assessing gas transit risks russia vs the eu abstract this paper proposes a transit risk index tri designed to assess the riskiness of pipeline gas imports and to study the effect of introducing new gas routes tri controls for gas dependency transit route diversification political risks of transit pipeline rupture probability and the balance of power between supplying and consuming countries along the transit route evaluating tri for the eu russia gas trade we show that the introduction of the nord stream pipeline would further widen already large disparities in gas risk exposure across the eu member states the gas risk exposure of the member states served by nord stream would decline in contrast eu countries not connected to nord stream but sharing other russian gas transit routes with the nord stream countries would face greater gas risk exposure we discuss the implications of our analysis for the design of the common energy policy in the eu

do greens drive hummers or hybrids environmental ideology as a determinant of consumer choice this paper uses several california data sets to test for differences in consumption patterns between greens and browns a person s environmentalism is rarely observed in consumer data sets in california a community s share of green party registered voters is a viable proxy for community environmentalism environmentalists are more likely to commute by public transit purchase hybrid vehicles and consume less gasoline than non environmentalists

globalisation and the brazilian steel industry 1988 97 over the course of the 1988 97 period the brazilian steel sector was subject to an unprecedented programme of trade liberalisation and privatisation while becoming far more open towards foreign investment and technology inflows using various indicators of competitive performance it is established that the impact of this drive towards globalisation was broadly favourable productivity and the technological level of production processes improved while import penetration remained minimal despite the scale of trade liberalisation however these improvements have to be set beside the fact that the competitive performance of the sector still lagged behind that of major international producers and technological weaknesses persisted the evolution of the sector s competitive behaviour can only be fully understood when pre existent internal factors as well as the externally imposed forces of globalisation are taken into account

manufacturing investment in south africa a time series model abstract using data from the south african manufacturing sector we estimate a theory consistent model of the evolution of the capital stock the model is used to test hypotheses about the nature of the constraints and objective function of firms in this sector in particular we look at the magnitude of the impact of increased economic uncertainty

information school choice and academic achievement evidence from two experiments we examine a natural experiment and a field experiment that provided direct information on school test scores to lower income families in a public school choice plan receiving information significantly increases the fraction of parents choosing higher performing schools parents with high scoring alternatives nearby were more likely to choose nonguaranteed schools with higher test scores using random variation from each experiment we find that attending a higher scoring school increases student test scores the results imply that school choice will most effectively increase academic achievement for disadvantaged students when parents have easy access to test score information and good options from which to choose

reacting to rankings evidence from america s best hospitals rankings and report cards have become a popular way of providing information in a variety of domains i estimate the response to rankings in the hospital market and find that hospitals that improve their rank are able to attract significantly more patients the average hospital in my sample experiences a 5 change in non emergency medicare patient volume from year to year due to rank changes these findings have implications regarding the competitiveness of hospital markets and the effect that the dissemination of quality information in hospital markets can have on individual choice

pro competitive effects of trade reform results from a cge model of cameroon abstract how likely is trade liberalization to produce efficiency gains in the presence of imperfect competition scale economies and higher than average wages in the modern sectors all common features in developing economies these features create a potential conflict to the extent that traditional notions of comparative advantage lead us to expect that the modern sectors will be squeezed with liberalization in this paper we investigate this issue by using an applied general equilibrium model calibrated to cameroonian data under perfect competition we find that the welfare effect is a wash since the beneficial consequence of expanded imports is offset by the reduction in employment in the modern high wage sectors under imperfect competition by contrast trade liberalization produces welfare gains of the order of 1 to 2 percent of income the key is the pro competitive effect of liberalization domestic firms in the modern sectors now perceive themselves as facing a higher elasticity of demand which spurs them to increase production

information competition and markets one of the dominant characteristics of modern capitalist economies is the important role played by competition not the peculiar static form of pure price competition embodied in the arrow debreu model but rather a dynamic competition more akin to the kind of competition represented by sports contests and other races including patent races in recent years there have been several attempts to explain why firms often base the pay of their workers and managers on relative performance see for example edward lazear and sherwin rosen 1981 such compensation schemes become desirable when three conditions are satisfied a the input effort of workers managers must not be directly observable at least without cost thus firms must either expend resources to monitor inputs or devise reward structures in which compensation is a function of variables such as output or profits which are themselves functions of inputs but are less costly to observe b the relationship between input and output must be stochastic so that by observing output one cannot perfectly infer what the input was c finally the stochastic disturbances which affect the relationship between input and output of different firms must be correlated by looking at the performance of one worker relative to that of others one can make better inferences about his effort than one can make without using this information not only can competition provide a basis of comparison which enables the design of reward structures that can simultaneously provide a high level of incentives with relatively low level risk but compensation schemes based on relative performance have the further advantage of automatically adjusting incentives to changes in the economic environment we refer to this as built in flexibility in a first best world with perfect information concerning the nature of the technology but where it is still costly to monitor individuals activities the compensation scheme would vary from time to time as the environment changed such changes in the compensation scheme are costly to implement and the information required to do so is seldom available when a task is easier the individual s rewards for performing the task should be reduced if pay is based on relative performance although all individuals perform better when they exert the same level of effort their compensation is automatically adjusted thus teachers frequently grade on the curve and a significant fraction of the pay of successful salesmen often consists of bonuses based on relative performance

how do different designs of energy labels influence purchases of household appliances a field study in switzerland abstract energy labels are a key element of energy efficiency policies they provide information on appliances energy consumption and aim at increasing consumers attention to this characteristic a well known example is the eu energy label which is required by law to be displayed on most energy using durables in the eu as well as in switzerland in cooperation with a large online retailer in switzerland we assess the impact of the eu energy label and of a newly designed monetary lifetime oriented energy label in the field we analyze private purchases of household appliances especially freezers vacuum cleaners and tumble dryers we find that the display of any of the two energy labels increases the sales proportion of energy efficient appliances compared to the absence of any energy label at the same time we observe a volume effect for freezers the average size of purchased freezers is larger when any of the two energy labels is displayed compared to the absence of any energy label the influence of the two different energy labels is similar except for vacuum cleaners for which monetary information might have an adverse effect

