the digital divide the role of political institutions in technology diffusion what factors have promoted and retarded the spread of the internet globally the internet is one example of the diffusion of technology much as other technologies the internet has diffused unevenly across countries raising concerns over a digital divide my main proposition is that its spread has been driven by neither technological nor economic factors alone rather political factors exert a powerful influence groups that believe they will lose from the internet use political institutions to enact policies that block the spread of the internet some political institutions make this easier than others data from roughly 190 countries from 1991 to 2001 showthat a country s regime type matters greatly even when controlling for other economic technological political and sociological factors democratic governments facilitate the spread of the internet relative to autocratic ones thus the spread of democracy may help reduce the digital divide

kleptocracy and divide and rule a model of personal rule many developing countries have suffered under the personal rule of kleptocrats who implement highly inefe cient economic policies expropriate the wealth of their citizens and use the proceeds for their own glorie cation or consumption we argue that the success of kleptocrats rests in part on their ability to use a divide and rule strategy made possible by the weakness of institutions in these societies members of society need to cooperate in order to depose a kleptocrat yet such cooperation may be defused by imposing punitive rates of taxation on any citizen who proposes such a move and redistributing the benee ts to those who need to agree to it thus the collective action problem can be intensie ed by threats which remain off the equilibrium path in equilibrium all are exploited and no one challenges the kleptocrat kleptocratic policies are more likely when foreign aid and rents from natural resources provide rulers with substantial resources to buy off opponents when opposition groups are shortsighted when the average productivity in the economy is low and when there is greater inequality between producer groups because more productive groups are more dife cult to buy off jel o12 h00

redistributive promises and the adoption of economic reform this paper analyzes the relationship between economic reform and the democratic process to ask the following question does the likelihood of adoption of an economic reform increase with an increase in the efficiency benefits from that reform a priori we might expect that this likelihood should increase monotonically for two reasons first economic reform results in an increase in the size of the national pie if the government has the ability to make compensatory tax transfers an increase in each citizen s income is possible second a larger economic reform results in a greater number of winners this might also be expected to reinforce the political support for economic reform so we should expect a reform with greater efficiency benefits to a larger population to have a greater chance of adoption by the government however in this paper we show that this intuition is mistaken in particular we demonstrate that there exists a certain non monotonicity between the distribution of winners from economic reform and the probability of its adoption an increase in the number of winners may lower rather than increase the likelihood of adoption of economic reform in particular even though reforms that benefit a minority or an overwhelming majority are adopted reforms that benefit a smaller majority are not adopted

strikes free riders and social customs in recent years there has been a growing literature on the role of social customs in the labour market marsden 1986 for example has emphasised the importance of group norms and social custom in various labour market contexts jones 1984 develops an economic model of conformist behaviour in which an individual s work effort is determined partly by tradition and by the behaviour of other workers a central theme of the literature is that a rational economic agent does not inhabit a social vacuum and hence that individual behaviour is influenced to some extent by the actions of others the approach promises the possibility of an escape from the free riders problem which as we shall investigate might have a number of labour market applications such a potential has been suggested by a number of writers in different fields eiser 1978 writing from a socio psychological perspective has stressed the role of social norms in producing cooperative outcomes in the theoretical context of the prisoner s dilemma such an emphasis is consistent with sen s 1977 argument that the concept of commitment might offer a solution to the free rider problems

the free rider problem and a social custom model of trade union membership the literature on public good provision by groups has traditionally emphasized the free rider problem if it is assumed that a group forms to provide or to lobby for the provision of a good that is collective to potential members then the major conceptual problem to the formation of such a group is that individuals can enjoy the benefits of group action without incurring the costs by doing this they free ride in small groups the free rider problem is not generally considered insurmountable however the larger the number of potential beneficiaries the more difficult it is to overcome the free rider problem due to exclusion and surveillance difficulties and the less likely is optimal collective good provision or any collective good provision in the extreme the free rider hypothesis has a long history in economic thought as early as 1848 the free rider potential of any group of workers was perceived by j s mill however it appears that it was not until 1965 that an attempt was made to explain why large groups providing collective goods manage to exist despite the free rider problem olson 1965 proposed the following explanation if a large group exists it must have formed either because membership is compulsory or because the group provides private goods and services accessible only to its members with ancillary provision of the collective good as a byproduct the literature that developed from olson s work has focused primarily on the suboptimal provision of the collective good the difficulties of getting members to contribute in proportion to the benefits received and preference revelation incentives see for example groves and ledyard 1977 however there are problems with both of the solutions proposed by olson to overcome the free rider problem facing large groups first if coercion is looked at as a solution to the free rider problem the question arises as to how the coercion itself is financed guttman 1978 this is unlikely to be costless the second problem concerns the byproduct solution private good pro

