democracy volatility and economic development growth stability is an important objective because development requires sustained increases in income because volatility is costly for the poor and because volatility deters growth we study the determinants of average growth and its volatility as a two equation system and find that higher levels of democracy and diversification lower volatility whereas volatility itself reduces growth muslim countries instrument for democracy and measures of diversification identify volatility in contrast to the lack of consensus on the democracy growth relationship the democracy stability link is robust rather than focus on growth this paper forges an alternative link between democracy and development through the volatility channel

fair share siting noxious facilities as a risk distribution game under nontransferable utility abstract the search for equitable solutions to the siting of noxious facilities has long been an unresolved problem theoretically and politically common prescriptions often involve compensating host communities in this article we address the case when compensation is not an option or when we are unable to translate risk into a common measure of utility we propose a new analytic for finding equity based fair share distributions of risk which translates directly to mixed siting strategies in order to do this we employ a new general solution concept for n person bargaining games under nontransferable utility we discuss conditions under which the existence of such solutions can be proven last we illustrate the solution concept with application to the lancer project a controversial municipal incinerator originally proposed for east los angeles comparing results obtained with the ntu shapley value with the actual proposal finally we point out that solutions will involve risk elimination not just redistribution per se but we need both and to talk of one without the other is at times unjust at times ineffectual and often both

a context based procedure for assessing participatory schemes in environmental planning the efficiency of participatory schemes in environmental planning is an emerging research area and many issues are not solved yet regarding the assessment of such procedures it is essential for decision makers to identify improvement opportunities of participatory schemes we propose an original procedure to address such issue through a bargaining model from the signaling game literature which accounts for participation design as well as for agents preferences beliefs and bargaining power the model is calibrated using qualitative data from surveys in french local communities involved in municipal solid waste management model simulations are used to test for assumptions on the stakeholder dialogue and explore sensitivity of game outcomes to structural parameters we propose a set of performance indicators to identify the most effective participatory schemes in achieving convergence in stakeholder positions regarding environmental and land use planning

openness external risk and volatility implications for the compensation hypothesis a central assumption in the globalization literature is that economic openness generates economic insecurity and volatility based on this assumption schol ars of international political economy have proposed the compensation hypothesis which claims that globalization bolsters rather than undermines the welfare state by increasing public demand for social protection against externally generated eco nomic instability the openness volatility link is dubious however on both theoret ical and empirical grounds in this study i revisit the volatility assumption focusing on a crucial difference between openness and external risk in their effect on volatil ity my statistical analysis of a panel data set from 175 countries 1950 2002 finds a consistent effect of external risk on volatility of the major economic aggregates but a largely insignificant effect of openness these findings suggest that economic volatility may be a mistaken link in explaining the openness spending nexus calling for further research on the causal mechanisms linking the two the general growth of government in the post world war ii era is one of the most important empirical regularities in political science measured by general govern ment consumption or sectoral expenditures government size grew dramatically during most of the postwar period intrigued by this phenomenal government growth political scientists offered numerous accounts some viewing this growth as a corollary of economic phenomena such as modernization industrialization income distribution or fiscal illusion and others attributing government growth to political causes such as bureaucratization interest group politics and electoral competition 1

capacity utilization and new source bias evidence from the us electric power industry abstract while prior research has shown that new source bias has increased construction costs and delayed the building of new electric power plants this research explores the empirical question of whether increased operating costs caused by new source bias are larger than the cost savings of newer technology if new sources do have higher operating costs an incentive exists to utilize order plants more intensively statistical evidence of these differing utilization rates is found

