valuing english primary schools this paper provides the first empirical evidence for the uk on the effect of primary school performance on property prices we find that on average a one percentage point increase in the neighbourhood proportion of children reaching the government specified target grade pushes up neighbourhood property prices by 0 67 at 2000 property prices we calculate the social valuation of a sustained 1 improvement in primary school performance to be up to 90 per child per year our instrumental variable and semi parametric approach avoids the problems of school quality endogeneity and omitted neighbourhood variables that occur in typical property value models

the analytics of the pricing of higher education and other services in which the customers are inputs many services provide outputs that depend partially on the customers as inputs the presence of other customers often contributes to the output experienced by each purchaser higher education is the premier example others are legion we provide a simple model that addresses the questions of competitive pricing and allocative efficiency for these types of services prices that charge customers for what they get on net output minus input from the firm both are competitive and support efficient allocations these prices internalize the apparent external effects of customers on each other few examples of such prices exist in the real world

disentangling effects of policy reform and environmental changes in the norwegian coastal fishery for cod we construct a detailed bioeconomic model of the norwegian coastal cod fishery this fishery has been open access up to the policy change during the cod crisis of 1989 1990 to answer to what extent the subsequent increase in biomass and profits was due to improved management we isolate the effect of environmental variability projecting stock and harvest forward in the counterfactual scenario of no intervention we show that the policy had a small positive impact on biomass but a pronounced positive effect on profit the main drivers of profit gains are increases in productivity and savings in fuel and labor costs jel d23 q22

competition between private and public schools vouchers and peer group effects a theoretical and computational model with tax financed tuition free public schools and competitive tuition financed private schools is developed students differ by ability and income achievement depends on own ability and on peers abilities equilibrium has a strict hierarchy of school qualities and two dimensional student sorting with stratification by ability and income in private schools high ability low income students receive tuition discounts while low ability high income students pay tuition premia tuition vouchers increase the relative size of the private sector and the extent of student sorting and benefit high ability students relative to low ability students

lies defection and the pattern of international cooperation this article characterizes how incentives to lie affect international cooperation and the design of cooperation agreements i study the optimal structure of cooperation agreements in an environment where the costs of cooperation fluctuate over time cooperation is complicated by the fact that the costs of cooperation are private information and participants can benefit from lying about them when the extent of asymmetries of information between the cooperating governments can be measured in terms of the transparency of the political process democracies face greater contracting opportunities than authoritarian regimes however this article shows that even under asymmetries of information a limited extent of cooperation can be achieved when the design of cooperation agreements recognizes incentives to lie

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

competition incentives and public school productivity abstract when competition increases it is often presumed that public schools will be forced to become more efficient this paper challenges that presumption showing that in well defined circumstances rent seeking public schools find it optimal to reduce productivity when a voucher is introduced this occurs for incentive reasons alone more generally the productivity effects of vouchers are shown to be non uniform varying systematically according to the distribution of households and the form the voucher takes when the voucher is targeted perverse productivity outcomes do not arise the analysis has relevance to the policy issue of voucher design

property rights in a fishery regulatory change and firm performance a new method is introduced and applied to the british columbia halibut fishery to analyze changes in productivity of firms harvesting a natural capital stock the index number technique decomposes the contributions of output prices variable input prices fixed inputs and productivity to firm profits adjusted for changes in the natural capital stock an application of the method is given using micro level data from a common pool resource the indexes provide a ready made comparison of all firms to the most profitable firm per unit of resource stock benchmarking with the decompositions also allows firms and regulators to improve overall industry performance by allowing them to analyze what components are contributing most to relative economic profits

the might of the pen a reputational theory of communication in international disputes i present a theory of effective diplomacy based on honesty and reputations i model diplomacy as a form of cheap talk and international interactions as an infinitely repeated game in which similar states find themselves in disparate situations over time the theory explains the success and failure of diplomacy reputations for honesty make honest communication possible a state caught bluffing is less able to communicate and less likely to attain its goals in the near future these findings imply that domestic audience costs are unnecessary for international signaling and that military strength is not the only way to build credibility

