bureaucratic minimal squawk behavior theory and evidence from regulatory agencies this paper develops a model in which a desire to avoid criticism prompts otherwise public spirited bureaucrats to behave inefficiently decisions are taken to keep interest groups quiet and to keep mistakes out of the public eye the policy implications of this minimal squawk behavior are at odds with the view that agencies should be structured to minimize the threat of capture an empirical test using data from us state public utility commissions rejects the capture hypothesis and is consistent with the squawk hypothesis longer puc terms of office are associated with a higher incidence of rate reviews and lower household electricity bills jel d73 l51 l97 l98

marriage market divorce legislation and household labor supply this paper provides a theoretical framework for analyzing the impact of the marriage market and divorce legislation on household labor supply in our approach the sex ratio in the marriage market and the rules governing divorce are examples of distribution factors these factors are defined as variables that affect the household members bargaining position but not preferences or the joint budget set we extend the collective labor supply model developed by chiappori to allow for distribution factors we show that our model imposes new restrictions on the labor supply functions and eases the identification of individual preferences and the intrahousehold decision process the model is estimated using psid data for the year 1988 our results do not reject the restrictions imposed by the model also the sex ratio and divorce laws deemed favorable to women are found to affect labor supply behavior and the decision process in the directions predicted by the theory and to have sizable effects

introduction imperfect information and rural credit markets puzzles and policy perspectives rural credit markets have been at the center of policy intervention in developing countries over the past forty years many governments supported by multilateral and bilateral aid agencies have devoted considerable resources to supplying cheap credit to farmers in a myriad of institutional settings the results of many of these interventions have been disappointing and one explanation for this must be that they were based on an inadequate understanding of the workings of rural credit markets the articles in this symposium issue are devoted to empirical and theoretical investigations of rural credit markets in the framework of the imperfect information paradigm the authors show how this framework is useful not only in explaining puzzling features of these markets but also in providing a policy perspective to assess the successes and failures of specific interventions

street level political controls over federal bureaucracy local partisan activities of legislators and their electoral coalitions systematically influence field office activities of federal bureaucracies in their electoral districts this alternative to centralized democratic controls over bureaucracy occurs because discretionary policy decisions made at the field office level are influenced by local resources generated through partisan activities our study of county level occupational safety and health administration enforcement in new york 1976 85 finds that county state and federal elected officials influence local enforcement activities with liberal democratic legislators associated with more active enforcement the county political parties are most influential for activities with the most local discretion while members of congress are more influential for local activities more readily controlled by the national office

introducing household production in collective models of labor supply in a recent paper chiappori 1992 i proposed a model of labor supply based on a collective representation of household behavior in this framework each household member is characterized by his or her own utility function and decisions are only assumed to result in pareto efficient outcomes i showed that these simple assumptions were sufficient to i generate testable restrictions on labor supply functions and ii recover individual preferences and the outcome of the decision process from observed behavior for the sake of simplicity the results were derived in the simplest possible case namely a static labor supply model with private consumptions such a framework was appropriate only for the purpose of the paper that is a preliminary exploration of the properties of collective models of labor supply the next step is to evaluate the robustness of the results to various extensions of the basic model this opens a general research program and generates a wide range of particular problems that it is hoped will be considered in the future among the most serious shortcomings of the 1992 model is the absence of household production as in most labor supply models agents were assumed to divide their time between market activities and leisure as apps and rees 1997 in this issue very rightly point out in their comment the absence of domestic production is far from innocuous as soon as welfare issues are considered for instance a low level of market labor supply will automatically be interpreted as a large consumption of leisure whereas it may in fact reflect the specialization of one of the members in domestic

