adverse selection and moral hazard with risk neutral agents abstract this paper surveys some recent developments of the literature on adverse selection and moral hazard in agency problems it is concerned with the case where both aspects coexist and both agents are income risk neutral it shows that in most cases the moral hazard aspect does not entail welfare losses compared to the pure adverse selection case it moreover analyses different ways using a single contract or a family of contracts of deriving the optimal contracts from the optimal pure adverse selection solution

generalized models of japanese demand for fish given a relative lack of knowledge about japanese consumer preferences for fish japanese fish demand is modeled using both marshallian ordinary and inverse demand systems each of which nests a number of competing specifications results indicate that the inverse demand systems dominate the ordinary demand systems in forecasting performance and in nonnested tests the inverse system suggests that japanese fish prices are less responsive to changes in consumption than found in previous studies

buyer collusion and efficiency of government intervention in wheat markets in northern india an asymmetric structural auctions analysis this paper uses auction theory to analyze wholesale markets for wheat in northern india this approach enables us not only to characterize the market in terms of buyer asymmetries but also to detect the existence of collusion and to quantify its impact on market prices we show that buyer asymmetries exacerbate the downward impact of collusion on prices the paper also demonstrates the use of auction theory to analyze questions of government efficiency it considers whether the government paid too much for the wheat it procured at the minimum support price and shows that for our sample it did not the paper is based on a primary survey of two wholesale markets in north india

an inverse demand system for new england groundfish welfare analysis of the transition to catch share management the welfare effects of the 2010 transition from days at sea to catch share management in the northeast u s groundfish fishery are examined by combining a model of groundfish demand with a simulation based model of supply counterfactual supply is constructed based on the days at sea system that was recalibrated to meet mandated conservation goals due to the decreases in catch that were required to meet those goals the 2010 policy undoubtedly resulted in worse outcomes for both producers and consumers compared to 2009 however the conservation equivalent days at sea system would have been far worse for both consumers and producers copyright 2013 oxford university press

the logic of political violence this paper offers a unified approach for studying political violence whether it emerges as repression or civil war we formulate a model where an incumbent or opposition can use violence to maintain or acquire power to study which political and economic factors drive one sided or two sided violence repression or civil war the model predicts a hierarchy of violence states from peace via repression to civil war and suggests a natural empirical approach exploiting only within country variation in the data we show that violence is associated with shocks that can affect wages and aid as in the theory these effects are only present where political institutions are non cohesive

price and quantity endogeneity in demand analysis evidence from directed acyclic graphs we propose to use the emerging method of directed graphs to study price quantity endogeneity issues in empirical demand analysis the approach is illustrated through the examination of u s meat consumption we find that for two major meat products beef and poultry retail prices contemporaneously caused quantities consumed thus were predetermined in contrast the quantity consumed of pork appeared to be predetermined relative to its price

farewell to confucianism the modernizing effect of dismantling china s imperial examination system abstract this study uses 1899 1908 prefecture level panel data to assess how the likelihood of passing the civil service examination affected modernization before and after the examination system s abolition because higher quotas were assigned to prefectures with an agricultural tax of over 150 000 piculs we use a regression discontinuity design to generate an instrument that resolves potential endogeneity and ensures robust results we find that following abolition prefectures with higher quotas of successful candidates tended to establish more modern firms and send more students for overseas study in japan a subsequent analysis using an individual dataset further shows that the skill level of these overseas students increased after abolition especially in regions with higher per capita quotas this finding implies that the examination system led to substantial misallocation of talents

a theory of political transitions we develop a theory of political transitions inspired by the experiences of western europe and latin america nondemocratic societies are controlled by a rich elite the initially disenfranchised poor can contest power by threatening revolution especially when the opportunity cost is low for example during recessions the threat of revolution may force the elite to democratize democracy may not consolidate because it is redistributive and so gives the elite an incentive to mount a coup highly unequal societies are less likely to consolidate democracy and may end up oscillating between regimes and suffer substantial fiscal volatility