measuring macroeconomic instability a critical survey illustrated with exports series for at least 40 years the analysis of the causes and consequences of macroeconomic instability has greatly deepened our understanding of the handicaps faced by developing countries this concern on economic instability is evidenced by a broad spectrum of indicators based on the deviation of observed values of a given economic aggregate from its reference or trend value in general the choice of this or that indicator is not discussed advocating that the resulting instability indicators are closely correlated focusing on measurements of instability in export revenue data for 134 countries from 1970 to 2005 this paper finds that this assertion may be true for variancebased indicators measuring the average magnitude of deviations from the trend however great discrepancies may arise between different measures of the asymmetry or of the occurrence of extreme deviations around the trend when different trend computation methods are used our purpose is therefore to invite further discussions regarding the use of these indicators and to highlight the different dimensions of instability which have been so far unheeded by the economic literature

decentralization and political career concerns abstract politicians career paths often start at some subnational governments and end at the national one allocation of authorities among national and subnational governments affects i how tempting the prospects of taking national offices are and hence how strong bureaucrats political career concerns are and ii whether the incentives generated by these political career concerns can be put into productive use at subnational governments we illustrate this tradeoff in determining the optimal degree of decentralization using china as a case study we also compare the equilibrium degree of decentralization in autocracy and in democracy

noxious facilities environmental damages and efficient randomized siting this paper considers the efficient siting of a noxious facility that causes environmental damages for example increased pollution in the host community the analysis shows that there can be multiple efficient locations without transfers and that an efficient location need not have the smallest wta or wtp in general there exist randomized outcomes that are ex ante efficient and that pareto dominate efficient outcomes the analysis also shows that a community s most preferred lottery never provides full insurance under some conditions lotteries with no host compensation are pareto superior to those with compensation

choosing and sharing implementing a project like a nationwide nuclear waste disposal which benefits all involved agents but brings major costs only to the host is often problematic in practice revelation issues and redistributional concerns are significant obstacles to achieving stable agreements we address these issues by proposing the first mechanism to implement the efficient site the host with the lowest cost and share the exact cost while retaining total control over realized transfers our mechanism is simple and in the vein of the well known divide and choose procedure the unique nash equilibrium outcome of our mechanism coincides with truthtelling is budget balanced individually rational and immune to coalitional deviations more generally our mechanism can also handle the symmetric case of positive local externalities e g olympic games and even more complex situations where the usefulness of the project regardless of its location is not unanimous

victim compensation revisited abstract the siting of an efficient noxious facility may decrease social welfare if people care about horizontal equity the facility decreases the relative attractiveness of the host city decreasing land rent in the host city and increasing land rent elsewhere victim compensation which promotes horizontal equity at the expense of efficiency will increase social welfare if a the demand for land is relatively inelastic b the demand for the output of the noxious facility is relatively elastic and c the preferences for horizontal equity are relatively strong

a theory of political transitions we develop a theory of political transitions inspired by the experiences of western europe and latin america nondemocratic societies are controlled by a rich elite the initially disenfranchised poor can contest power by threatening revolution especially when the opportunity cost is low for example during recessions the threat of revolution may force the elite to democratize democracy may not consolidate because it is redistributive and so gives the elite an incentive to mount a coup highly unequal societies are less likely to consolidate democracy and may end up oscillating between regimes and suffer substantial fiscal volatility

competition in regional environmental policies when plant locations are endogenous abstract a two region model is presented in which an imperfectly competitive firm produces a good with increasing returns at the plant level production of the good causes local pollution the firm decides whether to maintain plants in both regions serve both regions from a single plant or shut down if the disutility of pollution is high enough the two regions will compete by increasing their environmental taxes standards until the polluting firm is driven from the market alternatively if the disutility from pollution is not as great the regions will usually compete by undercutting each other s pollution tax rates

democracy and national economic performance the preference for stability appear to arise because democracies ameliorate the effects of social cleavages another mechanism that might explain democratic stability when growth and volatility are jointly examined democracies reveal highly favorable economic results oes democracy affect national economic performance and if so how no question is more central to the study of political economics almost all previous work on democracy and economic performance has focused exclusively on growth rates with contradictory and confusing results in this article we argue that to reveal the impact of democratic institutions on economic performance scholars must consider two dimensions of economic performance growth rate and volatility we begin with a novel hypothesis economic policy in democracy is risk avoiding relative to policy in nondemocracies 1 because voters are riskaverse they penalize incumbent governments for economic volatility and democratic governments respond accordingly in nondemocracies we posit that elites are more likely to seek risk that voters would reject consequently autocracies produce systematically more economic volatility than