product market competition and managerial slack this article analyzes the effect of product market competition on managerial incentives in contrast to hart 1983a i show that competition may actually exacerbate the incentive problem the difference in results derives from our different assumptions about managerial preferences the importance of assumptions about preferences suggests that we do not yet understand the precise mechanism through which competition affects incentives

barriers to consumer choice of energy efficient products a number of barriers deter consumers from making energy conserving choices when buying major durables in a field experiment refrigerator energy labels and sales staff emphasis were manipulated in an attempt to help put these barriers into perspective energy information was most effective in the low price market segment when consumers were choosing between manual and frost free refrigerators

strategic eurasian natural gas market model for energy security and policy analysis formulation and application to south stream abstract the mathematical formulation of a strategic eurasian natural gas market model is presented the model represents horizontal oligopolistic relationships among producers bilateral market power between producer russia and transit ukraine countries detailed transport constraints and operation decisions over a 20 year time horizon to demonstrate the model s capabilities a financial and market analysis of the proposed south stream gas pipeline from russia via the black sea to south europe is summarized insights obtained include the following first expectations of high demand growth in europe and or transit risks do not justify the construction of the south stream pipeline because under all demand and ukraine transit interruption scenarios the net benefits to the south stream participants are negative the npv ranges from 1 9 billion bn to 7 4 bn second ukraine s perception of high transit market power vis a vis russia may trigger the construction of the otherwise unprofitable south stream project thus under ukraine s high transit market power scenario the npv of south stream ranges between 2 4 bn and 24 5 bn third we find that the south stream investment increases the efficiency of the european gas market under the following conditions i when gas demand in europe grows 2 per year up to 2030 ii when ukraine poses high transit market power or iii under a combination of severe transit risks through ukraine and low demand scenarios in europe it should be noted that the value of south stream to both its project sponsors and the market as a whole is much higher when ukraine exercises transit market power than under the high demand scenario therefore whether ukraine is likely to wield market power is crucial to the success of the south stream project because that is the only scenario in which the project yields both a positive expected npv to its sponsors and the highest value to the market as a whole

organizational design and technology choice under intrafirm bargaining comment the authors consider a wide number of applications of an intrafirm bargaining game within organizations where employees and the firm engage in wage negotiations under their presumption that contracts cannot bind employees to the organization the resulting stable wage and profit profiles give rise to an objective function for the firm that places weight on inframarginal profits in an economically significant manner the authors in turn employ this methodology to explore applications of organizational design hiring and capital decisions training and cross training the importance of labor and asset specificity managerial hierarchies preferences for unionization responses to competition and internal capital budgeting copyright 1996 by american economic association

saving incentives for low and middle income families evidence from a field experiment with h r block this paper analyzes the effects of a large randomized field experiment carried out with h r block offering matching incentives for ira contributions at the time of tax preparation about 15 000 h r block clients in 60 offices in predominantly low and middle income neighborhoods in st louis were randomly offered a 20 percent match on ira contributions a 50 percent match or no match the control group brookings institute

investment options and bargaining power the eurasian supply chain for natural gas we use cooperative game theory to analyze how the architecture of the pipeline network determines the power structure in the supply chain for russian gas if the assessment is narrowly focused on the abilities to obstruct flows in the existing system the main transit countries belarus and ukraine appear to be strong if investment options are accounted for however russia achieves clear dominance we show that options to bypass one of the transit countries are of little strategic importance compared to russia s direct access to its customers through the baltic sea comparing the results of our calibrated model with empirical evidence obtained from transit and import agreements we find that the shapley value explains the power of major transit countries better than the core and the nucleolus

bargaining foundations of shapley value1 a transferable utility economy in which each agent holds a resource which can be used in combination with the resources of other agents to generate value according to the characteristic function v is studied using a dynamic model of bargaining the main theorem establishes that the payoffs associated with efficient equilibria converge to the agents shapley values as the time between periods of the dynamic game goes to zero in addition it is demonstrated that an efficient equilibrium exists and is unique when an additivity condition is satisfied to demonstrate the sensitivity of the solution to the institutional detail we modify the model to allow for partnerships and show that the shapley value is no longer achieved

industrialisation catching up and economic growth a comparative study across the world s capitalist economies various hypotheses are examined seeking to explain inter country convergence at the upper end but divergence at the lower end of the world income rankings a model of disequilibrium growth with sector specific technological progress and spillover is developed and then estimated on two samples of capitalist economies 1960 85 it is found that the degree of disequilibrium between agriculture and industry is greatest in the least developed economies but their rate of labor transfer has been slow technological spillover has stimulated productivity growth in less developed agricultural sectors but not in the industrial sectors of the least developed economies copyright 1991 by royal economic society

trade liberalization and technical efficiency in the indonesian chemicals industry this article examines the impact of trade reform on technical efficiency on the indonesian chemicals industry using firm level panel data the effects of trade reform on technical efficiency are an

