representative democracy and capital taxation abstract in this paper we study a political model of capital taxation voters who differ in their relative shares of capital and labor income choose tax policy under majority rule we compare two political regimes direct democracy where the voters vote directly on the policy and representative democracy where they elect a representative who then chooses policy in both regimes some form of commitment by the voters is necessary to avoid excessive taxation of capital but the necessary commitment under representative democracy corresponds closely to that provided by the actual institutions of most democracies

financial mechanism and enforceability of international environmental agreements we examine how international coordination among countries generates a trend towards establishing an international institution for the provision of global public goods in the present model the forces creating international agreement are a politician s motive for re election and a financial mechanism for compliance if a politician expects another politician in a neighboring country to signal his good performance to his citizen by participating in the agreement and is aware that his ex post deviation will be deterred by the financial mechanism he too decides to participate in the agreement which then corrects externality problems

intrinsic motivation in public service theory and evidence from state supreme courts abstractthis paper provides a theoretical and empirical analysis of the intrinsic preferences of state appellate court judges we construct a panel data set using published decisions from all state supreme courts from 1947 to 1994 we estimate the effects of changes in judges employment conditions on a number of measures of judicial performance the results are consistent with the hypothesis that judges are intrinsically motivated to provide high quality decisions and that at the margin they prefer quality over quantity when judges face less time pressure whether from the introduction of an intermediate appellate court the weakening of electoral demands or an increased salary they write more well researched opinions that are cited more often by other judges these effects are strongest when judges have more discretion to select their portfolios of cases

the real but limited influence of expert ideas a number of influential studies in political science argue that important economic policy changes in the rich democracies since the mid 1970s were caused by the introduction of new economic ideas this article claims that while experts exert strong influence over the selection of policy instruments their influence over the formulation of policy objectives is much weaker in the 1970s 1980s and 1990s the predominance of keynesianism in austria and denmark did not lead austrian and danish governments to maintain low unemployment longer than sweden where keynesianism was less strong but it did lead them to regard fiscal policy as an instrument that can be used to control the level of activity in the economy while their swedish counterparts relied instead on exchange rate and monetary policy

how delegation improves commitment abstract mccallum 1995 american economic review papers and proceedings 85 2 207 211 conjectures that delegation merely relocates the commitment problem but does not solve it this holds if optimal ex ante policies do not change if additional information becomes available however with a flexibility credibility trade off delegation improves credibility

bureaucrats or politicians part ii multiple policy tasks abstract policies are typically chosen by politicians and bureaucrats this paper investigates first the normative criteria with which to allocate policy tasks to elected policymakers politicians or non elected bureaucrats politicians are preferable if there is uncertainty about social preferences and flexibility is valuable or if policy complementarities and compensation of losers is important bureaucrats are preferable if time inconsistency and short termism is an issue or if vested interests have large stakes in the policy outcome we then compare this normative benchmark with the case in which politicians choose when to delegate and show that the two generally differ

the proper scope of government theory and an application to prisons when should a government provide a service in house and when should it contract out provision we develop a model in which the provider can invest in improving the quality of service or reducing cost if contracts are incomplete the private provider has a stronger incentive to engage in both quality improvement and cost reduction than a government employee has however the private contractor s incentive to engage in cost reduction is typically too strong because he ignores the adverse effect on noncontractible quality the model is applied to understanding the costs and benefits of prison privatization

to elect or to appoint bias information and responsiveness of bureaucrats and politicians in this paper we address empirically the trade offs involved in choosing between bureaucrats and politicians in order to do this we map institutions of selection and retention of public officials to the type of public officials they induce we do this by specifying a collective decision making model and exploiting its equilibrium information to obtain estimates of the unobservable types we focus on criminal decisions across us states supreme courts we find that justices that are shielded from voters influence bureaucrats on average i have better information ii are more likely to change their preconceived opinions about a case and iii are more effective make less mistakes than their elected counterparts politicians we evaluate how performance would change if the courts replaced majority rule with unanimity rule