productivity change under an individual transferable quota management system this is a scanned version of a published article the author 2012 published by oxford university press on behalf of the agricultural and applied economics association the original can be found at http www aaea org publications ajae to the best of our knowledge one or more authors of this paper were federal employees when contributing to this work

the effect of school quality on educational attainment and wages the paper examines the effects of school pupil teacher ratios and type of school on educational attainment and wages using the british national child development survey ncds the ncds is a panel survey which has followed a cohort of individuals born in march 1958 and has a rich set of background variables recorded throughout the individual s life the results suggest that once we control for ability and family background the pupil teacher ratio has no impact on educational qualifications or on male wages it has an impact on women s wages at the age of 33 particularly those of low ability we also find evidence that those who attend selective schools have better educational outcomes and in the case of men higher wages at the age of 33 the impact is higher for the type of individuals who are less likely not to attend selective schools but for whom a comparison group does exist among those attending

growth accounting in a fishery abstract since 1950 the real value of fish catches in norway has about doubled while the number of fishermen has declined by about 85 percent this has made it possible to maintain fishermen s incomes roughly on par with other occupational groups in norway it is investigated to what extent this increase in labor productivity is due to accumulation of capital increasingly abundant fish stocks or technological progress since the capital stock in recent years is not much greater in real terms than in the early 1960s it is tempting to ascribe most of the increase in labor productivity to technical progress this however would leave out the role of fish stocks if stocks have increased over this period this would explain some of what otherwise appears as a technical progress using data on labor capital fish catches and fish stock abundance 1961 2004 the development of total factor productivity is examined ignoring changes in fish stocks total factor productivity is estimated to have increased by 0 8 percent per year accounting for changes in fish stocks raises this to 1 7 4 3 percent per year depending on the importance assigned to stocks as factors of production

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

military coercion in interstate crises in an international crisis states make demands backed by threats to use force although these threats can be explicit in diplomatic communications they will not generally carry much weight unless substantiated by some show of force military measures designed to convey the commitment to resort to arms if one s demands are not satisfactorily met to have an impact this commitment must be credible it must be in one s interest to carry out the threat if the opponent refuses to comply in an environment where states possess private information about their valuations capabilities or costs credibility can be established by actions that a state unwilling to fight would not want or would not dare to take military moves such as arms buildups troop mobilizations and deployments to the potential zone of operations can alter incentives in a crisis by changing one s expected payoff from the use of force these are tacit bargaining moves that can restructure the strategic context thereby creating and possibly signaling one s commitments while undermining those of the opponent how can states use the military instrument to establish commitments and how does the nature of the instrument affect their ability to communicate them credibly to their adversaries there are two distinct mechanisms for credible signaling in economic models information can be transmitted reliably by sinking costs actors burn money to reveal that they value the disputed issue even more in contrast theories of interstate crisis bargaining usually rely on choices that increase the difference between backing down and fighting actors tie their hands by running higher risks of war to reveal their resolve the first mechanism involves costs that actors pay regardless of outcome and the second involves costs that actors pay only if they fail to carry out some threat or promise

return on capital and management reforms in norway s fisheries individual transferrable quotas itqs are used in norway s fisheries but only partly and with restrictions on transferability this paper examines how this has affected return on capital the return on boat capital in three of four fisheries examined has increased since itqs were introduced a part of this increase is due to an increase in value of fish landings but accounting for that still leaves room for increases due to itqs return on total capital including quota value has either stagnated or fallen this is consistent with the rate of return in itq fisheries being comparable with other industries in the long run jel q22 q28

