rankings methodology for international comparisons of institutions and individuals an application to economics in australia and new zealand abstract the objectives of this paper are threefold first we critically survey and analyse the different methodologies that have been adopted in the rankings literature second using journal articles included in the econlit database and on the basis of two criteria one based on citations and the other on perceptions of journal quality we rank economics teaching departments in australia and new zealand for 1988 2002 and 1996 2002 and for individual academic economists for the periods 1988 2002 1988 1995 and 1996 2002 furthermore we identify individual star performers and recognize them in a designated hall of fame for 1988 2002 third our methodology enables us to make international comparisons on total and per capita bases previous multi country ranking studies in economics do not rank economics departments they provide rankings based on total publications in economics in universities regardless of whether the economists are in the economics departments or in other departments thus no rankings on per capita bases are provided we correct this shortcoming by providing total and per capita rankings and analysing the correlations between total and per capita rankings this is the first study to examine whether the size of the economics department matters with regard to productivity

separation of powers and development abstract we model separation of powers as an instrument against corruption more specifically as a way to decrease the costs of collusion proofness then we show that the value of this institutional design is higher in developing countries unfortunately the same reasons which are behind this higher value also increase the implementation cost of this institution

toward a theory of regulation for developing countries following jean jacques laffont s lead the efficient operation and expansion of infrastructures in developing countries is crucial for growth and poverty reduction however recent reforms aimed at improving the performance of these sectors have had limited success evidence suggests that in many instances this was because the traditional regulatory theory relied on by policymakers was not suitable for the institutional context in developing countries this article surveys more recent theoretical work focusing on problems with regulation in these countries at the heart of the survey is the work of jean jacques laffont who in the last decade of his life set about developing a theoretical framework for regulation in developing countries we consider the implications of his work which focused on the key institutional limitations faced in developing countries we then discuss where experience suggests that there are important omissions from this modeling bringing in extensions and alternative approaches pursued by other authors we conclude by summarizing the key ways in which regulatory policy will be different when institutions are weak overall we find that an understanding of the institutional context and its implications are crucial when designing a regulatory framework for developing countries

on the robustness of alternative rankings methodologies australian and new zealand economics departments 1988 to 2002 just as friendly arguments based on an ignorance of facts eventually led to the creation of the definitive guinness book of world records any argument about university rankings has seemingly been a problem without a solution to state the obvious alternative rankings methodologies can and do lead to different rankings this article evaluates the robustness of rankings of australian and new zealand economics teaching departments for 1988 to 2002 and 1996 to 2002 using alternative rankings methodologies and compares the results with the rankings obtained by macri and sinha 2006 in the overall mean rankings for both 1988 to 2006 and 1996 to 2002 the university of melbourne is ranked first followed by uwa and anu

trends in rankings of economics departments in the u s an update economics departments in the u s are ranked based on 1 the number of pages published in thirty six economics journals 2 publications in five of the top journals 3 output per faculty member and 4 an index of the concentration of research in a department evidence shows that the top twenty departments have generally retained their positions since the 1970s but rather large changes have occurred in departments ranked from 240 to 100 an economists hall of fame is developed listing the top fifty individual producers of research in the thirty six journal set and the top five journals

competition among officials and the abuse of power traditional economic theory suggests that competition among officials providing government goods tends to reduce corruption however empirical evidence does not yet support this view in this paper i show that a corrupt and powerful central authority can use competition among officials to amass resources for itself while competition reduces corruption at the lower level of government corruption at the higher level of government is increased to avoid widespread theft from the central authority competing officials are monitored more intensively than a monopolist hence even though competition among officials generates more consumer surplus it may reduce welfare

corruption product market competition and institutional quality empirical evidence from the u s states this article argues that the effect of corruption on competition is dependent on the institutional environment when institutions are relatively efficient observed corruption is likely to be associated with relatively less competition conversely in areas with low quality institutions e g excessively burdensome regulations corruption may lead to relatively more competition i employ unique data on competition corruption and institutional quality across u s states from 1997 to 2009 and report that a higher level of corruption is associated with relatively more competition in states with low levels of institutional quality however as institutional quality improves the effect of corruption worsens thus institutional quality is a fundamental determinant of the corruption competition relationship improving institutional quality while at the same time reducing corruption will increase competition and likely improve economic outcomes jel d73 o17 l26