bureaucrats and short term politics this paper proposes a simple probabilistic voting model where the society consists of three groups of voters belonging to different generations since the youngest generation is excluded from participating in elections the political process results in an allocation of public expenditures that is shifted towards public consumption we show that the influence of bureaucrats who favor an excessive supply of public goods increases investment expenditures and limits the leeway of politicians to capture rents for themselves finally we discuss the conditions under which the impact of bureaucrats is welfare enhancing

a model of public opinion management abstract policymakers often motivate their decisions using information collected by government agencies while more information can help hold the government to account it may also give policymakers an incentive to meddle with the work of bureaucrats this paper develops a model of biased information gathering to examine how different disclosure rules and the degree of independence of government agencies affect citizen welfare disclosure rules and agency independence interact in subtle ways we find that secrecy is never optimal and yet insulating the agency from political pressure so that its information is always unbiased may also not be socially optimal a biased information gathering process can benefit the government by helping it to shape public opinion but it can also benefit the public by curbing the government s tendency to implement its ex ante favored policy thus mitigating the agency conflict between policymakers and the public

necessity as the mother of invention monetary policy after the crisis we examine recent changes in monetary policy due to the financial crisis and ask whether they are likely to be temporary or permanent we present evidence from two original surveys one of central bank governors the other of academic specialists we find that central banks in crisis countries are more likely to have resorted to new policies to have had discussions about changing mandates and to have communicated more extensively but thinking has changed more broadly for instance many central banks in non crisis countries also report implementing macro prudential measures looking forward we expect central banks to have broader mandates use macro prudential tools more widely and communicate more actively than before the crisis while there is no consensus yet about the usefulness of unconventional monetary policies we expect most of them will remain in central banks toolkits as governors who gain experience with a particular tool are more likely to assess that tool positively finally the relationship between central banks and their governments might well have changed with central banks crossing the line into the political realm more often than in the past

industry self regulation without sanctions the chemical industry s responsible care program industry self regulation the voluntary association of firms to control their collective action has been proposed as a complement to government regulation proponents argue that the establishment of

accountability with large electorates we show that ignorant voters can succeed in establishing high levels of electoral accountability in our model an incumbent politician is confronted with a large number of voters who receive fuzzy private signals about her performance a sampling effect enables the incumbent to form a precise estimate of the median voter s signal and the resulting level of accountability is as if the incumbent faced a perfectly informed social planner public information or ideological preferences can impair the beneficial impact of the sampling effect on accountability overconfidence of voters can restore the full benefit of the sampling effect

the finnish power market are imports from russia low cost electricity market integration of high and low price areas is expected to bring benefits to the consumers in a high price area however these potential benefits are highly dependent on the market characteristics and the policy interventions we use simulation to study the effects of different alternatives for the expansion and operation of the interconnector finland russia on the finnish market a high price area our results show that the current trading arrangement where a single trader owns the transmission rights and limits the trade during peak hours to avoid capacity charges in russia is beneficial for finland at the current interconnection capacity however if the interconnector is expanded the behaviour of the trader would create significant distortions in the finnish market we also analyse the pros and cons of maintaining a strategic reserve in finland in combination with the different scenarios of interconnection expansion and trading arrangements we conclude that in the absence of trust in imports the need for a strategic reserve is undeniable this will slightly reduce the economic benefits of integration for finnish consumers but it will significantly improve reliability

information polarization and term length in democracy abstract this paper considers term lengths in a representative democracy where the political issue divides the population on the left right scale parties are ideologically different and better informed about the consequences of policies than voters are a short term length makes the government more accountable but the re election incentive leads to policy distortion as the government seeks to manipulate swing voters beliefs to make its ideology more popular this creates a trade off a short term length improves accountability but gives distortions a short term length is best for swing voters when the uncertainty is large and parties are not very polarized partisan voters always prefer a long term length when politicians learn while in office a long term length becomes more attractive for swing voters