buying negative agenda control in the u s house we explore the foundations of the legislative party cartel as theorized by cox and mccubbins 1993 2005 to determine how majority party moderates who suffer net policy losses from the majority leadership s use of negative agenda control are kept from defecting from the cartel arrangement first we identify formally the group of majority party members who are net policy losers we find that those members occupying the initial 30 of the space within the majority party blockout zone that space closest to the floor median are hurt on a pure policy basis by the cartel arrangement second we find that members in this 30 zone are rewarded disproportionately by majority party leaders relative to members in other intervals on the same side of the floor median via side payments in the form of campaign contributions in addition majority party members within the 30 zone receive side payments commensurate with their particular policy loss

collective labor supply heterogeneity and nonparticipation in this paper we extend the collective model of labour supply developed by chiappori 1988 to allow for discrete choices censoring and nonparticipation in employment we derive the collective restrictions on labour supply functions that we contrast with restrictions implied by the usual unitary framework we apply our results to the estimation of a collective labor supply model for married couples without children using uk data from 1979 to 1993 taking into account unobserved heterogeneity we use the log linear labor supply framework the implications of the unitary framework are rejected while those of the collective approach are not the estimates of the sharing rule show that wages have a strong influence on bargaining power within couples

collective labour supply heterogeneity and non participation we present identification and estimation results for the collective model of labour supply in which there are discrete choices censoring of hours and non participation in employment we derive the collective restrictions on labour supply functions and contrast them with restrictions implied by the usual unitary framework using the large changes in the wage structure between men and women in the u k over the last two decades we estimate a collective labour supply model for married couples without children the estimates of the sharing rule show that male wages and employment have a strong influence on bargaining power within couples

land contingent poverty alleviation schemes abstract target groups for rural poverty alleviation schemes in south asia and elsewhere have often been identified in terms of their landholding class with landless or near landless households being the intended beneficiaries this paper offers a quantitative approach to the analysis and design of land contingent poverty alleviation schemes an application to bangladesh suggests that when income is generally unobserved landholding class is a good instrument for targeting poverty relief in that it is strongly correlated with the informationally feasible allocations which minimize aggregate poverty for a given budget it is however far from being a perfect instrument even under otherwise ideal conditions the maximum feasible reduction in poverty which is attainable by relying solely on land based targeting is substantially less than that attainable with perfect income information indeed the poverty alleviation impact of domestically financed and revenue neutral transfers across 10 landholding classes in rural bangladesh could also be achieved without targeting by simply giving every household a lump sum payment equivalent to 10 of mean rural income political restrictions on tax powers or errors made in administration will further reduce the gains from land contingent targeting greater impact on poverty for a given budgetary cost will require more precise targeting within landholding classes

two stage residual inclusion estimation addressing endogeneity in health econometric modeling the paper focuses on two estimation methods that have been widely used to address endogeneity in empirical research in health economics and health services research two stage predictor substitution 2sps and two stage residual inclusion 2sri 2sps is the rote extension to nonlinear models of the popular linear two stage least squares estimator the 2sri estimator is similar except that in the second stage regression the endogenous variables are not replaced by first stage predictors instead first stage residuals are included as additional regressors in a generic parametric framework we show that 2sri is consistent and 2sps is not results from a simulation study and an illustrative example also recommend against 2sps and favor 2sri our findings are important given that there are many prominent examples of the application of inconsistent 2sps in the recent literature this study can be used as a guide by future researchers in health economics who are confronted with endogeneity in their empirical work

an experimental examination of vertical control and cost predation abstract in recent years there has been renewed interest in and concern about firms use of vertical control as a way to exert market power such behavior could be used to gain a competitive advantage over rivals in input and or output markets this paper uses laboratory experimental methods to examine three questions i is anti competitive behavior by a dominant firm in input markets an observable behavior ii is cost predation an observable laboratory phenomenon and iii if such behaviors are observed what are the efficiency consequences results of this dominant firm experiment indicate that all three questions can be answered in the affirmative and the negative efficiency consequences can be profound

