prices and the winner s curse we usually assume that increases in supply allocation by rationing and exclusion of potential buyers reduce prices but all these activities raise the expected price in an important set of cases when common value assets are sold furthermore when we make the assumptions needed to rule out these anomalies for symmetric buyers small asymmetries among the buyers necessarily cause the anomalies to reappear our results help explain rationing in initial public offerings and outcomes of spectrum auctions we illustrate our results in the wallet game and in another new game we introduce the maximum game

almost common values auctions revisited in almost common value auctions one bidder the advantaged bidder has a valuation advantage over all other regular bidders it is well known that in second price auctions with two bidders even a slight private value advantage can have an explosive effect on auction outcomes as the advantaged bidder wins all the time and auction revenue is substantially lower than in a pure second price common value auction we explore the robustness of these results to the addition of more regular bidders in second price auctions and the extent to which these results generalize to ascending price english auctions in an effort to provide insight into when and why one ought to be concerned about such slight asymmetries

using stochastic frontier analysis to measure the impact of weather on the efficiency of electricity distribution businesses in developing economies abstract this paper analyses the influence of weather variables on the efficiency of electricity distribution companies in argentina brazil chile and peru covering 82 firms which represent more than 90 percent of the distribution market of energy delivered for the period 1998 2008 stochastic frontier analysis sfa is applied using a translog input distance function two different approaches are evaluated weather in the production function and weather in the inefficiency term the efficacy of one over the other is determined using nested models weather data are collected from meteorological stations 429 and nasa 3423 coordinates a geographic information system gis is used for locating the firms service areas and their weather conditions a combination of cost only and cost quality models is proposed for cost only models the results suggest that on average there is a significant increase in measured efficiency when weather is incorporated in the production function under the cost quality models on average the effect of weather is much lower this suggests that firms have internalised the effects of weather and have adapted their networks to the environment in which they operate a company level analysis indicates that across models a significant number of companies are affected by weather regulators are advised to make proper adjustments of efficiency scores when specific firms face important efficiency changes due to weather

individual risk in an investment based social security system this paper examines the risk aspects of an investment based defined contribution social security plan we focus on the risk after the plan is fully phased in individuals deposit a fraction of wages to a personal retirement account pra invest these funds in a 60 40 equity debt mix and in a similarly invested annuity at age 67 the value of the assets follows a random walk with mean and variance of a 60 40 equity debt portfolio over the period 1946 95 a mean log return of 5 5 percent net of administrative costs of 0 4 percent and a standard deviation of 12 5 percent we study he stochastic distributions of this process by doing 10 000 simulations of the 80 year experience of the cohort that reached age 21 in 1998 the resulting annuities are compared to the future defined benefits specified in current law the benchmark benefits with no uncertainty a 5 5 percent log return would permit the benchmark benefits to be purchased with pra deposits of 3 1 percent of payroll only one sixth of the pay as you go tax needed for the benchmark benefits saving a higher share of wages provides a cushion that protects the individual from the risk of an unacceptably low level of benefits for example pra deposits of 6 percent of wages reduces the probability that the benefits are less than the benchmark to 0 17 and the probability that they are less than 61 percent of the benchmark to 0 05 pra deposits of 9 percent of wages half of the tax rate required in a pay as you go system would substantially reduce these risks this pure investment based plan is an extreme case the investment risk can be reduced further by using a mixed system that combines pay as you go and investment based components or that makes intergenerational transfers conditional on the performance of stock and bond prices this abstract was borrowed from another version of this item

alternative regulatory methods and firm efficiency stochastic frontier evidence from the u s electricity industry the use of incentive regulation and other alternative regulatory programs in u s electricity markets has grown during the past two decades within a stochastic frontier framework i investigate the effect of individual programs on the technical efficiency of a large set of coal and natural gas generation units i find that those programs tied directly to generator performance and those that modify traditional fuel cost pass through programs to provide a greater incentive to reduce fuel costs are associated with greater efficiency levels other programs have no statistical association with efficiency levels