uncertainty electoral incentives and political myopia we study the determinants of political myopia in a rational model of electoral accountability with informational frictions and uncertainty when politicians ability is ex ante unknown and policy choices are unobservable elections improve political accountability and selection however incumbents underinvest in costly policies with future returns to signal high ability and increase re election probability surprisingly uncertainty reduces political myopia and may increase social welfare we also address the socially optimal political rewards and the desirability of a one term limit our predictions are consistent with several stylised facts and with a new empirical observation aggregate uncertainty is positively correlated with fiscal discipline

the economics of career concerns part i comparing information structures many incentives in organizations arise not through explicit formal incentive contracts but rather implicitly through career concerns this paper models career concerns through agents trying to manipulate the market assessment of their future productivity the information flow from current actions to market assessment is therefore crucial in determining the nature of these incentives improved information may either increase or reduce incentives the impact of information provides a major distinction between the explicit and implicit incentives model the paper derives general results on comparisons of information structures which serve as counterparts to the standard results on information structures in the principal agent model sufficient statistic impact of a blackwell garbling comparison of inclusive information structures 1999 the review of economic studies limited

divorce comes at a price an ex ante welfare analysis of ownership unbundling of the distribution and commercial companies in the dutch energy sector vertical unbundling in the electricity sector is a hot political topic in the european union the european commission has decided that the ownership unbundling of transmission networks from other stages in the value chain is the most effective way to ensure fair network access and infrastructure investment while this european unbundling debate has not ended yet and most countries still do not have an independent transmission system operator tso the dutch government has already taken one step further in 2008 it decided that distribution companies should be completely separated from commercial activities that are part of the same holding generation trade and supply this governmental decision has been fiercely debated although the goal is to improve competition as well as security of supply these benefits are uncertain nevertheless it is certain that ownership unbundling comes at a cost in this paper we present an ex ante cost benefit analysis of the dutch unbundling act we conclude that it is unlikely that this act is welfare enhancing divorce comes at a price

social cost benefit analysis of electricity interconnector investment a critical appraisal abstract this paper examines the economic analysis social cost benefit analysis underlying two decisions to build an interconnector norned and the east west interconnector in europe the main conclusion is that current interconnector and transmission investment decisions in europe are unlikely to maximize social welfare the arguments are as follows i it is unclear how much demand for transmission capacity and interconnectors actually exists and thus the benefits of investment are unclear ii both analyses underlying the investments studied are incorrect to the point where in one case even the sign may be wrong iii the main criticism concerns the fact that they do not take the resulting changes in generator investment plans into account and ignore the potential benefits of increased competition iv several smaller issues can be improved such as the discount rate used v decisions at the european level are taken very differently and approval may depend on which authority grants approval vi interconnector decisions receive the most attention although most money goes to transmission investments two research recommendations for future improvements are formulated

the geopolitics of cross border electricity grids the israeli arab case abstract countries often attempt to establish regional electricity grids however whereas research on natural resources frequently seeks to understand policy outcome through a geopolitical prism when it comes to electricity studies the prism is always economic or technical hence this study is a first attempt to identify the geopolitical dimension of cross border electricity grids the study argues that success in establishing electricity grids requires identifying how the geopolitical dimension interplays with the physical dimension to examine the role of these geopolitical bottlenecks the study examines negotiation protocols spanning over 15 years on establishing ten grid connections between israel and its arab neighbors it finds that electricity geopolitics has been used both as a platform for deeper international cooperation and as a stick against neighboring states when policies are driven by a peace dividend proposals for grid connection appear to evolve and overcome the dependency and the security economy bottlenecks when relations deteriorate proposals for grid connections appear to undergo reconsideration and to be held hostage by higher politics if when and how electricity grids materialize is a function of the nature of the electricity network as a twofold package and of the ability of the planning process to accommodate geopolitical uncertainty

politics and monetary policy abstract how and why do politicians preferences about monetary policy differ from the interest rates set by independent central banks looking at the european central bank ecb this paper shows that politicians on average favor significantly lower interest rates three factors explain the different preferences first politicians put relatively less weight on inflation and more on output in their preferred monetary policy reaction function second their preferences are affected by political economy motives third different preferences are also and largely due to different constituencies as politicians primarily focus on national economic objectives rather than the euro area as a whole