electoral cycles in government employment evidence from us gubernatorial elections abstract incumbents may opportunistically design policies increasing employment before elections or postpone cuts until afterwards i investigate electoral cycles in public sector employment around us gubernatorial elections exploiting staggered gubernatorial election cycles across states i use both county fixed effects models and a geographic discontinuity design that compares neighboring counties at state borders with a difference in gubernatorial election cycles consistent with manipulation state and local government employment per capita are higher leading up to elections afterwards employment abruptly returns to normal political and spatial heterogeneities are investigated including by election competitiveness term limits incumbent party affiliation and ideological alignment between the incumbent and the state legislature or local citizens differences across types of government employment and private sector employment are also explored

intrahousehold inequality and the theory of targeting the two literatures on targeting and on intrahousehold inequality have developed rapidly over the past 15 years but largely independent of each other the literature on targeting concerns itself with the design of tax and transfer programs for poverty alleviation in the presence of limited information on who the poor are the literature on intrahousehold inequality arose out of a dissatisfaction with unitary models of the household especially in explaining inequality in consumption and achievements of different household members even after allowing for relevant differences among them the authors begin to forge the link between the two literatures so they can address issues policymakers face around the world after a brief reprise of the key features of the two literatures they indicate how the presence of intrahousehold inequality and allocation mechanisms could affect the standard analysis of targeting theory they conclude with a list of policy questions for further research this abstract was borrowed from another version of this item

productivity health and inequality in the intrahousehold distribution of food in low income countries a model is formulated incorporating linkages among nutrition labor market productivity health heterogeneity and the intrahousehold distribution of food and work activities in a subsistence economy empirical results based on a sample of households from bangladesh indicate that despite considerable intrahousehold disparities in calorie consumption households are averse to inequality furthermore consistent with the model the results also indicate that both the higher level and greater variance in the calories consumed by men relative to women reflect in part the greater participation by men in activities in which productivity is sensitive to health status copyright 1990 by american economic association

income splitting specialization and intra family distribution income splitting for tax purposes results in more specialization of wives but does this in turn generate more gender inequality in my dynamic bargaining model with a divorce threatpoint i find that who controls the couple s labour supply plays a crucial role in establishing this link if spouses choose their labour supply non cooperatively only the husband s increase but not her own decrease in labour supply introduces a negative term in the wife s change in welfare if the wife does not control her own labour supply a decrease in her own labour supply introduces an additional negative term la fragmentation du revenu aux fins d impot resulte en une plus grande specialisation des epouses mais est ce que cela engendre davantage d inegalite entre genres dans un modele de marchandage dynamique avec menace de divorce a la cle on decouvre que la personne qui controle l offre de travail du couple joue un role crucial dans la reponse a cette question si les epoux choisissent leurs offres de travail de maniere non cooperative seul l accroissement de l offre de travail de l epoux et non le declin de l offre de travail de l epouse introduit un terme negatif dans le changement de niveau de bien etre de l epouse si l epouse ne controle pas sa propre offre de travail un declin dans son offre de travail introduit un element negatif additionnel

gender differentials in farm productivity implications for household efficiency and agricultural policy abstract within many african households agricultural production is simultaneously carried out on many plots controlled by different members of the household detailed plot level agronomic data from burkina faso provides striking evidence of substantial inefficiencies in the allocation of factors of production across the plots controlled by different members of the household production function estimates imply that the value of household output could be increased by 10 15 by reallocating currently used factors of production across plots this finding contradicts standard models of agricultural households a richer model of behaviour which recognizes that the individuals who comprise a household compete as well as co operate has important implications for the structure of agricultural production and for the design of agricultural policy

deregulation market power and risk behaviour in spanish banks abstract this paper provides empirical evidence on the effects of regulatory changes in the market power of spanish banks it also analyses the response of banks in terms of risk taking behaviour as a result of a reduction in economic profits we find that liberalisation measures have increased competition and eroded banks market power we observe that banks with lower charter values tend to have lower equity assets ratios lower solvency and to experience higher credit risk the last evidence is new in the literature and calls for strengthening regulatory concerns about credit risk management by banks in situations of increased competition

