the role of monitoring of corruption in a simple endogenous growth model i introduction during the last 30 years economists from various fields have contributed to the analysis of corruption the first paper to receive widespread attention was published in 1975 rose ackerman 1975 since then a large literature has developed and much attention has been paid to the relationship between corruption and economic growth in the analysis of the consequences of corruption the literature supports two opposing positions on one hand common wisdom views corruption as an obstacle sand to development and growth on the other hand other researchers since the pioneering works of left 1964 and huntington 1968 have suggested that corruption may promote efficiency by allowing firms to bypass government failures of various sorts grease corruption more recent expositions of efficiency enhancing corruption can be found in lui 1985 acemoglu and verdier 1998 2000 and barreto 2000 barreto 2000 presents a simple neoclassical endogenous growth model where the public sector s monopolistic position is explicitly considered results indicate that a corruption equilibrium is characterized by lower growth rates compared to the ideal situation in which public goods are provided competitively barreto 2000 also shows that if the public sector is subject to significant bureaucratic red tape all of the agents within the economy may prefer the corruption equilibrium as corruption can bypass bureaucratic obstacles from a theoretical point of view there are several ways in which corruption may reduce economic growth corruption can act as a tax and thus lower incentives to invest corruption could cause talented people to engage in rent seeking rather than productive activities corruption may distort the composition of government expenditure as corrupt politicians could be expected to invest in large non productive projects from which considerable bribes can be extracted more easily than from productive activities empirical analysis has also provided evidence of the negative effects of corruption on economic growth mauro 1995 shows that corruption reduces economic growth via reduced private investment 1 similar results are obtained by keefer and knack 1995 using other measures of corruption and a different selection of countries 2 recently the grease the wheels hypothesis has been tested and statistically supported see aidt 2009 campos dimova and ahmad 2010 meon and sekkat 2005 among others in this article we develop a theoretical endogenous growth model which incorporates corruption in our model the social loss brought about by corruption stems from the fact that firms must bribe a bureaucrat in order to invest and consequently devote fewer resources to the accumulation of capital therefore in our model corruption has a negative effect on private investment other models share our framework ehrlich and lui 1999 claim that individuals have an incentive to compete over the privilege of becoming bureaucrats the so called investment in political capital since they obtain economic rents through corruption this investment in political capital consumes economic resources which could otherwise be used for production or investment in human capital in del monte and papagni 2001 corruption arises when bureaucrats manage public resources to produce public goods and services corruption reduces the quality of public infrastructure resulting in a negative effect on economic growth the novel feature of this article is the study of the impact of monitoring of corruption on economic growth 3 in our theoretical model we derive a nonlinear relationship between the level of monitoring and economic growth as well as between corruption and economic growth 4 at low monitoring levels the economy experiences widespread corruption and medium growth rates whereas no corruption occurs at intermediate monitoring levels but low growth rates are recorded

emission standards and stochastic waste load empirical work regarding the impact of environmental regulations on firm behavior has been developed under the assumption that emissions of pollutants are deterministic the implication is that the regulation is effective only when the constraint is exactly satisfied in real life however it is seldom the case that emission constraints are exactly satisfied the purpose of this paper is to find out whether regulation schemes are ineffective or whether the structure is an optimal reaction to random fluctuations in emissions the swedish pulp and paper industry is used as an empirical illustration

the who and why of lottery empirical highlights from the seminal economic literature lotteries operate today in many countries around the world this type of gambling is usually run by governments and is sometimes described as regressive lottery is an unfair bet so explaining the purchase of lottery tickets by risk averse consumers has been a challenge for economic theory lotteries can be analysed from either of two economic perspectives as a source of public revenue or as a consumer commodity in this paper the state of economic research on lotteries is reviewed focusing on its main empirical findings

dynamic firm behavior within an uncertain environment abstract in this paper we study the impact of an uncertain environment on the optimal dynamic investment policies of a value maximizing firm we present a model in which risk averse behavior of the shareholders is incorporated we derive the policies that can be optimal for the firm and present solutions under different scenarios after incorporating a dynamic version of the capital asset pricing model we can derive a new formula for the shareholders time preference rate which consists of the riskless interest rate and a risk premium