does delegation of fiscal policy to an independent agency make a difference evidence from intergovernmental transfers in india abstract one area of fiscal policy in which several countries have delegated responsibility to an independent agency is the distribution of national resource transfers across regional and local governments such delegation is expected to promote equity and efficiency and mitigate distortions created by political incentives this paper tests whether delegation to an independent agency indeed makes a difference by contrasting the impact of partisan politics on two types of fiscal transfers to states in the indian federation over a period of time 1972 1995 the pattern of evidence shows that while the transfers that are determined by the central political executive are indeed distributed to favor particular states that are politically important for the central ruling party the transfers that are delegated to an independent agency serve to constrain such partisan impact

managerial incentive problems a dynamic perspective the paper studies how a person s concern for a future career may influence his or her incentives to put in effort or make decisions on the job in the model the person s productive abilities are revealed over time through observations of performance there are no explicit output contingent contracts but since the wage in each period is based on expected output and expected output depends on assessed ability an implicit contract links today s performance to future wages an incentive problem arises from the person s ability and desire to influence the learning process and therefore the wage process by taking unobserved actions that affect today s performance the fundamental incongruity in preferences is between the individual s concern for human capital returns and the firm s concern for financial returns the two need be only weakly related it is shown that career motives can be beneficial as well as detrimental depending on how well the two kinds of capital returns are aligned it is well understood by now that informational externalities may place special demands on the organization of economic exchange simple price mediated markets will frequently fail in the presence of asymmetric information in that case more elaborate contractual arrangements have to be used as substitutes for the price system lately considerable effort has been devoted to the analysis of contracting under incomplete information with the objective to understand the range of economic institutions that emerge in response to the failure of the price system the analysis of moral hazard has played a prominent role in this development moral hazard problems arise when for some reason or another transacting parties cannot contract contingent on the delivery of the good for instance in buying labour services it may be that the amount of labour supplied is not directly observable precluding a simple exchange of wage for labour as a partial remedy to this problem an imperfect mutually observed signal about the supply of labour can be used as a proxy in the contract frequently output is taken as such a proxy the drawback is that output is often influenced by other factors than labour input which induce undesirable risk into the contract one is therefore faced with a tradeoff between allocating risk associated with incomplete observability and providing incentives for a proper supply of labour gaining insight into this tradeoff is important not only for understanding contracting in the small e g managerial incentive schemes but also because it is closely related to the fundamental tension between equity and efficiency in the society as a whole while our understanding of moral hazard has advanced a lot in past years it is clear that much work remains an important question that has received little attention until

setting customer expectation in service delivery an integrated marketing operations perspective service firms have increasingly been competing for market share on the basis of delivery time many firms now choose to set customer expectation by announcing their maximal delivery time customers will be satisfied if their perceived delivery times are shorter than their expectations this gap model of service quality is used in this paper to study how a firm might choose a delivery time commitment to influence its customer expectation and delivery quality in order to maximize its market share a market share model is developed to capture 1 the impact of delivery time commitment and delivery quality on the firm s market share and 2 the impact of the firm s market share and process variability on delivery quality when there is a congestion effect we show that the choice of the delivery time commitment requires a proper balance between the level of service capacity and customer sensitivities to delivery time expectation and delivery quality we prove the existence of nash equilibria in a duopolistic competition and show that this delivery time commitment game is analogous to a prisoners dilemma

the effect of government corruption on the efficiency of us commercial airports abstract in this paper we argue that the cost of providing public goods is affected by local government corruption because bureaucrats have no strong incentives to pursue mandated tasks under a corrupt environment commercial airports in the united states are chosen to demonstrate such impacts of corruption we first develop a theory which predicts the impacts of corruption on productivity and variable input allocation of airports we then test the predictions by estimating a stochastic variable cost frontier model which incorporates both technical and allocative efficiency of airports the empirical evidence confirms the theoretical predictions by revealing the following 1 airports are less productive in more corrupt environments and 2 airports tend to use more contracting out to replace in house labor in more corrupt environments the findings can be applied to the context of other public goods and have important policy implications for reforming governance structure of public good provision

