the role of risk preferences in pay to bid auctions we analyze a new auction format in which bidders pay a fee each time they increase the auction price bidding fees are the primary source of revenue for the seller but produce the same expected revenue as standard auctions assuming risk neutral bidders if risk loving preferences are incorporated in the model expected revenue increases our model predicts a particular distribution of ending prices which we test against observed auction data the degree of fit depends on how unobserved parameters are chosen in particular a slight preference for risk has the biggest impact in explaining auction behavior suggesting that pay to bid auctions are a mild form of gambling this paper was accepted by peter wakker decision analysis

consumer support for environmental policies an application to purchases of green cars this paper focuses on how consumer motivation can be tapped in order to encourage the adoption of cleaner technologies consumers are heterogeneous they may be guided by intrinsic motivation or extrinsic motivation while information provision policies such as the energy label for cars may be effective in encouraging certain consumers to adopt green cars financial incentive schemes such as subsidies or fines may be more persuasive for extrinsically motivated consumers we develop a dynamic theory of adoption of environmental innovations in which information provision policies are followed by financial incentives first carrot then stick incentives analysis of a survey dataset of swiss households observes considerable heterogeneity in terms of support of information provision or financial incentive policies in line with our conjectures our results will be of particular interest to policymakers interested in guiding consumers towards cleaner technologies

the observed landholding fertility relationship is it monotonic empirical studies of fertility in traditional agriculture report either a positive or a negative estimate for landholding estimation with data from rural bangladesh in this study shows that the uncontrolled effect of landholding on fertility is positive however when the impact of pooling land in extended families is controlled for the effect turns negative yet the addition of a quadratic term for landholding provides a significantly u shape relationship the non monotonic relationship is analysed in terms of prestige cost of child labour which is assumed to increase with landholding but to generate differential child contributions to household income and potential old age support to parents

poverty and public policy the problem of poverty is particularly acute in india with 14 of the world s population we have the misfortune of having almost twice as large a share of the world s poor indeed as i shall presently underline the question of poverty and its amelioration has been at the center of our concerns from the beginning of our planning efforts almost four decades ago little therefore can be said on it that some distinguished indian economist has not already said in some ways therefore to talk on the design of public policy for poverty to an indian audience is to carry coal to newcastle or as the old saying goes to teach your grandmother how to suck eggs nonetheless i hope to provide a fresh perspective by putting the problem into an explicit analytical framework that permits alternative policy designs to be sharply defined and contrasted i also intend to draw on international experience to put our efforts and problems into both historical and comparative perspectives

the concept of total economic value of environment a reconsideration within a hierarchical rationality abstract beyond a purely typological distinction between use option and non use values these different environmental values are not treated differently within the concept of total economic value when expressed in monetary terms from individual preferences these values are incorporated into a sole approach reasoning in terms of utility in this paper we argue that option and non use values stem from more different levels of choice problems than use values and thus must be apprehended in a multidimensional framework we distinguish three levels of choice problem to which various rationality criteria of social cost benefit analysis are attached this allows us to make a distinction between the different components of the value of the environment according to the level of problems to which they re relevant thus we propose to re interpret the concept of total economic value particularly option and non use values within this multidimensional framework we present an application of this framework for the selection of preferred highway route highway a85 in france

toilet cleaning and department chairing volunteering a public service abstract who will do a job that nobody wants but that someone has to do the search for a volunteer is modelled as a war of attrition in which everyone is tempted to just wait for someone else to do it we show that the volunteer will be ceteris paribus the individual for whom the benefit cost ratio of performing the public service is largest the one most impatient to consume it or the one who stands to benefit from it the longest

sustainability impacts of car road pricing a computable general equilibrium analysis for austria abstract nationwide car road pricing schemes are discussed across europe we analyse the impacts of such schemes with respect to environmental economic and social indicators of sustainability also quantifying the trade offs among these three dimensions under different charging principles and revenue recycling options in our analysis we employ a computable general equilibrium cge approach develop a modelling structure for private transport and provide detailed empirical analysis for the case of austria regarding the social dimension it has often been argued that poorer households and commuters would have to bear a disproportionate share of the road pricing burden we find the contrary i e a stronger negative policy impact on richer households and on a small group of intensive car users the choice of revenue recycling is able to ameliorate the negative social and economic effects of road pricing without reversing the desired positive environmental effects for political feasibility questions of distributional impacts are most urgent and therefore we address them systematically within a quantitative framework

heterogeneity redistribution and the friedman rule we study monetary models with nondegenerate stationary distributions of money holdings we find that the friedman rule does not typically maximize ex post social welfare an increase in the rate of growth of the money supply has two effects the standard distortionary or rate of return effect makes money a less desirable asset for all moneyholders a second redistributive effect creates a transfer from one type of agent to the other an increase in the rate of growth of money away from the friedman rule can produce a rate of return effect that dominates the standard effect

the response of labour effort to falling real wages the mexican peso devaluation of february 1982 abstract this paper reports empirical evidence on the effect of the february 1982 mexican peso devaluation with its concomitant reduction in real income on the output of individual workers using a set of pooled data for 46 workers employed in two textile plants in mexicali over a 22 week period the regression results show a significant increase in average output of about 15 in response to the 25 decrease in wages due to the devaluation the study also finds that there was no significant response in output to the legislated annual increase in money wages of january 1982