differential consumer demand systems it is shown in this paper that several well known systems like the rotterdam model and the almost ideal demand system can be seen as different parametrizations of the budget share differential equation using a third parametrization a new system called the cbs system is developed and discussed special attention is given to the relative price version of the system and in particular to the special case of preference independence some estimates for the netherlands based on time series for 1953 1981 using various approaches are presented

push or pull performance pay incentives and information we study a principal agent model wherein the agent is better informed of the prospects of the project and the project requires both an observable and unobservable input we show 1 performance pay may not be optimal even if output is the only informative signal of an essential input 2 total surplus tends to be higher if one input is unobservable than if both inputs are observable and 3 bunching may arise amongst low and intermediate types we explore the implications for push and pull programs used to encourage r d activity but our results have applications beyond this context

generating enhanced fishery rents by internalizing product quality characteristics this paper demonstrates howadditional rents are generated in a fisherycharacterized by intraseasonal variation infish characteristics including size condition and composition based on anexpanded conceptual model of the optimalharvest rule fish characteristics affect preand post harvest production yields and outputprices a dynamic empirical model which uses asystem of quality characteristics and anhedonic equation illustrates the complexrelationships and management choices associatedwith internalizing seafood qualitycharacteristics in a hake fishery the modelretains the regulated open access managementsystem but controls intertemporal andintersectoral quotas production portfolios and total allowable catch results demonstratethat including revenue side effects frominternalizing fish quality can generatesignificantly greater rents and reduce therelative benefits of increased productionyields if excluded bioeconomic models canunderestimate the level of regulatory rentdissipation and overemphasize managementobjectives such as full utilization whichcould misdirect processing decisions and resultin a suboptimal resource management plan implications for data collection multidisciplinary analysis and improvements inmarine resource management are discussed

pricing of eco labels with retailer heterogeneity abstract eco labels are important features of many natural resource and food markets they certify that a product has some desirable unobserved quality typically related to a public good such as being sustainably produced two issues that have received limited attention are whether pricing varies across different eco labels that may compete with each other and to what extent different retailers charge different prices using a unique data set of salmon prices in eight different united kingdom retail chains we investigate these issues by estimating a price attribute model that includes two eco labels and one country of origin label results show substantial variation in the prices of the different eco labels and that eco label premiums vary across retail chains specifically salmon certified with the marine stewardship council msc label has a high premium in low end retail chains but no statistically significant premium in the high end chains these findings question the ability of the msc label to transmit consumer willingness to pay for public goods through the supply chain to incentivize sustainable management in contrast premiums for organic certification are similar in magnitude across retailer types in general failure to account for retailer heterogeneity will over or under estimate a label s premium

a varying coefficient approach to global flexibility in demand analysis a semiparametric approximation to reduce dimensionality issues this article derives a globally flexible demand system that can be estimated non parametrically with a specially devised temporal kernel statistical and economic results from a meat demand application underscores the usefulness of a temporal kernel in globally approximating an integrable demand system

estimating structural change with smooth transition regressions an application to meat demand this paper explores the role of structural change in systems of demand equations specifically we adapt the time varying regression framework of lin and terasvirta 1994 which in turn is related to the dynamic smooth transition models introduced by terasvirta 1994 unlike previous efforts at modeling structural change in demand systems we do not impose the nature of the change to be monotonic several non monotonic alternatives are considered an application is presented using the almost ideal inverse demand system iaids applied to u s meat demand data 1960 2004 results show the importance of modeling structural change and that moreover the best fitting model is associated with a form of symmetric non monotonic structural change

