the first model in this model an important distinction is made between international equilibrium and global equilibrium in both models the impact of reductions in communication costs on the market extent of firms trade volumes and productivity are examined the models have generic multiple equilibria with quite different welfare and comparative static properties

quantifying loss averse tax manipulation this article presents evidence that loss aversion affects taxpayers as they file their annual tax returns and presents a framework for estimating the policy impact of this psychological phenomenon in my theoretical framework taxpayers manipulate the money paid to the tax authority through avoidance and evasion activities when taxpayers face the prospect of owing the tax authority money on tax day loss aversion generates the perception of a greater marginal utility of tax reduction and therefore motivates greater pursuit of tax reduction activities applying a bunching based identification strategy to u s tax return data i estimate that taxpayers facing a payment on tax day reduce their tax liability by 34 more than taxpayers owed a refund

the behavioral response to housing transfer taxes evidence from a notched change in d c policy abstract this paper estimates the behavioral response to residential real estate transfer taxes by studying notched tax rate changes in washington d c exploiting both a price and time notch as identifying variation we provide evidence that there is manipulation of the sales price to the lower tax rate region around the price notch and use this manipulation to show that there was significant awareness of the tax changes and the incentives they created we then construct difference in difference estimates to examine whether there is a lock in effect in the volume of house sales away from the price and time notches we find no evidence of a lock in effect in this setting taken together our results suggest that the welfare costs of a state introducing or eliminating a housing transaction tax are small

taxpayer confusion evidence from the child tax credit we develop an empirical test for whether households understand or misperceive their marginal tax rate our identifying variation comes from the loss of the child tax credit when a child turns 17 using this age discontinuity we find that despite this tax liability increase being lump sum and predictable households reduce their reported wage income upon discovering they have lost the credit this finding suggests that households misinterpret at least part of this tax liability change as an increase in their marginal tax rate this evidence supports the hypothesis that tax complexity can cause confusion and leads to unintended behavioral responses jel d12 d14 h24 h31

coordinating adoption decisions under externalities and incomplete information abstract a monopolist sells a good whose value depends on the number of buyers who adopt it as well as on their private types the seller coordinates the buyers adoption decisions based on their reported types and charges them the price based on the number of adoptions we study ex post implementable sales schemes that are collusion proof and show that under the revenue maximizing scheme more buyer types are willing to adopt when there are more adoptions and the number of adoptions is maximized subject to the participation constraints

rational incompatibility with international product standards abstract international product standardization enables traditional price based competition but the existence of redesign costs or network effects creates market frictions that diminish the incentive to standardize if there already exists a different technology in an established market this leads to multi attribute competition between products and will generally reduce trade flows not only do incumbent firms using a different technology have an incentive to deviate from an international standard but a host country government concerned for its consumers welfare has no incentive to enforce the international standard and may even value deviation from the international standard through technical barriers to trade

the market value of rarity abstract most theories of demand assume that consumers value the characteristics of products but are unconcerned with how many other consumers also consume the product however several theories of demand argue that consumers can value the exclusivity of possessing a rare object we test this implication on a particular collectible rare coins our paper examines the case of coins of a given type and identical quality that have mintages in different quantities this allows us to exclude the common case in which rarity or price itself is an indicator of quality for our sample rarer coins command higher prices rarity in the form of original mintage more strongly influences the market price than does collectibility as represented by the rarest coins of each mint mark or year we also point out that here may be other goods such as automobiles for which rarity may influence market demand

local network externalities and market segmentation this paper models interaction between groups of agents by means of a graph where each node represents a group of agents and an arc represents bilateral interaction it departs from the standard katz shapiro framework by assuming that network benefits are restricted only amongst groups of linked agents it shows that even if rival firms engage in bertrand competition this form of network externalities permits strong market segmentation in which firms divide up the market and earn positive profits the analysis also shows that some graphs or network structures do not permit such segmentation while for others there are easy to interpret conditions under which market segmentation obtains in equilibrium c 2009 elsevier b v all rights reserved