do political parties matter evidence from u s cities are cities as politically polarized as states and countries no is the answer from our regression discontinuity design analysis which shows that whether the mayor is a democrat or a republican does not affect the size of city government the allocation of local public spending or crime rates however there is a substantial incumbent effect for mayors we investigate three mechanisms that could account for the striking lack of partisan impact at the local level and find the most support for tiebout competition among localities within metropolitan areas

do parties matter for economic outcomes a regression discontinuity approach a long standing issue in political economics is to what extent party control makes a difference in determining fiscal and economics policies this question is very difficult to answer empirically because parties are not randomly selected to govern political entities this article uses a regression discontinuity design namely party control changes discontinuously at 50 of the vote share which can produce near experimental causal estimates of the effect of party control on economic outcomes the method is applied to a large panel data set from swedish local governments with a number of attractive features the results show that there is an economically significant party effect left wing governments spend and tax 2 3 more than right wing governments left wing governments also have 7 lower unemployment rates which is partly due to that left wing governments employ 4 more workers than right wing governments jel c21 d72 d78 h71 h72

environmental protection in the federalist system the political economy of npdes inspections i introduction federal regulatory programs from occupational safety to protection of the environment are implemented jointly by national and state agencies more broadly almost all regulatory programs involve some delegation to branch offices meat inspections or regional districts tax collection given the pervasiveness of regulatory federalism surprisingly little research has been done on the political consequences of delegating national policy to local actors in particular the small but growing literature on the politics of regulation has almost completely ignored the role of federalism in implementing regulatory policy 1 perhaps the most widely accepted model of bureaucratic decision making peltzman s 1976 model of support maximization implies that delegation can have a profound impact on the implementation of regulatory policy peltzman s model posits that regulators maximize support while minimizing opposition in the context of environmental protection a rational regulator would calculate the marginal support from pollution abatement generated by inspecting a given plant and equate that to the marginal opposition arising from job loss generated by that action pashigian 1985 points out that in environmental legislation local and national interests are unlikely to be identical because industry the primary target of pollution control measures has an uneven geographic distribution thus a local regulator performing peltzman s calculation is quite likely to reach a very different decision than a national regulator this paper examines the extent to which local regulators are able to respond to local interests when enforcement of a national policy has been delegated to them there are three possibilities one is that delegation of enforcement to local government represents a complete abdication of control by the federal government at the other extreme is the possibility the federal government can delegate with no loss of control because of its ability to enforce its goals through the use of threats loss of authority over the program and incentives additional grant money the third possibility is that both local and national interests can influence a delegated program the federal government will lose some control when it delegates but the loss will not be total the clean water act of 1972 is one of the largest federal regulatory programs ever delegated to the states under the act the federal government took over the previously state level responsibility for regulating water pollution 2 under the clean water act industrial polluters are issued permits which specify types and amounts of pollutants allowed in effluent discharged during a given time period these limits are set by state or regional authorities but must conform to minimum national standards permit writers may consider the desires of the local community if those desires demand more stringent standards than the federal minimums but may not respond to community demands for lower standards local communities with considerable employment in the industry for example might want a lower standard than the federal mandate although a politically minded regulator does not have the ability to actually grant a permit with a lower standard a second source of discretion is available in the form of selective enforcement while permits are difficult enough to issue they are meaningless without some method of verifying compliance 3 the state or regional environmental protection agency epa conducts regular on site inspection of polluters although the epa requests that delegated states inspect polluters at least once a year it is not required in practice states have considerable discretion on how and when to inspect polluters this should not come as a surprise there are 7 500 npdes facilities in the country variation in state performance could be due to location alone this study using data from the epa s permit compliance database which tracks compliance with the clean water act analyses plant level inspection violation and effluent discharge data