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

noisy observation in adverse selection models we consider a principal agent contracting problem under incomplete information where some of the agent s actions are imperfectly observable contracts take the form of reward schedules based on the noisy observation of the agent s action we first review situations where the principal can reach the same utility as in the absence of noise then we focus on the use of linear reward schedules which allow universal implementation i e implementation of a given mechanism for any unbiased noise of observation and on quadratic reward schedules which only require the knowledge of the variance of the noise we exhibit sufficient conditions under which linear reward schedules implement a given mechanism finally we characterize necessary conditions for a mechanism to be implementable under noisy observation by a linear schedule and by quadratic schedules we give the geometric intuition behind all results

individual preferences for political redistribution what drives people s support of governmental reduction of income inequality we employ data from a large international survey in order to evaluate the explanatory power of three competing forces referred to as the homo oeconomicus effect the public values effect and the social rivalry effect the empirical analysis reveals that at the aggregate level all three effects play a significant role in shaping individual preferences for political redistribution attitudes of citizens in formerly socialist countries turn out to differ from those of western citizens in a systematic way 2002 elsevier science b v all rights reserved

the local effects of an innovation evidence from the french fish market in this paper we investigate the effect on quality quantity and prices of an innovative fishing gear introduced for a subsample of vessels on a single wholesale fish market in france estimations are conducted using transaction data over the 2009 2011 period during which the innovation was introduced using a difference in differences approach around the discontinuity we find that for the treated the innovation has a large effect on quality 29 2 percentage points and prices 23 2 percentage points a shift in caught fish species is observed and new targeted species are fished very intensively we also quantify the treatment effect on the treated market from aggregate market data using factor models and a synthetic control approach we find a sizable effect of the innovation on market quality which is consistent with non treated vessels adapting their fishing practices to remain competitive the innovation has no effect on market quantities and prices

hedonic prices for fish tuna prices in hawaii over the past two decades the marketing of fish has recognized the importance of quality yet empirical analysis of market transactions could give us little insight into the value of different qualities of fish because market data are typically aggregated we exploit a dataset on the auction price of tuna sold in hawaii to estimate a hedonic model the model provides empirical estimates of price increments due to species quality of the fish such as size or fat content method of handling and market conditions the empirical results are also used to estimate price flexibilities for landings in hawaii

aggregation without separability composite commodity theorems in quantity space abstract in this paper we provide an obvious extension of the composite commodity theorems to the case of inverse demands where quantities and not prices can be used for aggregation first the hicks leontief commodity theorem is extended to the quantity space and then its generalised stochastic version is presented

a unique informationally efficient allocation mechanism in economies with consumption externalities this article investigates the informational requirements of resource allocation processes in pure exchange economies with consumption externalities it is shown that the distributive lindahl mechanism has a minimal informational size of the message space and thus it is informationally the most efficient allocation process that is informationally decentralized and realizes pareto efficient allocations over the class of economies that include nonmalevolent economies furthermore it is shown that the distributive lindahl mechanism is the unique informationally efficient decentralized mechanism that realizes pareto efficient and individually rational allocations over a certain class of nonmalevolent economies

flexible specification of mixed demand systems common flexible functional forms are not very useful for modeling mixed demand systems because derivation of mixed demands requires closed forms for both direct and indirect utility functions in this paper we study the alternative of using a direct approximation to mixed demands we develop a new approach to slutsky relations for mixed demand functions allowing formulation of a rotterdam mixed demand model the resulting mixed demand system is illustrated with an application to meat demand in canada

causality in demand a co integrated demand system for trout in germany this article focuses on causality in demand a methodology where causality is imposed and tested within an empirical co integrated demand model not prespecified is suggested the methodology allows different causality of different products within the same demand system the methodology is applied to fish demand on the german market for farmed trout and substitutes it is found that supply sources i e aquaculture and fishery are not the only determinant of causality storing tightness of management and aggregation level of integrated markets might also be important the methodological implication is that more explicit focus on causality in demand analyses provides improved information the results suggest that frozen trout forms part of a large european whitefish market where prices of fresh trout are formed on a relatively separate market redfish is a substitute on both markets the policy implication is that increased production of trout causes a downward pressure on fresh trout prices but froz

sealed bid auction of netherlands mussels statistical analysis this article presents an econometric analysis of the many data on the sealed bid auction that sells mussels in yerseke town the netherlands the goals of this analysis are obtaining insight into the important factors that determine the price of these mussels and quantifying the performance of an individual purchase manager besides a case study the article is a general study on the role of auctions in supply chains and on hedonic price factors