second price common value auctions under multidimensional uncertainty the literature has demonstrated that second price common value auctions are sensitive to the presence of asymmetries among bidders in a two bidder model bikhchandani 1988 reputation in repeated second price auctions j econ theory 46 97 119 has shown that if it is common knowledge that one bidder has a disadvantage compared to her opponent that bidder almost surely never wins the auction employing a similar two bidder model this paper shows that this result does not carry over when one allows for two sided uncertainty in such case in every equilibrium the disadvantaged type bidder needs to win the auction with strictly positive probability we then solve for the equilibria in two cases one with two types and another with a continuum of types and we show that they converge to the symmetric equilibria of the corresponding symmetric auctions we thus reestablish a lost linkage in the analysis of common value and almost common value auctions

idiosyncratic risk aggregate risk and the welfare effects of social security we ask whether a pay as you go financed social security system is welfare improving in an economy with idiosyncratic productivity and aggregate business cycle risk we show analytically that the whole welfare benefit from joint insurance against both risks is greater than the sum of benefits from insurance against the isolated risk components one reason is the convexity of the welfare gain in total risk the other reason is a direct risk interaction which amplifies the utility losses from consumption risk we proceed with a quantitative evaluation of social security s welfare effects we find that introducing an unconditional minimum pension leads to substantial welfare gains in expectation even net of the welfare losses from crowding out about 60 of the welfare gains would be missing when simply summing up the isolated benefits

value for money german local government efficiency in a comparative perspective in this article we investigate the cost efficiency of german local governments in the state of baden wurttemberg in 2004 using a stochastic frontier approach besides being the first study on german data we add two elements to the literature first we provide a comparative perspective allowing us to embed our results in the broader literature second unlike most previous studies we explicitly account for exogenous or nondiscretionary influences when estimating municipal efficiency scores the results suggest that disregarding such exogenous factors can lead to significant and systematic bias in the estimated inefficiency levels particularly underestimation of efficiency occurs for municipalities with high tourist activity while the reverse is true for municipalities with high unemployment

funded pensions and intergenerational and international risk sharing in general equilibrium we explore intergenerational and international risk sharing in a general equilibrium multiple country model with two tier pensions systems the exact design of the pension system is key for the way in which risks are shared over generations the laissez faire market solution fails to provide an optimal allocation because the young cannot share in the financial risks however the existence of wage indexed bonds combined with a pension system with a fully funded second tier that pays defined wage indexed benefits can reproduce the first best if wage indexed bonds are not available mimicking the first best is not possible except under special circumstances we also explore whether national pension funds want to deviate from the first best by increasing domestic equity holdings with wage indexed bonds this incentive is absent while there is indeed such an incentive when wage indexed bonds do not exist

optimal bidding in auctions from a game theory perspective abstract the game theoretic perspective in auction bidding has provided a powerful normative framework for the analysis of auctions and it has generated an impressive volume of research contributions tracing this research we review key recent advances which have greatly expanded our understanding of the operation of auctions and produced a more accurate analysis of mechanism design and optimal bidding we follow various experimental studies which have shown that the predictive power of auction theory remains in many cases limited for this reason we concentrate on research themes which enhance the applicability of auction theory leading to more realistic descriptions of bidding behaviors we identify important innovations which expand the environment of auction bidding and carry us beyond rational decision making we conclude providing directions of future research and discussing their implications

on the value of competition in procurement auctions it is commonly stated that ascending price or second price auctions allocate goods e ciently to those who value them most this implies that the more bidders at the auction stage the more e cient the nal allocation we review this statement when bidders have private information both on a private element and a common element while the nal allocation need not be ex post e cient we show that when bidders are ex ante symmetric more competition at the auction yields higher e ciency on expectation when bidders are ex ante asymmetric in particular with respect to the information on the common element the statement need no longer be true

foreign direct investment spillovers and technical efficiency in the indonesian pharmaceutical sector firm level evidence the spillovers of foreign direct investment fdi on domestic firms performances have been highly debated for many years this article contributes to this debate by analysing spillovers effects on technical efficiency of indonesian pharmaceutical sector using a unique unbalanced panel of highly disaggregated at five digit international standard industrial classification isic 210 firms over the period 1990 1995 1001 observations the stochastic production frontier spf and the data envelopment analysis dea based on malmquist productivity indices mpi have been used to test the spillovers effects of fdi on technical efficiency the empirical results from the spf show that foreign firms are more efficient than domestic competitors and the presence of the former increases the inefficiency of the latter similarly the results from the mpi demonstrate that fdi has a negative and significant impact on technical efficiency changes in domestic competitors but generate positive spillovers to domestic s