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

exports and economic growth in bangladesh this study investigates the effect of exports on economic growth in bangladesh based on a two sector growth model using annual data for the period 1961 92 the article estimates an autoregressive conditional heteroscedastic model of economic growth which is found to capture the volatility of the bangladesh economy the results suggest that an increase in the share of investment in gdp significantly increases the growth rate of gdp in normal years but negligibly increases gdp growth in abnormal years abnormalities in the economy arise from war political turmoil and natural disasters the key finding is that export growth has significantly increased economic growth through its positive impact on total factor productivity in the economy the contribution of exports to economic growth was more pronounced during 1982 90 when the government pursued a policy of trade liberalisation and structural reform and political turmoil was not persistent this finding is not sensitive to the choice of the model or t

on the importance of the supply side in demand side management we discuss how the structure of market supply affects the evaluation of policies to promote energy efficiency in household appliances if competitive markets offer the levels that consumers demand product standards inefficiently restrict choice if suppliers price discriminate minimum standards can restrict the inefficient use of energy intensity to segment consumers we also compare the effects of average intensity standards energy prices and innovation and consider what the different behavioral predictions imply for empirical studies of energy efficiency good policymaking requires knowing not only how consumers value energy efficiency in their decision making but also how producers respond to those values

incentives for managers and inequality among workers evidence from a firm level experiment we present evidence from a firm level experiment in which we engineered an exogenous change in managerial compensation from fixed wages to performance pay based on the average productivity of lower tier workers theory suggests that managerial incentives affect both the mean and dispersion of workers productivity through two channels first managers respond to incentives by targeting their efforts towards more able workers implying that both the mean and the dispersion increase second managers select out the least able workers implying that the mean increases but the dispersion may decrease in our field experiment we find that the introduction of managerial performance pay raises both the mean and dispersion of worker productivity analysis of individual level productivity data shows that managers target their effort towards high ability workers and the least able workers are less likely to be selected into employment these results highlight the interplay between the provision of managerial incentives and earnings inequality among lower tier workers

the short run and long run effects of behavioral interventions experimental evidence from energy conservation we document three remarkable features of the opower program in which social comparison based home energy reports are repeatedly mailed to more than six million households nationwide first initial reports cause high frequency action and backsliding but these cycles attenuate over time second if reports are discontinued after two years effects are relatively persistent decaying at 10 20 percent per year third consumers are slow to habituate they continue to respond to repeated treatment even after two years we show that the previous conservative assumptions about post intervention persistence had dramatically understated cost effectiveness and illustrate how empirical estimates can optimize program design jel d12 d83 l94 q41

misselling through agents this paper analyzes the implications of the inherent conflict between two tasks performed by direct marketing agents prospecting for customers and advis ing on the product s suitability for the specific needs of customers when structuring salesforce compensation firms trade off the expected losses from misselling unsuitable products with the agency costs of providing market ing incentives we characterize how the equilibrium amount of misselling and thus the scope of policy intervention depends on features of the agency problem including the internal organization of a firm s sales process the transparency of its commission structure and the steepness of its agents sales incentives jel m31 m37 m52 when purchasing unfamiliar products consumers often rely on information and advice pro vided by representatives of the seller this creates the possibility of misselling the question able practice of a salesperson selling a product that may not match a customer s specific needs 1 this problem is particularly severe in markets for technically complex products such as con sumer electronics auto repairs medical care and retail financial services including securities pensions insurance policies and mortgages an important feature of these markets is that the seller often deals with the customer through an agent rather than directly for example financial brokers typically recommend purchase of a specific product after inquiring about their customers particular circumstances and needs the possibility of abuse has led to regulation in some of these markets most notably for securities transactions the financial industry regulatory authority finra the major self regulatory organization for securities firms operating in the united states mandates that broker dealers make a reasonable effort to obtain information about the individual characteristics of their noninstitutional cus tomers and to ensure that their recommendations are suitable to customers financial situations

disciplining firms the impact of trade reforms on profit margins in indian industry the paper analyses the effects of increased trade exposure on the profitability of firms in indian industry while trade reforms are often expected to decrease profit margins as firms struggle to compete in international markets there is the possibility that increased competition may improve firm efficiency and provide a positive impetus to firm profitability this paper is different from many others in this area in that it considers both these possibilities an efficiency index is created to directly analyse the impact of changing efficiency levels on firm profit margins results indicate that liberalization significantly influenced profit margins however its main effect is through the impact that it has had on other firm variables market shares advertising r d and exports all of which changed after 1991 while exports have had a pro competitive effect on profit margins in the selected sample ad and r d both cause an increase in profit margins it is also found that neither capital nor manageri

competition for aid and trade policy this paper considers the optimal allocation of a given amount of foreign aid between two recipient countries it is shown that given consumer preferences a country following a more restrictive trade policy would receive a smaller share of the aid if the donor country maximises its own welfare in allocating aid if on the other hand the donor country allocates aid in order to maximize the sum of the welfare of the two recipient countries the result is just the opposite finally we analyze the situation where the recipient countries compete with each other for the given amount of aid it is shown that this competition tends to lower the level of optimal tariffs in the recipient countries

the role of sales agents in information disclosure evidence from a field experiment with a large nationwide retailer we run a natural field experiment to measure the effects of energy use information disclosure customer rebates and sales agent incentives on demand for energy efficient durable goods although a combination of large rebates plus sales incentives substantially increases market share information and sales incentives alone each have zero statistical effect and explain at most a small fraction of the low baseline market share sales agents strategically comply only partially with the experiment targeting information to more interested consumers but not discussing energy efficiency with the disinterested majority these results suggest that seller provided information is not a major barrier to energy efficiency investments at current prices in this context data as supplemental material are available at http dx doi org 10 1287 mnsc 2015 2327 this paper was accepted by john list behavioral economics

trade liberalization and productivity growth new evidence from the turkish rubber industry this paper empirically examines the effects of a change in foreign trade regime on productivity growth based on a generalized leontief factor demand function system total factor productivity growth tfpg rates are calculated for the turkish rubber industry during a substantial trade liberalization in the 1980s tfpg was significantly higher following trade liberalization technological change was the major contributor to this growth when a panel data estimation technique is used to explain technological change the effects of trade liberalization become clearer a one percentage point increase in the protection level led to more than a one percentage point 1 27 decline in the technological change rate