elite recruitment and political stability the impact of the abolition of china s civil service exam this paper studies how the abolition of an elite recruitment system china s civil exam system that lasted over 1 300 years affects political stability employing a panel data set across 262 prefectures and exploring the variations in the quotas on the entry level exam candidates we find that higher quotas per capita were associated with a higher probability of revolution participation after the abolition and a higher incidence of uprisings in 1911 that marked the end of the 2 000 years of imperial rule this finding is robust to various checks including using the number of small rivers and short run exam performance before the quota system as instruments the patterns in the data appear most consistent with the interpretation that in regions with higher quotas per capita under the exam system more would be elites were negatively affected by the abolition in addition we document that modern human capital in the form of those studying in japan also contributed to the revolution and that social capital strengthened the effect of quotas on revolution participation

instrument choice in a fishery abstract this paper considers the choice of regulatory instruments in a fishery fishing captains consumers and input suppliers each attempt to influence the regulator s choice of instruments the regulator chooses among instruments such as input restrictions entry restrictions or individual transferable quotas itqs regulatory instruments that result in zero fishery rents can only occur if the regulator places an extraordinary weight on the welfare of input suppliers relative to fishing captains and consumers indeed heterogeneity of fishing captains is neither necessary nor sufficient to obtain regulations that fail to generate fishery rents

on the design of incentive schemes under moral hazard and adverse selection abstract this paper characterizes a class of optimal incentive schemes in a simple principal agent model which allows for moral hazard and adverse selection we show that incentive compatible allocation can always be approximately implemented through a menu of quadratic incentive schemes it is also proved that the set of incentive compatible allocations is independent of the distribution of the additive uncertainty which affects the outcome informational requirements and economic interpretation of quadratic and linear schemes are discussed

price formation of fish an application of an inverse demand system inverse demand systems explain price variations as functions of quantity variations they have properties analogous to those of regular demand systems there are very few examples of their empirical application in part this is due to lack of data for which price is the decision variable and the quantity given the case of fish landed at belgian sea ports appears to suit an inverse demand system well a rotterdam variant of such a system in estimated allais interaction intensities have been derived and show a reasonable pattern

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

estimating market demand for fresh yam characteristics using contingent valuation implications for crop breeding and production choices this study uses the box cox bc transformations to examine nonlinearity in price modeling and compare results from several functional specifications in hedonic price analysis of yam in togo based on a sample of 6 402 observations on price and produce characteristics generated through a market experiment it is found that the bc quadratic asymmetric specification is the most suitable function several characteristics are valued more than others and prices vary across species time and market sites some residual symptoms of pest and disease damages on yam tubers reduce their market values tuber weight exhibits a diminishing marginal value and price per kilogram decreases above an optimum size therefore producers do not derive additional reward from extra large tubers we conclude that to effectively access and benefit from urban markets producers should focus on small size low weight and conical shaped tubers which are easy to process and meet the esthetic qualities preferred by urban consumers the implications for research on improved variety development to reduce poverty and for crop and resource management practices are drawn

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

multiproduct nonlinear pricing typically work on mechanism design has assumed that all private information can be captured in a single scalar variable this paper explores one way in which this assumption can be relaxed in the context of the multiproduct nonlinear pricing problem it is shown that the firm will choose to exclude some low value consumers from all markets a class of cases that allow explicit solution is derived by making use of a multivariate form of integration by parts in such cases the optimal tariff is cost based