the welfare consequences of mixed environmental policy instruments with voluntary provision this article evaluates the welfare consequences of a mixed regulatory framework with a voluntary cap and trade program and intensity standards using data from the texas electricity industry i construct and estimate a structural model of the compliance choices of power generating units to recover their abatement costs then i simulate for the counterfactual equilibrium under a mandatory cap and trade regulation results show that the mixed policy framework mainly benefits generating units with small capacity and high abatement costs however a mandatory cap and trade regulation with redistribution policies could bring in substantial pareto improvement

property rights protest and the siting of hazardous waste facilities ture since that time no major hwf has been sited anywhere in the united states the epa had anticipated that local opposition would make finding these sites an exceptionally difficult task their pessimism was well founded and if anything understated according to the hazardous waste counsultant s latest state by state review the outlook for siting hwfs in the future is even more bleak than in the past due in large part to what they term a worsening of the emotional atmosphere surrounding siting efforts this failure to site any new hwf has come about in spite of assurances by government and company officials that new facilities built according to the present standards would pose negligible risks to the local residents attempts have been made to break the deadlock by instituting extensive public participation procedures establishing state siting boards with the power to overrule local decision makers and requiring facility owners to compensate local governments for safety services the latter provided in this paper we argue that the ambiguous nature of the present property rights governing the siting of hwfs is an important cause of the stalemate we offer a new approach to siting which recognizes the de facto property rights assumed by local communities we propose a political market via a referendum

transboundary externalities in the environmental transition hypothesis the environmental kuznets curve ekc is a hypothesis which implies that it is possible to grow out of environmental degradation most theoretical models of the ekc relation have not accounted for transboundary and intergenerational externalities nor have empirical studies provided evidence that validates an inverted u shaped relation between environmental degradation and economic growth for pollution problems where the effects are far displaced or are long delayed

the effect of environmental regulation on optimal plant size and factor shares the method for measuring the effects of environmental regulation on the size distribution of industrial plants and the distribution of factor shares described in this paper focuses on the 20 industries with highest per unit pollution abatement costs and the 20 with the lowest costs the study finds that compliance with environmental laws has not only reduced the number of plants in the affected industries but has placed a greater burden on small rather than on large plants besides redistributing within industry market shares environmental regulation has increased the use of capital relative to labor although the disproportionate burden placed on small plants in the high abatement cost industries may have been unintended it is likely that large firms will be less vocal opponents of environmental regulation than are small firms 22 references 12 tables

a consumption based theory of the environmental kuznets curve abstract most theories about the inverted u relationship between pollution and income termed the environmental kuznets curve ekc are production side theories emphasizing pollution and abatement technologies production side theories are implicitly based on the assumption of low factor mobility and the absence of pollution as a variable in the utility function both assumptions are called into question by the empirical evidence of ekcs for i pollutants that are long lived and not easily shiftable and ii regional cross sections with free labor mobility hazardous waste sites are a prime example this paper develops a stylized model of the ekc based on perfect mobility of households and labor it represents the first attempt at developing a consumption side model of the ekc

entitlement to assort democracy compromise culture and economic stability abstract we propose a simple model to support rodrik s 2000 conjecture that democracy lowers economic instability through breeding compromise culture in the model a population of compromisers and opportunists collectively bargain over the assortativity level of matching through a democratic political institution we show that compromisers are able to achieve a positive level of assortativity which helps them to avoid matching with opportunists this in turn raises compromisers payoffs above opportunists and eventually compromisers dominate the population through cultural evolution