the provision of incentives in firms i ncentives are the essence of economics despite many wide ranging claims about their supposed importance there has been little empirical assessment of incentive provision for workers the purpose of this paper is to critically overview existing work on the provision of incentives since the interests of workers and their employers are not always aligned a large theoretical literature has emphasized how firms design compensation contracts to induce employees to operate in the firm s interest this literature has reached into many areas of compensation and has pointed to a multitude of different mechanisms that can be used to induce workers to act in the interests of their employers these include piece rates options discretionary bonuses promotions profit sharing efficiency wages deferred compensation and so on my objective here is to evaluate this literature in the light of a growing empirical literature on compensation where possible i will address the literature from two perspectives first an underlying assumption of this literature is that individuals respond to contracts that reward performance accordingly i consider whether agents behave in this way and whether these responses are always in the firm s interest second i address whether firms write contracts with these responses in mind in other words do contracts look like the predictions of the theory incentives are provided to workers

economic benefits of management reform in the gulf of mexico grouper fishery a semi parametric analysis this paper uses a semi parametric empirical model to estimate the economic benefits of adopting a property rights based management program in the gulf of mexico grouper fishery the analysis predicts that a rights based fleet will be comprised of fewer more cost efficient boats than under the current controlled access management program results indicate that in the year of our data 1993 the smaller more productive fleet could harvest the allowable reef fish catch at a cost saving of 2 92 7 07 million 12 30 less than under controlled access management recent tightening of controlled access regulations suggest that the benefits from management reform could be even larger in the current day fishery

search and active learning with correlated information empirical evidence from mid atlantic clam fishermen this paper examines search with active learning and correlated information we first develop a simple model to show how correlation affects the decision to acquire information a unique data set on fishing site choice by mid atlantic clam fishermen is used to test the model predictions results find that clam fishermen search new sites when the catch at familiar sites declines i e when the opportunity cost of gathering information is low and also when catch at familiar sites is on the rise search following a catch decline occurs at spatially distant sites whereas search following a catch increase occurs at nearby sites correlated learning is crucial for explaining the site choice patterns in our data these results provide new insights that may extend to a variety of economic search problems where correlated learning is important

domestic opposition and signaling in international crises this article explores the effect of domestic political competition on the escalation of international crises it combines an incomplete information model of crisis bargaining with a simple model of two party electoral choice one state has two strategic actors a government and an opposition party both of which declare openly whether they support the use of force to alter the status quo the rival state updates its beliefs and selects its strategy in response to both signals the parties payoffs depend upon a retrospective evaluation by the domestic electorate the model shows that the inclusion of a strategic opposition party decreases the ex ante probability of war by helping to reveal information about the state s preferences this finding has important implications for research on democracy and international conflict since it suggests a mechanism through which democratic states can overcome informational asymmetries which have been identified as a central obstacle to negotiation

deterrence the elusive dependent variable the testing of theory in international relations requires clearly articulated assumptions the specification of scope conditions rigorously formulated propositions appropriate tests and a valid and reliable data set against which to test the propositions this last requirement has generally been the most neglected dimension of research in this article we examine two prominent studies of immediate extended deterrence by paul huth and bruce russett that do not deal adequately with the problems intrinsic to constructing a valid data set for quantitative analysis t the problems are particularly acute in the testing of theories of deterrence because of the difficulties inherent in identifying deterrence successes which leave few if any behavioral traces and of inferring the intentions of would be challengers our analysis explores these problems and suggests ways of testing theories of deterrence that can reduce the threats to valid inference 2 we would like to thank the canadian institute for international peace and security and