welfare and competition effects of electricity interconnection between ireland and great britain this study analyzes the effects of additional interconnection on welfare and competition in the irish electricity market i simulate the wholesale electricity markets of the island of ireland and great britain for 2005 i find that in order for the two markets to be integrated in 2005 additional interconnection would have to be large the amount of interconnection decreases for high costs of carbon since this causes the markets to become more similar this suggests that in the absence of strategic behavior of firms most of the gains from trade derive not from differences in size between countries but from technology differences and are strongly influenced by fuel and carbon costs social welfare increases with interconnection although at a decreasing rate as the amount of interconnection increases there are also positive effects on competition in ireland the less competitive of the two markets finally it is unlikely that private investors will pay for the optimal amount of interconnection since their returns are significantly smaller than the total social benefit of interconnection

pandering and pork barrel politics abstract we develop a model of pork barrel politics in which a government official tries to improve her reelection chances by spending on targeted interest groups the spending signals that she shares their concerns we investigate the effect of such pandering on public spending pandering increases spending relative to a non accountable official one who does not have to run for reelection if either the official s overall spending propensity is known or if it is unknown but the effect of spending on the deficit is opaque to voters by contrast an unknown spending propensity may induce the elected official to exhibit fiscal discipline if spending is transparent

improving supplier s situation through supplier cooperation the case of xintang jeans town abstract inferior labor conditions in developing countries have raised western customers awareness of sweatshops developing countries suppliers are facing growing pressure from western clients on ethical issues associated with the production of low cost goods at the expense of worker health safety and welfare inferior working conditions not only adversely affect worker well being but also negatively impact performance and productivity which is detrimental to the entire supply chain in the long run in this paper we consider the case of xintang international jeans and textile city the largest manufacturing base of jeans in china which sought to shed its sweatshop image working closely with the administration of this manufacturing base we applied operations research techniques to analyze local suppliers possible operations strategies based on considerations of price and delivery guarantees two critical dimensions of competition in the apparel and textile industry our analysis highlighted the fact that local suppliers cooperation may be an effective way for improving labor conditions our work has implications for societal improvement in developing countries through better labor conditions and increased cooperation while maintaining a healthy level of competition

regulation versus taxation abstract we study which policy tool and at what level a majority chooses in order to reduce activities with negative externalities we consider three instruments a rule that sets an upper limit to the activity which produces the negative externality a quota that forces a proportional reduction of the activity and a proportional tax on it for all instruments the majority chooses levels which are too restrictive when the activity is performed mainly by a small fraction of the population and when costs for reducing activities or paying taxes are sufficiently convex also a majority may prefer an instrument different than what a social planner would choose for instance a rule when the social planner would choose a tax

water on fire gains from electricity trade in light of the ongoing liberalization of electricity trade in the nordic countries and perhaps in northern europe we argue that gains from electricity trade may be different from those traditionally associated with comparative advantages and economies of scale in particular we consider gains arising from the exploitation of technological complementarities between hydro and thermal systems our theoretical framework highlights essential features of the two systems and allows for an analysis of effects of trade we study three trading regimes which may arise either endogenously or because of trade regulations day night power exchange seasonal energy banking and unbalanced trade the analysis suggests that gradual trade liberalization may be costly

the role of local officials in new democracies evidence from indonesia this paper shows that the body of appointed officials that a new democracy inherits from the previous regime is a key determinant of the extent of electoral fraud and clientelistic spending in new democracies i develop a model that predicts that appointed officials have stronger incentives to influence voters during national level elections because of their career concerns i test the implications of the model using data from indonesia s transition to democracy both the pattern of alignment of electoral results between village and district levels and the pattern of subsequent turnover of appointed village heads corroborate the predictions of the model