are disadvanteged bidders doomed in ascending auctions a bidder is said to be advantaged if she has a higher expected valuation of the auction prize than her competitor when the prize has a common value component a bidder competing in an ascending auction against an advantaged competitor bids especially cautiously and hence the advantaged bidder wins most of the time however contrary to what is often argued a disadvantaged bidder still wins with positive probability even if his competitor s advantage is very large and even if the disadvantaged bidder has the lowest actual valuation ex post therefore the disadvantaged bidder has an incentive to participate in the auction and the presence of a bidder with a small advantage does not have a dramatic effect on the seller s revenue

the effect of bidders asymmetries on expected revenue in auctions abstract bidders asymmetries are widespread in auction markets yet their impact on behavior and ultimately revenue and profits is still not well understood this paper defines a natural benchmark auction environment to which to compare any private values auction with asymmetrically distributed valuations the main result is that the expected revenue from the benchmark auction dominates that from the asymmetric auction both in the first price auction and the second price auction moreover for classes of distributions that lend themselves to a quasi ordering of more or less asymmetric configurations we prove that the expected revenue is lower the more asymmetric bidders are these results formalize the idea that competition is reduced by bidders asymmetries applications to merger analysis joint bidding and investment are discussed

a portfolio approach to the optimal mix of funded and unfunded pensions abstractin this paper we address the optimal funding of pensions by means of portfolio choice approach considering the unfunded paygo pension system as a quasi asset with hedging and diversif

designing social security a portfolio choice approach public social security systems may provide diversification of risks to individuals life time income capturing that a pay as you go program paygo may be considered as a quasiasset we study the optimal size of the social security program as well as the optimal split between a funded part and a paygo part by means of a theoretical portfolio choice approach a low yielding paygo system can benefit individuals if it contributes to hedge other risks to their lifetime resources moreover a funded part of the social security system can be justified by potential imperfections to the individuals free access to the stock market numerical calculations for sweden norway the us and the uk demonstrate that the optimal size of paygo part of the pension program varies considerably in response to differences in projected growth rates and the correlation between stock returns and growth our calculations suggest that a paygo program has an important role in the three former countries but not in the u k

the missing piece in policy analysis social security reform this lecture discusses the economic losses that result from an unfunded social security retirement system and the potential gain from shifting to a funded system the social security payroll tax distorts labor supply and the form in which compensation is paid although each individual s benefits are linked to that individual s previous payroll tax payments the low equilibrium rate of return inherent in an unfunded system implies a net payroll tax that causes distortions the resulting deadweight loss is 1 of each year s gdp in perpetuity an amount equal to 20 of payroll tax revenue and a 50 increase in deadweight loss of the personal income tax also there is the loss of investment income resulting from forcing employees to accept the low implicit return of an unfunded program rather than the much higher return paid on private saving or in a funded social security program the present value of the annual losses from using an unfunded system exceeds the benefit to those who received windfall transfers when the program began and when it expanded shifting to a funded program cannot reverse the crowding out of capital that has already occurred recognizing the existing unfunded obligation only makes that piece of the national debt explicit but shifting to a funded program limits crowding out of capital formation to the amount that already occurred future increases in annual saving that result from economic growth are able to earn the higher rate of return on real capital the present value of these gains is equivalent to a perpetuity of more than 2 of gdp a year the combi nation of improved labor market incentives and higher real return on saving has a net present value gain of more than 15 trillion an amount equivalent to three percent of each future year s gdp forever this abstract was borrowed from another version of this item

intergenerational risk sharing abstract in this paper we examine government debt and tax transfer policies that can be improve the allocation of risk between generations markets cannot allocate risk efficiently between two generations whenever the two generations are not both alive prior to the occurence of a stochastic event this implies that government policies transferring risk between generations have the potential to create first order welfare improvements our model provides a non keynesian justification for the debt finance of wars and recessions as well as an added rationale for social security type tax transfer schemes which aid unlucky generations e g the depression generation at the expense of luckier generations

pensions and intergenerational risk sharing in general equilibrium we investigate intergenerational risk sharing in two pillar pension systems with a pay as you go pillar and a funded pillar the funded pension pillar can be either defined contribution or defined benefit only a defined benefit scheme with an appropriate investment policy establishes optimal intergenerational risk sharing we show how the pension system affects capital markets in general and the equity premium in particular