nutrition and labor producvivity in agriculture estimates for rural south india using panel data for rural south india a fixed effects individual wage equation and farm production function are estimated that have calorie intake and nutritional status weight for height of workers as their arguments neither market wages nor farm output are observed to be responsive to changes in the daily energy intake of workers however both are highly elastic with respect to weight for height these results suggest that while the human body can adapt to inadequate nutrition in the short run it cannot adapt as readily to chronic malnutrition that eventually results in loss of weight for height copyright 1988 by mit press

poverty and the forward falling labor supply function a microeconomic analysis abstract existing subsistence efficiency target income and limited aspiration theories impose a backward bending labor supply behavior on poor workers in less developed countries recent empirical studies of worker behavior in the unorganized sectors of ldcs contradict this view and report evidence of both a forward falling and an upward rising labor supply this study formulates an increasing elasticity of substitution utility function model to analyze the observed behaviors the function displays both nonhomotheticity and variable elasticity properties and is capable of generating labor supply curves with forward falling and upward rising segments while the upward rising supply is considered to be usual worker behavior the forward falling segment represents a below subsistence distress sale phenomenon and the subsistence income of the worker is implied to occur at the turning point joining the two segments of the supply curve econometric estimates of the utility and the labor supply functions provide support to the theoretical results

economic insights from internet auctions this paper surveys recent studies of internet auctions four main areas of research are summarized first we survey several studies that document and attempt to explain the frequently observed sniping or last second bidding behavior in these auctions second we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets most notably due to the winner s curse third we explore research about the role of reputation mechanisms installed to help combat these distortions finally we discuss what internet auctions have to teach us about auction design

carbon tax simulations using a household demand model abstract the main objective of this paper is to analyse consumer response and welfare effects due to changes in energy or environmental policy to achieve this objective we formulate and estimate an econometric model for non durable consumer demand in sweden that utilises micro and macro data in the simulations we consider two revenue neutral scenarios that both imply a doubling of the co2 tax one that returns the revenues in the form of a lower vat and one that subsidise public transport one conclusion from the simulations is that the co2 tax has regional distribution effects in the sense that household living in sparsely populated areas carry a larger share of the tax burden

motor fuel taxes and household welfare an applied general equilibrium analysis the shifts in expenditure patterns of motor fuel tax receipts that have occurred over the last decade typically are not included in the incidence estimates of these taxes we explicitly incorporate these changing expenditure patterns into our analysis of distributional impacts of motor fuel tax increases using an applied general equilibrium framework our results indicate that the greater the proportion of motor fuel tax revenue devoted to general uses the greater is the absolute and relative burden of the lowest income household and the more regressive is the policy with respect to the overall distributional structure

on measuring aggregate social efficiency abstract cross country comparisons of social indicators controlling for income and or social spending have been widely used to measure and explain social efficiency analogously to technical efficiency in production the article argues that these methods are clouded in ambiguities about what is being measured standard methods of measuring technical efficiency require assumptions that are unlikely to hold for social indicators in the context of a simple parametric model of life expectancy conditions are identified under which there will be a systematic pattern of bias in estimates of efficient public health spending

inside and outside money as alternative media of exchange we study a random matching model of money in which a subset of people called bankers have known histories and the rest called nonbankers have unknown histories earlier we showed that if there are no outside assets then an optimal arrangement has bankers issuing objects banknotes that are used in trades involving nonbankers here the same model is used to compare such exclusive use of inside money to the exclusive use of outside money we show that the set of implementable outcomes using outside money is a strict subset of the set using inside money

land holdings living standards and labour supply functions evidence from a poor agrarian economy recent empirical studies of labour supply in ldc agriculture show both positive and negative sloping curves contrary to the traditional claims that such functions are backward bending in this study the causes for these differing results are traced empirically to the economic status of workers and the level of development of their villages in sharp contrast to prior assertions that workers in developing nations are limited by low aspirations

does ecological economics have a future contradiction and reinvention in the age of climate change abstract this paper addresses the role of neoclassical methodologies in ecological economics and the contradictions these methodologies pose to the field s critical founding principles we first consider robert costanza s treatment of nicholas stern s global deal and then survey climate change related articles published in this journal over the past five years this survey reveals how mainstream neoclassical methodologies dominate discourse and do so by marginalizing more critical political economy analyses this situation imperils the field s founding vision of a no growth steady state it also fails to address the related growth dynamics of capitalism without such a critical treatment the field s formal embrace of methodological pluralism actually entails an ideological empiricism that renders ecological economics theoretically incoherent this situation undermines the field s historical promise as an alternative economic paradigm ecological economics now faces a problematic future its survival in a form faithful to its founding vision will require an explicit choice to address its internal contradictions and reinvent itself in ways relevant to our contemporary context without such a choice ecological economics will likely succumb to an implicit acceptance of the hegemony of mainstream economic methodologies and their pro growth imperatives

gambling by auctions abstract we provide theoretical and empirical analysis of a selling mechanism used by an internet web site that combines important features of auctions and gambling this is the first analysis of such a selling mechanism which provides insights into how the two kinds of behavior might be related in real life the winner of the object is the bidder with the highest bid not submitted by any other bidder in the equilibrium of our game theoretical model each bid made with positive probability yields the same probability of winning bidders are more likely to submit higher bids and the bid distribution does not depend on the value of the object or the highest bid allowed if one controls for the number of bidders most of these key theoretical predictions are confirmed by the data

an analysis of the war of attrition and the all pay auction we study the war of attrition and the all pay auction when players signals are affiliated and symmetrically distributed we a find sufficient conditions for the existence of symmetric monotonic equilibrium bidding strategies and b examine the performance of these auction forms in terms of the expected revenue accruing to the seller under our conditions the war of attrition raises greater expected revenue than all other known sealed bid auction forms journal of economic literature classification numbers d44 d82 1997 academic press