on the coverage of public employment schemes for poverty alleviation abstract the cost effectiveness of public employment as a means of poverty alleviation depends on policy design choices concerning coverage and wage rates the choice is between schemes which aim for wide coverage at potentially low wages and schemes which ration participation so that more beneficiaries can escape poverty conditions are derived for ranking stylized policy alternatives in terms of a broad class of poverty measures the preferred policy is shown to depend on the budget level administrative cost the initial wage distribution and the policy maker s aversion to poverty empirical simulations for bangladesh data generally support wide coverage for distributionally sensitivity poverty measures but limited coverage for other measures

regulation and market power in the spanish liquefied petroleum gas industry progress or failure this paper presents a detailed study of the structure market power and competition in the distribution sector for liquefied petroleum gas lpg within spain it is a segment of energy consumption and supply that is not often given serious attention despite the fact that lpg is a crucial source of energy to many households in many countries in europe and in the rest of the world despite formally being an open and liberalized sector the spanish lpg market is characterized by high concentration within the industry repsol butano the dominant operator practically controls the entire value chain these structural characteristics probably justify state intervention in the form of price fixing in order to guarantee accessible prices for final consumers nevertheless applying this tool has had negative effects on the opening and liberalization process on the one hand it fails to encourage entry or an increase in the participation of new operators on the other it has considerably deteriorated the economic and financial performance of the distribution agents that are subjected to two strong forces first the dominant operator looks after its own interests and its income and second the government tries to defend the interests of final consumers by fixing prices that inadequately remunerate the activity this shows the contradictory regulatory actions that try to promote competition and then establish mechanisms to regulate activity by fixing prices that act as price limits these government set prices discourage new competitors from entering

competition regulation and pricing behaviour in the spanish retail gasoline market abstract the restructuring of the spanish oil industry produced a highly concentrated oligopoly in the retail gasoline market in june 1990 the spanish government introduced a system of ceiling price regulation in order to ensure that liberalization was accompanied by adequate consumer protection by 1998 prices were left to the free market this paper examines the pricing behaviour of the retail gasoline market using multivariate error correction models over the period january 1993 abolishment of the state monopoly december 2004 the results suggest that gasoline retail prices respond symmetrically to increases as well as to decreases in the spot price of gasoline both over the period of price regulation january 1993 september 1998 and over the period of free market october 1998 december 2004 however once the ceiling price regulation was abolished cooperation emerged between the government and the major operators repsol ypf and cepsa elf to control the inflation rate this resulted in a slower rate of adjustment of gasoline retail prices when gasoline spot prices went up as compared with the european pattern finally the spanish retail margin was by the end of our timing period of analysis as in the starting years after the abolishment of the state monopoly above the european average this pattern confirms our political economic hypothesis which suggests that the spanish government and the oil companies were working together in reducing the inflation in periods of rising oil and gasoline prices it is also inferred that explaining the pricing pattern in energy markets may require different hypothesis than the classical perspective involving just firms taking advantage of market power

how serious is the neglect of intrahousehold inequality in this report the authors develop a framework for assessing the consequences of ignoring intrahousehold inequality in the measurement and analysis of poverty and inequality they apply this framework to data for the philippines and conclude that 1 the result of neglecting intrahousehold inequality will probably be considerable understatement of the levels of poverty and inequality with the philippine data measured levels of inequality and poverty were off 30 percent as a result of ignoring intrahousehold variation and 2 patterns of inequality revealed by household level data are somewhat different from patterns revealed by individual level data but the differences seem not to be dramatic to confirm these results the exercise should be repeated with data from other countries

deregulation and competition in spanish banking the spanish financial system has undergone a strong liberalization process in the last fifteen years which has accelerated recently starting from a situation of tight regulation and protection from competition the deregulation process has been reinforced by the projected integration of european financial markets and has accompanied major developments in financial markets and banking deregulation has many effects in this short note we concentrate mainly on competition in banking after reviewing the evolution of regulation section 2 and the present state of the financial system section 3 we analyze the effects of liberalization on competition section 4 and conclude with some comments on other effects and open questions

