implications of ethnic diversity ethnically differentiated societies are often regarded as dysfunctional with poor economic performance and a high risk of violent civil conflict the author distinguishes between dominance in which one group constitutes a majority and fractionalization in which there are many small groups in terms of overall economic performance the research shows that both theoretically and empirically fractionalization is normally unproblematic in democracies although it can be damaging in dictatorships in terms of the risk of civil war the author shows that both theoretically and empirically fractionalization actually makes societies safer while dominance increases the risk of conflict a policy implication is that fractionalized societies are viable and secession should be discouraged

an economic or political kuznets curve this paper examines two closely related empirical hypotheses an economic kuznets curve and a political kuznets curve we find a robust inverted u relationship between income inequality and political development but not one between income inequality and economic development exploring the cross section aspect of the panel data we find that the economic kuznets curve is sensitive to different control specifications and to different functional specifications but the political kuznets curve is robust using dynamic panel data estimation we find that the economic kuznets curve does not hold up intertemporally while the political kuznets curve does

a general equilibrium analysis of the optimal number of firms in a polluting industry in partial equilibrium competitive models in which emissions are proportional to output the optimal output of individual firms in a polluting industry is the same with or without a pigouvian tax the same holds in general equilibrium only if the production function of those firms is homothetic the pigouvian tax increases the price of the polluting good reducing industry output and as a consequence the relative price of the input in which polluting firms are relatively intensive they will adjust their input ratios accordingly and if production functions are non homothetic this will either increase or decrease the level of output at which the total profit of the individual firm is zero une analyse en equilibre general du nombre optimal de firmes dans une industrie polluante dans les modeles concurrentiels en equilibre partiel la production optimale des firmes individuelles dans une industrie polluante est identique qu il y ait ou non une taxe a la pigou on obtient le meme rdsultat en equilibre general si la fonction de production de ces firmes est homothetique la taxe a la pigou augmente le prix du produit polluant reduit le niveau de production de l industrie et par voie de consequence le prix relatif de l intrant employe de fa9on relativement intensive par les firmes polluantes ces firmes vont ajuster les ratios d intrants en consequence si les fonctions de production ne sont pas homothetiques ces ajustements vont augmenter ou reduire le niveau de production qui correspond a un profit total nul pour la firme individuelle

pigou and coase in retrospect this paper documents through direct quotation and mathematical analysis the parallels between both the logic and the policy conclusions of a c pigou and r h coase it is shown that pigou s analysis encompasses the essential features of both the nature of the firm and the problem of social cost but more importantly pigou lays out the logical connection between the two an underlying theme is that particularly in the case of pigou much substance has been lost in mathematical translation had that substance not been forgotten the 1960 coase would not have had to attack pigou c 1993 academic press inc copyright 1993 by oxford university press

electoral institutions ethnopolitical cleavages and party systems in africa s emerging democracies do electoral institutions and ethnopolitical cleavages shape the structure the fragmentation or concentration of party systems separately or jointly if they shape the structure of party systems jointly how can this joint effect be theoretically specified and empirically tested if ethnopolitical groups and associated ethnopolitical cleavages are not primordially fixed but constructed in the course of social economic and political interactions as the accumulated findings of over three decades of comparative research on ethnopolitics attest how can constructed ethnopolitical groups be specified and associated eth

income distribution and macroeconomics this paper analyzes the role of wealth distribution in macroeconomics through investment in human capital it is shown that in the presence of credit markets imperfections and indivisibilities in investment in human capital the initial distribution of wealth affects aggregate output and investment both in the short and in the long run as there are multiple steady states this paper therefore provides an additional explanation for the persistent differences in per capita output across countries furthermore the paper shows that cross country differences in macroeconomic adjustment to aggregate shocks can be attributed among other factors to differences in wealth and income distribution across countries

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

the profits of power land rights and agricultural investment in ghana we examine the impact of ambiguous and contested land rights on investment and productivity in agriculture in akwapim ghana we show that individuals who hold powerful positions in a local political hierarchy have more secure tenure rights and that as a consequence they invest more in land fertility and have substantially higher output the intensity of investments on different plots cultivated by a given individual corresponds to that individual s security of tenure over those specific plots and in turn to the individual s position in the political hierarchy relevant to those specific plots

preferences for redistribution a country comparison of fairness judgements this paper seeks to explain within and between country variation in redistributive preferences in terms of self interest concerns and an input based concept of fairness which we examine by looking at the effects of beliefs regarding the causes of income differences results of estimations based on data for 25 countries indicate that both factors are indeed important determinants of redistribution support in line with hypothesised patterns we find that while differences in beliefs on what causes income differences seem to be important for explaining within country variation in redistributive preferences they do little to explain between country differences differences in the effects of holding certain beliefs however are important for explaining between country variation in redistributive preferences suggesting considerable heterogeneity across societies in what is considered as fair

institutions and the resource curse countries rich in natural resources constitute both growth losers and growth winners we claim that the main reason for these diverging experiences is differences in the quality of institutions more natural resources push aggregate income down when institutions are grabber friendly while more resources raise income when institutions are producer friendly we test this theory building on sachs and warner s influential works on the resource curse our main hypothesis that institutions are decisive for the resource curse is confirmed our results contrast the claims of sachs and warner that institutions do not play a role