informative advertising with differentiated products in this paper we study the role of promotional expenditures by sellers in a model of product differentiation advertising conveys full and accurate information about the characteristics of products heterogeneous consumers who have no source of information other than advertisements seek to purchase the products that best fit their needs despite the roles played by advertising in improving the matching of products and consumers and in increasing the elasticity of demand faced by each firm we find that the market determined levels of advertising are excessive given the extent of diversity in the market we derive a promotional equilibrium based on a specific information transmission technology paying explicit attention to the structure of consumer information and its impact on firms demand curves this allows us to study the effects of changes in the advertising technology including an increased ability to target messages to specific groups of consumers on the equilibrium in the product market we find that decreased advertising costs may reduce profits by increasing the severity of price competition

comparison friction experimental evidence from medicare drug plans consumers need information to compare alternatives for markets to function efficiently recognizing this public policies often pair competition with easy access to comparative information the implicit assumption is that comparison friction the wedge between the availability of comparative information and consumers use of it is inconsequential because information is readily available and consumers will access this information and make effective choices we examine the extent of comparison friction in the market for medicare part d prescription drug plans in the united states in a randomized field experiment an intervention group received a letter with personalized cost information that information was readily available for free and widely advertised however this additional step providing the information rather than having consumers actively access it had an impact plan switching was 28 percent in the intervention group versus 17 percent in the comparison group and the intervention caused an average decline in predicted consumer cost of about 100 per year among letter recipients roughly 5 percent of the cost in the comparison group our results suggest that comparison friction can be large even when the cost of acquiring information is small and may be relevant for a wide range of public policies that incorporate consumer choice

can cross border transmission expansion lead to fair and stable cooperation northeast asia case analysis abstract in this paper we present a framework for analyzing cross border power interconnection projects based on cooperative game theory compared to existing studies we not only quantify the benefits of interconnections and suggest cost benefit allocation techniques but also analyze the stability of the allocations which is a crucial aspect in regions where coordination and mutual trust between countries have not been built yet we apply our framework to the northeast asia where six countries china russia mongolia south korea north korea and japan are suggested for cross border transmission expansion planning cooperation cost benefits allocation of the interconnections is analyzed according to the marginal contribution of each country to the grand coalition and the minimal dissatisfaction of each coalition that ensures the stability of the solution accordingly game theory concepts the shapley value and the nucleolus are used in our analysis moreover we employ the core concept to further analyze the stability of the allocation solution and present a visualization of the feasible space formed by all stable allocations we found out that the grand coalition i e the scenario where all countries agree on the cooperation is the optimal and stable coalition with 7 1 billion total savings per year we also suggested a scheme of investment allocation and payments between the northeast asian countries in order to ensure that the proposed interconnections are plausible in practice

optimal second best tariffs on an intermediate input with particular reference to pakistan abstract this is a theoretical and empirical study of trade policy in a small open economy with intermediate inputs the first part develops a theoretical model and obtains expressions for optimal second best tariffs on an intermediate input when tax revenue is used to provide a public good and all other taxes are unalterable in the second part we estimate for pakistan the optimal tariff on sheet steel using the formula developed in the theoretical part we find that the current level of tariff is considerably higher than the optimal one even after making generous allowances for government s revenue constraint

piece rates fixed wages and incentives evidence from a field experiment data from a field experiment are used to estimate the gain in productivity that is realized when workers are paid piece rates rather than fixed wages the experiment was conducted within a tree planting firm and provides daily observations on individual worker productivity under both compensation systems unrestricted statistical methods estimate the productivity gain to be 20 since planting conditions potentially affect incentives structural econometric methods are used to generalize the experimental results to out of sample conditions the structural results suggest that the average productivity gain outside of the experimental conditions would be at least 21 7

what the seller won t tell you persuasion and disclosure in markets imagine that you are considering an investment in a new public offering of a firm s shares the firm s officers make a presentation that includes an audited financial statement an earnings forecast reviewed by its prestigious investment bankers and an impressive demonstration of its new technology or suppose that you are buying a new furnace to replace an old one that is not working well the salesman displays a chart showing that the projected total life cycle cost of one particular model including capital costs and fuel usage over the projected lifetime of the furnace is lower than that of some competing models you have considered this paper reviews the theoretical arguments about how sellers disclose information in an attempt to encourage buyers and the potential role for regulation in encouraging efficient disclosure of information how well does a system of private reporting work when should we expect all the relevant information to be reported if testing and reporting by the seller are costly will too little testing and reporting be done or too much when some information is withheld what sort of information is withheld how do rational buyers respond to such withholding how are prices and welfare affected what role is there for laws and regulations to improve the functioning of markets we address these questions by studying the theory of persuasion games games in which one or more sellers provide verifiable information to buyers to influence the actions they take

deindustrialization adjustment the world bank and the imf in africa abstract to date most of the analysis of structural adjustment has focused on the agricultural sector comparatively little has been written on the relationship between structural adjustment and industry yet arguably given the limitations of an agriculturally based economy africa requires some form of industrialization to augment living standards in the long run the paper attempts to sketch out and analyze the world bank imf model of industrial adjustment a number of serious deficiencies are found in the model including weaknesses in its methodological foundation inconsistencies in the components and impediments linked to structure and class that will constrain the adjustment process overall it is suggested that the world bank imf model is likely to deindustrialize the existing manufacturing base without encouraging any significant replacement