telecommunications reform internet use and mobile phone adoption in the developing world summary how do telecommunications policies influence technology adoption has regulatory reform helped mitigate or exacerbate the digital divide we examine the effects of four policy reform strategies on a country s share of internet bandwidth internet hosts internet users personal computers and mobile phones we argue that the best policy environment for the telecommunications sector is one maintained by an independent regulator that is not above representing the public interest or entering into public private partnerships to develop national information infrastructure holding other factors constant privatizing the national telecommunications operator only has a few demonstrable effects and the effects are mixed liberalizing the market for consumer communications services and separating the telecommunications regulator from direct control by the executive branch of government are for the most part constructive policies for encouraging technology adoption yet over time too little public policy oversight usually has a negative impact on technology adoption regulatory independence mitigates against the digital divide but regulatory withdrawal exacerbates it our findings offer greater coverage than prior research and emerge from a time series cross sectional study of multiple technology indicators in 154 countries during the period 1990 2007

social custom management opposition and trade union membership abstract this paper investigates the determinants of voluntary unionization in the labor market in a discrete time version of the social custom model employer behavior in form of management opposition to union membership is explicitly taken into account conditions for the existence of unions in the long run are determined it is shown that increasing the surplus per worker or the union bargaining power may have a negative impact on union density via more management opposition different incentives for management opposition can explain the greater success of unions in centralized bargaining systems

dynamics of a household norm in female labour supply abstract this paper develops a continuous variant of the theory of social custom of akerlof q j econom 94 1980 749 to model the impact of a traditional household norm on married women s labour supply the erosion of this norm is treated as the endogenous result of feedback of the labour supply behaviour on the norm beliefs these endogenous dynamics are shown to imply multiple long run equilibria on both the individual and collective levels exhibiting hysteresis and mutual transitions dependent on the wage rate it is suggested that these properties have played important roles in the long run increase in married women s labour supply in many oecd countries

exiting a lawless state an earlier paper showed that an economy could be trapped in an equilibrium state in which the absence of the rule of law led to asset stripping and the prevalence of asset stripping led to the absence of a demand for the rule of law highlighting a coordination failure this paper looks more carefully at the dynamics of transition from a non rule of law state the paper identifies a commitment problem as the critical feature inhibiting the transition the inability under a rule of law to forgive theft this can lead to the perpetuation of the non rule of law state even when it might seem that the alternative is pareto improving

cheat or perish a theory of scientific customs abstract performance incentives have become increasingly important in academia evidence suggest that they increase not only researchers effort but also their cheating we develop a principal agent framework in which a research institution principal aims to reward scientific productivity considering the social benefit of research and the remuneration costs researchers agents take into account what others are doing as a consequence the introduction of performance incentives not only leads to fraudulent behavior in the short run but may also deteriorate the scientific norm in the long run in the face of these dynamics the principal pursues two goals to increase productivity effort incentive policy and to deal with fraud anti fraud policy several factors determine the optimal mix of policies economic factors researchers cost of providing high or low effort the societal value of scientific knowledge and the societal costs of scientific misbehavior and psychological factors the evolution of norms over time an important insight of our theory is that when research institutions seek to encourage the production of high quality research they should also raise the salary for normal research to avoid misconduct