firm behaviour under pollution ratio standards with non compliance this paper compares a firm s short run optimal production and abatement rules under emission level standards and standards expressed in terms of emissions per unit of output ratio standards the models allow for non compliance with standards with expected penalties dependant on either level or relative violations of the standard in question it is shown that ratio arguments make a difference to the optimal decision rules derived for a profit maximising firm for example for a given level of emissions the firm both produces more and abates more under a ratio standard so that ratio and level standards cannot be used interchangeably to achieve the same combination of emissions and output the implications for the efficiency of pollution control are briefly discussed

endogenous corruption in a neoclassical growth model abstract the following paper presents a simple neoclassical growth model where corruption is an endogenous result of competition between a public agent and a private agent the model provides a simple theoretical framework in which the level of corruption as well as the effects of corruption on income consumption and growth are identifiable bureaucratic red tape is then added to the model the results suggest that a priori corruption is neither efficiency enhancing nor efficiency detracting with respect to growth but always results in some income redistribution

reward structures and the allocation of talent as relative rewards that different professions receive are a key factor in the allocation of talent what determines the reward structure of a society is an important question this paper develops an equilibrium model of the allocation of talent between productive and unproductive activities such as rent seeking the existence of rent seeking creates a negative externality on productive agents and implies that relative rewards are endogenously determined the same externality can also lead to the existence of multiple equilibria each with different reward structures in a dynamic setting allocations of past generations as well as expectations of future allocations influence current rewards and the society may get trapped in a rent seeking steady state equilibrium the paper also discusses how the non pecuniary reward structure can be influenced by equilibrium selection and a historical example that suggests the presence of a causal link from the allocation of talent to non pecuniary rewards

using electoral cycles in police hiring to estimate the effect of police on crime comment previous empirical studies have uncovered little evidence that police reduce crime possibly due to simultaneity problems this paper uses the timing of mayoral and gubernatorial elections as an instrumental variable to identify a causal effect of police on crime increases in the size of police forces are shown to be disproportionately concentrated in mayoral and gubernatorial election years increases in police are shown to substantially reduce violent crime but have a smaller impact on property crime the null hypothesis that the marginal social benefit of reduced crime equals the costs of hiring additional police cannot be rejected

erratum standards versus standards the effects of different pollution restrictions when economists refer to pollution standards they almost universally mean uniform restrictions on pollution emissions e g william j baumol and wallace e oates 1975 ch 13 susan rose ackerman 1973 david besanko 1978 however in practice standards take many forms not only emissions restrictions but restrictions on pollution per unit of output or per unit of an input restrictions on the use of a polluting input or mandated use of a particular pollution control technology these specifications of regulations will have a variety of effects on a firm s resource allocation decisions for instance allowing pollution per unit of output as the standard instead of directly restricting the level of pollution gives the firm some choice in addition to reducing pollution it can increase its output to dilute the pollution this paper examines the effects of five different forms of pollution standards on input decisions the level of production and firm profits the results show that the different standards by providing firms with different incentives change the firm s allocation decisions and affect the relative profitability of the standards section i reviews the existing literature on the incentives of different instruments the following section describes the model to be used five different forms of pollution constraints are individually examined in section iii using a graphical approach their relative effects as well as some special cases are assessed in section iv finally section v raises the case of different standards when firms are not identical

economic shocks and lottery sales an examination of maine state lottery sales most u s states earn significant amount of revenues from lottery sales however they are also criticized for promoting the lotteries because they have been seen as taking advantage of poor popula

buying a dream alternative models of demand for lotto existing lotto demand models utilize effective price computed as the face value of a ticket minus the expected value of prize money per ticket as their primary explanatory variable by contrast this article proposes a key role for consumption benefit or fun in the demand for gambling in general and lotto demand in particular it develops an alternative model of lotto demand that focuses on the maximum possible prize when this is tested against the traditional model using data from the u k national lottery we find that jackpot considerations exert an influence over and above that of variations in effective price