democracy diversification and growth reversals there exists convincing evidence that democratic countries are less volatile this conclusion is usually reached with respect to volatility as measured by the standard deviation of annual growth rates of per capita gdp which includes both low and high frequency fluctuations however recently several studies have documented that significant changes in trend growth such as growth accelerations that last a decade or similar periods of negative growth are quite common in this paper we ask whether democracy also has a stabilizing effect on trend volatility i e whether more democratic countries experience fewer and milder swings of trend growth we find a common phenomenon medium term reversals of growth that is periods of exceptionally high growth are on average followed by periods of exceptionally low growth and vice versa the propensity to experience large swings of trend growth is not uniform across countries less democratic countries are more susceptible to it when compared with factors commonly associated with volatility such as measures of quality of institutions macroeconomic policies and financial development we find that democracy is the most robust predictor of a country s propensity for growth reversals we construct a model in which non democracies have high barriers of entry for new firms this leads to less sectoral diversification fewer sectors are operated but more resources are channeled to each in an uncertain environment this leads to infrequent but large growth accelerations when one of the few sectors operated is successful however these accelerations are followed by large declines when fortunes change in favor of the missing sectors we present empirical evidence that confirms the positive relationship between democracy and industrial diversification

participatory politics social cooperation and economic stability few would doubt the proposition that political institutions matter for economic development yet robust generalizations and systematic evidence on how exactly they do so are lacking in this paper attention is drawn to regularity in the cross national data that has received little attention to date participatory political regimes are associated with significantly lower levels of aggregate economic instability after presenting some of the evidence it is speculated that the reason has to do with the propensity of democracy to moderate social conflict and induce compromise three distinct arguments as to why this may be the case are presented

fairness and social risk i unaggregated analyses this paper is the second of a two paper study of fairness issues for decisions that affect the benefits received and the risks encountered by a population the study examines fairness for individuals and for homogeneous groups within the population it considers fairness both for population benefit risk profiles and for probability distributions over profiles our study bases fairness on notions of envy among individuals and groups the first paper focused on fairness in profiles and profile distributions when benefits and risks are not aggregated the present paper uses individual preferences to assess fairness when benefits and risks are aggregated within groups or over the population it concentrates on intergroup envy measures and fairness indices that account for ways that aggregated benefits and risks might be allocated to members of groups or to groups within the population

behavior of the firm under regulatory constraint a recent article by akira takayama discusses an earlier paper by harvey averch and leland l johnson on fair rate of return regulation of public utilities although takayama p 255 agrees with averch and johnson s general conclusions that a firm will tend to increase its investment with the introduction of an active constraint on its rate of return he criticizes the a j argument as being confusing ambiguous and in error takayama then attempts a clarification and presents a new formulation which leads to the a j result quoted above this comment will discuss several of takayama s criticisms in addition to showing that the so called a j effect cannot be derived from the basic assumptions made by both averch and johnson and takayama 1 we will show that the very assumptions used to prove the a j effect by defining the region of x require an assumption that the a j effect exists in the first place

the siting of hazardous waste facilities in federal systems the political economy of nimby this paper offers a new political economy explanation for thepervasive problem of siting hazardous waste treatment facilitiesin federal system we first show that a decentralized systemyields the first best waste treatment capacity level and that acentralized structure gives rise to free riding behavior amonglocal jurisdictions in our model each community seeks toinfluence the central government through political contributions this leads to suboptimal levels of treatment capacity thecapacity is increasing in the compensation level if the marginalbenefit of treatment capacity is sufficiently large and in thegovernment s weight on aggregate social welfare relative tolobbying activities the centralized system can replicate thedecentralized system with a sufficiently high compensation level since compensation has proved difficult a centralized systemfaces greater obstacles than a decentralized system