competition in bureaucracy and corruption abstract this paper studies the consequences of introducing competition between bureaucrats firms are supposed to invest into eliminating negative externalities of production while bureaucrats administer the process by issuing licences some bureaucrats are corrupt that is they issue a licence to any firm in exchange for a bribe the competition regime is found to create more ex ante incentives for firms to invest while the monopoly regime is better at implementing ex post allocation that is distributing the licences given the firms investment decisions additional results on the effect of punishments and bureaucrats rotation are provided

separation of regulators against collusive behavior we show that the separation of powers in regulation may act as a commitment against the threat of regulatory capture splitting regulatory tasks and monitoring technologies among several nonbenevolent regulators may reduce their discretion in engaging in socially wasteful activities when regulators make collusive offers that are accepted by the agent whatever his characteristics competition between regulators relaxes collusion proofness constraints and improves social welfare this result is robust to different specifications of the agent s preferences and to the timing of the game as long as one insists on safe side contracting offers we also discuss how separation affects both allocative efficiency and the distribution of rents in the economy

bribery inefficiency and bureaucratic delay abstract we examine bribery in a dynamic setting with a partially honest bureaucracy the presence of honest officials lowers the bribe that a corrupt official can extract from efficient applicants consequently efficient applicants may face delays in receiving licenses or may never receive licenses as inefficient applicants are serviced ahead of them an increase in the proportion of honest officials while directly increasing the incidence of socially optimal decisions can also induce greater inefficiencies misallocation and delay from corrupt officials as a result social welfare may be non monotonic in the proportion of honest officials and small differences in monitoring costs may lead to very different levels of corruption competition between officials can hurt efficiency its desirability depends on the prevalence of applicants ability to pay bribes

european economics an analysis based on publications in the core journals abstract in this paper we provide a ranking of european economics institutions and countries based on publications in a core set of 10 economic journals from 1991 to 1996 we find that the three leading universities in europe are the london school of economics tel aviv university and oxford university while the three top ranked countries are the u k france and israel

competition and the reform of incentive schemes in the regulated sector abstract we consider a regulation problem with complete contracting in a principal agent model with adverse selection and review within this model the various channels by which external competition parameters affect incentives within the regulated firm the channels are the principal s information the principal s objective function the agent s incentive constraint the agent s participation constraint we consider in particular a better information structure a threat of liquidation a fight for talent a more efficient private sector and the existence of better substitutes we characterize in each case the conditions under which the effect on incentives is positive

the interaction between forms of insurance contract and types of technical change in medical care a simple three parameter description of medical technology is introduced to investigate the relationships between technical change welfare and type of insurance contract the value of a particular change in technology depends on the existing form of contract the marginal equilibrium expected utility to consumers of different types of technical change hinges on the manner in which the insurance arrangement is designed to mitigate moral hazard these results open the way for a positive model of the effects of insurance arrangements on the types of technology that are adopted and the effects of technical changes on the prevalent forms of insurance contract

competition and corruption in an agency relationship abstract the paper reconsiders the relationship between competition and corruption in a model where corruption has solid informational foundations and where the regulatory response to the possibility of corruption is taken into account it is shown that the effect of greater competition on corruption depends on the complementarity or substitutability of the two instruments available to decrease information rents namely low powered incentives and greater competition the paper concludes with a brief empirical exploration of the relationship between competitiveness and corruption on african data

medical care costs how much welfare loss hardly a week goes by without a front page newspaper article on rising health care costs and the uninsured in this article i focus mainly on costs arguing that the issue has been somewhat misconceived while the level of medical care spending in the u s is a cause for concern the welfare losses associated with rises in that level of spending may not be as large as the public rhetoric can make them seem in fact cost containment may not be as urgent as is widely supposed and some proposed cost containment policies may result in welfare losses for the insured and even increase the number of uninsured