voluntary pollution reductions and the enforcement of environmental law an empirical study of the 33 50 program abstract this paper studies determinants and effects of firms participation in the 33 50 program which is a voluntary pollution reduction vpr program initiated by government regulators we examine a wide range of explanations for voluntary corporate environmentalism and find evidence in support of an enforcement theory that predicts that 1 vpr participation is rewarded by relaxed regulatory scrutiny 2 the anticipation of this reward spurs firms to participate in the program and 3 the program rewards regulators with reduced pollution we also find that 33 50 participation was more likely for firms operating in states with larger environmentalist constituencies

a test of the unitary and collective models of household labour supply this paper tests the unitary and the collective household labour supply models within a structural framework a nonlinear unrestricted household labour supply system is postulated and the set of parametric restrictions imposed by each model is derived our results generally reject the income pooling restrictions embodied in the unitary model also the symmetry of cross wage effects is rejected however the collective model is not rejected for groups with no pre school children

birth control and female empowerment an equilibrium analysis we analyze from a theoretical perspective the impact of innovations in birth control technology on intrahousehold allocation of resources we consider a model of frictionless matching on the marriage market in which men as well as women differ in their preferences for children moreover men unlike women must marry to enjoy fatherhood we show that more efficient birth control technologies generally increase the power hence the welfare of all women including those who do not use them this empowerment effect requires that the new technology be available to single women an innovation reserved to married women may result in a disempowerment effect

intra household resource allocation an inferential approach if household income is pooled and then allocated to maximize welfare then income under the control of mothers and fathers should have the same impact on demand with survey data on family health and nutrition in brazil the equality of parental income effects is rejected unearned income in the hands of a mother has a bigger effect on her family s health than income under the control of a father for child survival probabilities the effect is almost twenty times bigger the common preference or neoclassical model of the household is rejected if unearned income is measured with error and income is pooled then the ratio of maternal to paternal income effects should be the same equality of the ratios cannot be rejected there is also evidence for gender preference mothers prefer to devote resources to improving the nutritional status of their daughters fathers to sons

an experimental evaluation of strategic preemption abstract this paper reports the results of a series of two stage two person noncooperative games where one player can strategically preempt the other in one of our designs the subgame perfect equilibrium entails complete preemption in the other it entails partial preemption the data show that players tend to completely preempt when it is privately optimal however when partial preemption is privately optimal a non trivial fraction of players persist in choosing the non preemptive structure this may result because of occasional irrational behavior following preemptive play which induces some dominant agents to play less aggressively

the empirical content of nash bargained household behavior in households whose allocation decisions can be represented as nash bargained household decisions extrahousehold environmental parameters eeps serve as pure shifters of the threat points the comparative statics of changes in demands due to changes in these eeps are given these are incorporated into a comprehensive statement of the empirical content of nash bargained household behavior including a nash generalization of barten s 1966 fundamental matrix equation of the theory of consumer demand estimation and data requirements are discussed along with nested testing of the following structure the neoclassical model is nested in the nash bargained model which in turn is nested in an unrestricted model of household demands emphasized throughout is the enriched menu of explanatory variables for demand analysis provided by the nash model as well as the model s ability to jointly analyze i household formation and ii intrahousehold allocation decisions

intrahousehold inequalities in child rights and well being a barrier to progress this paper uses unicef s multiple indicators cluster surveys cross country data to shed light on unequal investments in the wellbeing of children boys and girls within the household the paper proposes a new methodology to measure the extent of gender intrahousehold inequality and its contribution to overall levels of inequality using an l theil index decomposition the individual and joint distribution of inequality in four key indicators of child wellbeing is analyzed stunting birth registration school attendance and time spent on work and chores working hours in the search for evidence of gender bias evidence from various separate county studies had shown that the direction of the gender bias is not universal such conclusion holds when using a consistent methodology and comparable cross country datasets this paper shows that disparities inside households do not follow the same bias toward one or the other gender in all countries and the direction of the bias is not the same across indicators of wellbeing while progress in improving child wellbeing has occurred in many countries inequalities remain intrahousehold inequalities might still be considered a priority in an agenda focused on closing these progress gaps