voluntary auctions for noxious facilities incentives to participate and the efficiency of siting decisions abstract this paper explores the efficiency properties of a voluntary auction under which the city submitting the low bid hosts the region s noxious facility and receives the high bid as compensation in the nash equilibrium of the auction game the auction mechanism is individually rational participation is rational for all values of the local environmental costs of the facility incentive compatible the facility is located in the low cost city and revenue neutral if the compensation of the host city distorts location choices participation in the auction is rational for all values of local environmental costs if the scale economies associated with the noxious facility are large relative to the average local environmental cost and the distortionary cost per dollar of compensation

the dilemma of cheap food and self sufficiency the case of wheat in iran self sufficiency in wheat has been one of the major goals of iranian agricultural policies since the revolution of 1979 even so the country failed to achieve this goal by the early 2000s despite a satisfactory growth in wheat production this paper addresses this failure and the political difficulties in introducing reforms that would reduce the need for import first the production and consumption of wheat are examined the conclusion is that the cheap bread policy has mainly been responsible for the imbalances between domestic supply and demand and the continued reliance on wheat imports moreover the paper argues that the subsidy program is an expensive safety net for the needy and shows that the iranian government has intended to reform the program since the early 1990s however subsidy reforms are politically sensitive especially in developing countries where subsidies are considered very important both for supporting the poor and for political stability an analysis of the iranian attempts at subsidy reform suggests that they have not yet succeeded mainly due to such political considerations

environmental regulation whose self interests are being protected special interest can explain why environmental policy limits economic activity in areas where air quality is above minumum standards locational competition among region helped create a policy that raised factor mobility cost from slower to faster growing regions analysis of votes shows greater support for this policy was received from northern urban constituencies and the greatest opposition came from the south and the west pollution abatement costs per unit of output are higher in areas with higher not lower air quality

compensating for public harms why public goods are preferred to money this paper provides evidence that public goods represent a more acceptable response to public harms than monetary compensation we demonstrate a preference for public goods over monetary compensation in part because receipt of public goods may limit the sense of guilt or bribery from accepting compensation for the injury more surprising this preference for public goods over money in the presence of a harm remains in a free market choice where guilt is not an issue it appears that public goods psychologically mitigate or balance public harms in a way that makes them more valuable in the presence of public harms

cost minimizing regulation of sulfur emissions regional gains in electric power environmental regulations set maximum allowable rates for sulfur dioxide emissions from electric utilities by ignoring firm differences in marginal abatement costs and preventing emissions trading these standards do not minimize the cost of reducing einissions this paper estimates marginal abatement cost functions for 56 utilities for 1973 79 marginal costs vary substantially across firms due to differences in the price of low and high sulfur fuels and the intensity of regulation the potential savings from a cost minimizing reallocation of abatement resources are estimated for five regions current expenditures are found to be 47 higher than cost minimizing levels i mplementation of the 1970 clean air act amendments relies extensively on technology based emission standards economists long have recognized that these standards can result in an inefficient allocation of pollution control resources engineering based restrictions ignore or oversimplify differences in abatement costs among polluters limited empirical research suggests that current standards result in substantially higher costs as much as ten times higher than a cost minimizing regulatory scheme 2 these studies however are based on engineering estimates of marginal abatement costs the models often assume that all polluters adopt control technologies that are required only for new plants and that have been largely unadopted by polluting firms 3 the impact of changing factor prices on marginal abatement costs typically is ignored the difficulty is that the resulting estimates of the cost of regulation neither adequately reflect the range of control options available to polluters nor take into account how polluters actually have responded to environmen

directional heterogeneity of environmental disamenities the impact of crematory operations on adjacent residential values a hedonic study of residential house sales in rawlins wyoming was conducted to estimate the impact of an environmental shock from a new point source upon adjacent residential property values we use a unique data base of house sale prices and associated house attributes including structural and neighbourhood characteristics and geographic distances and directions from the source of the shock atmospheric emissions from a new crematory our data spans 27 months of house sales 7 months before and 20 months after the startup of crematory operations results indicate that proximity measured both in terms of direction and distance from the crematory imparts a statistically significant negative impact on average house sale prices an increase of 0 3 to 3 6 of average sale price for every one tenth mile increase up to one half mile in distance away from the crematory but depending on direction from the crematory this distance benefit increases somewhat with calendar time only for houses located west of