global ex vessel fish price database revisited a new approach for estimating missing prices the global ex vessel fish price database ex vessel db reported in sumaila et al j bioecon 9 1 39 51 2007 was the first comprehensive database that presents average annual ex vessel prices for all commercially exploited marine fish stocks by nationality of the fishing fleet it contained over 30 000 reported price items covering the period from 1950 to the present and supplemented missing prices with estimates based on prices from a different year species group or fleet nationality this paper describes a revised missing price estimation approach focused on the computation of annual average international prices for each species group adjusted to domestic prices using the real exchange rate based on national purchasing power parity key advantages of the new approach are that it allows a larger number of reported prices to be used in the price estimation and accounts for relative price level differences that exist between countries our new approach should improve the estimates in regions where reported prices are scarce or non existent by linking domestic prices to the trends in international prices our analysis based on the revised ex vessel price estimates in real 2005 usd shows that the global marine fisheries landings have generated total value of usd 4 2 trillion since 1950 including usd 100 billion in 2005

affect or information labeling policy and consumer valuation of rbst free and organic characteristics of milk abstract using a labeling policy framework we answer the question of whether attitude has an impact on consumers valuation of rbst free and organic characteristics of milk we utilize 2 years of consumer survey data and a hedonic model to estimate marginal effects of attitude on consumer valuation of rbst free and organic milk findings indicate that in 2001 milk value was impacted by attitude regardless of whether attitude was measured using an opinion based or behavioral construct in 2004 the contribution of attitude to value was insignificant implications for labeling policy are discussed

the glittering prizes career incentives and bureaucrat performance bureaucracies are configured differently to private sector and political organizations across a wide range of civil services entry is competitive promotion is constrained by seniority jobs are for life and retirement occurs at a fixed age this implies that older entering officers who are less likely to attain the glittering prize of reaching the top of the bureaucracy before they retire may be less motivated to exert effort using a nationwide stakeholder survey and rich administrative data on elite civil servants in india we provide evidence that i officers who cannot reach the senior most positions before they retire are perceived to be less effective and are more likely to be suspended and ii this effect is weakened by a reform that extends the retirement age together these results suggest that the career incentive of reaching the top of a public organization is a powerful determinant of bureaucrat performance

wine prices and quality ratings a meta regression analysis this article examines the empirical support for the hypothesized hedonic theoretical relation between the price of wine and its quality the examination considers over 180 hedonic wine price models developed over 20 years covering many countries the research identifies that the relation between the price of wine and its sensory quality rating is a moderate partial correlation of 0 30 this correlation exists despite the lack of information held by consumers about a wine s quality and the inconsistency of expert tasters when evaluating wines the results identify a moderate price quality correlation which suggests the existence of strategic buying opportunities for better informed consumers strategic price setting possibilities may also exist for wine producers given the incomplete quality information held by consumers the results from the meta regression analysis point to the absence of any publication bias and attribute the observed asymmetry in estimates to study heterogeneity the analysis suggests the observed heterogeneity is explained by the importance of a wine s reputation the use of the 100 point quality rating scale the analysis of a single wine variety style and the employed functional form the most important implication from the analysis is the relative importance of a wine s reputation over its sensory quality inferring that producers need to sustain the sensory quality of a wine over time to extract appropriate returns the reputation of the wine producer is found not to influence the strength of the price quality relationship this finding does not contradict the importance of wine producer reputation in directly influencing prices

inverse demand systems and welfare measurement in quantity space most studies of welfare or cost benefit analyses are concerned with the welfare effects of price changes 11 19 27 33 50 there are however many situations in which policy options are directly related to quantity changes the welfare effects of price changes are analyzed with the traditional demand system in which commodity quantities are determined as functions of their prices the welfare effects of quantity changes on the other hand are associated with the inverse demand system in which commodity prices are dependent on their quantities in conventional welfare analysis of price change prices are taken to be exogenous or predetermined while quantities are endogenous in contrast in welfare analysis of quantity changes quantities are exogenous while prices are endogenous price based or dual welfare measures are relevant when there are well functioning competitive markets and quantities are fully adjusted to changes in prices on the other hand quantity based or primal welfare measures are useful in situations where there are constraints on commodity quantities or when transaction costs impede consumers from fully adjusting to changes in prices the choice between priceand quantity based welfare measures is empirical and proper measurement of welfare effects requires the knowledge as to which variable price or quantity is the exogenous one for individual consumers it may be reasonable to assume that the supply of commodities is perfectly elastic and therefore prices can be taken as exogenous but this assumption may not be tenable for consumers in the aggregate or if highly aggregated economy wide data are used to estimate demand relations at the aggregate level quantities are more properly viewed as exogenous than are prices although individual consumers make their consumption decisions based on given prices the quantities of commodities are predetermined by production at the market level and prices must adjust so that the available quantities are consumed 28 1 2