conditional versus unconditional trade concessions for developing countries we consider a small open economy that faces a commitment problem in trade liberalization we examine how the relationship with a large trading partner affects the ability of the small countrys government to sustain free trade through a reputational mechanism if the small country s government is patient enough it can overcome its domestic commitment without the help of the large country unconditional liberalization by the large trading partner has an ambiguous effect on the small country s dynamic incentives liberalization through a reciprocal trade agreement in which the large country lowers its tariffs conditionally on the small country doing the same unambiguously dominates unconditional liberalization by the large country as a way of boosting trade reforms and reinforcing policy credibility in the small country however if capacity in the import competing sector can only be reduced gradually a conditional reciprocal agreement may require an asynchronous exchange of concessions with the large country liberalizing before the small country

power in a theory of the firm transactions take place in the firm rather than in the market because the firm offers power to agents who make specific investments past literature emphasizes the allocation of ownership as the primary mechanism by which the firm does this within the contractibility assumptions of this literature we identify a potentially superior mechanism the regulation of access to critical resources access can be better than ownership because i the power agents get from access is more contingent on their making the right investment and ii ownership has adverse effects on the incentive to specialize the theory explains the importance of internal organization and third party ownership

factors influencing willingness to pay for the energy star label abstract in the united states nearly 17 of greenhouse gas emissions come from residential energy use increases in energy efficiency for the residential sector can generate significant energy savings and emissions reductions consumer labels such as the us environmental protection agency s energy star promote conservation by providing consumers with information on energy usage for household appliances this study examines how the energy star label affects consumer preferences for refrigerators the results of an online survey of a national sample of adults suggest that consumers are on average willing to pay an extra 249 82 349 30 for a refrigerator that has been awarded the energy star label furthermore the results provide evidence that respondent willingness to pay was motivated by both private energy cost savings and public environmental benefits

network access and market power abstract we use cooperative game theory to study the impact of the liberalization of eu natural gas markets on the balance of power between local champions customers and outside producers such as russian gazprom we calibrate a model of the eurasian gas network and distinguish between two steps of the reform first the opening of access to transit pipes and second the opening of access to distribution systems hence customers using the shapley value as a power index we find a modest and rather heterogeneous impact from the first step the impact of the second step is much larger and yields a clear pattern all local champions lose while all customers and all outside players gain as one third of the losses of champions within eu leaks to players abroad current reforms might enhance the dominance of already powerful outside producers when network power is assessed with the nucleolus in contrast full liberalization of access to customers does not benefit outside producers at all

imperfect competition and returns to scale in a newly industrialising economy a general equilibrium analysis of korean trade policy abstract a general equilibrium analysis of industrial protection in korea is presented using a model which incorporates imperfect competition and scale economies the results suggest that in spite of the strong performance of the korean economy significant additional income of about 7 of gdp might have been generated via lengthened production runs and increased labour productivity in manufacturing had less distortionary policies been used some of the observed distortions may however have been essential to sustain stable political coalitions while this has not been taken into account the analysis nevertheless lends support to the view that industrial organisation is particularly important in analysing trade reforms in newly industrialising countries even though the best reforms are still those which balance incentives within and across sectors

value consistency and random coalition formation abstract given an n player cooperative game and a feasible age n vector suppose that the players in a cooperative game are randomly split into two coalitions each with a randomly chosen leader the two leaders bargain bilaterally and each pays out of his share a wage to each member of his coalition as specified by the wage vector the wage vector is said to be consistent with the above procedure if it is equal to the ex ante expected payoff vector we prove that if all 2 coalition partitions are equally likely and if the bilateral bargain splits the surplus equally then the unique consistent payoff vector is the shapley value an equivalent consistency result holds for partitions with more than two elements these results are related to gul s 1989 result on noncooperative implementation of the shapley value journal of economic literature classification number 026

liberalization growth and structural change evidence from nepalese manufacturing this paper presents an empirical analysis of the consequences of liberalization on industrial structure in nepal a least developed country with weak institutions and severe infrastructure bottlenecks results suggest some structural change in manufacturing output and trade orientation which appears to be due to a change in incentive structure but no significant improvements were recorded in total factor productivity growth which is of central importance for a least developed country like nepal export intensity rose significantly in the postliberalization period despite poor productivity performance of export oriented industries while import intensity fell due mainly to improved competitiveness in import competing industries and a fall in imports for smuggling to india

critical survey endogenous growth theory a critical assessment a critical assessment is made of endogenous growth theory from the perspective of recent developments within economics as a discipline these include its increasing mathematical formalisation its focus upon microfoundations the casual use of econometrics to test models and the incorporation of factors that have traditionally been outside mainstream economics it is found that the theory focuses upon market imperfections and technological progress in a variety of ways and reconstructs their impact upon the macroeconomy as a growth rather than as a level effect whilst the growth rate is endogenised this leads to the problem of multiple equilibria and extremely complex dynamics the generalisation from exogenous growth theory is however associated with even more extreme assumptions and analytical distance from the socioeconomic processes of growth itself copyright 2000 by oxford university press

the impact of structural adjustment programs on manufacturing lessons from nicaragua abstract since 1988 nicaragua has applied structural adjustment programs including stabilization and liberalization measures as of 1991 these measures succeeded in combating inflation but they did not lead to increased production nor to an improved trade balance the nicaraguan manufacturing sector was especially vulnerable because of a decade long lack of investment and the non market environment in which firms operated in the 1980s the combination of trade liberalization with an overvalued exchange rate and financial liberalization had in particular negative effects on manufacturing production and investment in addition specific industrial policies are necessary to increase manufacturing competitiveness

the benefits of integrating european electricity markets this paper builds on and extends work under contract ener b1 491 1 2012 published as newbery et al 2013

openness and the market friendly approach to development learning the right lessons from development experience abstract two central policy issues in economic development today are how open should a developing country be to the world economy and what should the government do or not do to promote rapid growth this paper examines these questions in relation to the highly successful east asian countries and contributes to the debate between world bank and heterodox economists the paper suggests that there has been significant convergence between the two schools on analytical and empirical issues but not on policy it takes this debate further by analyzing the principal issues still in contention