why are stabilizations delayed when a stabilization has significant distributional implications e g tax increases to eliminate a large budget deficit socioeconomic groups may attempt to shift the burden of stabilization onto other groups the process leading to stabilization becomes a war of attrition each group attempting to wait the others out and stabilization occurring only when one group concedes and bears a disproportionate share of the burden the authors solve for the expected time of stabilization in a model of rational delay and relate it to several political and economic variables they motivate this approach and its results by comparison to historical and current episodes copyright 1991 by american economic association

can higher prices stimulate product use evidence from a field experiment in zambia the controversy over how much to charge for health products in the developing world rests in part on whether higher prices can increase use either by targeting distribution to high use households a screening effect or by stimulating use psychologically through a sunk cost effect we develop a methodology for separating these two effects we implement the methodology in a field experiment in zambia using door to door marketing of a home water purification solution we find evidence of economically important screening effects by contrast we find no consistent evidence of sunk cost effects jel c93 d12 i11 m31 o12

consequences opportunities and generalized consequentialism and non consequentialism abstract in a recent paper published in journal of economic theory 101 2001 423 436 by suzumura and xu an analytical framework was developed which allowed us to characterize the concept of consequentialism and non consequentialism to simplify matters however the treatment in that paper was confined only to the cases where no trade off exists between consequential considerations which reflect the individual s preferences over alternatives and non consequential considerations which reflect the individual s concern over richness of opportunities from which alternatives are chosen the present paper represents a generalization of our previous framework which can now accommodate the situations where consequential considerations and non consequential considerations actively interact the analysis covers both the cases of finite and infinite number of alternatives

the effect of price and income changes on food energy intake in sri lanka data is used to analyze the food acquisition behavior of households from a 1980 81 survey designed to be nationally sectorally and regionally representative of sri lanka the poor are shown to be much more responsive to price and income changes than other income groups the urban population generally exhibits lower income elasticities of demand for food commodities the poor appear to efficient substitutors thereby mitigating the effects of a price change on caloric intake the important exception is rice whose elasticity of calorie consumption with respect to price was about 4 times higher than for any other commodity the reluctance of households to substitute for rice even when faced with rising prices coupled with its large budget share show rice to be the most important consumption good higher rice prices are an important determinant of poverty for landless and urban workers moderating food prices preferably through technological change is a key ingredient to raising consumption among the poor simulations show that even if there are rapid and proportional increases in expenditures of all income groups this will not dramatically increase caloric intake among the poor however if the absolute value of the increase in real expenditures were distributed equally to all households there would be a marked increase in the of households consuming an adequate diet

human development revisited a new undp report abstract the undp s first annual human development report is reviewed and discussed the report introduces a new index the human development index hdi as a counter to measures of national income such as gdp measuring development of countries with the aid of this index gives a significantly different ordering to one based on gnp per capita this point is not disputed although success on the index is not a necessary and sufficient condition for success in terms of rapid economic growth as is shown by the case of sri lanka nevertheless the report is welcome for its attention to human development issues for its useful statistical annex and for its observation that the poverty of the people of the developing world has been no barrier to the affluence of their armies

a theory of exit in duopoly we develop a duopoly model in which exit occurs because of the existence of fixed costs or opportunity costs each firm enters the market knowing its own cost but not that of its opponent as times goes on each firm becomes increasingly pessimistic about the cost of its remaining rival the time of exit is the only strategic variable so that our model is a war of attrition in contrast to the classic war of attrition however we assume that with positive probability each firm s costs may be low enough that staying in forever is a dominant strategy thus our model unlike the classic one has a unique equilibrium

growth and equity in developing countries a reinterpretation of the sri lankan experience in the important debate between the proponents of direct basic needs and indirect economic growth measures of promoting welfare sri lanka has frequently been cited as one country which has successfully pursued the direct approach it has raised living standards without much cost in terms of reduced growth this conclusion however is based on analyses which do not account for the initial conditions of the countries being compared after methodologically incorporating these concerns neither the improvement in living standards nor the 2 0 percent per capita growth rate during the period of direct policy measures 1960 78 was exceptional in contrast during the period of more indirect growth promoting policies 1977 84 i economic growth more than doubled to an average rate of 4 3 percent per capita per annum ii expenditure inequality did not significantly change iii consumption expenditures of the population and the poor generally increased and iv several living standard indicators continued to improve

long run gasoline demand for passenger cars the role of income distribution it is commonly agreed that the level of income and prices are crucial determinants of the consumption of motor gasoline the respective long run price and income elasticities are regularly calculated using cross sectional models despite the acknowledgement of the role of income distribution it plays no role in intercountry cross sectional models this is due to a lack of appropriate data this paper shows that the omission of distributional characteristics provides misleading elasticities using available distributional measures this paper is referring to an income threshold which is crucial to the acquisition of an automobile it is shown that on the one hand in poor countries an unequal income distribution is needed to enable at least some people to buy automobiles on the other hand in wealthy countries an unequal income distribution would exclude some people from acquiring automobiles hence depending on the income level inequality has a diverging impact on the ability to buy durable goods the second part of this paper develops a pooled 90 country model to examine this approach empirically it could be shown that distribution variables are highly significant to explain the demand for automobiles and motor gasoline moreover the consideration of the distribution of income leads to a considerable decrease in income elasticity values this is mainly due to the positive correlation between income level and income equality within the sample