efficiency gains from port reform and the potential for yardstick competition lessons from mexico abstract this paper shows how measures of relative efficiency performance could promote yardstick competition between port infrastructure operators the illustration is based on a study of the efficiency effects of the mexican 1993 port reform it covers 1996 99 and relies on a stochastic production frontier to show that mexico s ports achieved 2 8 3 3 average annual efficiency gains since reform the port specific measures point to consistent leaders and laggards which would not all be identified by common partial productivity indicators this information could be built into an explicit incentive based regulatory regime aiming at promoting catch up by laggards

a women s boom in the boardroom effects on performance this article analyzes whether improving gender diversity in boardrooms improves firms economic performance in the context of french cac40 listed companies between 2008 and 2012 this research uses instrumental variable panel regressions including production frontier estimates to arrive at two key results first gender diversity in boards depends on firms attributes including their previous gender promotion strategies second promoting women in boardrooms has a significant and positive effect on economic performance after accounting for the endogeneity of diversity gender diversity even reduces corporate inefficiencies and enables firms to come closer to their optimal performance

voluntary participation and intergenerational risk sharing in a funded pension system we explore the feasibility of a funded pension system with intergenerational risk sharing when participation in the system is voluntary typically the willingness of the young to participate depends on their belief about the future young s willingness to do so we characterise equilibria with voluntary participation and show that the likelihood of their existence increases with risk aversion and financial market uncertainty we find that mandatory participation is often necessary to sustain a funded pension pillar and to let participants benefit from intergenerational risk sharing

examining the relationship between default risk and efficiency in islamic and conventional banks we examine the relationship between efficiency and default risk in islamic banks ibs and conventional banks cbs in gulf cooperation countries gcc and three non gcc countries over the period 2002 2010 to the best of our knowledge this is the first study to consider the efficiency default risk paradigm in a comparative setup which includes ibs efficiency and default risk are measured using the stochastic frontier approach and distance to default merton s model respectively the existence of causality reverse causality between the two is addressed via a panel vector auto regression var framework our analysis shows that the relationship between profit efficiency and default risk banks across the sample for cbs and for the gcc is such that a decrease in default risk is associated with lower efficiency levels with the single exception of ibs the causality from profit efficiency to default risk is inversely related for all categories for cbs the trade off between efficiency and risk is evident the absence of a trade off for ibs suggests that efficiency and default risk are plausible early warning indicators of ib instability these findings could be of relevance to regulators in countries where both banking system co exist

reputation in repeated second price auctions abstract a model in which two bidders take part in a series of second price comon value auctions is examined the question of an optimal auction from an auctioneer s standpoint in a repeated auction setting is partially addressed it is shown that the results from single auction models do not carry over to repeated auctions when one of the bidders is endowed with a reputation for bidding aggressively second price auctions with two bidders are highly susceptible to manipulative behaviour by an aggressive bidder and yield much lower revenues to the auctioneer

a rational economic model of paygo tax rates abstract we argue that paygo rates are determined by a representative agent and a benevolent government jointly maximizing the expected life time utility of the agent the distributions of labor and capital income are calculated from national data on real gdp real wages and the real return to capital since 1950 with uniform risk aversion predicted rates explain 83 of the variance of observed rates the globalization of capital markets would lead to convergence of paygo rates our results are immune to crises like 2008

the impact of ownership on the cost of bus service provision an example from italy this article examines the potential impact of ownership on the cost of bus service provision for a sample of 65 private and 12 public companies providing local public transit lpt in piedmont italy from 1998 to 2002 a translog cost frontier is estimated using the model in battese and coelli 1995 where inefficiency scores are allowed to vary across firms and over time a public ownership dummy is included in the inefficiency model and it is always positive and significant density and scale economies and cost inefficiencies are then computed private companies seem to experience higher density and scale economies than public ones cost inefficiencies appear higher in the public sample

farmers health and agricultural productivity agriculture is one of the most hazardous productive sectors around the world most previous studies have focused on health issues of farmers in developing countries while little attention has been paid to farmers health problems in developed countries the present study assesses the effect of farmers health conditions on agricultural productivity in norway employing stochastic frontier regression techniques we conclude that differences in farmers health help to explain the variance in agricultural production efficiency