a network game analysis of strategic interactions in the international trade of russian natural gas through ukraine and belarus abstract natural gas is an important source of relatively low emission low cost non nuclear and abundant energy however the difficulty of storage and transportation adds geopolitical and geostrategic complexity to its international trade much of the global natural gas trade occurs through natural gas pipelines which as an infrastructure is strictly specific to the transportation of natural gas therefore the very structure of natural gas pipeline networks can dictate the strategic relationship among countries involved in its trade this paper applies a network game model where these pipeline networks are modeled as graphs and respective value functions and employs the link based flexible network allocation rule developed by jackson 2005 as a solution concept to measure the relative power structure among these natural gas trading countries the paper analyzes the case of trade between russia ukraine belarus and western europe and compares the results to existing analyses that employ a cooperative game model in characteristic function form and the shapley value as the solution concept whereas the results of the analysis conducted in the previous literature indicate that russia s relative power was significantly stronger than other players both before and after the construction of the nord stream pipeline the results provided in this paper draw a different conclusion ukraine s relative power was already equal to that of russia before the nord stream this may be understood as one of the underlying causes for the prolonged conflicts that occurred repeatedly in this region concerning natural gas trade

why does the law of one price fail an experiment on index mutual funds we conduct an experiment to evaluate why individuals invest in high fee index funds in our experiments subjects allocate 10 000 across four s p 500 index funds and are rewarded for their portfolio s subsequent return subjects overwhelmingly fail to minimize fees we can reject the hypothesis that subjects buy high fee index funds because of bundled non portfolio services search costs for fees matter but even when we eliminate these costs fees are not minimized instead subjects place high weight on annualized returns since inception fees paid decrease with financial literacy interestingly subjects who choose high fee funds sense they are making a mistake

should the fiscal powers of the northern ireland assembly be enhanced abstractshould the fiscal powers of the northern ireland assembly be enhanced regional studies northern ireland has been characterized by an inability to narrow the persistent economic gap relative to britain some commentators have suggested that regional corporation tax variation may be the game changer in closing this gap this paper draws on a range of studies that help one better understand the historical and institutional context however the analysis of tax variation is broader than this consideration is given as to which taxes might be the most suitable candidates for devolution while greater tax variations could certainly complement an emphasis on increased competitiveness aimed at improving economic outcomes they are no substitute for such a focus as is often the case in institutional and economic development issues of sequencing and policy capacity are salient

south african manufacturing industries catching up or falling behind this article argues that intra industry trade with developed countries is an important source of technology transfer south africa has an industrial structure that is suited to such trade but high costs and weak social capacity to assimilate new technology therefore reintegration into the world economy is likely to reinforce dependence on resource intensive industries in the short run this need not adversely affect economic growth but unless the quality and quantity of education and training are improved the prospects for rebuilding the technological capacity and catch up with oecd countries are bleak

monitoring motivation and management the determinants of opportunistic behavior in a field experiment economic models of incentives in employment relationships are based on a specific theory of motivation employees are rational cheaters who anticipate the consequences of their actions and shirk when the marginal benefits exceed costs we investigate the rational cheater model by observing how experimentally induced variation in monitoring of telephone call center employees influences opportunism a significant fraction of employees behave as the rational cheater model predicts a substantial proportion of employees however do not respond to manipulations in the monitoring rate this heterogeneity is related to variation in employee assessments of their general treatment by the employer jel d2 j2 l2 l8 m12

openness and the finance growth nexus abstract rajan and zingales 2003 hypothesize that openness trade and financial is a crucial determinant of financial development the main policy implication emerging from this hypothesis is that openness should be promoted as a means of facilitating economic growth through financial development while subsequent research confirms that openness affects financial development we study whether finance continues to be growth promoting as economies become increasingly open a key implicit assumption behind the policy recommendation using data from 78 economies for the period 1981 2006 we find that very high levels of financial openness generally erode the growth promoting role of financial development while high trade openness strengthens it these worldwide findings by and large hold for subsamples of sub saharan african latin american and oecd economies notable exceptions are the invariance of the finance growth fg nexus on trade openness in oecd economies and the positive effect of financial openness on the fg link in latin american economies

knowledge is less power experimental evidence from residential energy use abstract imperfect information about product attributes inhibits efficiency in many choice settings but can be overcome by providing simple low cost information we use a randomized control trial to test the effect of high frequency information about residential electricity usage on the price elasticity of demand informed households are three standard deviations more responsive to temporary price increases an effect that is not attributable to price salience conservation extends beyond pricing events in the short and medium run providing evidence of habit formation and implying that the intervention leads to greenhouse gas abatement survey evidence suggests that information facilitates learning jel d12 d83 l11 l94 q41 q54

booming sector and de industrialisation in a small open economy this paper presents a theoretical analysis of the dutch disease the phenomenon whereby a boom in one traded goods sector squeezes porfitability in other traded goods sectors both by directly bi

theories of institutions and economic reform in africa abstract the paper presents and critically examines the theories of institutions that can be used as a guide to economic reform in africa three approaches to institutions are initially discussed the model of structural adjustment new institutional economics and the old institutionalist tradition five institutions related to the development of markets in africa are examined from the three perspectives the institutions include property rights including their role in agriculture money and financial institutions prices and markets firms and industrial organization and markets and states the main conclusion of the paper is that structural adjustment due to its neoclassical roots is basically ainstitutional and therefore ill equipped to promote the development of markets in africa while new institutionalism provides interesting insights it is also limited by its neoclassical economic foundations thus if african governments desire to promote market reform they would be best advised to consult the old institutionalist literature particularly the very interesting recent work of proponents of this tradition