assets subsistence and the supply curve of labor the backward bending supply curve of labor is now accepted as a matter of course by most economists it has no doubt been perplexing to observe that the most commonly employed types of utility functions do not yield such curves under the usual textbook analysis of the problem 1 particular preference maps have been found that generate backward bending curves 2 however they are nonparametric leading to difficulties of estimation and upon closer examination seem to imply counter intuitive results we will show that taking into account the wealth position of an individual on the one hand and survival consideration on the other greatly expands the variety of shapes that can be derived for the supply curve from some simple utility functions the use of a specific simple utility function also implies some severe restrictions on the form the supply curve can take rendering it testable empirical evidence is shown to support the conclusion that the supply curve is monotonic we will also show that the notion that the aggregate supply curve of labor slopes down rests in part on an error of aggregation and that the empirical evidence usually cited in support of the negative slope when correctly interpreted cannot be so construed

less fighting than expected experiments with wars of attrition and all pay auctions while all pay auctions are well researched experimentally we do not have much laboratory evidence on wars of attrition this paper tries to fill this gap technically there are only a few differences between wars of attrition and all pay auctions behaviorally however we find striking differences as many studies our experiment finds overbidding in all pay auctions in contrast in wars of attrition we observe systematic underbidding

who emits most associations between socio economic factors and uk households home energy transport indirect and total co2 emissions abstract does the association between household characteristics and household co2 emissions differ for areas such as home energy transport and indirect emissions this question is policy relevant because distributional implications of mitigation policies may vary depending on the area of emissions that is targeted if specific types of households are likely to have higher emissions in some areas than in others so far this issue has not been examined in depth in the literature on household co2 emissions using a representative uk expenditure survey this paper compares how household characteristics like income household size education gender worklessness and rural or urban location differ in their association with all three areas as well as total emissions we find that these associations vary considerably across emission domains in particular whilst all types of emissions rise with income low income workless and elderly households are more likely to have high emissions from home energy than from other domains suggesting that they may be less affected by carbon taxes on transport or total emissions this demonstrates that fairness implications related to mitigation policies need to be examined for separate emission domains

the sunk cost fallacy in penny auctions this article theoretically and empirically analyses behaviour in penny auctions a relatively new auction mechanism as in the us dollars or war of attrition players in penny auctions commit higher non refundable costs as the auction continues and only win if all other players stop bidding i first show that in any equilibria that does not end immediately players bid probabilistically such that the expected profit from every bid is zero then using two large data sets covering 166 000 auctions i calculate that average profit margins actually exceed 50 to explain this deviation i incorporate a sunk cost fallacy into the theoretical model to generate a set of predictions about hazard rates and player behaviour which i confirm empirically while players do slowly learn to correct this bias and there are few obvious barriers to competition activity in the market is rising and concentration remains relatively high

a comment on growth and equity in developing countries a reinterpretation of the sri lankan experience by bhalla and glewwe the inaugural issue of this journal contained an article by bhalla and glewwe which addresses some problems that arise in attempting to assess the relative success or failure of policies in different countries or policy regimes bhalla and glewwe 1986 p 36 their conceptual framework contrasts two approaches to raising economic welfare the direct or basic needs approach and the indirect or economic growth approach p 61 from 1960 to 1977 sri lanka is seen as approximating the first regime while the subsequent period following the change of government in 1977 is cast as having a closer correspondence to the second the general conclusion invited by the paper is that the change in policy orientation has been for the better the evidence suggests that the post 1 977 policies have not been detrimental to equity objectives and may offer more promise than those which they replaced p 62 in what follows i will suggest that bhalla and glewwe have exceeded the interpretations which their data will support accordingly their case cannot be sustained much as one would like to have answers to the questions they raise for my own part i share the majority view that sri lanka s system of food subsidies was and to some extent remains inefficient but it is surprising to find that bhalla and glewwe also question performance in the social field between 1960 and 1977 and that they totally ignore sri lanka s current state of disruption in their optimistic prognosis

food and freedom the links between food and freedom at first appear rather remote to policymaking and far from central and practical concerns the lecture discusses important connections between the two that need to be recognized more fully as background to practical food policy although ethics specifically freedom seems far less compelling a concept than concrete demands of food the contrast is artificial the provision of food is a central issue in general social ethics since so much in human life does depend on the ability to find enough to eat in particular the freedom that people enjoy to lead a decent life including freedom from hunger from avoidable morbidity from premature mortality etc is centrally connected with the provision of food and related necessities also the compulsion to acquire enough food may force vulnerable people to do things they resent doing and may make them accept lives with little freedom thus the role of food in fostering freedom can be extremely important on the other side freedom may also causally influence the success of the pursuit of food one consideration that has received a great deal of attention relates to the role of freedom to make profits by providing incentives for the expansion of food production this consideration has often cropped up in the critical evaluation of agricultural policies pursued in many countries in africa and asia the lecturer supplements the conceptual and theoretical discussions with practical illustrations

welfare implications of the renewable fuel standard with an integrated tax subsidy policy abstract this paper derives the optimal integrated tax subsidy policy where one input is taxed and revenues are used to subsidize the use of a substitute input to reduce greenhouse gas emissions given the existing policies under the renewable fuel standard policies we measure the welfare effects and impact on cellulosic ethanol production after implementing the tax subsidy policy using a general equilibrium model a revenue neutral integrated tax subsidy scheme leads to a small positive tax rate for crude oil and a large positive subsidy for cellulosic ethanol because the former has a larger emissions coefficient than the latter the overall welfare effects of an integrated tax subsidy scheme are less than a 1 increase for the economy but the growth in the cellulosic ethanol industry could range from 28 to 238 because the revenues from taxing crude oil are directly used to subsidize cellulosic ethanol production