insurance and incentives for innovation in medical care economists have frequently pointed to the distorting effects of health insurance as a major contributor to rapidly increasing health costs relatively little is known however about the influence of changing medical technology on expenditures if increases in expenditures are in part the result of development of costly but worthwhile new technologies a common view among noneconomists failure to take account of this may lead to over statement of the distortive effects of insurance on the other hand some observers have questioned whether the benefits derived from expensive medical innovations always exceed the costs 18 others have suggested that resources devoted to the development of very expensive technologies might be better used for other kinds of medical research 16 3 in light of these arguments it appears that the relationships between medical insurance and technological change may be quite important if the extent of insurance coverage influences the rate and direction of technological change in medicine then the long run welfare effects of insurance are more complex than current models 5 6 allow it is sometimes argued informally that such an influence existsthat the presence of insurance biases the system toward innovations that expand capabilities while increasing expenditures and away from those that reduce costs 15 20 such a hypothesis has however never been developed as an implication of a formal economic model even the term bias in the argument is unclear it appears to be used in a normative sense but it has not been explained clearly why such a bias if it exists leads to welfare losses even if it is true for example that the presence of insurance leads to the adoption of a more costly mix of medical innovations than would otherwise occur this is not obviously undesirable to facilitate the purchase of costly but beneficial medical care is the purpose of insurance this paper defines bias in technological change in a normative sense it employs a simple model of insurance and profit maximizing innovators and develops sufficient

medical insurance technological change and welfare concerns have been expressed about the welfare effects of expensive innovations in medical care financed largely through medical insurance this paper develops a model which considers such issues it is shown that even if insurance is purchased optimally subject to a plausible constraint on the form of the contract innovations may be adopted that have the effect of reducing expected welfare the question of how the benefits of medical innovations ought to be measured in the presence of insurance is also explored

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

the relative impacts of economics journals 1970 1990 our data collection and database assembly efforts were assisted by john p sophocleus mark gwartney michele butler and scott ralston we received extremely valuable computer programming assistance from jon brunson and edward novak constructive comments were receivedfrom two anonymous reviewers financial supportfrom the faculty development committee at salisbury state university is gratefully acknowledged

corruption and market competition evidence from post communist countries summary this paper empirically examines whether market competition is associated with greater bribe payments we use firm level data from the business environment and enterprise performance surveys since market competition could be endogenous and some firms report zero bribes we employ a tobit estimation methodology instrumenting for market competition we find that greater market competition increases the amount of bribes paid results are robust across several measures of market competition however market competition is less strongly associated with bribes in the presence of other obstacles of doing business that could also lead to more bribes

corruption and competition in procurement abstract we consider a procurement problem in which the procurement agent is supposed to allocate the realization of a project according to a competitive mechanism that values bids in terms of the proposed price and quality potential bidders have private information about their production costs since the procurement agent is also in charge of verifying delivered quality in exchange for a bribe he can allow an arbitrary firm to be awarded the realization of the project and to produce a quality level lower than that announced we compute equilibrium corruption and we study the impact on corruption of the competitiveness of the environment and in particular of i an increase in the number of potential suppliers of the good or service to be procured and ii an increase of competition in the market for procurement agents we identify the effects that influence equilibrium corruption and show that contrary to conventional wisdom corruption may well be increasing in competition

the politics of government decision making a theory of regulatory capture the paper develops an agency theoretic approach to interest group politics and shows the following 1 the organizational response to the possibility of regulatory agency politics is to reduce the stakes interest groups have in regulation 2 the threat of producer protection leads to low powered incentive schemes for regulated firms 3 consumer politics may induce uniform pricing by a multiproduct firm 4 an interest group has more power when its interest lies in inefficient rather than efficient regulation where inefficiency is measured by the degree of informational asymmetry between the regulated industry and the political principal congress

optimal health insurance and provider payment the authors derive optimal insurance for patients and payment method for physicians when neither the input decided by the patient quantity of treatment nor the input decided by the physician effort are contractible the equilibrium in this third best regime may sometimes be second best in which both the physician input and the report of treatment are verifiable otherwise truthful reporting forces a third best characterized by provider prospective payment and suboptimal effort while consumers demand becomes excessive the authors also analyze how professional ethics alters the equilibrium finally collusive reporting mechanisms imply more stringent constraints while competition among physicians relaxes them copyright 1997 by american economic association

politics and administration this paper develops a theory of the eectiveness of government programs in the model a bureaucrat chooses a mechanism for assigning a good such as a license or a benet payment to a client of uncertain qualications the mechanism uses a means test to verify the client s eligibility a politician who values the payos of a subset of client types exercises oversight by designating the resources available for means testing and the population of clients that can be served the model makes predictions about common administrative pathologies including inecient and politicized distribution of resources program errors and backlogs when the politician favors marginally qualied clients programs will tend to be universal with low per capita spending and high error rates when the politician favors highly qualied clients programs have smaller client populations higher per capita spending and lower error rates notably the bureaucrat can only use discriminatory testing in the latter case and programs with larger budgets do not spend more per client