the value of the voting right a study of the milan stock exchange experience i study the large premium 82 percent attributed to voting shares on the milan stock exchange the premium varies according to the ownership structare and the concentration of the voting rights and it can be rationalized in the presence of enormous private benefits of control a case study seems to indicate that in italy private benefits of control can easily be worth more than 60 percent of the value of nonvoting equity a tentative explanation for these findings is provided traditional finance theory disregards the value of voting rights in pricing common stock in most cases this omission does not seem harmful many studies of differential voting stocks in different countries have indicated that voting rights are generally worth between 10 percent and 20 percent of the value of common stock the italian evidence i present differs sharply from this view in italy voting shares that have inferior dividend rights trade at an average premium

quality ladders and product cycles we develop a two country model of endogenous innovation and imitation in order to study the interactions between these two processes firms in the north race to bring out the next generation of a set of technology intensive products each product potentially can be improved a countably infinite number of times but quality improvements require the investment of resources and entail uncertain prospects of success in the south entrepreneurs invest resources in order to learn the production processes that have been developed in the north all r d investment decisions are made by forward looking profit maximizing entrepreneurs the steady state equilibrium is characterized by constant aggregate rates of innovation and imitation we study how these rates respond to changes in the sizes of the two regions and to policies in each region to promote learning

tagging and targeting of energy efficiency subsidies corrective taxation is a common approach to addressing externalities internalities and other market distortions these distortions are often heterogeneous for example some cars pollute more than others and many people consume alcohol rationally even as present biased individuals might over consume such heterogeneity raises the question of whether a corrective tax is well targeted does it primarily affect individuals subject to relatively large distortions a tax set at the average level of the distortion could actually reduce welfare if the marginal individuals were already making relatively undistorted decisions this paper studies the targeting of corrective subsidies for energy ef cient durable goods such as air conditioners insulation and cars these subsidies are justi ed by multiple distortions primarily including environmental externalities credit constraints landlord tenant information asymmetries imperfect information and behavioral biases such as inattention to energy costs allcott and greenstone 2012 gillingham newell and palmer 2009 we rst argue that these distortions are heterogeneous on observables wealthy people are less credit constrained homeowners are unaffected by the landlord tenant problem and we show empirically that environmentalists are more attentive to energy costs and believe that energy ef cient goods save more money we then show that

the role of information and social interactions in retirement plan decisions evidence from a randomized experiment this paper analyzes a randomized experiment to shed light on the role of information and social interactions in employees decisions to enroll in a tax deferred account tda retirement plan within a large university the experiment encouraged a random sample of employees in a subset of departments to attend a benee ts information fair organized by the university by promising a monetary reward for attendance the experiment multiplied by more than e ve the attendance rate of these treated individuals relative to controls and tripled that of untreated individuals within departments where some individuals were treated tda enrollment e ve and eleven months after the fair was signie cantly higher in departments where some individuals were treated than in departments where nobody was treated however the effect on tda enrollment is almost as large for individuals in treated departments who did not receive the encouragement as for those who did we provide three interpretations differential treatment effects social network effects and motivational reward effects to account for these results

what drives natural gas prices a structural var approach abstract in this study we develop a structural vector autoregressive model var for the german natural gas market our setup allows us to analyze the determinants of the natural gas price in a comprehensive framework in particular we illustrate the usefulness of our approach by disentangling the effects of different fundamental influences on gas prices during three recent supply interruptions the russian ukrainian gas dispute of january 2009 the libyan civil war in 2011 and the withheld russian exports in february 2012 our results show that the natural gas price is affected by temperature storage and supply shortfalls in the short term while the long term development is closely tied to both crude oil and coal prices capturing the economic climate and the substitution relationship between the different energy commodities

quality disclosure and certification theory and practice this essay reviews the theoretical and empirical literature on quality disclosure and certification after comparing quality disclosure with other quality assurance mechanisms and describing a brief history of quality disclosure we address two sets of theoretical issues first why don t sellers voluntarily disclose through a process of unraveling and given the lack of unraveling is it desirable to mandate seller disclosure second when we rely on certifiers to act as the intermediary of quality disclosure do certifiers necessarily report unbiased and accurate information we further review empirical evidence on these issues with a particular focus on healthcare education and finance the empirical review covers quality measurement the effect of third party disclosure on consumer choice and seller behavior as well as the economics of certifiers jel d18 k32 l15 m31

optimal debt structure and the number of creditors within an optimal contracting framework we analyze the optimal number of creditors a company borrows from we also analyze the optimal allocation of security interests among creditors and intercreditor voting rules that govern renegotiation of debt contracts the key to our analysis is the idea that these aspects of the debt structure affect the outcome of debt renegotiation following a default debt structures that lead to inefficient renegotiation are beneficial in that they deter default but they are also costly if default is beyond a manager s control the optimal debt structure balances these effects we characterize how the optimal debt structure depends on firm characteristics such as its technology its credit rating and the market for its assets

the limits of trade policy reform in developing countries trade reform is now raising some new issues this paper deals with three sets of questions first how can trade reform be sustained can governments convince business labor or consumers that trade reform will be lasting so as to forestall possible adverse reactions that would jeopardize the sustainability of the reform second what role should trade reform play when it is implemented in the context of macroeconomic instability are there potential conflicts between the standard desiderata for trade reform and the requirements of macro stability finally should we be worried about the consequences of trade reform in the imperfectly competitive market environments that characterize the developing economies

conceptual issues in the design of trade policy for industrialization abstract this paper considers the following question starting from first principles what kind of a case can be made for an industry oriented trade policy and what would such a policy look like the answer lies in an explicit consideration of specific market failures and externalities which in the absence of corrective policies may leave industry in command of a socially suboptimal share of the economy s resources the paper considers such market failures and the role that trade policy can play in addressing them special attention is paid to a the appropriate level of protection b price versus nonprice measures c the role of targeting selectivity and uniformity d the stability of incentives over time and e the qualitative aspects of trade regimes