determinants of bank cost efficiency in transition economies evidence for latin america central and eastern europe and south east asia in this study we adopt wang s 2002 heteroscedastic stochastic frontier model which allows us to investigate bank cost efficiency and to measure the marginal effects of some variables on both the level and the variability of inefficiency in recent years the financial crisis has significantly affected the banking systems of the transition countries hence the efficiency is of major importance for the stability of the banks regarding the determinants of efficiency we find evidence that banks that follow a more cautious strategy characterized by lower risk appetite and average expectations on profitability have higher cost efficiency we also find that traditional deposit taking and loan making still remain the most efficient activity of the banks additionally the results showed that a higher gross domestic product growth rate implies an increase in the inefficiency level indicating an unsustainable bank management behaviour which in periods of economic growth adopts policies that can generate

propagation and smoothing of shocks in alternative social security systems abstract even with well developed capital markets there is no private market mechanism for trading between current and future generations this generates a potential role for public old age pension systems to spread economic and demographic shocks among different generations this paper evaluates how different systems smooth and propagate shocks to productivity fertility mortality and migration in a realistic olg model we use reductions in the variance of wealth equivalents to measure performance starting with the existing u s system as a unifying framework in which we vary how much taxes and benefits adjust and which we then compare to the existing german and swedish systems we find that system design and shock type are key factors the german system and the benefit adjustment only u s system best smooth productivity shocks which are by far the most important shocks overall the german system performs best while the swedish system which includes a buffer stock to relax annual budget constraints performs rather poorly focusing on the u s system reliance solely on tax adjustment fares best for mortality and migration shocks while equal reliance on tax and benefit adjustments is best for fertility shocks

political intergenerational risk sharing abstract in a stochastic two period olg model featuring an aggregate shock to the economy ex ante optimality requires intergenerational risk sharing we compare the level of intergenerational risk sharing chosen by a benevolent government and by an office seeking politician in our political system the transfer of resources across generations is determined as a markov equilibrium of a probabilistic voting game low realized returns on the risky asset induce politicians to compensate the old through a payg system this political system typically generates an intergenerational risk sharing scheme that is i larger ii more persistent and iii less responsive to the realization of the shock than the social optimum this is because the current politician anticipates her transfers to the elderly to be compensated by future politicians through offsetting transfers and hence overspends

the optimal mix between funded and unfunded pension systems when people care about relative consumption the paper studies the optimal portfolio mix between funded and unfunded pension systems when people care about relative consumption in pay as you go systems with fixed contribution rates pensions are tied to wages this lowers the uncertainty of individuals future relative position thereby increasing the attractiveness of unfunded systems the paper shows analytically that the optimal share of funding decreases with the importance of relative standing a calibrated version of the model suggests that the concern for relative standing has also a quantitatively important impact on the optimal share of funding for reasonable assumptions it is typically around 20

a generalized production frontier approach for estimating determinants of inefficiency in u s dairy farms this article investigates farm level efficiency of u s dairy farmers by estimating their technical and allocative efficiency technical inefficiency is assumed to be composed of a deterministic component that is a function of some farm specific characteristics and a random component by doing this we extend the stochastic frontier methodology in which determinants of technicial inefficiency are explicitly introduced in the model given the inputs variations in efficiency of farms are then explained by both deterministic and random components of technical inefficiency the empirical results indicate that a levels of education of the farmer are important factors determining technical inefficiency and b large farms are more efficient technically than small and medium sized farms both technical and allocative inefficiency are found to decrease with increase in the level of education of the farmer

can the small dairy farm remain competitive in us agriculture smaller dairy farms in the us are observed to have higher costs than larger farms and whether those higher costs are due to technology or inefficiency has implications for policy to address the small farm if high cost of production on smaller farms is due to a higher cost frontier then to make small farms competitive would require research to devise and design technology that is suitable for small farms if instead high cost is due to inefficiency then educational approaches are needed to ensure small dairy farms use technology efficiently to determine the cause of higher costs on small farms the cost of milk production by farm size was decomposed into frontier and efficiency components with a stochastic cost curve using data on usa dairy farms although the frontier cost of production decreases with farm size that cost reduction is not as pronounced as a cost curve that includes inefficiency the higher cost of production on many smaller farms is caused by inefficiency rather than technology