poverty and famines an essay on entitlement and deprivation this book focuses on the causes of starvation in general and famines in particular the traditional analysis of famines is shown to be fundamentally defective and the author develops an alternative analysis

using contingent valuation to elicit public preferences for water fluoridation the methods and results of a contingent valuation survey to elicit public preferences for water fluoridation are reported the study demonstrates that not only is it important to acknowledge that there will be losers from the introduction of such a programme but that losers must be allowed to express a value for the magnitude of their perceived loss two methods of valuing this loss are explored conventional willingness to accept compensation questions are compared with questions in which losers are asked to state their willingness to pay to prevent their water being fluoridated the results provide tentative support for asking willingness to pay to prevent questions instead of willingness to accept questions when evaluating certain types of public good the issue of protest responses in contingent valuation surveys is also highlighted and discussed

changes in the living standards of the poor in sri lanka during a period of macroeconomic restructuring abstract beginning in 1977 sri lanka moved away from its welfare oriented economy characterized by extensive government intervention in controlling prices and expensive consumer subsidies toward a more market oriented outward looking liberalized economy investment increased due largely to dramatic increases in the inflow of foreign capital combined with greater deficit financing unemployment declined and the rate of growth of gdp increased the major increase in foreign assistance coupled with deficit spending enabled the government to undertake the ambitious infrastructure projects that stimulated demand however this policy change had deleterious consequences for the poor rapid inflation which resulted in a decline of real wages coupled with dramatic decreases in the value of the food stamp scheme brought about a decline in calorie consumption for lower expenditure groups in addition levels of malnutrition as measured by acute wasting were higher after the policy change

will developing country nutrition improve with income a case study for rural south india aggregate estimates of food expenditure are consistent with such a possibility implying income expenditure elasticities close to one however the high degree of aggregation at which such estimates are made means that the considerable increase in price per nutrient as income increases is ignored and the nutrient elasticities are therefore overstated estimates for a rural south indian sample indicate that this bias is considerable and that the true nutrient elasticities with respect to income may be close to zero

combinations of policy instruments to decrease the climate impacts of housing passenger transport and food in finland policy instruments and measures already target the global warming impacts of housing and transport in many countries although many of those instruments were not originally developed for the purpose however the challenge of curbing climate change calls not only for innovative and improved instruments but for integrated policy packages that address consumption across the entire product life cycle recognize links between different consumption sectors and identify and harness synergies between instruments to this end we first evaluate the effectiveness of existing policy instruments targeted at housing passenger transport and food in finland the results show large impacts on greenhouse gas emissions second we integrate instruments into packages which minimize potential negative interferences while strengthening synergies and complementarities between instruments we estimate the potential of the consequent emission reductions to be considerable by 2020 housing and passenger transport emissions are estimated to decline by 4 2 million tons mt integrated food related policy packages are estimated to reduce emissions 0 3 mt in finland and life cycle based emissions by 0 5 mt altogether the emission reduction would be 4 5 mt in finland which is over 6 of finland s average emissions 68 mt for years 2008 2012 in conclusion though greenhouse gas emissions of household consumption have already been affected by policy instruments it is better to develop policy packages by which the synergies between measures can be reinforced and hence overall effectiveness can be improved we found acceptability of policy instruments to be a key issue necessitating careful implementation long term consistency and research showing evidence of their effectiveness the full realization of the policy package potential requires improved co operation across relevant ministries and public authorities which can be facilitated by common policy programs and objectives for all related public authorities the project results were used in the preparation of a revision of finland s program for sustainable consumption and production we propose that similar policy package development processes in other countries would increase further our understanding about effective policy packages reinforce each other and speed up the changes for more sustainable consumption

on the economics of state lotteries s tate lotteries can be evaluated from either of two perspectives familiar to economists as a consumer commodity or as a source of public revenue l as a commodity the lottery is notable for its broad market penetration and rapid growth sixty percent of the adults in lottery states play at least once in a year the annual growth in real per capita sales in lottery states has averaged 12 percent rising in 1989 dollars from 22 in 1975 to 108 in 1989 as a source of public revenue lotteries account for a rather modest fraction of revenue in states that run them 3 3 percent in 1986 but they are nonetheless one of the most visible state government activities lottery sales exceed those of all other products sold directly by state governments to the public and are larger than all but three major activities of state government education public welfare and highways clotfelter and cook 1989 table 2 5 moreover lotteries are a qualitatively new activity for state governments in that they are a business operated in effect for profit state liquor stores are perhaps the closest analog but they were created to encourage temperate drinking practices and do not engage in the sales promotion and marketing activities that are characteristic of the lotteries lotteries enjoy an honored place in american history as a device for raising funds for public purposes funding for such institutions as the jamestown settlement harvard college and the continental army as well as hundreds of bridges fire houses and schools came from lotteries but after the

prospect theory in a dynamic game theory and evidence from online pay per bid auctions abundant evidence exists that expected utility theory does not adequately describe decision making under risk although prospect theory is a popular alternative it is rarely applied in strategic situations in which risk arises through individual interactions this study fills this research gap by incorporating prospect theory preferences into a dynamic game theoretic model using a large field data set from multiple online pay per bid auction sites the authors empirically show that their proposed model with prospect theory preferences makes a better out of sample prediction than a corresponding expected utility model prospect theory also provides a unified explanation for two behavioral anomalies average auctioneer revenues above current retail prices and the sunk cost fallacy the empirical results indicate that bidders are loss averse and overweight small probabilities such that the expected revenue of the auction exceeds the current retail price by 25 46 the authors illustrate and empirically confirm a managerial implication for how an auctioneer can increase revenue by changing the details of the auction design