subsidies hierarchy and peers the awkward economics of higher education higher education is a business it produces and sells educational services to customers for a price and it buys inputs with which to make that product production is subject to technological constraints costs and revenues discipline decisions and determine the long run viability of a college or university but higher education is not just a business while that statement is often meant to imply that higher education is nobler than business more decent and humane in the purposes it serves it can also mean that even in economic terms higher education is in important ways simply different from a business this paper asks how well our extensive experience with commercial businesses and the microeconomic theory of firms and markets that has evolved to describe them helps in understanding the economics of higher education that experience and those insights will be used by trustees politicians administrators lawyers reporters and the public as well as by economists to understand and evaluate the behavior of colleges and universities so it is useful to ask how safe it is to use the economic analogy in the context of higher education drawing parallels between universities and firms students and customers faculty and labor markets and so on the discussion here seeks to identify the key economic features of higher education that make it different from familiar for profit industries and to ask what difference those differences make this is a stick that can be picked up from either end one approach is to start with meticulous economic theory and see how far it can be made to encompass the economic realities of higher education an excellent recent paper by rothschild and white 1995 does that in their matching model students and colleges meet

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

equilibrium and inefficiency in a community model with peer group effects public service output depends on input expenditures on own personal characteristics and on the characteristics of the other residents in the community the peer group effect in a community model with public expenditures set by voting with migration between communities and with land price differentials capitalization it is shown that communities may become heterogeneous in composition and second best inefficient this equilibrium occurs when the peer group effect is neither too strong nor too weak the inefficiency arises because an externality is created by migration the land price differential does not play the part of the price of the better peer group but of a transfer payment

could do better the effectiveness of incentives and competition in schools this paper studies the eects of incentive mechanisms and of the competitive environment on the interaction between schools and stu dents in a set up where their eort aects the students educational attainment we show that increasing the power of the incentive scheme and the eectiveness of competition may have the counterintuitive ef fect of lowering the students attainment in a simple dynamic set up where the reputation of the schools aects recruitment we show that increased competition leads to segregation of pupils by ability

capabilities uncertainty and resolve a limited information model of crisis bargaining this paper presents and solves a crisis bargaining game under limited information the sides alternate offers from three possible offers with war and its costs starting if the target s counteroffer is rejected the equilibrium of the model falls into four different cases these four cases are analyzed to determine how the sides communicate through their offers and how the costs of war initial beliefs misperceptions and distribution of capabilities drive the probabilities of a crisis and war the model demonstrates a joint selection bias misspecification problem in empirical studies of crises arising from the unobservable nature of beliefs several empirical studies of crisis bargaining are discussed in the light of this methodological problem new patterns of evidence are found that support the presence of the selection problem and their conclusions are reexamined

total factor productivity change in the new england groundfish fishery 1964 1993 abstract we develop estimates of total factor productivity tfp change in the new england groundfish fishery from 1964 to 1993 using a procedure similar to squires 1992 rand j econom 23 2 221 236 method which extends standard tfp measurement by including the effect of fluctuations in stock abundance the results indicate that tfp increased on average by 4 4 per year from 1964 to 1993 a higher average rate of increase occurred between 1964 and 1982 possibly due to new technologies e g fishfinders tfp declined at 0 33 annually from 1983 to 1993 due to stringent output and effort control measures

goliath s curse coercive threats and asymmetric power states typically issue compellent threats against considerably weaker adversaries yet their threats often fail why expanding on a standard model of inter national crisis bargaining i argue that a theory of reputation building can help shed light on this puzzle the model casts reputation as a strategic problem showing that challengers issuing compellent threats have incentives to anticipate the reputation costs that target states incur when appeasing aggressors if challengers can recognize these costs and offset them with side payments or smaller demands then even reputation conscious targets will acquiesce i argue however that military strength contributes to information problems that make challengers more likely to underesti mate their targets reputation costs and insufficiently compensate them in this way military power can undermine the effectiveness of compellent threats the logic is illustrated by the 1939 russo finnish crisis and the argument s implications for the study of coercive diplomacy are explored

cheap talk can matter in bargaining this paper describes an intuitive way in which cheap talk can matter in a twostage bargaining game in which talk may be followed by serious negotiation the intuition that all buyers would claim to have low reservation prices is incorrect in our model instead if good faith participation is endogenously determined then the parties can use talk to trade off bargaining position against the probability of continued negotiation our cheap talk equilibrium features bargaining behavior that could not be equilibrium behavior in the absence of talk