the costs of water pollution regulation in the pulp and paper industry this paper studies plant level data on actual and permitted levels of water pollution emissions for the pulp and paper industry there is widespread and substantial overcompliance with the relevant regulations aggregate bod emissions in 1992 were only 50 of the amount allowed overcompliance appears to imply a zero marginal abatement cost and its prevalence therefore has the potential to substantially change the debate over the costs of regulation we show instead that plants incurred substantial costs to overcomply marginal abatement costs were roughly 13 000 ton in 1992 we discuss possible explanations for costly overcompliance and their implications for estimation

second best energy policies for heterogeneous firms this paper investigates second best issues in the regulation of external costs of energy use by heterogeneous firms the efficiency of regulatory energy policies depends in general on the policy incentives given for both output reduction and input substitution the resulting endogeneity of firms supply functions appears to lead to complicated policy rules in contrast to earlier efforts the analysis considers an arbitrarily large number of non identical price taking firms in a joint market a large variety of possible production functions including varying levels of economies of scale and possibilities for input substitution and elasticities of market demand which may vary from completely elastic to completely inelastic two second best instruments are considered namely output taxes and energy efficiency standards and are compared to the benchmark of first best energy taxes the underlying market factors determining the relative efficiency of these second best instruments when used optimally are identified

the peculiar scale economies of lotto the best selling lottery game in the united states is lotto a parimutuel game of long odds and large jackpots unlike in the other popular lottery games numbers and instant there is a strong tendency for per capita lotto sales to increase with the size of the population base the fact that the jackpot also tends to increase with population size is not a complete explanation since the probability of winning tends to be inversely proportional to state population our explanation for why the games are more successful in large states is that players tend to judge the likelihood of winning based on the frequency with which someone wins then a larger state can offer a game at longer odds but the same perceived probability of winning as a smaller state this abstract was borrowed from another version of this item

what is the optimal design for lottery linked savings programmes in this article we determine the optimal design of lottery linked savings lls programmes lls vehicles such as lottery bonds are financial instruments that preserve depositors principal but provide randomized variable returns to these depositors through periodic lottery drawings in lieu of the regular coupon payments traditionally received by bondholders this type of asset is very popular in europe we note that the framing of lls instruments is linked to their popularity and we attempt to elucidate that link and thereby determine the optimal structure of payments for lls programmes our goal is to frame lls programmes in a manner that both maximizes their investors satisfaction and preserves their ability to serve as inexpensive sources of capital for their issuers we demonstrate that the optimal pay off structure is characterized by a high level of skewness as investors are willing to accept a decrease in the small and medium prizes of the lottery in exchange for an increase in the grand pri

comparative statics of a monopolistic firm facing price cap and command and control environmental regulations abstract an exhaustive comparative statics analysis of a model of a monopolistic firm facing price cap regulation and a variety of commonly implemented command and control environmental regulations is carried out the comparative statics are intrinsic to each of the models and thus form their basic empirically testable properties several unanticipated results emerge from the analysis in particular it is shown that a subset of the intrinsic comparative statics are qualitatively invariant to all of the commonly employed command and control environmental regulations that a price cap regulated profit maximizing monopoly might face while others are specific to the type of command and control environmental regulation in place

on lottery sales jackpot sizes and irrationality a cautionary note jackpot size has a greater impact than expected price as a determinant of lottery sales suggesting that agents exhibit irrational lotto mania we demonstrate why this conclusion is problematical by considering the reduced form obtained if agents are described by cumulative prospect theory

organized crime corruption and punishment we analyze an oligopoly model in which differentiated criminal organizations globally compete on criminal activities and engage in local corruption to avoid punishment when bribing costs are low that is badly paid and dishonest law enforcers work in a weak governance environment and the rents from criminal activity are sufficiently high we find that increasing policing and sanctions can generate higher crime rates indeed beyond a threshold further increases in intended expected punishment create incentives for organized crime to extend corruption rings and ensuing impunity results in a fall of actual expected punishment that yields more rather than less crime