evolutionary game theory game theory has been developed as a theory of rational behavior in interpersonal conflict situations with economics and the other social sciences being the intended fields of application since the theory is based on an idealized picture of human rationality it is by no means obvious that it can be applied to situations in which the players cannot be attributed any intellectual capabilities however in their seminal paper the logic of animal conflict maynard smith and price showed that animal contests can be modeled as games and that game theory can be applied successfully in biology the objective of this chapter is to review some of the developments in this biological branch of game theory and to point out the distinctions and similarities with the classical branch also see parker and hammerstein 1985 the main emphasis will be on the mathematics involved lack of space prevents an extensive discussion of the underlying biological assumptions as well as an analysis of specific examples for these the reader is referred to the very stimulating book evolution and the theory of games by john maynard smith

evolutionary stability in unanimity games with cheap talk abstract this paper studies a class of games of perfectly coinciding interests with a preplay communication stage added if messages are costless cheap talk there are inefficient nash equilibria even under communication however i show that only strategies that induce efficient outcomes are evolutionary stable

the limitations of pigouvian taxes as a long run remedy for externalities comment carlton and loury 1980 p 565 are the first to show that the competitive firm should operate in the range of decreasing returns to scale if the average pollution damage function is falling at the optimal output level or in the range of increasing returns if it is rising there is no reason however for them to conclude from their discovery that contrary to widely held beliefs use of a pigouvian per unit tax will not in general lead to an efficient allocation of resources in the long run p 559 c l prove that in general a tax upon the output of a polluting firm must be accompanied by a lump sum tax subsidy scheme this comment shows that a single per unit tax on emissions rather than output does lead to an efficient allocation of resources even where a single tax on output does not the model allows for emissions that are variable with respect to output as well as emissions that are independent of the level of output both of which cases are treated by c l c l p 560n observe that their results are unchanged if the problem is reformulated as one in which the number and output of firms of one industry affect the cost curves of other competitive industries following this suggestion a simple economy is assumed in which there are two industries whose total outputs x and y are produced by a variable and divisible number of firms n and m respectively the production of good y causes pollution that mixes uniformly throughout the airshed in which the economy is situated the total quantity of emissions per time period is

social divisions and institutions assessing institutional parameter variation this paper investigates the hypothesis that the association between property rights institutions and income is weaker in countries with high social divisions it argues that social divisions should have a negative effect on perceived institutional inclusiveness which in turn should depress institutional payoffs absent a property rights indicator that captures the perceived inclusiveness of institutions social divisions should then weaken the observed association between property rights institutions and income the empirical results support this hypothesis and highlight the importance of evaluating whether the institutions measure used captures the institutional framework applying to the population at large

an evolutionary approach to pre play communication we add a round of pre play communication to a finite two player game played by a population of players pre play communication is cheap talk in the sense that it does not directly enter the payoffs the paper characterizes the set of strategies that are stable with respect to a stochastic dynamic adaptive process periodically players have an opportunity to change their strategy with a strategy that is more successful against the current population any strategy that weakly improves upon the current poorest performer in the population enters with positive probability when there is no conflict of interest between the players only the efficient outcome is stable with respect to these dynamics for general games the set of stable payoffs is typically large every efficient payoff recurs infinitely often

cheap talk coordination and entry we show how costless nonbinding nonverifiable communication cheap talk can achieve partial coordination among potential entrants into a natural monopoly industry where the payoffs are qualitatively like the battle of the sexes the analysis would apply equally in other economic situations with such payoffs for example bargaining under complete information or choosing compatibility standards while cheap talk helps achieve asymmetric coordination in a symmetric mixed strategy equilibrium it cannot achieve complete coordination if the game involves even a small amount of conflict

communication between rational agents abstract conventional game theoretic solution concepts never guarantee meaningful communication in cheap talk games i define a solution concept which does guarantee communication in some games i assume full rationality without imposing equilibrium conditions but add a natural behavioral assumption about how agents use language agents have a propensity to speak the truth and to believe others speak the truth but use the game s strategic incentives to check whether such behavior and beliefs are rational i also define and prove the existence of an equilibrium version of the concept and present examples where its predictions seem more natural than farrell s neologism proof equilibrium

income distribution development and foreign trade a cross sectional analysis abstract this paper analyses cross sectional evidence on income inequality in developing countries within a consistent theoretical framework where the major explanatory variables are factor endowments their ownership structure and foreign trade distortions the resulting explanation of cross country differences in income distribution is considerably better than what is found in the existing literature endowments in mineral resources land concentration in agricultural exports trade protection and secondary schooling are shown to be major determinants of differences in income inequality across developing countries

social preferences self interest and the demand for redistribution preferences for redistribution may be influenced by values and beliefs about distributive justice as well as by self interest people may prefer more redistribution to the poor if they believe that poverty is caused by circumstances beyond individual control therefore beliefs about the causes of income may affect demand for redistribution alternatively the effect of these beliefs on redistributive preferences may be spurious if they are correlated with income and self interest is not properly controlled for they may also measure incentive cost concerns using social survey data i find that self interest cannot explain the effect of these beliefs on redistributive preferences 2001 elsevier science b v all rights reserved

communication coordination and nash equilibrium i note a methodological problem in studying the role of pre play communication in ensuring equilibrium to deal with this problem i define a solution concept for the extended game in which talk is followed by play that is intermediate between nash equilibrium and rationalizability in some games our solution concept implies a nash outcome while in others it does not

pigouvian penalty for oil spills abstract the imposition of ex ante taxes on expected spilled oil in addition to ex post payments for damages under tort liability would foster economic efficiency this paper begins the analysis of the joint approach with the case in which pigouvian taxes are used exclusively a model is developed in which the volume of spilled oil causing environmental damage is reduced first by spill prevention expenditures by shippers and then by clean up expenditures by the government the efficient pigouvian tax on expected spilled oil equals marginal environmental damage which equals the net marginal cost of prevention which equals marginal clean up cost