do intergovernmental organizations promote peace a basic debate in world politics involves the impact of intergovernmental organizations igos on international conflict liberals functionalists and others see igos as capable of transforming global anarchy while realists emphasize the essential irrelevance of igos in managing such fundamental processes as war and peace recent quantitative studies also yield disparate conclusions depending on particular econometric assumptions implying variously that igos foster pacific relations among states have no impact on dispute behavior or even increase dispute propensity at least part of the problem is a lack of theoretical and empirical specificity the authors apply bargaining theory to develop a middle path between the realist and liberal perspectives only some igos those with security mandates and the most sophisticated institutional structures are likely to influence dispute behavior the authors combine the theory with two improvements in research design first igos vary in capability mandate and cohesion the authors construct a dataset of igo institutional heterogeneity and member cohesiveness second states join igos for reasons that are not unrelated to why states fight the authors control for the level of international involvement among countries and find support for their arguments in initial tests

dea based predictors for estimating fleet size changes when modelling the introduction of rights based management the introduction of individual transferable quotas itqs into a fishery is going to change not only the amount of catch a fleet can take but often also changes the fleet structure particularly if total allowable catches are decreased this can have an impact on the economic social and environmental outcomes of fisheries management management strategy evaluation mse modelling approaches are recognised as the most appropriate method for assessing impacts of management but these require information as to how fleets may change under different management systems in this study we test the applicability of data envelopment analysis dea based performance measures as predictors of how a fishing fleet might change under the introduction of itqs and also at different levels of quota in particular we test the assumption that technical efficiency and capacity utilisation are suitable predictors of which boats are likely to exit the fishery we also consider scale efficiency as an alternative predictor we apply the analysis to the torres strait tropical rock lobster fishery that is transitioning to an itq based management system for one sector of the fishery the results indicate that capacity utilisation technical efficiency and scale efficiency are reasonable indicators of who may remain in the fishery post itqs we find that the use of these measures to estimate the impacts of lower quota levels provides consistent fleet size estimates at the aggregate level but which individual vessels are predicted to exit is dependent on the measure used

assessing efficiency gains from individual transferable quotas an application to the mid atlantic surf clam and ocean quahog fishery delayed fishing fleet restructuring complicates the assessment of efficiency gains from individual transferable quota itq fisheries management programs this article presents a methodology to estimate harvest sector efficiency gains in lieu of incomplete fleet restructuring the methodology is applied to assess the efficiency gains in the mid atlantic surf clam and ocean quahog fishery itq program while roughly 128 vessels harvested clams under the previous management regime the analysis suggests that 21 25 vessels will remain under ltqs the efficiency gains are estimated to be between 11 1 million and 12 8 million annually 1990 dollars

evaluating tradable property rights for natural resources the role of strategic entry and exit this paper presents an econometric approach to the evaluation of environmental regulation using tradable property rights existing empirical research on this issue which compares overall industry efficiency before and after the introduction of new regulations conflates two distinct phenomena efficiency changes due to exit of excess capital and changes in the efficiency of individual firms because the regulatory process induces firms of different types to enter and exit the industry at different rates the true efficiency and equity effects of tradable property rights cannot be assessed without correcting for these changes in sample composition this paper examines the impact of regulatory change in the mid atlantic surf clam fishery using an econometric model that separates its effects on industry structure and vessel efficiency the analysis finds that contrary to widely held belief tradable property rights did not disproportionately benefit either large fishing firms or highly integrated firms

the effect of competition on the efficiency of secondary schools in england abstract in this paper we calculate the technical efficiencies based upon multiple outputs school exam performance and attendance rates of all secondary schools in england over the period 1993 1998 we then estimate models to examine the determinants of efficiency in a particular year and the determinants of the change in efficiency over the period our results suggest that the greater the degree of competition between schools the more efficient they are the strength of this effect has also increased over time which is consistent with the evolution of the quasi market in secondary education competition is also found to be an important determinant of the change in efficiency over time there is however some evidence of conditional convergence between schools