permit trading and credit trading a comparison of cap based and rate based emissions trading under perfect and imperfect competition this paper compares emissions trading based on a cap on total emissions permit trading and on relative standards per unit of output credit trading two types of market structure are considered perfect competition and cournot oligopoly we find that output abatement costs and the number of firms are higher under credit trading allowing trade between permit trading and credit trading sectors may increase welfare with perfect competition permit trading always leads to higher welfare than credit trading with imperfect competition credit trading may outperform permit trading environmental policy can lead to exit but also to entry of firms entry and exit have a profound impact on the performance of the schemes especially under imperfect competition we find that it may be impossible to implement certain levels of total industry emissions under credit trading several levels of the relative standard can achieve the same total level of emissions

double dipping in environmental markets abstract there is an increasing tendency to use markets to induce the provision of environmental services as such markets increase in scope potential market participants might sell multiple environmental services the question we consider here is whether participants in such markets should be allowed to sell credits in more than one market simultaneously some have argued in favor of such double dipping because it would make the provision of environmental services more profitable in practice however most programs do not allow double dipping we show that if the optimal level of pollution abatement is sought then double dipping maximizes societal net benefits however if pollution policies are set in a piecemeal fashion then the caps for each market are unlikely to be optimal and in this second best setting a policy prohibiting double dipping can lead to greater social net benefits we explore conditions under which a single market policy is preferred or equivalently where piecemeal policies are likely to yield particularly inefficient outcomes

a macroeconomic model on the quality of government and economic performance i introduction the empirical analysis of hall and jones 1999 suggests that the fundamental determinant of a country s economic performance is its social infrastructure the institutions and government policies that provide incentives for individuals those incentives can encourage productive activity or predatory behavior like rent seeking and corruption although suppression of rent seeking appears to be most efficient if it is carried out by the government the power to make and enforce rules makes the government itself particularly prone to expropriation for instance while bureaucrats protect property by suppressing private rent seeking that interferes with productive activity they may also seek rents themselves by soliciting bribes from citizens 1 how do the efficiency of bureaucrats in protecting property rights and the degree of their corruption affect the relative rewards received by producers private rent seekers and bureaucrats and how does the reward structure interact with the allocation of talent between productive and unproductive activity and hence influence a country s economic performance 2 to address the above issues we work with an essentially standard macroeconomic model of production and trade externality based on the work of diamond 1982 in which productive activity is subject to private and public expropriation private rent seekers and bureaucrats do not produce they are completely dependent on producers efforts one important feature is the presence of a negative externality the unproductive activity exerts on the relative rewards that determine the allocation of agent across activity see murphy shleifer and vishny 1993 we first consider as a benchmark a model where the size of bureaucracy is exogenously given and then endogenize it as an individual s choice under an exogenous bureaucracy an agent chooses to be a producer or a private rent seeker producers conduct transactions in the decentralized markets more productive activity yields higher returns to both producers and private rent seekers and this strategic complementarity results in multiple pareto rankable equilibria the equilibrium with a larger population of producers and less rent seeking features higher welfare by choosing a small size of bureaucracy the government can establish the superior equilibrium as the unique outcome that also achieves the constrained optimum social welfare however is decreasing in the size of bureaucracy in this equilibrium the implication is that the smaller the size of bureaucracy the higher the welfare the optimal size of bureaucracy depends on two opposite influences on producers incentives one is the positive effect through better property rights protection the other includes various negative effects as a result of corruption tax burdens and the fact that resources taken up in the public sector could otherwise be devoted to production if the population of bureaucrats is endogenously determined equilibria exist as long as bureaucrats efficiency is high and corruption is low the equilibrium with a larger bureaucracy is associated with higher production and welfare the reason is that with sufficient efficiency in deterring private rent seeking and low corruption a larger bureaucracy makes private production more profitable by reducing resources allocated to private rent seeking and the resulting externality further improves the relative rewards to productive activity in general the equilibrium size of the bureaucracy is not optimal one resulting implication is that for the equilibrium with a smaller bureaucracy society would benefit by increasing the size of bureaucracy despite the fact that bureaucrats are corrupt many believe that the size of government is an important factor for determining economic performance however hall and jones 1999 p 111 argue that the characteristics of an economy such as the size of government should better be thought as outcomes rather than determinants