worker substitutability and patterns of unionisation a strategic three party bargaining model is developed in which one distinguished party the firm has to reac h agreements with the other two each of which is a group of workers in the prebargaining stage the two worker groups decide whether to organize jointly or separately the main observation relates the equi librium pattern of unionization to the substitutability in production between the two groups the outcome is joint or separate unions acco rding to whether the two groups are substitute or complementary facto rs of production the analysis also considers possibilities for firm s strategic intervention in the unionization process copyright 1988 by royal economic society

the effect of the union wage differential on management opposition and union organizing success that large union wage differentials increase organization is incorrect for the united states today it is incorrect because organization is the joint decision of workers and management not a worker s decision while potential wage increases are a plus to workers they reduce profits and thus are a minus to management in an institutional setting in which management allocates significant resources to convince workers to vote against unions it is erroneous to analyze the effect of the union wage differential on organizing solely from the workers side just as it is erroneous to analyze any economic outcome solely in terms of one blade of the market scissors my claim is threefold

a reinterpretation of the modern theory of forward exchange rates the modern theory of forward exchange rate determination mt has been widely although not unanimously accepted as an improvement over the traditional interest rate panty theory irpi the latter theory contends that in equilibruim the forward rate f will equal except for transactions costs the interest panty forward rate f 1 covered interest arbitrage cia is a pnmary but as shall be seen not the only force insunng this equilibnum condition for the forward market for example if f exceeds f then covenng arbitrageurs borrow or forego lending in the domestic country purchase the foreign currency on the spot market lend abroad at the foreign interest rate and simultaneously sell the foreign currency including interest on the forward market these transactions cause f to decline and or f to increase until equilibnum is restored motivated in part by early empincal studies of the irpi which found evidence of apparent deviations of f from f and by the intuitively appealing argument that expectations or speculation can also influence f the mt suggests that the equilibrium forward rate is better explained as a weighted average of f and the expected

an economic theory of the open shop trade union there has been significant interest recently both in the empirical investigation of the determinants of trade union membership in the u k and elsewhere and in the theoretical analysis of the economic effects of the closed shop trade union however there is little rigorous microeconomic explanation of union membership which is relevant for much of the u k and similar labour markets where the open shop union is prevalent this paper attempts to overcome the free rider problem of explaining union membership in the open shop we argue that both private pecuniary gains and social influences affect the individuals union membership decisions citing evidence in support of these basic assumptions we show that stable intermediate union density is a possible equilibrium outcome in a generalised social custom model we also analyse the simultaneous determination of wages and union membership deriving a number of comparative static results in particular we find that both wages and union density depend upon inter alia the level of strike pay the net cost of union membership and the individual s sensitivity to social custom and associated solidarity effects we argue that the approach is consistent with various stylised facts concerning both wage bargaining and union membership and is able to explain a number of otherwise puzzling features of union membership

open shop unions and product market competition in this paper we analyse the impact of changes in product market competition on wage outcomes in the presence of an open shop union with less than full union membership product market competition is shown to aect not only a unionised rm s pro ts but also its payoin the event of a dispute in contrast to the pre diction of the standard model increases in product market competition may now increase wage levels the model is therefore able to accommodate the mixed empir ical ndings regarding the impact of product market competition on union wages

spot versus forward speculation and hedging a diagrammatic exposition abstract it has recently been recognized that the controversial implication of the modern theory of forward exchange that the forward rate can differ from the rate required for interest parity no longer holds when speculators are allowed to choose between spot and forward speculation this paper shows this result within the diagrammatic apparatus usually used to describe the modern theory the paper also shows the effect of importers and exporters choosing between spot and forward hedging it is observed that when either speculators or traders can choose between money market and forward speculation hedging forward rates equal interest parity rates the diagram can be adapted to consider borrowing lending spreads etc

the theory of social custom a modification and some extensions can unprofitable social customs persist can they account for important economic phenomena akerlof s original model of social custom suffers from two defects first sanctions for violating the custom depend discontinuously on the size of the violation and second the model borders on the unmanageable this paper shows that customs can persist and can lead to such phenomena as involuntary unemployment when sanctions are continuous more important the continuity assumption simplifies the model dramatically making the analysis of social customs tractable the simplified model is used to extend akerlof s analysis of a just wage to cases in which workers are heterogeneous