the concept and measurement of subsistence a survey of the literature abstract subsistence is a widely used concept but most of the time its precise meaning is not property stated this study attempts to provide an appropriate exposition of the concept by examining the manner in which it is used and the role it plays in different theoretical analyses and policy formulations it has been shown that contrary to the conventional notion of a minimum standard of physical needs only subsistence is an absolute minimum standard of physical and mental survival and productive efficiency the lowest standard of social desirability is given by the needs of physical and mental survival in addition to these the standard of subsistence includes the needs of physical and mental efficiency for productive living in the society the attainment of a certain minimum of physical mental and social magnitudes provides the standard of subsistence commodities or their characteristics are the needs of this standard income by providing the command over these needs affords an individual the capability to attain it hence income is used to characterize subsistence three different methods of subsistence determination have been identified the most commonly used methods the social and the scientific ones are found to be arbitrary the determination of subsistence from the analysis of the agents declaration or behavior seems to be a better method while the declaration or expenditure based studies suffer from various limitations studies based on the behavior of income earning offer a better direction

all pay auctions with a buy price option all pay auctions this paper studies all pay auctions in which there is a buy price option for bidders to guarantee purchases at a seller specified price we analyze symmetric increasing bidding equilibria in the first and second price all pay auctions with the buy price option while the optimal buy price in the second price is higher than are those in the first price all pay auction both formats maintain the same expected profit with an endogenous entry process all pay auctions with the buy price can attract more consumers and ultimately reach a higher expected profit than does the uniform posted price selling mechanism jel d44 l11 l81

voting on the environment price or ideology evidence from swiss referendums studies on preferences for environmental quality usually posit that price and income explain most of the observed choices however we argue that conceptions of social norms and the common good are equally important when analyzing environmental voting outcomes and are a significant component of the environmental demand we study aggregate results of three ballot proposals in switzerland put to vote in the year 2000 which foresaw different tax schemes on fossil energy all three bills were rejected by the electorate we are able to show that regions with producer interests car commuting habits and elderly population are less supportive of ecological tax reforms unlike higher education and leftist political affinity that work in favor of the bills though more importantly our results underline the importance of including variables pertaining to the notion of ideology both in terms of statistical fit and obtaining unbiased estimates for price and income determinants

the timing and incidence of exploratory drilling on offshore wildcat tracts this paper is an empirical study of learning and strategic delay in exploratory drilling the specific context is drilling on federal land off the coast of texas and louisiana between 1954 and 1990 the us federal government held a number of sales in which it sold the oil and gas rights to thousands of parcels of its offshore land these parcels known as tracts each cover an area of five thousand acres on average the typical sale involves more than a hundred tracts most sales are wildcat sales which consist of tracts located in areas where there has not been prior exploratory drilling and on site drilling is not permitted prior to the sale firms have access only to seismic information and as a consequence face considerable uncertainty the rights to the tracts are sold individually using a first price sealed bid auction and ownership of tracts in an area is typically distributed among several firms tracts within an area often share common geological features and a subset may be located over a common pool in either case the ex post value of nearby leases will be correlated and as result there is an information externality associated with exploratory drilling 20 refs 1more fig 5 tabs less

a behavioural analysis of the subsistence standard of living subsistence is analysed as an endogenous variable contrary to its conventional exoge nous treatment it is postulated that the subsistence livers perceive their own standard of subsistence direct their earnings behaviour towards attaining maintaining or exceeding this standard and thus reveal the standard through this behaviour the labour supply function of the working poor which displays a forward falling segment at low wages and an upward rising segment at higher wages is hypothesised to offer measures of subsistence and survival standards the concepts are rationalised using sen s concept of freedom of choice and arrow s concept of freedom as flexibility it is argued that at below subsistence living individuals lack freedom of flexibility in choosing their preferences and thus suffer the loss of freedom of choice while subsistence offers a reasonable minimum of this freedom the freedom is completely lost at the lowest survival standard

human development in poor countries on the role of private incomes and public services development is often taken to mean rising incomes discussions of the goals of development now often emphasize the reduction of poverty rather than raising average incomes per se the role of social services particularly basic health and education has also received greater emphasis in the 1980s viewed mainly as instruments for raising the incomes of the poor but in all these approaches income growth of one sort or another is what development is all about a rather different view of the meaning of development has recently found expression in the 1990 human development report hrd produced by the united nations development programme a conceptual underpinning for this approach can be found in the work of amartya sen the essence of this view is that human development what people can actually do and be is the overriding purpose of economic development underdevelopment is viewed as the lack of certain basic capabilities rather than lack of income per se we do not aim here to advocate one of these approaches over the other but rather to explore their implications for development policy for instance what does the human development approach imply about the role of economic growth and in particular about reducing income poverty should development priorities shift toward the provision of public services in poor countries even if such a shift is at the expense of income growth

bargaining power strike durations and wage outcomes an analysis of strikes in the 1880s strike outcomes in the 1880s had a winner take all character successful strikes ended with a discrete wage gain failed strikes ended with a return to work at the prestrike wage we present a theoretical interpretation of these outcomes based on a war of attrition model we fit an empirical model specifying the capitulation times of the two parties and the size of the wage gain in the event of a strike success the results show a systematic relation between the determinants of strike success and the determinants of the wage gain for a successful strike