the role of federal renewable fuel standards and market structure on the growth of the cellulosic biofuel sector abstract this article examines the effect of the renewable fuel standards and market power on the growth of the cellulosic biofuel sector we develop a sectoral model to show how changes in the regulations governing cellulosic fuel production affect the equilibrium quantity of cellulosic ethanol based on model calibration for washington state we find that existing low cost waivers purchased by obligated parties in lieu of cellulosic fuel production negate the effectiveness of the renewable fuel standard to induce the production and consumption of cellulosic biofuels however raising waiver price slightly relative to the status quo significantly increases the equilibrium quantity of cellulosic ethanol the high cost of cellulosic ethanol production is often cited as the cause of the lack of cellulosic ethanol production which is used to justify low waiver prices our policy message is the converse the low current waiver price significantly contributes to the cellulosic ethanol market stagnation in the context of the current biofuel policy

voluntary environmental agreements good or bad news for environmental protection abstract there has been growing interest in the use of voluntary agreements vas as an environmental policy tool this article uses a simple model to determine whether vas are likely to lead to efficient environmental protection we consider cases where polluters are induced to participate either by a background threat of mandatory controls the stick approach or by cost sharing subsidies the carrot approach the results suggest that the overall impact on environmental quality could be positive or negative depending on a number of factors including the allocation of bargaining power the magnitude of the background threat and the social cost of funds

regulation by prices quantities or both a review of instrument choice choosing appropriate policy instruments is an important part of successful regulation once objectives are agreed and suitable targets adopted policy makers can employ command and control regulation and or economic instruments and choose between fixing a price or a quantity this paper examines the relative advantages of price quantity and hybrid instruments according to their efficiency under uncertainty the trade off between credible commitment and flexibility implementation international considerations and political economy various illustrations of the theory are provided with two detailed applications to climate change and transport policy specifically congestion and safety pricing

an economist s guide to lottery design this paper outlines the issues relevant to the design of pari mutuel lottery games and makes inferences about game design effects from estimates of how rollovers affect sales lottery tickets sales depend positively on the proportion of revenue returned as prizes positively on the skewness of the prize distribution which depends largely on how much of the prize money goes to the jackpot and negatively on the variance in the prize distribution which depends largely on how much goes on smaller prizes we simulate the effects of envisaged game design changes on sales revenue and find potentially large effects

habit and long memory in uk lottery sales long memory processes can occur as a consequence of aggregation over heterogeneous agents we examine the uk lottery and by estimating the level of fractional differencing find evidence of the long memory property in lottery sales a result that has broader implications on the estimation of demand models for lotteries

on emissions trading and market structure cap and trade versus intensity standards this paper examines the interdependence between imperfect competition and emissions trading we particularly analyze the long run equilibrium in a two sector clean and dirty model with cournot competition among firms who face a fixed cost of production the clean sector is defined as the sector with the highest long run cost margin on emissions we compare the welfare implications of a cap and trade scheme with an emissions trading scheme based on relative intensity standards it is shown that a firm s long run equilibrium output in the clean or dirty sector does not depend on the emissions trading format but only depends on the fixed cost of producing in the respective sector intensity standards can result in clean firms selling allowances to dirty firms or dirty firms selling to clean firms the former outcome yields higher welfare it is demonstrated that cap and trade outperforms the intensity based trading scheme in terms of long run welfare with free entry and exit with intensity standards the size of the clean sector is too large

the welfare effects of lotto evidence from the uk abstract this paper estimates the demand for lottery tickets using pooled cross section data that contain individual incomes and extensive information about characteristics one of the cross sections corresponded to a draw which was a double rollover the jackpot was enhanced by adding the two previous draws jackpots which had not been won together these datasets provide sufficient observations facing different prices to allow us to estimate the price elasticity as well as the income elasticity of demand we estimate tobit and other specifications and use the estimates to evaluate the welfare effects arising from the introduction of the lottery