using notches to uncover optimization frictions and structural elasticities theory and evidence from pakistan we develop a framework for nonparametrically identifying optimization frictions and structural elasticities using notches discontinuities in the choice sets of agents introduced by tax and transfer policies notches create excess bunching on the low tax side and missing mass on the high tax side of a cutoff and they are often associated with a region of strictly dominated choice that would have zero mass in a frictionless world by combining excess bunching observed response attenuated by frictions with missing mass in the dominated region frictions it is possible to uncover the structural elasticity that would govern behavior in the absence of frictions and arguably capture long run behavior we apply our framework to tax notches in pakistan using rich administrative data while observed bunching is large and sharp optimization frictions are also very large as the majority of taxpayers in dominated ranges are unresponsive to tax incentives the combination of large observed bunching and large frictions implies that the frictionless behavioral response to notches is extremely large but the underlying structural elasticity driving this response is nevertheless modest this highlights the inefficiency of notches by creating extremely strong price distortions they induce large behavioral responses even when structural elasticities are small

configuring value for competitive advantage on chains shops and networks building on thompson s 1967 typology of long linked intensive and mediating technologies this paper explores the idea that the value chain the value shop and the value network are three distinct generic value configuration models required to understand and analyze firm level value creation logic across a broad range of industries and firms while the long linked technology delivers value by transforming inputs into products the intensive technology delivers value by resolving unique customer problems and the mediating technology delivers value by enabling direct and indirect exchanges between customers with the identification of alternative value creation technologies value chain analysis is both sharpened and generalized into what we propose as a value configuration analysis approach to the diagnosis of competitive advantage with the long linked technology and the corresponding value chain configuration model as benchmark the paper reviews the distinctive logic and develops models of the value shop and the value network in terms of primary activity categories drivers of cost and value and strategic positioning options 1998 john wiley sons ltd

tax evasion capital gains taxes and the housing market abstract in this study we exploit a policy shock that differentially increased capital gains taxes for housing units with holding period less than 5 years and document tax avoidance and tax evasion in the residential resale market in china we show suggestive evidence that after the capital gains tax increase resale transactions exhibit more bunching above 5 years of holding period but the responses are small and imprecisely estimated more importantly using precise information of both the actual transaction price and the reported price to the tax authority we find that tax evasion measured by the difference between the two prices becomes 23 3 higher we also document that the policy has strong heterogeneous effects whereby cash buyers are 8 4 more likely to buy a house than buyers who need financing after the policy this is mainly because financing buyers prefer a higher reported price and so less tax evasion to secure higher bank loans but cash buyers do not have such concern

measuring income tax evasion using bank credit evidence from greece we document that in semiformal economies banks lend to tax evading individuals based on the bank s assessment of the individual s true income this observation leads to a novel approach to estimate tax evasion we use microdata on household credit from a greek bank and replicate the bank underwriting model to infer the banks estimate of individuals true income we estimate that 43 45 of self employed income goes unreported and thus untaxed for 2009 this implies 28 2 billion of unreported income implying forgone tax revenues of over 11 billion or 30 of the deficit our method innovation allows for estimating the industry distribution of tax evasion in settings where uncovering the incidence of hidden cash transactions is difficult using other methods primary tax evading industries are professional services medicine law engineering education and media we conclude with evidence that contemplates the importance of institutions paper trail and political willpower for the persistence of tax evasion jel codes g21 h22 h24 h26 p37

theorizing path dependence a review of positive feedback mechanisms in technology markets regional clusters and organizations the concept of path dependence has often been criticized as vague and only narrowly applicable although we can find some very refined definitions of the concept we also find a wide range of empirical phenomena being described as path dependent we argue that more detailed accounts of the positive feedback mechanisms that form paths can take path dependence beyond this state of being overdetermined but under specified reviewing three well described cases of path dependent dynamics in technology markets regional clustering and organizations we define a core set of positive feedback mechanisms that constitute path dependence at different analysis levels and clarify the relationship between positive feedback and increasing returns we show that path dependent processes that is processes driven by positive feedback that veer toward rigidity or lock in can be but do not have to be found under many labels including structural inertia coevolution or institutional persistence we conclude that a precise definition of path dependence does not need to be at odds with the concept s widespread use in understanding organizational and industrial development processes copyright 2013 the author 2012 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