money and interest in a cash in advance economy the authors analyze an aggregative general equilibrium model in which the use of money is motivated by a cash in advance constraint applied to purchases of a subset of consumption goods the system is subject to both real and monetary shocks which are economy wide and observed by all they develop methods for verifying the existence of characterizing and explicitly calculating equilibria copyright 1987 by the econometric society

are co2 taxes regressive evidence from the danish experience abstract denmark today carries one of the heaviest environmental tax burdens in the world bringing in around 10 of public revenues while evaluations have shown that the danish co 2 and other environmental taxes work as an effective measure to reduce emissions a considerable barrier to increased use of these instruments today seems to be a widespread perception of their socially adverse effects in this article it is demonstrated that co 2 taxes imposed on energy consumption in households as well as in industry do in fact tend to be regressive and therefore have undesirable distributional effects this holds especially for taxes imposed directly on households to analyze this we apply national consumer survey statistics in combination with input output tables

when can carbon abatement policies increase welfare the fundamental role of distorted factor markets abstract this paper employs analytical and numerical models to assess the welfare effects of a revenue neutral carbon tax and nonauctioned carbon emissions permits taking into account preexisting tax distortions in factor markets the presence of preexisting taxes significantly raises the general equilibrium costs of both policies this cost increase is much greater under emissions permits since this policy does not generate revenues to reduce distortionary taxes under our central estimates emissions permits cannot increase welfare unless environmental damages exceed about 18 per ton of carbon in contrast an appropriately scaled carbon tax is welfare improving so long as environmental damages are positive

war and conflict in economics theories applications and recent trends we review the main economic models of war and conflict these models vary in details but their implications are qualitatively consistent highlighting key commonalities across a variety of conflict settings recent empirical literature employing both laboratory and field data in many cases confirms the basic implications of conflict theory however this literature also presents important challenges to the way economists traditionally model conflict we finish our review by suggesting ways to address these challenges

on self interested preferences for burden sharing rules an econometric analysis for the costs of energy policy measures abstract this paper examines the acceptance of burden sharing rules that refer to the costs of the german energy transition which is one of the most challenging and disputed national climate and energy policy measures based on data from a comprehensive survey of more than 2200 citizens the empirical analysis reveals that the polluter pays rule has by far the highest support compared with the ability to pay rule and especially compared with the equal pay rule which is widely refused in the sample since the distribution of the costs of the german energy transition is largely in line with a polluter pays rule its strong support seems to contribute to the high acceptance of the energy transition at all the main result of our econometric analysis with multivariate binary and ordered probit models is that not only some attitudinal factors like environmental values and political identification but especially economic self interest is relevant since equivalent energy expenditures have a significantly negative effect on the support of the polluter pays rule and especially equivalent income has a significantly negative effect on the preference for the ability to pay rule these results suggest that the use of distributional arguments for the criticism of energy policy measures is not necessarily value driven on the basis of real perceptions of distributive justice but can also be strategically motivated to prevent and combat economically unfavorable measures together with the strong general support of the polluter pays rule these results suggest that a sharp reorientation of the german energy transition due to distributional arguments is not very useful

lifetime incidence and the distributional burden of excise taxes this implies that low income households in one year have some chance of being higher income households in other years and significantly affects the estimated distributional burden of excise taxes this paper shows that household expenditures on gasoline alcohol and tobacco as a share of total consumption a proxy for lifetime income are much more equally distributed than expenditures as a share of annual income from a longer horizon perspective excise taxes on these goods are therefore much less regressive than standard analyses suggest this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

strategic bargaining models and interpretation of strike data attrition screening and signalling models of strategic bargaining are characterized in terms of their predictions about the incidence mean duration and settlement rates of strikes and the terms of wage settlements these predictions are compared with the general features observed in empirical studies of strikes in canada and the united states conclusions are drawn about the types of models capable of generating these features and about the conformity of the models to the evidence methods are described for computing the numerical examples used to illustrate the models

characterizations of consequentialism and nonconsequentialism abstract by allowing for the possibility that individuals recognize the intrinsic value of choice along with the instrumental value thereof we suppose that individuals express extended preference orderings of the following type choosing an alternative x from an opportunity set a is better than choosing an alternative y from an opportunity set b within this framework we identify a consequentialist and a nonconsequentialist who show contrasting attiduces toward alternatives vis a vis opportunities this paper characterizes these attitudes in terms of some axioms whereas the companion paper explores the implication of these concepts in the context of social choice theory a la arrow journal of economic literature classification numbers d00 d60 d63 d71

why inside money matters this note observes that in a simple infinite horizon economy with heterogeneous endowments and a cash in advance constraint fiat money can be used to implement a pareto optimum only with type specific taxation by contrast if credit contracts are enforceable the same allocation can be reached in equilibrium without type specific policy we argue that the advantages of inside money and the fact that they depend on the capacity of the economy to enforce the repayment of debt direct us toward the study of the institutional infrastructure underlying self enforcing inside money equilibria

the generalized war of attrition abstract we model a war of attrition with n k firms competing for n prizes in a natural oligopoly context the k 1 lowest value firms drop out instantaneously even though each firm s value is private information to itself in a standard setting context in which every competitor suffers losses until a standard is chosen even after giving up on its own preferred alternative each firm s exit time is independent both of k and of other players actions our results explain how long it takes to form a winning coalition in politics solving the model is facilitated by the revenue equivalence theorem jel d43 d44 l13 o30