the spanish oil sector from state intervention to free trade abstract this article describes how the entrance of spain into the ec forced the spanish oil sector to reorganize its relatively inefficient and backward structure in anticipation of future competition and in harmony with ec rules to protect the spanish industry over a transitional period spain replaced its former legal oil monopoly by a de facto monopoly recent developments show parallel with the development of a strong partly privatized state oil company the gradual disintegration of this system this is forcing the smaller private spanish oil companies to establish partnerships with foreign consortia to secure their positions in their home market

vertical integration and collusive incentives an experimental analysis abstract we consider vertically related industries with multiple downstream markets firms make simultaneous output choices in a repeated game upstream duopolists merge with producers in one of the downstream markets that also is a duopoly experimental duopoly markets are constructed to assess the effects of vertical integration upon outputs and profits we find that integration raises outputs in both downstream and upstream markets although only the upstream effect is statistically significant integrated profits are lower and consumer welfare is higher the integrated markets tend to equilibrate more quickly

price regulation in the spanish energy sectors who benefits abstract this paper analyses the distribution of benefits between firms and consumers due to the price regulation of the spanish energy sectors electricity oil fuels and gas during the decade 1987 1997 to that effect we compare the actual evolution of energy prices with alternate benchmarks in order to assess the potential existence of a pro industry or a pro consumer bias in the pricing policies followed by the regulator our results show a pro industry biased regulatory context where consumers benefitted very little from price control the successive price adjustments over time allowed the companies to keep all the productivity gains and cost reductions and to increase their profitability rates relative to those achieved in the manufacturing sector

parties politics and regulation evidence from clean air act enforcement does local federal regulation respond to the preferences of local congressional representatives for example do republican congressmen reduce local enforcement of clean air laws in their districts we use facility level panel data on clean air act inspections over 1989 2005 to study the causal effect of a congressman s party affiliation on local enforcement random assignment of electoral outcomes is obtained with a regression discontinuity design we find that new republican vs democratic representatives significantly depress inspection rates for local polluting facilities in the first year after their election jel d73 q52 q53

do voters affect or elect policies evidence from the u s house there are two fundamentally different views of the role of elections in policy formation in one view voters can affect candidates policy choices competition for votes induces politicians to move toward the center in this view elections have the effect of bringing about some degree of policy compromise in the alternative view voters merely elect policies politicians cannot make credible promises to moderate their policies and elections are merely a means to decide which one of two opposing policy views will be implemented we assess which of these contrasting perspectives is more empirically relevant for the u s house focusing on elections decided by a narrow margin allows us to generate quasi experimental estimates of the impact of a randomized change in electoral strength on subsequent representatives roll call voting records we find that voters merely elect policies the degree of electoral strength has no effect on a legislator s voting behavior for example a large exogenous increase in electoral strength for the democratic party in a district does not result in shifting both parties nominees to the left politicians inability to credibly commit to a compromise appears to dominate any competition induced convergence in policy

anticompetitive vertical integration by a dominant firm backward vertical integration by a dominant firm into an upstream competitive industry causes both input and output prices to rise the dominant firm s advantage may or may not offset the negative effect of higher prices on social welfare whether it does depends on a simple indicator derived from input and output market shares and the degree of prior vertical integration a vertical merger is similar to a hypothetical horizontal merger suggesting that vertical merger policy for this industry should be similar to horizontal merger policy the dominant firm model yields an observable sufficient indicator of welfare improving vertical mergers copyright 1998 by american economic association