the economic implications of using haccp as a food safety regulatory standard abstract this article discusses the nature and role of hazard analysis critical control point haccp as a food safety control system and in particular its role as an element of public food safety regulation the notion of efficiency in food safety regulation is discussed and related to the nature of food safety controls it is suggested that if appropriately applied haccp is a more economically efficient approach to food safety regulation than command and control cac interventions the economic implications of haccp are discussed with reference to estimates of the costs and benefits in particular for the food industry finally the use of haccp as an international trade standard and the facilitation of trade in processed food products is considered

welfare implications of the renewable fuel standard with an integrated tax subsidy policy abstract this paper derives the optimal integrated tax subsidy policy where one input is taxed and revenues are used to subsidize the use of a substitute input to reduce greenhouse gas emissions given the existing policies under the renewable fuel standard policies we measure the welfare effects and impact on cellulosic ethanol production after implementing the tax subsidy policy using a general equilibrium model a revenue neutral integrated tax subsidy scheme leads to a small positive tax rate for crude oil and a large positive subsidy for cellulosic ethanol because the former has a larger emissions coefficient than the latter the overall welfare effects of an integrated tax subsidy scheme are less than a 1 increase for the economy but the growth in the cellulosic ethanol industry could range from 28 to 238 because the revenues from taxing crude oil are directly used to subsidize cellulosic ethanol production

optimal investment policies for a polluting firm in an uncertain environment in this paper a stochastic dynamic model of the firm is used as a framework to study the optimality of abatement investments production causes pollution as an inevitable byproduct and in this model the latter is taxed by the government the firm can diminish these tax payments through reducing its pollution output by carrying out abatement investments it turns out that provided that its liquidity position is sufficiently strong the firm performs a growth policy such that expected marginal revenues of productive and abatement investments are balanced growth stops as soon as marginal revenue equals the shareholders time preference rate at that time dividend is paid out we also obtain that the emissions tax rate must exceed a certain lowerbound when the government wants emissions to decrease during the firm s growth phase

emissions trading ercs or allowances emissions trading takes place from two alternative baselines 1 emission reduction credits ercs in which the baseline is existing regulations which are often activity based or 2 cap and trade which specifies the total allowable emissions this paper examines the effects of these two tradable permit systems on marginal and average costs for the firm using electricity generation as an example the erc system subsidizes the activity level to which it is tied and fails to incorporate the full cost of external harm into the product price if the permit limit is chosen ef ficiently the cap and trade system is more effi cient

crime inequality and unemployment there is much discussion of the relationships between crime inequality and unemployment we construct a model where all three are endogenous we find that introducing crime into otherwise standard models of labor markets has several interesting implications for example it can lead to wage inequality among homogeneous workers also it can generate multiple equilibria in natural but previously unexplored ways hence two identical neighborhoods can end up with different levels of crime inequality and unemployment we discuss the effects of anti crime policies like changing jail sentences as well as more traditional labor market policies like changing unemployment insurance this abstract was borrowed from another version of this item

pollution standards vs charges under uncertainty conventional analysis of pollution control policy under uncertainty does not properly account for the potential cost effectiveness difference between standards and charges thus drawing misleading conclusions for the case of inefficient standards correcting for this anomaly the following conclusions can be drawn when uncertainty involves the position of the marginal damage cost schedule rather than policy indifference a charge is always superior to an inefficient standard when uncertainty is about the position of the marginal control cost schedule policy indifference may occur but if it does it must be the case that the slope of marginal damage cost exceeds that of marginal control cost