distributional effects of a carbon tax on chinese households a case of shanghai abstract as an effective policy instrument to reduce co 2 emissions the effects of a carbon tax on distribution have been the critical factor in determining whether a carbon tax will be acceptable in china taking shanghai as an example which is the economic center and front runner of china this paper estimates the distributional effect of a carbon tax on households in various income groups by using the input output model and the suits index the results indicate that the comprehensive distributional effect of the carbon tax is regressive the expenditure of the low income group caused by the carbon tax accounts for 0 853 of the total expenditure while that of the high income group 0 712 the direct distributional effect presents a weak progressivity while the indirect one is significantly regressive and the latter is much larger than the former moreover the suits index of the carbon tax is 0 078 implying that the carbon tax burden on the low income group is the highest and thus that a carbon tax can intensify income inequality therefore when introducing a carbon tax some rational associated redistribution or compensation measures such as purposive transfer payments should be implemented to restrict or even eliminate the regressivity of the carbon tax

what is a fair co2 tax increase on fair emission reductions in the transport sector we examine how individual preferences for fair reductions of carbon dioxide co2 emissions affect the support for increases in the co2 tax on gasoline and diesel we assume that people not only care about their own material welfare but also have preferences for fairness in policy design and we explore the implications using original data from a mail questionnaire sent to a representative sample of the swedish population the main result is that fairness in policy design does matter those respondents who adhere to a fairness principle tend to be relatively more positive to increases in the co2 tax one possible explanation for this result is that there is a relatively high degree of reciprocity regarding the origin of emissions and the fairness regarding who should bear the burden of co2 reductions via a split sample analysis we also find that the relative importance of fairness principles is dependent upon whether one uses a car often or not this sheds light on the potential goal conflict between the importance of fairness principles and self interest in the form of a need for private car transportation

the value of inside and outside money abstract we study dynamic economies in which agents may have incentives to hold both privately issued a k a inside and publicly issued a k a outside circulating liabilities as part of an equilibrium our analysis emphasizes spatial separation and limited communication as frictions that motivate monetary exchange we isolate conditions under which a combination of inside and outside money does and does not allow the economy to achieve a first best allocation of resources we also study the extent to which the use of private circulating liabilities alone or the use of public circulating liabilities alone can address the frictions that lead to monetary exchange

performance in living standards abstract our ultimate objective is to enhance the standard of living of our societies but the standard of living has different meanings for different people a thorough investigation of the concept of the standard of living has been made only recently by sen who defines it in terms of functioning and capabilities functioning is an achievement whereas capability is the ability to achieve the main objective of the present paper is to compare achievements levels and improvement changes in the standard of living across countries using an axiomatic approach an achievement index is derived which accomodates the view that a further increase in the standard of living of a country when it is already at a higher level signifies an achievement greater than that of another with an equal increase but from a lower base the paper also tests for the statistical relationship between indicators of the countries standards of living so derived in their capita gdp the question posed is whether the aggregate income which provides people with the means to achieve a better life can be used as proxy measure of the standard living and extent to which the country s improvement in the standard of living can be explained by the levels and changes in the per capita income the analysis presented in the paper is based on the data from 80 developing countries

the effects of human capital on wages and the determinants of labor supply in a developing country abstract the heckman procedure is used to correct for sample selection bias in estimating wage offer and net labor market supply equations the findings show that wages are affected by education and experience in addition the wage offer is influenced by other genetic and environmental influences captured in the wage of one s father calories as predicted by exogenous instruments are also shown to influence the wage offer suggesting that better nutrition increases labor productivity the probability of market labor participation as well as the amount of net market labor supply declined with the size of paddy landholding in addition to the net market supply elasticity increasing with the amount of land owned and being lower for urban than rural workers

labor supply the family and poverty the s shaped labor supply curve abstract the canonical model of labor supply is extended to account for subsistence needs and a frequently rigid division of labor within families gender various theories that have been put forward are thus reconciled in particular with respect to the distinct work choices of the poor the model predicts negative labor supply elasticities for secondary workers at low wage rates and positive ones at higher rates but near 0 for primary workers at all levels detailed time allocation data of the rural philippines support these conclusions as well as evidence from other studies including of industrialized countries policy implications are briefly discussed

liberalization and inequality in sri lanka a comment abstract paul glewwe has recently argued against the widely held view that the liberalizing policy reform in sri lanka in the late 1970s increased inequality we contend here that glewwe has not convincingly discredited the household income distribution data that he has misinterpreted the expenditure distributions and that he has not considered the welfare distributional effects of the relative price changes induced by the policy reforms furthermore we argue that a sound basis remains for the contention that the policy reforms of the late 1970s increased inequality

a synthetic cohort analysis of female labour supply the case of thailand abstractthis study analyzes trends and patterns in employment hours worked and women s wages for thai women and relations among these variables in models of female labour supply labour supply behaviour of thai women is investigated with synthetic cohort data defined by age year of birth and level of educational attainment constructed from annual labour force surveys from 1985 to 2004 according to pseudo panel estimates wage increases lead to a reduction in hours worked but also an increase in the employment population ratio with elasticity estimates that are robust across a variety of specifications estimates based on disaggregation by marital status show that marriage provides protection against wage decreases allowing married women greater choice between hours of work and other household activities alternative disaggregations find that younger cohorts of women and those with the highest education show the greatest positive response of the employment rate to wage changes leading to a fut