intergenerational risk sharing and endogenous labour supply within funded pension schemes funded defined benefit pensions add to welfare on account of providing intergenerational risk sharing but lower it on account of inducing labour supply distortions we show that a properly designed funded defined benefit pension scheme involves a welfare improvement even if contributions are distortionary and even if individuals face potentially correlated wage and equity risks numerical calculations indicate that diversification gains from risk sharing are large compared to the losses related to labour supply distortions this result withstands a number of extensions like the introduction of a short sale constraint for individuals or the inclusion of a labour income tax

on the estimation of technical and allocative inefficiency using stochastic frontier functions the case of u s class 1 railroads in this paper the author considers specification and estimation of technical and allocative inefficiency in a cost minimizing framework using panel data some distinguishing features of the model are 1 the functional form of the production technology is flexible enough to allow elasticity to vary across firms 2 allocative inefficiency coming from managerial errors ou t of inertia ignorance etc are separated from random errors in optimization 3 the panel nature of the data allows the estimation of input and firm specific allocative inefficiency together with technical inefficiency and 4 subdivision of the sample period allows one to make efficiency comparisons of each firm over the subperiods and to check the stability of the parameter estimates copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

the influence of public subsidies on farm technical efficiency a robust conditional nonparametric approach the objective of this paper is to assess the influence of public subsidies on farm technical efficiency using recent advances in nonparametric efficiency analysis to this end we use robust conditional frontier techniques as well as insights from recent developments in nonparametric econometrics the paper contributes to the ongoing methodological discussion on how to model the effect of public subsidies on farmers production decisions the analysis is conducted using an unbalanced panel data of 1604 observations from 313 french farms located in the french region meuse over the period 2006 2011 the estimates indicate that public subsidies influence negatively the conditional technical efficiency of farms this suggests that public subsidies affect both the range of the attainable set for the inputs and outputs and the distribution of the efficiency scores inside the attainable set

social security taxation and intergenerational risk sharing the life cycle hypothesis has become the dominant mode used to analyze the effects of a social security system on private saving the labor leisure choice and social welfare as both barro and samuelson indicate a fully funded social security program in a world of certainty would drive out an equivalent amount of private saving if the interest rate is r the effects of a payment of a dollar into the social security pool while young would just offset the effects of receiving 1 r dollars as a transfer when retired papers by diamond hi and samuelson among others have examined the effects of non fully funded social security schemes in a growing economy a non fully funded program can be used to alter the private sector s saving rate and hence the capital labor ratio social security then can be used as a policy tool for achieving the or some variant of the golden rule growth path this abstract was borrowed from another version of this item

pension reform during the demographic transition the aim of this paper is to quantify the welfare effects of some currently discussed pension reform proposals in germany the analysis is based on an extended overlapping generations model which accounts for intra generational heterogeneity rising life expectancy and declining fertility given a baseline path of the economy under the existing unfunded pension system the model calculates the macroeconomic impact as well as the distributional and efficiency effects of various pension reform measures aimed at reducing the level of the future unfunded pension system simulations reveal that pension reforms cannot be evaluated solely in terms of inter and intra generational equity substantial efficiency gains or losses might arise if the linkage between contributions and benefits is improved or weakened

corruption and inefficiency theory and evidence from electric utilities we investigate the determinants of the efficiency of firms with a focus on the role of corruption we construct a simple theoretical model where corruption increases factor requirements of firms because it diverts managerial effort away from factor coordination we then exploit a unique dataset comprising firm level information on 80 electricity distribution firms from 13 latin american countries for the years 1994 to 2001 as predicted by the model we find that more corruption in the country is strongly associated with more inefficient firms in the sense that they employ more inputs to produce a given level of output the economic magnitude of the effects is large the results hold both in models with country and firm fixed effects the results survive several robustness checks including different measures of output and efficiency and instrumenting for corruption other elements associated with inefficiency are public ownership inflation and lack of law and order but corruption appears to play a separate and more robust role

bidding to lose auctions with resale a losing bidder can still purchase the prize from the winner after the auction we show why a strong bidder may prefer to drop out of the auction before the price has reached her valuation and acquire the prize in the aftermarket a strong bidder may be in a better bargaining position in the aftermarket if her rival won at a relatively low price so it can be common knowledge that in equilibrium a weak bidder will win the auction and even without uncertainty about relative valuations resale will take place the possibility of reselling to a strong bidder attracts weak bidders to participate in the auction and raises the seller s revenue