weitzman revisited emission standards versus taxes with uncertain abatement costs and market power of polluting firms studies dealing with the optimal choice of pollution control instruments under uncertainty have invariably taken it for granted that regulated firms face perfectly competitive markets by introducing the product market into the stochastic framework of weitzman rev econ stud 41 477 491 1974 this paper shows for the case of a polluting symmetric cournot oligopoly that weitzman s policy rule for choosing emission standards versus taxes with uncertain abatement costs is biased in the presence of market power since the oligopolists take into account their influence on the market price their total abatement effort including the restriction of output is less vulnerable to miscalculations of the tax rate compared to price taking firms consequently the comparative advantage of instruments is shifted in favour of taxes in a further step the provided policy recommendations are generalised by abolishing the assumption that firms are symmetric

optimal lottery design for public financing this article develops a model of optimal lottery design for public financing on the assumption that economic agents view buying lottery tickets as a form of entertainment given that lotteries are optimally designed it offers two findings 1 the fundraising potential of a lottery is independent of its type specifically of whether it is a fixed prize type or a pari mutuel and 2 the ratio of the optimal winning prize amount in each prize class to total lottery sales is equalised to the elasticity of demand for lottery ticket purchases with respect to the winning prize in each prize class

performance versus design standards in the regulation of pollution abstract this paper presents a model of pollution regulation in an oligopolistic market two forms of regulation are considered performance standards which regulate pollution directly by an upper limit on emissions and design standards which regulate pollution indirectly by a minimum usage requirement of an enissions control input equilibria under each regulatory regime are characterized a welfare analysis reveals that performance standards are preferred to design standards if the objective is minimization of emissions plus pollution damage costs however the comparison is indeterminate if the regulator s objective is total surplus less pollution damage an equivalence between emissions taxes and performance standards is established so the above welfare comparisons also apply to emissions taxes versus design standards

emissions reductions or green booms general equilibrium effects of a renewable portfolio standard renewable portfolio standards rps are commonly promoted as a policy tool to reduce emissions associated with fossil generation while also stimulating development of local renewable resource endowments we develop a general equilibrium model of an rps policy that captures key features such as a fixed factor renewable endowment substitution across sectors of the economy and endogenous price responses we analytically decompose the effects of an rps into a a substitution effect b an output tax effect and c an output effect we show that an increase in the rps can either deliver large resource booms or large emissions savings but not both our framework can translate different renewable resource endowments and pre existing standards across states into economic and environmental impacts to inform current renewable energy and climate policies

investment under uncertainty irreversibility and the arrival of information over time in this paper we consider a risk neutral competitive firm which is uncertain about the true state of demand we build upon arrow by demonstrating that the irreversibility of investment in physical capital together with the anticipation of receiving information and of learning the state of demand lead to 1 cautious investment behaviour and hence to lower investment levels than otherwise since the firm cannot disinvest if market conditions turn out to be less favourable than currently anticipated 2 a time varying risk premium or marginal adjustment cost which is shown to arise endogenously and to be positively related to the investment level and to the anticipation of greater information in the sense of blackwell 1951 1953 3 a gradual adjustment of the capital stock to the desired level defined as the optimal capital stock corresponding to the true state of demand

a model of bureaucracy and corruption we analyze bureaucracy and corruption in a market with decentralized exchange and lemons exchange is modeled as a sequence of bilateral random matches agents have private information about the quality of goods they produce and can supplement trade with socially inefficient bribes bureaucracy is modeled as a group of agents who enjoy centralized production and consumption transaction patterns between the bureaucracy and the private sector are fully endogenous centralized production and consumption in the bureaucracy give rise to low power incentives for the individual bureaucrats as a result private agents might bribe bureaucrats whereas they do not bribe each other an equilibrium with corruption and an equilibrium without corruption can coexist we discuss some welfare implications of the model