elected or appointed how the nomination scheme of the city manager influences the effects of government fragmentation abstract empirical research on the causal effect of government fragmentation derives diverse results one reason for this diversity might be that studies are typically settled in a variety of institutional environments to assess the extent to which the local political system might shape the effects of fragmentation this study measures the causal effect of a change in the nomination scheme of the city manager on the council size effect i combine a regression discontinuity design with a difference in differences approach in a large panel dataset of german municipalities the study finds that when the manager is appointed by council there is no significant council size effect but that there is a negative effect when the manager is elected by voters for those expenditure categories over which the manager has the most discretion these findings suggest that the nature of the political system does indeed matter

incomplete social contracts there is a long normative social contract tradition that attempts to characterize ex post income inequalities that are agreeable to all behind a veil of ignorance this paper takes a similar normative approach to characterize social decision making procedures it is shown that quite generally some form of majority voting is preferred to unanimity behind a veil of ignorance whenever society faces deadweight costs in making compensating transfers deviations from unanimity or ex post pareto optimality are ex ante efficient to the extent that they economize on costly compensating transfers put another way the optimal decision rule trades off the benefits of minority protection and those from greater flexibility jel h11 g33 g34 d63 p16 p48

the politics of ambiguity politicians face a trade off between the policies that maximize their chances of reelection and their most preferred policies or the policies most preferred by the constituency which they represent this paper analyzes this trade off in a dynamic electoral model in which the voters are not fully informed about the preferences of the incumbent first we show that the incumbent follows a policy which is intermediate between the other party s ideal policy and his own ideal policy second we show that often the incumbent has an incentive to choose procedures which make it difficult for voters to pinpoint his preferences with absolute precision thus politicians may prefer to be ambiguous

learning about voter rationality we model the accountability relationship between voters and politicians to clarify what can and can t be learned about voter rationality from existing evidence from the behavior literature we make two key points first we show that evidence on the electoral consequences of natural disasters and economic shocks typically interpreted as evidence for voter irrationality is consistent with a canonical model with rational voters second we show that the evidence on the electoral consequences of disaster response typically interpreted as evidence for voter rationality is consistent with the same model with irrational voters hence neither body of evidence can adjudicate between rational and irrational voting behavior we also derive new hypotheses that can better guide future empirical work attempting to assess voter rationality

the economics of career concerns part ii application to missions and accountability of government agencies the paper uses a simple multitask career concern model in order to analyse the incentives of government agencies officials incentives are impaired by the agency pursuing multiple missions a lack of focus is even more problematic in the case of fuzzy missions that is when outsiders are uncertain about the exact nature of the missions actually pursued by the agency consequently agencies pursuing multiple missions receive less autonomy the paper further shows that professionalization creates a sense of mission for the agency and that the specialization of officials raises their incentives last the paper compares its predictions with the stylized facts on government bureaucracies 1999 the review of economic studies limited

political centralization and government accountability boffa acknowledges financial support from the free university of bolzano ww82 piolatto from the spanish ministry of science and innovation eco 2012 37131 and the government of catalonia 2014 sgr 420 ponzetto from the spanish ministry of science and innovation jci 2010 08414 and eco 2011 25624 the spanish ministry of economy and competitiveness ryc 2013 13838 the government of catalonia 2009 sgr 1157 and 2014 sgr 830 the barcelona gse and the bbva foundation through its first grant for researchers innovators and cultural creators

shared accountability and partial decentralization in local public good provision abstract recent decentralization reforms in developing countries have often lead to the coexistence of multiple tiers of government in given policy areas triggering new accountability issues this paper provides a novel theoretical treatment of the efficiency consequences of such partial expenditure decentralization it develops a political agency model in which two levels of government are involved in the provision of a local public good with voters imperfectly informed about each government s contribution to the public good a central result of the model is that partial decentralization is desirable only if the benefits of vertical complementarity in public good provision outweigh the costs of reduced accountability which result from detrimental vertical strategic interactions operating through the electoral process through variants of the model the interplay between decentralization and democratization is analyzed from a positive point of view the model predicts a relationship between electoral incentives and equilibrium decentralization