reforming social security assessing the effects of alternative funding strategies population ageing implies that the large pay as you go social security programmes implemented in many oecd economies will run into severe financial problems by means of a numerical overlapping generations model this paper investigates the intergenerational welfare effects of a transition to funded security programmes such programmes imply permanent increases in the welfare of the young and unborn generations it is demonstrated that the size of the welfare gains varies significantly between alternative funding strategies a nonindividualized funding strategy characterized by increased government asset accumulation triggers considerable welfare gains through increased asset returns in the future even larger welfare gains may be realized by an individual funding strategy characterized by increased asset accumulation accompanied by an adoption of actuarial supplementary pensions i e actuarial supplementary pensions combined with a fixed minimum pension which reduces future tax distortions drastically

how not to run auctions the european 3g telecom auctions abstract there were enormous differences in the revenues from the european third generation 3g or umts mobile phone license auctions from 20 euros per capita in switzerland to 650 euros per capita in the uk though the values of the licenses sold were similar poor auction designs in some countries facilitated collusion between firms and failed to attract entrants the sequencing of the auctions was also crucial we discuss the auctions in the uk netherlands germany italy austria switzerland belgium greece and denmark

intergenerational risk sharing pensions and endogenous labour supply in general equilibrium we show that a two tier pension system with a pay as you go first tier and a fully funded defined wage indexed second tier can provide for optimal intergenerational risk sharing without distorting the labour supply thereby achieving the first best other arrangements with a fully funded second tier fail to achieve the first best

risk sharing and efficiency implications of progressive pension arrangements the present paper aims to quantify the welfare effects of progressive pension arrangements in germany starting from a purely contribution related benefit system we introduce basic allowances for contributions and a flat benefit fraction since our overlapping generations model takes into account variable labor supply borrowing constraints as well as stochastic income risk we can compare the labor supply the liquidity and the insurance effects of the policy reform our simulations indicate that for a realistic parameter combination an increase in pension progressivity would yield an aggregate efficiency gain of more than 2 percent of resources however such a reform would not be implemented because it would not find political support of the currently living generations

investment climate and firm productivity an application to vietnamese manufacturing firms abstractthe fundamental aspect of a national competitive advantage is a good investment climate understanding the role of the investment climate in generating firm productivity has received extensive attention by policymakers and economists in many countries the article studies the effect of different dimensions of the investment climate on firm productivity using a large dataset of vietnamese manufacturing firms the article finds that deficiencies in the investment climate are prejudicial to firm productivity and competition furthermore in examining the effect of corruption in association with the quality of the business environment the study also investigates the possibility that corruption may compensate firms for a bad investment climate or at least may neutralize the negative impact of inefficient government regulations in other words corruption acts as speed money to improve the efficacy of the provision of public services or provides leeway for entrepreneurs to bypass the inefficient reg

the measurement and sources of technical inefficiency in the indonesian weaving industry production function models are estimated with a time series of cross section data on indonesian weaving establishments the sources of technical inefficiency are investigated three firm attributes are identified as being potentially related to firm efhciency tbey are firm ownership age and size the importance of these attributes as sources of inefficiency in the indonesian weaving industry is investigated and the implications of the find ings discussed

savings for retirement under liquidity constraints a note pension systems often entail some compulsory saving over which individuals have some degree of choice in terms of the pension plan in which to invest we analyse whether the choice between alternative plans is affected by the presence of liquidity constraints during working life and we prove that the analytical conditions that determine the choice between different plans are the same in the constrained and unconstrained case