efficient estimation of hedonic inverse input demand systems this article is concerned with efficient estimation of characteristics demand we derive and estimate an inverse input demand system for quality characteristics by using 172 946 observations over 881 trading days in the icelandic fish auctions an improved estimation method based on an expanded random coefficient model is suggested as an alternative to the currently used two stage method of brown and rosen the estimates demonstrate the improved efficiency of the suggested method a number of empirical results emerge including a general increase in the demand for quality the purpose of hedonic price analysis is to determine how the price of a unit of a commodity varies with its characteristics that is to estimate the hedonic price function some recent examples of the estimation of hedonic price functions are nerlove combris lecocq and visser and mcconnell and strand however theory predicts that shifts in supply or demand affect the implicit price relationships between the overall price of the good and its individual characteristics and so we need to estimate the underlying demand and supply functions for the characteristics rosen developed a two stage method for analyzing hedonic markets in the first stage of this method the hedonic price function is estimated and in the second stage a system of demand and supply functions for characteristics is estimated using the shadow prices of the characteristics from the first stage as variables brown and rosen showed that this procedure could yield estimates of demand and supply functions that are mere transformations of the coefficients in the hedonic function they suggested the currently used two stage method using data from multiple markets this method utilizes the within market variation to iden

characteristics and hedonic pricing of differentiated beef demands we estimate a cbs system model of u s derived demand for meat we use this model 1 to examine relationships between three quality categories of beef and three other meats and 2 to simulate how taste shifts have affected demands for meats over time we extend previous studies by disaggregating wholesale beef production into three quality categories 1 usda choice grade or higher 2 usda select or lower and 3 cow and bull beef innovative features of our empirical model include a breakout of table cuts into choice and select and the use of a hedonic characterization of the two breakouts to value choice ness and beef ness our model demonstrates important shifts in separate demands for choice and select beef we show that separately the demand for choice grade beef declined in the 1980s and 1990s and the demand for select beef increased a departure from the relatively stable demand characterizations of more aggregated measures of combined choice and select beef jel classification q11 q13

preference variable impacts in direct and inverse differential demand systems preference variables are included in the inverse rotterdam model based on the tintner ichimura basmann relationship linking preference effects on quantities demanded to price effects and preference effects on marginal utilities restrictions are placed on the effects of the preference variables on the marginal utilities resulting in reductions in the parameter space for the preference variables in both direct and inverse demand systems the model is used to analyze impacts of product quality on fresh citrus demand

a precursor to muth tinbergen s 1932 model of rational expectations this paper describes a model published in 1932 in which explicitly rational expectations are used to study a dynamic problem of intertemporal inventory allocation the model is very similar to muth 1961 except that the stochastic process in the latter is serially correlated whereas in tinbergen s model the disturbances are serially uncorrelated hence tinbergen was able to solve a rational expectations model thirty years before muth s much more well known contribution copyright 1991 by royal economic society

multi task incentive contract and performance measurement with multidimensional types abstract this paper provides a new explanation for the dominance of the low powered incentive contract over the high powered incentive contract using a hybrid model of moral hazard and adverse selection we first show that unobservable risk aversion or cost leads to low powered incentives we then consider the case where both risk aversion and cost of the agent are unobservable to the principal this multidimensional mechanism design problem is solved under two assumptions with regard to the structures of performance measurement system and wage contract it is shown that if the deterministic and stochastic components of performance measures vary proportionally the principal is inclined to provide a low powered incentive contract moreover it is shown that if the base wage depends on a quadratic function rather than the direction of the performance wage vector no incentive is provided for most of the performance measures in an orthogonal performance measurement system