pricing and capacity decisions for a service facility stability and multiple local optima we consider a model for optimal pricing and capacity for a service facility the problem is formulated as one of optimal design of a single server queueing system in which the design variables are the service rate and the arrival rate equivalently the price charged for admission the model is a variant of one introduced by dewan and mendelson we allow for an upper bound on the arrival rate and consider slightly more general user value functions we show that an optimal solution may not lie in the interior of the feasible region and thus may not be characterized by the first order differential conditions moreover the first order conditions typically have several solutions some of which may be relative minima and produce a negative value of the objective function customer value minus the sum of expected delay cost and capacity cost per unit time we also examine the stability of the equilibrium arrival rate and the convergence of a dynamic adaptive algorithm for finding the optimal service rate in the context of a model in which the distribution of customers value of service is uniform we show that the equilibrium arrival rate is stable if and only if the service rate is above a threshold value which depends on the price charged for admission and the parameters of the uniform distribution of value of service the dynamic adaptive algorithm always converges to a relative maximum of the objective function if the service rate can be adjusted every time the arrival rate changes otherwise the algorithm will start to diverge if and when the service rate ever falls below the threshold value associated with stability of the equilibrium arrival rate

lame ducks and local fiscal policy quasi experimental evidence from portugal i use the introduction of mayoral term limits in portugal to identify how an exogenous variation in eligibility for office affects policy decisions relying on a quasi experimental difference in differences approach i find that term limited incumbents pursue more conservative fiscal policies than those who are eligible for re election heterogeneous effects show that the treatment effects primarily reflect the behaviour of right leaning term limited incumbents results are in line with a model in which right leaning officeholders try to maintain a good reputation by pleasing an electorate prone to redistribution while they are eligible but adopt policies closer to their true preferences when term limited

bureaucrats or politicians part i a single policy task this paper investigates the normative criteria that guide the allocation of a policy task to an elected politician versus an independent bureaucrat the bureaucrat is preferable for technical tasks for which ability is more important than effort or if there is great uncertainty about whether the policymaker has the required abilities the optimal allocation of redistributive tasks is ambiguous and depends on how the bureaucrat can be instructed but irrespective of the normative conclusion the politician prefers not to delegate redistributive policies

accountability and decentralisation in government an incomplete contracts model this paper approaches the question of the appropriate level of decentralisation of power in government as a problem in the allocation of control rights under incomplete contracts the model of the paper compares allocations of power to local central and regional government as alternative means of motivating governments to act in the interests of citizens centralisation allows benefits from policy coordination but has costs in terms of diminished accountability which can be precisely defined as the reduced probability that the welfare of a given region can determine the re election of the government the model is extended to allow for conflicts of interest within regions and externalities between central and local governments in a federation it is also applied to determining levels of fiscal transfer between localities and to circumstances where governments may act as leviathans appropriating resources for their own use

political budget cycles and the civil service evidence from highway spending in us states abstract we study political budget cycles in infrastructure spending that are conditional on bureaucratic organization bureaucrats can facilitate or hinder politicians ability to engage in voter friendly spending around elections to test this idea we use civil service reforms undertaken by us states in the second half of the 20th century to study political budget cycles in highway spending under civil service and patronage we find that under patronage highway spending is 12 higher in election years and 9 higher in the year before an election by contrast under civil service highway spending is essentially smooth over the electoral cycle these findings provide a novel way through which civil service rules can stabilize government activity

ideas institutions and interests in the politics of cross border electricity interconnection greenlink britain and ireland abstract increasing electricity interconnection is necessary for both closer market integration and facilitating more renewable generation across the european union however progress on the ground has been slow this paper adds to the literature on the politics of interconnection through a case study of a proposed link between ireland and great britain we analyse how the institutional setting for investment has evolved at eu and member state level and how the influence of stakeholders is mediated by the ability of actors to define their interests and by institutional points of entry using this framework we examine the greenwire greenlink project we find first that developments in the institutional context especially the adoption of a new cap and floor regime for merchant investment by the gb regulator have had both positive and negative impacts on the project second we find that regulators and governments in the two markets have found it hard to define their interests in the project and its net social benefit due to informational complexities and changes in information over time third the project has met with local public opposition that is strong but which has little leverage due to a lack of institutional entry points