property rights corruption and the allocation of talent a general equilibrium approach we consider an economy where contracts are necessary to encourage investments contract enforcement requires that a fraction of the agents work in the public sector and do not accept bribes we find that 1 it may be optimal to allow some corruption and not enforce property rights fully 2 less developed economies may choose lower levels of property right enforcement and more corruption 3 there may exist a free lunch such that over a certain range it is possible simultaneously to reduce corruption increase investment and achieve a better allocation of talent bureaucratic corruption is widespread in many societies casual empiricism and case studies suggest that corruption distorts the allocation of resources and discourages investment and the creation of new firms e g mydral 1968 desoto 1989 cross country studies also find that countries with high corruption or long bureaucratic delays suffer lower growth e g mauro 1996 sartre 1997 it is therefore tempting to conclude that government policies and bureaucratic corruption are at least partly responsible for the lack of development or slow growth of many economies e g shleifer and vishny 1993 nevertheless governments and bureaucracies do not exist only to seek rents they perform a number of useful functions including provision of public goods correction of market failures and redistribution without understanding why the state exists it is difficult to assess why corruption arises what its consequences are and whether and how it should be prevented in this paper we analyse how the employees of the state bureaucrats can misuse their power to enforce property rights the protection of property rights is commonly viewed as one of the most important roles of the state by political philosophers as diverse as david hume karl marx and robert nozick while a number of social scientists including north and thomas 1973 and rosenberg and bridzell 1989 emphasise the importance of secure property rights in the development of western societies for the state to have a role in enforcing property rights some contractual problems must exist between private parties in our economy these contractual problems are between entrepreneurs in particular production requires two agents and one of the entrepreneurs needs to undertake an investment but the returns accrue to the other one this can be thought as a partnership with the first agent as an upstream supplier providing an input of variable

government transaction policy media of exchange and prices abstract we study government transaction policies in search theoretic models of money we model government as a subset of agents who are subject to the same random matching technology and other constraints as private agents but who behave in an exogenous way regarding which objects they accept in trade and at what price the objective is to see how these policies affect private agents strategies and hence the set of equilibria we analyze how the effects depend on factors like the size of government the intrinsic properties of money and the availability and efficacy of substitutes like barter or foreign currency journal of economic literature classification numbers c78 e31 e42

emissions taxes versus intensity standards second best environmental policies with incomplete regulation the best emissions tax or emissions cap may be an inferior instrument under incomplete regulation leakage without leakage an intensity standard regulating emissions per unit of output is inferior due to an implicit output subsidy this inefficiency can be eliminated by an additional consumption tax with leakage an intensity standard can dominate the optimal emissions tax since the implicit output subsidy prevents leakage the addition of a consumption tax improves an intensity standard s efficiency may prevent leakage and may be efficient comparing intensity standards to output based updating shows that the latter dominates if updating is sufficiently flexible

the impact of public scrutiny on corporate philanthropy this paper proposes that a corporation s vulnerability to public scrutiny drives its corporate giving the hypothesis that companies donate for strategic motives is tested against the alternative that they do so for altruistic reasons court cases and news articles were selected as proxies for public scrutiny macroeconomic variables were used to gauge the level of public charitable need and test for altruism through examining the philanthropic behavior of 40 fortune 500 companies over 7 years this paper finds that companies are strategic and altruistic in their giving

lottery markets design micro structure and macro behavior an ace approach abstract an agent based computational modeling of the lottery market is established in this paper to study the design issue in terms of the lottery tax rate as well as the emerging market behavior by using genetic algorithms and fuzzy logic lottery participants are modeled as autonomous agents who may endogenously adapt to exhibit behavioral properties consistent with well noticed behavior of lottery markets three major findings are presented first as anticipated a laffer curve is found in this model nonetheless the laffer curve has a flat top which indicates the non uniqueness of the optimal lottery tax rate second conscious selection behavior is also observed but it becomes weaker as time goes on third for the halo effect we observe exactly the opposite each of these three findings are then compared with available empirical results and the mechanism of genetic algorithms is further examined in light of the anti halo effect

equitably slicing the pie water policy and allocation abstract non point source pollution is deteriorating water quality throughout the world new zealand is addressing this issue by regulating land based nutrient losses with debates over how to allocate limits across a heterogeneous landscape we develop a spatially explicit economic land use model to investigate efficiency and equity issues from seven approaches to allocate nutrient discharges across two new zealand watersheds we find that the preferred allocation differs across land use land characteristics and regulation stringency and that there is no universal best allocation option therefore decision makers should focus on at least efficiency and equity and on how to compensate those most affected