foreign direct investment inflows and the industrialization of african countries summary this paper examines the relationship between inward foreign direct investment fdi and the industrialization process in africa it uses panel data from 49 countries over the period of 1980 2009 the results indicate that fdi did not have a significant impact on the industrialization of these countries while other variables such as the size of the market the financial sector and international trade were important this study concludes that the role of fdi in the transformation agenda which is currently being discussed in africa should be carefully analyzed to maximize the impact of these capital inflows

determinants of efficiency in least developed countries further evidence from nepalese manufacturing firms using a translog stochastic production frontier and maximum likelihood econometric methods we estimate and model the determinants of firm level efficiency in the nepalese context our results are broadly in line with theoretical expectations we find that large firms are more efficient and that a higher capital intensity leads to inefficiency there is no statistical evidence to suggest that foreign participation leads to efficiency improvements also we do not observe any link between export intensity and efficiency improvement we find that higher protection leads to inefficiency overall our results suggest that an outward looking industrial strategy which relies on less intervention and permits the development of large scale industries is conducive to efficiency improvement in least developed countries ldcs like nepal

drivers of structural transformation the case of the manufacturing sector in africa abstract this paper analyzes the driving factors of manufacturing development in africa using the system gmm technique with four year average panel data over the period 1995 2014 including 53 african countries the paper finds four main results 1 there is a u shaped relationship between the manufacturing share of gdp and per capita gdp 2 exchange rate depreciation stimulates africa s manufacturing sector 3 good governance especially a low level of corruption and better government effectiveness contribute to africa s manufacturing development 4 the size of domestic market positively affects the manufacturing share of gdp on the other hand the paper finds no significant effects of fdi and urbanization on manufacturing development the implication of these findings is that improving the level of competitiveness expanding the size of domestic market combating corruption as well as improving government effectiveness are key for africa s manufacturing sector development moreover the u shaped relationship between the manufacturing share of gdp and per capita gdp implies that african countries should not expect industrialization to automatically happen with income increase but rather they should proactively tackle key obstacles to the development of the manufacturing sector

production and costs in the south african motor vehicle industry this study investigates the existence of economies of scale in the south african motor vehicle industry as well as the substitution possibilities between input pairs and the direct and cross price elasticities of demand for the various inputs because of data limitations a translog cost function was estimated for only a three input model corresponding to a homogeneous production function involving capital labour and intermediate goods the issue of the existence of economies of scale in the south african motor vehicle industry is a particularly important one because south africa once again is a member of gatt and a full participant in the international trade arena the null hypothesis of constant returns to scale was rejected at the 0 5 level of significance thus the results of this model are certainly consistent with economies of scale in the south african motor vehicle industry the estimated direct price elasticities were consistent with the hypothesis that during the past two decades capital wa

the fiscal impact of privatisation in latin america the goal of achieving fiscal balance through privatisation is misplaced because the revenues generated are rarely large or timely enough to bring the budget deficit under control in mexico argentina brazil and chile fiscal crisis preceded and encouraged the decision to privatise but only in argentina did the revenues from privatisation contribute significantly to fiscal adjustment the article develops a model incorporating time preferences and longer term fiscal impacts which shows that major fiscal benefits can be expected only under rare circumstances politicians continue to tout the fiscal benefits of privatisation perhaps to gain support or to signal their commitment to economic reform

the origins and sustainability of mexico s free trade policy standard explanations for trade liberalization do not fully account for mexico s turn toward free trade during the 1980s to a large extent the initiative came from within the country even many mexican entrepreneurs whose sectors seem likely to lose from increased competition now support trade liberalization four conditions lowered the political cost benefit ratio for policymakers and entrepreneurs first mexico s leaders dispersed implementation into several financial ministries thereby better insulating this policy from lobbying by the likely losers second potential losers were less well informed than were likely winners third under these conditions the liberal ideological biases of mexican elite policymakers and investors flourished prompting them to accept a higher political cost than would have been tolerated otherwise finally many mexicans came to perceive trade liberalization as a necessary tool in the fight against inflation each of these hypotheses however also flags a possible threat to the policy s future political survival

trade quotas and buyer power with an application to the e u natural gas market we consider a market in which domestic buyers negotiate contracts with foreign sellers and explore how trade quotas can help to increase the buyers countervailing power we use the shapley value to describe bargaining power and the distribution of the trade surplus in such a bilateral oligopoly by exploiting strategic externalities among the buyers bilateral trade quotas can improve the buyers bargaining positions in contrast aggregate trade restrictions on all buyers trade never improve buyer surplus minimum quotas on imports from fringe suppliers can benefit nonaffected buyers as these enjoy positive externalities we apply these insights to the e u market for natural gas and show that the effects of trade quotas on e u gas importers power can be significant

central asian gas in eurasian power game abstract following the dissolution of the soviet union various gas pipeline projects have been proposed to diversify transit routes and export markets of the landlocked central asian states to evaluate the pipeline project s impact on the players bargaining power i apply the cooperate game theory to a quantitative model of the eurasian gas trade and quantify the bargaining power structure via the shapley value due to ample production capacities in central asia i observe little strategic interaction between the west and china thus demand competition with china is not necessarily a disadvantage for the west and the turkmenistan china pipeline does not affect the impact of the westbound projects aiming europe and turkey for turkmenistan i e the main supplier in the region a link via the caspian sea to turkey is the most beneficial westbound option although the projects carrying gas from azerbaijan and turkmenistan to europe enjoy the european commission s political support they yield marginal benefits to the european consumers thanks to its transit position turkey collects a large share of the benefits in the east west gas trade