a method to estimate the costs and benefits of undergrounding electricity transmission and distribution lines abstract there has been a general shortfall of peer reviewed literature identifying methods to estimate the costs and benefits of strategies employed by electric utilities to improve grid resilience this paper introduces for the first time a comprehensive analysis framework to estimate the societal costs and benefits of implementing one strategy to improve power system reliability undergrounding power transmission and distribution lines it is shown that undergrounding transmission and distribution lines can be a cost effective strategy to improve reliability but only if certain criteria are met before the decision to underground is made

elected versus appointed policymakers evidence from city treasurers abstract this paper investigates whether the method of selecting public officials affects policy making i compare the policy choices of bureaucrat city treasurers and politician city treasurers who are selected and held accountable in very different ways the analysis draws on rich data from california to examine whether cities with appointed or elected city treasurers pay lower costs to borrow the results demonstrate that having appointive treasurers reduces a city s cost of borrowing by 19 31 percent holding officials directly accountable to voters can result in lower levels of performance in complex policy areas

interconnections and market integration in the irish single electricity market interconnections can be an effective way to increase competition and improve market integration in concentrated wholesale electricity markets with limited number of participants this paper examines the potential for interconnections and increasing market integration in the irish single electricity market sem we use a time varying kalman filter technique to assess the degree of market integration between sem and other large mature and interconnected wholesale electricity markets in europe including great britain gb the results indicate no market integration between sem and other european markets except for elspot and gb we show that the current state of market integration between sem and gb is just 17 indicating potential to improve market integration via increased interconnector capacity the results indicate that liquidity of wholesale markets might be a crucial factor in the market integration process while our results remain inconclusive in determining whether increased trade of renewables can improve market integration

price delivery time guarantees and capacity selection this paper studies the impact of using delivery time guarantees as a competitive strategy in service industries where demands are sensitive to both price and delivery time we assume that delivery reliability is crucial and investment in capacity expansion is plausible in order to maintain a high probability of delivering the time guarantee a mathematical framework is proposed to understand the interrelations among pricing delivery time guarantee and capacity expansion decisions specifically an optimization model is developed to determine the joint optimal selection of these three important decision variables with an objective of maximizing the average net profit we characterize the optimal decisions and study their qualitative behaviors as various parameters change we further present a numerical example to illustrate how the results of our model can be used to provide useful managerial insights for selecting the best competing strategies for firms with different operating characteristics our model and results are also applicable to a make to order manufacturing environment

how to benefit from a common european electricity market design abstract the realization of an internal electricity market in europe is currently on the one hand progressing in particular thanks to the wide spread implementation of market coupling solutions for cross border congestion management on the other hand diverging national market designs pose a threat to the continuation of this process given the challenges to electricity market design in a multi regional context we analyze how different design aspects namely cross border congestion management and capacity mechanisms affect welfare and generation adequacy in europe in doing so we rely on an agent based simulation model for electricity wholesale markets which we apply within several numerical computational case studies for the region of central western europe 2012 2030 our results confirm the benefits of market coupling in terms of welfare as well as generation adequacy furthermore we find indications that coordinating market designs across regions supports these targets therefore we recommend that european energy policy forms a stable transparent regulatory framework with cross border market coupling as an integral component in this context energy policy targets should be clearly defined and operationalized which also needs to consider potential conflicts between them finally electricity market designs need to be coordinated among states to benefit most from a common european market

politicians bureaucrats and targeted redistribution abstract the paper argues that for political reasons elected politicians are more likely to be engaged in targeted redistribution than appointed bureaucrats it uses the example of patronage jobs in the u s local governments to provide empirical support for this claim it shows that the number of public employees is higher for elected chief executives this difference is stronger in public services with bigger private public wage differential and it increases during election years it also finds that the number of public employees increases with the age of bureaucrats while there is no such relationship in the case of politicians which is consistent with younger bureaucrats having stronger career concerns