the determinants of the cost efficiency of electric generating plants a stochastic frontier approach this article provides a detailed analysis of generation plant operating cost efficiency over the period 1988 1997 i estimate a stochastic frontier cost function together with a model of plant inefficiencies to measure the operating efficiencies of individual plants and identify factors that are associated with variations in plant efficiencies i find evidence that plant efficiencies are associated with capacity utilization of the plant the number of plants under utility management and ownership form i also find that regulatory restructuring activity in certain states is associated with improvements in plant operating performance the purpose of this article is to provide a detailed analysis of the operating cost efficiencies of electricity generating plants over the period 1988 1997 i estimate the operating efficiencies of fossil fueled steam generating plants and examine factors that influence plant operating performance i use the estimation procedure of battese and coelli 1995 to simultaneously estimate a stochastic frontier cost function and a function relating plant efficiency levels to plant specific factors and other explanatory variables a comprehensive data set allows me to investigate the influence of capacity utilization ownership form and utility experience on plant efficiency levels since significant regulatory change in the electricity industry had begun during this time period i also investigate the impact of state level regulatory change on plant operating efficiency a number of authors have analyzed the efficiencies of electricity generating plants relative to a best practice frontier including kopp and smith 1980 schmidt and lovell 1979 stevenson 1980 cote 1989 reifschneider and stevenson 1991 hammond 1992 pollitt 1995 and fire grosskopf and logan 1983 1985 these studies find considerable evidence of inefficiency in electricity generation during the 1960s and 1970s the present study provides more recent information regarding generating plant efficiencies during a period of significant regulatory and structural change studies investigating the determinants of power plant departures from the frontier have focused primarily on the effects of ownership mode pollitt 1995 provides a comprehensive review of these studies reifschneider and stevenson 1991 examine the impact on cost efficiency of a number of variables including the capacity utilization of the firm s generating facilities more recently knittel 2001 examines the impact of incentive regulation on plant efficiency levels steiner

productive efficiency of specialty and conventional coffee farmers in costa rica accounting for technological heterogeneity and self selection a steep decline in coffee prices at the producer level led to considerable pressure for farmers in costa rica and producer countries all over the world one possible reaction was moving to specialty markets where price pressure was perceived to be lower we use original survey data from 2002 2003 and 2003 2004 to analyze the factors influencing participation in specialty markets and to estimate separate production functions for specialty and conventional coffee farmers allowing for farm specific inefficiencies applying a sample selection framework we find significant selection bias in the sub sample of specialty farmers and evidence for the overestimation of efficiency if this bias is not adequately controlled for among the most important factors that influence farm specific efficiency levels in the two sub samples are the availability of additional income activities experience in coffee cultivation and membership in cooperatives based on the results we derive policy recommendations to improve farmers production performance and ability to cope with the effects of the coffee crisis these policy measures include the provision of extension services with respect to farm management skills the creation of income opportunities in rural areas and the support of farmer owned cooperatives

a portfolio approach to the optimal funding of pensions abstract fully funded pension systems are advocated for their higher rate of return but this return is typically risky using a simple mean variance model we find that mixed funded unfunded systems are desirable in this setting because they enable risk diversification

estimating the potential for electricity savings in households abstract improving efficiency in the use of energy is an important goal for many nations since end use energy efficiency can help to reduce co 2 emissions furthermore since the residential sector in industrialised countries requires around one third of the end use electricity it is important for policy makers to estimate the scope for electricity saving in households to reduce electricity consumption by using appropriate steering mechanisms we estimate the level of technical efficiency in the use of electricity using data from a swiss household survey we find an average inefficiency in electricity use by swiss households of around 20 to 25 bottom up economic engineering models estimate the potential in switzerland to be around 15 in this paper we use a sub vector input distance frontier function based on economic foundations our estimates lie at the upper end of the electricity saving potential estimated by the afore mentioned economic engineering approach

stock market wealth and consumption this paper explores the link between changes in the aggregate value of corporate stock and changes in consumer spending it presents data on the distribution of corporate stock ownership based on the 1998 survey of consumer finances it also uses time series evidence on the comovement of stock market wealth and various categories of consumer spending to calibrate the wealth effect it concludes that in the year after a change in stock market values consumer spending is likely to rise by between one and two cents for each dollar increase in the value of corporate stock

the effects of investing social security funds in the stock market when fixed costs prevent some households from holding stocks with fixed costs of participating in the stock market consumers with high income will participate in the stock market but consumers with lower income will not participate if a fully funded defined contribution social security system tries to exploit the equity premium by selling a dollar of bonds per capita and buying a dollar of equity per capita consumers who save but do not participate in the stock market will increase their consumption thereby reducing saving and capital accumulation calibration of a general equilibrium model indicates that this policy could reduce the aggregate capital stock substantially by about 50 cents per capita