the political economy of food subsidy reform the case of egypt abstract this paper examines the political economy of food subsidy reform efforts in egypt egypt provides a case of a country with a large food subsidy program that has been relatively effective as a social safety net but a program that is also expensive and poorly targeted to the needy policy discussions about strategies to improve the system s performance run into the extreme political sensitivity of the issue of food subsidies in egypt food subsidies are perceived to be important in promoting political stability and providing some legitimacy to a political system where civil liberties are limited egypt therefore illustrates the dilemmas facing policymakers and others contemplating food subsidy reform in developing countries where there are concerns that reform may spark political unrest this paper argues that even in cases where food subsidy reform is a highly politicized issue there are still a number of pragmatic policy steps that can be taken that meet the twin goals of reforming the system in ways that better target the poor while functioning more efficiently

siting noxious facilities a siting lottery with victim compensation abstract this paper proposes a scheme to facilitate the siting of noxious facilities a regional government announces that it will a use a lottery to choose a site for a noxious facility and b transfer income from tenants to host city landowners to at least partly offset the effects of the noxious facility on local property values the government will hold the lottery only if all citizens agree in advance to abide by the resulting siting decision the lottery approach is superior to the conventional approach to siting advance notification in the sense that the lottery approach achieves unanimous support for the siting decision with less compensation the compensation scheme can be financed with a regionwide tenant tax or a tax on residents in the nonhost city for small compensation programs the nonhost tax is superior to the regional tax

nimby taxes matter the case of state hazardous waste disposal taxes this paper links the theoretical and empirical literatures on interjurisdictional tax and regulatory competition focusing on the case of state hazardous waste disposal taxes it begins by demonstrating that local environmental taxes can be inefficient and that the inefficiency depends on the tax elasticity of polluters responses the paper then uses panel data from the toxics release inventory to estimate the magnitude of the tax elasticities and to demonstrate the empirical relevance of the theoretical inefficiency of local taxes 1999 elsevier science s a all rights reserved

the good the bad and the civil society abstract there are three signature features of autocracies first there is a wide variety across autocracies in terms of economic performance some do much better and some much worse than democracies second economic performance of a given autocracy is more sensitive to leader quality and exhibits higher volatility third all autocracies good or bad tend to have weaker civil societies than democracies do we attribute these features to the core of the autocratic political institution the incumbent leader selects the future leader as opposed to citizens at large selecting the future leader under democracy we deliver our analysis in an overlapping generations model where two kinds of dynamic free riding problems arise the first arises among different generations of citizens in implementing far sighted policies political leaders come in two types good ones aim to correct this first kind of dynamic free riding problem while bad ones do not care and only aim to steal public assets both types need a weak civil society to achieve their goals but a second dynamic free riding problem arises among different leaders when it comes to weakening the civil society the autocratic leader selection mechanism helps resolve this second dynamic free riding problem results in a continuously weakened civil society and generates large variations of economic performances both within a given autocracy and across different autocracies a rich set of comparative statics is derived