physician reimbursement and technology adoption this study analyses the incentives of health care providers to adopt new technologies in a world with ex post moral hazard it is shown that in a second best efficient world with respect to insurance coverage a linear remuneration scheme implements the adoption of second best efficient technologies only in special cases under a third best standard coinsurance contract the adequate reimbursement rule is characterised depending on the characteristics of the technology and on patients demand elasticities with respect to monetary and non monetary costs a shift from fee for service to capitation is likely to display undesirable incentives for very severe illnesses by inducing a reduction in the technically feasible level of healing or an increase in non monetary costs of treatment

taxes and bribery the role of wage incentives this paper presents a simple model to evaluate alternative payment schemes for tax inspectors in the presence of corruption we consider problems of both moral hazard which arises because taking bribes cannot be observed without costly monitoring and adverse selection since not all potential tax inspectors can be identified as being honest or dishonest we identify three wage regimes first one could pay the same wage that a tax inspector could earn elsewhere his reservation wage second one could pay a wage which solves the moral hazard problem i e deters bribery this we call an efficiency wage by analogy with recent models examined i n macro economics third the government could pay a wage below the reservation wage at which only the dishonest become tax inspectors the capitulation wage we make precise the conditions under which each yields the greatest amount o f tax revenues net o f administrative costs many countries in the developing world are undergoing structural adjustment programmes which require fundamental fiscal changes outside agencies advise restoration of budget balance a task which involves expenditure cuts and tax increases the treatment of public employee pay scales often poses a particular dilemma i n this process wages and salaries are a significant component of government expenditures and one important question concerns the extent to which wages rather than employment cuts should be used to save money there is sometimes a reluctance to advocate wage cuts stemming in part from a feeling that this might impair the performance of the public sector hence tanzi 1990 argues that a policy of wage cutting is likely to increase the inefficiency of public sector employees especially at a time when the public sector is expected to play a larger role in restructuring the economy p 16 in the context of tax collection the issue is particularly pressing given the need to raise more tax revenues a reduction in efficiency in this branch of the government i s likely t o mean that fewer returns are processed and when individuals living standards are squeezed their incentive to accept bribes in lieu o f collecting taxes i s increased o n this count i t i s even sometimes suggested that wages of tax inspectors should be increased to aid the effort to the comments of henry bienen john hey and two anonymous referees have been helpful in revising this paper the authors are also grateful t o the john m olin program for the study o f economic organization and public policy at princeton university and the pew charitable trusts for financial support mclaren also acknowledges support from the international finance section of princeton university none of the above should be implicated in any way see for example goode 1984 chapter 1 3 and gould and amaro reyes 1983

choosing agents and monitoring consumption a note on wealth as a corruption controlling device there are a large number of cases where corruption has been discovered when investigating levels of consumption that appear to be hard to justify the informativeness of an agent s level of consumption depends on his legal income and initial level of wealth as conspicuous consumption by wealthy agents leads to little updating of the principal s belief about their honesty this introduces a tendency to prefer poor agents as they are easier to monitor more generally we describe the basic problem of choosing agents and monitoring consumption with the aim of reducing corruption and discuss features of the practical applications castrated slaves called eunuchs were employed by sultans to guard their harems this solution to a particularly distressing principal agent problem is one instance of a general strategy that can be called choosing agents in this strategy the principal selects an agent to whom he is about to delegate a task based on an observable characteristic in the standard agency model it is clear that the agent s degree of risk aversion can be costly to the principal perhaps because of the difficulty in observing risk aversion few economists have emphasised the potential benefits of using particular types of agents an exception is schelling 1960 who discusses the use of agents with a low personal cost of conflict and mentions the strategic advantages of delegating authority to a military commander of known motivation a subsequent paper by vickers 1985 emphasises the potential value of hiring a manager who is committed to maximise the company s sales instead of profits similarly rogoff 1985 analyses the benefits of delegating the conduct of monetary policy to a conservative central banker in a setting where there is time inconsistency while rotemberg and saloner 2000

does competition kill corruption corrupt agents officials or gangsters exact money from firms corruption affects the number of firms in a free entry equilibrium the degree of deep competition in the economy increases with lower overhead costs relative to profits and with a tendency toward similar cost structures increases in competition may not lower corruption the model explains why a rational corrupt agent may extinguish the source of his bribe income by causing a firm to exit assessing the welfare effect of corruption is complicated by the fact that exit caused by corruption does not necessarily reduce social welfare