an analysis of the efficient production frontier in the fishery implications for enhanced fisheries management the transformation relationship between factor inputs and outputs the efficient production frontier epf contains important information for fisheries managers a directional technology distance function model of the harvesting technology is used to measure changes in the epf over time frontier shifts are summarized with input and output based frontier indicators that are interpreted as measures of bioeconomic productivity change the model is applied to the mid atlantic surf clam and ocean quahog fishery

audience costs and reputation in crisis bargaining in crisis bargaining literature it is conventional wisdom that the ability of generating higher audience costs is an advantage for a leader of a state however empirical studies show that democratic states use this mechanism only occasionally this paper formally shows that higher audience costs may be good or bad depending on 1 the benefit cost ratio of the crisis 2 initial probability of resolve and 3 how fast states generate audience costs with time in particular if the value of the prize over the cost of attacking is low or the initial probability of resolve is high enough then having greater ability to generate audience costs may undermine democratic states diplomatic success

reputation and hegemonic stability a game theoretic analysis we develop and explicate a game theoretic model in which repeated play incomplete information and reputation are major elements a significant advance of this model is the way it represents cooperation under incomplete information among rational actors of different sizes the model is used to formalize certain aspects of the theory of hegemonic stability it shows that the dilemma or limits of hegemonic stability look like natural attributes of games where reputation is involved unifying both benevolent and coercive strands of hegemony theory an example drawn from recent developments in the organization of petroleum exporting countries shows how our model of reputation guides the study of hegemonic regime construction we conclude by comparing the nature of cooperative behavior under conditions of complete and incomplete information

peer group effects and educational attainment abstract given the aims of an educational system the relationship between educational inputs and educational outputs the educational production function a frequency distribution of students by ability and a fixed educational budget how should students and educational expenditures be allocated over classrooms the paper focuses on peer group effects which capture the influence of a student s classmates on his educational attainment and the determinants of whether streaming or mixing is preferable it should be noted that peer group effects arise in other contexts notably in the workplace thus the paper casts some light on the optimal composition of teams

the trade off between child quantity and quality an empirical investigation of trade offs between number of children and their scholastic performance confirms that family size directly affects children s achievement though parents show no favori

productivity measurement in common property resource industries an application to the pacific coast trawl fishery this article measures total factor productivity in industries that exploit resources held in common particular attention is paid to the valuation and specification of in situ commonproperty resources in a neoclassical production technology catchability of the resource and variations in economic capacity utilization an empirical analysis of the open access pacific coast trawl fishing industry demonstrates that disentangling the productivity residual from changes in resource abundance its catchability and variations in capacity utilization hones the productivity residual to finer precision lowering mean productivity growth by about hak removing biological noise from highly variable resources is also important the results are related to aprogram limiting the number of vessels and can contribute to sustainable resource management whenever resources are held in common

rational deterrence in an imperfect world this chapter applies recent economic research on games with incomplete information to the calculus of deterrence 1 we do not attempt to provide a complete theory of rational deterrence the focus is on the role of reputation and signaling in establishing deterrence we show how strategic players signal a reputation for strength from the perspective of an internally consistent equilibrium model

productivity development in icelandic norwegian and swedish fisheries this article analyses the total factor productivity tfp performance of fisheries in iceland norway and sweden during the period 1973 to 2003 we measure tfp growth using real gross value added as output and capital input labour input and a stock input index based on the major fish stocks in developed neighbouring countries we expect rapid diffusion of fishing technology innovations contributing to productivity convergence in addition innovations in the public regulation and the industrial organization may also have influenced productivity growth during the period we find that iceland had the highest annual tfp growth accounting for stock changes it amounts to 3 while the corresponding figures for sweden and norway are 2 8 and 0 8 respectively despite best practice fishing technologies being widely available we find no evidence of productivity convergence among the three countries