on a political solution to the nimby conflict scale economy in the construction and operation of public facilities such as landfills calls for cooperation among communities to build a common facility arthur o sullivan 1993 such a facility is a mixture of a public good and a private bad and hence leads to strong opposition by communities to locate it in their vicinity bruno s frey et al 1996 this is one of the most serious environmental concerns of recent years and is known as nimby not in my backyard in this paper we study the hypothesis that a democratic political process creates an adequate mechanism for the resolution of the nimby conflict the intuitive explanation is simple a nimby conflict is likely to induce lobbying and symmetric pressures by all threatened communities in the relevant region as is well known gene m grossman and elhanan helpman 1994 when subject to symmetric pressures politicians stick firmly to principles and function most efficiently the existing literature on the siting of noxious facilities focuses mainly on normative issues such as welfare maximizing siting via decentralized community based mechanisms e g howard kunreuther and paul r kleindorfer 1986 robert c mitchell and richard t carson 1986 and deborah minehart and zvika neeman 2002 evidently however such mechanisms have seldom been practiced e g stephen k swallow et al 1992 the current study adopts a positive approach integrating a political economic framework with a model of a competitive real estate market in the theoretical section a government of a linear two city economy determines the location of a noxious facility which affects the equilibrium in the real estate market and induces the spatial distributions of price and population the government is subject to political pressures by city level lobbies of landowners both landlords and home owners in general the political equilibrium and the socially optimal siting differ however the more equitable the distribution of landownership in the region the smaller the difference at the limit when property distribution is perfectly equitable and all cities participate in the political arena the government locates the facility at the socially optimal site the analysis proceeds by identifying additional conditions under which the political equilibrium siting coincides with the socially optimal location and with an empirical analysis in the empirical section the theoretical framework is extended to account for a multiple city region and is calibrated to assess the prospects of the political system for resolving the nimby conflict in the context of landfill siting in israel it is shown that if all cities in the region form political lobbies and the politicians are not extremely corrupt the political siting is close geographically to the socially optimal location and the difference entails a less than 0 1 percent reduction in social welfare moreover even if the formation of lobbying in the region is incomplete as long as the weight the politicians assign to social welfare is larger than 0 7 the proximity of the politically and socially optimal locations is preserved we interpret the above results as supportive of the hypothesis of an effective political solution to the nimby conflict

using choice question formats to determine compensable values the case of a landfill siting process abstract siting noxious facilities such as community landfills is a challenging problem for local planners who recognize the importance of economic efficiency and equity political acceptance and meeting federal regulatory standards meeting these criteria requires technical and socio economic analyses in conjunction with public input planners may also recognize that political acceptance requires compensation for the host community either in the form of monetary or in kind transfers following breffle and rowe breffle w s rowe r d 2002 comparing choice question formats for evaluating natural resource tradeoffs land econ 78 2 298 314 we use a resource to resource paired comparison survey method to estimate compensatory values associated with an in county landfill for both the host and non host communities our results indicate that while a host community household s minimum willingness to accept payment for hosting a landfill may exceed a non host community household s maximum willingness to pay a large difference in population sizes between the two communities enables the landfill to pass a kaldor potential compensation test

the institutional foundations of inequality and growth abstract after a decade of research the effect of inequality on long run economic growth remains unresolved in part because researchers have treated omitted variable bias as an estimation problem rather than a deeper question of causality in this article we argue that the key omitted variable is the quality of economic institutions using both cross country and panel data specifications we find no direct effect of inequality on growth in the long run rather the protection of property rights simultaneously raises growth rates and reduces income inequality we interpret these findings as evidence that insecure property rights disproportionately disadvantage the poor

customer ownership and quality provision in public services under asymmetric information the implementation of projects producing external effects is often a source of disagreement and conflict between hosting and nonhosting communities the article focuses on the impact of participatory ownership on conflict resolution and social welfare in the presence of asymmetric information and imperfect quality monitoring we show that in such situations the participatory solution may help solve deadlocks that money transfers to a for profit operator cannot solve the analysis highlights three main factors behind this fact first a customer owned cooperative internalizes at least partially the external effects generated by the project second the alignment of cooperative members preferences with those of the social planner reduces in some cases eliminates the distortions caused by information asymmetries third cooperatives require less costly monitoring than their for profit counterparts we also show that cooperatives productive inefficiency with respect to for profits may emerge endogenously as a consequence of a lower pressure to compete on costs for the market