adjustment costs firm responses and micro vs macro labor supply elasticities evidence from danish tax records we show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms we develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs we present evidence supporting three predictions of this model by analyzing bunching at kinks using danish tax records first larger kinks generate larger taxable income elasticities second kinks that apply to a larger group of workers generate larger elasticities third the distribution of job offers is tailored to match workers aggregate tax preferences in equilibrium our results suggest that macro elasticities may be substantially larger than the estimates obtained using standard microeconometric methods

sustainability in the diffusion of innovations smallholder nontraditional agro exports in guatemala i nontraditional agro exports in guatemala since the late 1970s guatemala like a number of other developing countries has experienced an extraordinarily rapid growth in the production of nontraditional agro exports ntxs the share of agricultural exports coming from ntxs grew from less than 6 in 1980 to more than 22 in 1992 rationales behind the promotion of ntxs by governments and development agencies include seeking foreign exchange earnings alternatives to depressed market conditions for traditional export crops and rural poverty reduction as part of the packages mandated by structural adjustment and trade liberalization programs many national governments including guatemala s introduced policies in favor of ntx producers such as export facilitation procedures subsidy programs and fiscal reforms trade agreements such as the generalized system of preferences and the caribbean basin initiative created additional incentives for ntx exporters in the guatemalan context private organizations and trade associations such as the association of exporters of nontraditional products played a catalytic role in promoting ntxs in the 1980s as a potential new approach to rural development international donors have invested heavily in the promotion of ntxs among smallholders one such effort that received considerable attention is the agricultural cooperative cuatro pinos that was founded in 1979 with financial assistance from a swiss development agency cooperative membership grew tenfold in the following 10 years reaching more than 1 900 members in the late 1980s and operating in ten different villages pre ntx agriculture in the region was dominated by the milpa sys

differential uncertainties and risk attitudes between conventional and organic producers the case of spanish arable crop farmers the growing importance of economic factors in farmers decision to go organic has raised interest in characterizing the economic behavior of organic versus conventional farms published analyses so far have not considered differential uncertainties and farmers risk preferences between conventional and organic practices when comparing these techniques our article attempts to assess this issue we use a model of farmer decision under risk to analyze the differential values between spanish cop organic and conventional farms and to assess the incentives for adoption of organic practices results show that organic and conventional farms do have different abilities to control production risk as well as different risk preferences organic price premiums and subsidies are found to be powerful instruments to motivate adoption of organic techniques

interactions between cap agricultural and agri environmental subsidies and their effects on the uptake of organic farming we analyze the effects of the interactions that the two pillars of the european union common agricultural policy market support and rural development have on farmers uptake of organic farming practices special attention is given to the 2003 reform which substantially altered the relative importance of the two types of support by decoupling direct agricultural payments from the production of a specific crop in our empirical analysis we study the case of sweden making use of the variation in the timing of farmers decisions regarding participation in support programs we estimate a dynamic non linear unobserved effects probit model to account for unobserved individual heterogeneity and state dependence our results indicate the existence of a negative effect of the market support system in place when organic farming techniques were adopted before the 2003 reform however this effect is reversed by the introduction of decoupling furthermore the effects of support differ between certified and non certified organic production both pillars have significant effects on non certified organic farming whereas certified organic farming is exclusively driven by agro environmental subsidies

a positive theory of flexibility in accounting standards abstract we develop a positive theory of accounting standards when standards generate network externalities and differ in the amount of reporting discretion or flexibility they provide firms we evaluate expected value maximizing firms preferences between two standards regimes rigid and flexible as the number of firms subject to each standard varies as the organization of the securities market varies and as the mapping from the underlying economics of the firms transactions to the accounting reports produced under the two standards vary we also compare firms preferences between the two regimes to the preferences of profit maximizing traders in the firms securities

the economics of convention c onventions regulate much of economic and social life yet they have received surprisingly little attention from economists by a convention we mean a pattern of behavior that is customary expected and self enforcing everyone conforms everyone expects others to conform and everyone has good reason to conform because conforming is in each person s best interest when everyone else plans to conform lewis 1969 familiar examples include following rules of the road adhering to conventional codes of dress and using words with their conventional meanings conventions with direct economic implications include species of money and credit industrial and technological standards accounting rules and forms of economic contracts indeed it would scarcely be an exaggeration to say that almost all economic and social institutions are governed to some extent by convention the main feature of a convention is that out of a host of conceivable choices only one is actually used this fact also explains why conventions are needed they resolve problems of indeterminacy in interactions that have multiple equilibria indeed from a formal point of view we may define a convention as an equilibrium that everyone expects in interactions that have more than one equilibrium the economic significance of conventions is that they reduce transaction costs imagine the inconvenience if whenever two vehicles approached one another the important exceptions are sugden 1986 and ullman margalit 1977 the interested reader might also refer to the symposium on social norms that appeared in the fall 1989 issue of this journal with articles by sugden 1989 and elster 1989

farmers adoption of integrated crop protection and organic farming do moral and social concerns matter we investigate empirically the role of moral and social concerns in farmers decision to adopt integrated crop protection ip and organic farming of a survey questionnaire has been sent to 1286 fruit growers and vegetable producers located in the french areas of alpes de haute provence hautes alpes and vaucluse analysis of individual responses n 243 shows that although economic concerns play a strong role a significant number of respondents give high importance to moral and social ones we also examine how these considerations matter according to different crop protection strategies that is conventional farming ip and of using a multinomial logistic regression we find that 1 social concerns e g showing to others one s environmental commitment drive both ip and of adoption 2 moral concerns e g do not feel guilty about one s choices increase the probability of organic farming adoption only and 3 farmers who give high importance to economic concerns e g cutting production costs are less likely to adopt of

product compatibility as a signal of quality in a market with network externalities abstract in this paper i consider the compatibility decision as a signaling device of the quality of a newly introduced technology of which users are not informed provided that firms are located sufficiently far apart in hotelling s 0 1 interval i find separating equilibria where low compatibility signals high quality this possible separation is due to the fact that low compatibility is more advantageous to the high quality entrant than to the low quality entrant since it can prevent users of the established technology from enjoying network benefits from the new technology very much

interconnected communications networks and home market effects abstract this study develops a model of trade that highlights the effects of the interconnection of country specific communications networks as a driving force behind trade in high tech products with positive transport costs by constructing a two country model of monopolistic competition with two production factors it is shown that the locational decisions of firms may magnify the influence of interconnected networks in a reversal of the standard home market effects the abundance of unskilled labour in the developing countries can attract high tech firms from the developed countries jel classification d43 f12 l13

training wages and sample selection estimating sharp bounds on treatment effects this paper empirically assesses the wage effects of the job corps program one of the largest federally funded job training programs in the u s even with the aid of a randomized experiment the impact of a training program on wages is difficult to study because of sample selection a pervasive problem in applied microeconometric research wage rates are only observed for those who are employed and employment status itself may be affected by the training program this paper develops an intuitive trimming procedure for bounding average treatment effects in the presence of sample selection in contrast to existing methods the procedure requires neither exclusion restrictions nor a bounded support for the outcome of interest identification results estimators and their asymptotic distribution are presented the bounds suggest that the program raised wages consistent with the notion that the job corps raises earnings by increasing human capital rather than solely through encouraging work the estimator is generally applicable to typical treatment evaluation problems in which there is nonrandom sample selection attrition copyright wiley blackwell