group lending repayment incentives and social collateral abstract in this paper we investigate the impact on repayment rates of lending to groups which are made jointly liable for repayment this type of scheme especially in the guise of the grameen bank in bangladesh has received increasing attention we set up and analyze the repayment game which group lending gives rise to our analysis suggests that such schemes have both positive and negative effects on repayment rates the positive effect is that successful group members may have an incentive to repay the loans of group members whose projects have yielded insufficient return to make repayment worthwhile the negative effect arises when the whole group defaults even when some members would have repaid under individual lending we also show how group lending may harness social collateral which serves to mitigate its negative effect

international environmental agreements for local and global pollution abstract increasing concerns about climate change have given rise to the formation of international environmental agreements ieas as a possible solution to limit global pollution effects in this paper we study the stability of ieas in a repeated game framework where we restrict to strategies which are simple and invariant to renegotiation our main contribution is that we characterize necessary and sufficient conditions for stability of an iea when pollution has both a global and local effect local pollution spillovers are represented by a network structure we find that stable ieas exist if the network structure is balanced too large asymmetries in the degree of local spillovers may however lead to non existence of stable structures we also discuss the implications of our results for welfare the generality of our approach allows for several applications in particular the provision of public goods

why political reservations many countries are amending their political systems to set aside positions to groups such as women and racial or religious minorities that are perceived as being disadvantaged using evidence from india this article assesses the case for these reservations jel h4 o15 several countries have introduced procedures either explicit quotas or forms of gerrymandering to ensure political representation of disadvantaged groups such as women or ethnic minorities in 2001 quotas for women in parliaments were in force in more than 30 countries in india seats are reserved for historically disadvantaged groups scheduled castes or sc and scheduled tribes or st in federal or state legislative assemblies and for both historically disadvantaged groups and women at all levels of the panchayat system the system of decentralized decision making on the basis of evidence accumulated about the indian experience this paper reviews the case for reservation

centralized versus decentralized provision of local public goods a political economy approach abstract this paper takes a fresh look at the trade off between centralized and decentralized provision of local public goods it argues that the sharing of the costs of local public spending in a centralized system will create a conflict of interest between citizens in different jurisdictions when spending decisions are made by a legislature of locally elected representatives this conflict of interest will play out in the legislature depending on precisely how the legislature behaves the result may be excessive public spending or allocations of public goods characterized by uncertainty and misallocation across districts the extent of the conflict of interest between districts is affected by spillovers and differences in tastes for public spending thus the relative performance of centralized and decentralized systems depends upon spillovers and differences in tastes for public spending but for different reasons than suggested in the existing literature

tax authority to the european parliament in this paper we analyze whether countries of the ec community should plead for a decentralized system to finance the european funds rather than using a uniform tax imposed by the european parliament the analysis is within a multistage game theoretic framework in which the implication of the financing system of a confederation on the investment behavior in the respective states is considered the paper is in the tradition of the literature which claims that from a view of global efficiency property rights structures inducing ex post efficient allocations may be worse than a system leading to an ex post inefficient allocation for this specific economic issue we elucidate the tradeoff between incentive effect and distributional policy especially we demonstrate that rather homogeneous countries benefit by installing a central tax institution if the countries are rather heterogeneous the countries may have opposing interests with respect to the answer of the question which is presented in the title it is possible that the high developed country prefers to install a central tax authority while the low developed country does not however in general the reverse ordering which is more in line with our intuition results

does affirmative action reduce productivity a case study of the indian railways summary our objective is to shed empirical light on a claim often made by critics of affirmative action policies that increasing the representation of members of marginalized communities in jobs comes at the cost of reduced productive efficiency we undertake a systematic empirical analysis of productivity in the indian railways the world s largest employer subject to affirmative action in order to assess whether higher proportions of affirmative action beneficiaries in employment have reduced efficiency in the railway system we find no evidence for such an effect indeed some of our results suggest that the opposite is true

public goods in networks this paper considers incentives to provide goods that are non excludable along social or geographic links we find first that networks can lead to specialization in public good provision in every social network there is an equilibrium where some individuals contribute and others free ride in many networks this extreme is the only outcome second specialization can benefit society as a whole this outcome arises when contributors are linked collectively to many agents finally a new link increases access to public goods but reduces individual incentives to contribute hence overall welfare can be higher when there are holes in a network

equilibrium existence and uniqueness in impure public good models abstract despite widespread application of the impure public good model surprisingly little attention has been given to the model s equilibrium properties this paper presents a proof that clearly shows sufficient conditions for existence and uniqueness of a nash equilibrium

olson s exploitation hypothesis in a public good economy a reconsideration since the publication of olson s 1965 the logic of collective action the exploitation hypothesis in which the rich shoulder the provision burden of public goods for the poor has held sway despite empirical exceptions to address such exceptions we establish two alternative exploitation hypotheses based on contributors asymmetric preferences or on their productivity differences regarding the public good the classic hypothesis and its two variants are proven in a novel fashion for asymmetric preferences we also establish the exploitation hypothesis for the joint products model with private and public co benefits our theoretical insights are then illustrated by some empirical examples from the field of international public goods such as military defense and cross border pollution

optimal pricing in networks with externalities we study the optimal pricing strategies of a monopolist selling a divisible good service to consumers who are embedded in a social network a key feature of our model is that consumers experience a positive local network effect in particular each consumer s usage level depends directly on the usage of her neighbors in the social network structure thus the monopolist s optimal pricing strategy may involve offering discounts to certain agents who have a central position in the underlying network our results can be summarized as follows first we consider a setting where the monopolist can offer individualized prices and derive a characterization of the optimal price for each consumer as a function of her network position in particular we show that it is optimal for the monopolist to charge each agent a price that consists of three components i a nominal term that is independent of the network structure ii a discount term proportional to the influence that this agent exerts over the rest of the social network quantified by the agent s bonacich centrality and iii a markup term proportional to the influence that the network exerts on the agent in the second part of the paper we discuss the optimal strategy of a monopolist who can only choose a single uniform price for the good and derive an algorithm polynomial in the number of agents to compute such a price third we assume that the monopolist can offer the good in two prices full and discounted and we study the problem of determining which set of consumers should be given the discount we show that the problem is np hard however we provide an explicit characterization of the set of agents who should be offered the discounted price next we describe an approximation algorithm for finding the optimal set of agents we show that if the profit is nonnegative under any feasible price allocation the algorithm guarantees at least 88 of the optimal profit finally we highlight the value of network information by comparing the profits of a monopolist who does not take into account the network effects when choosing her pricing policy to those of a monopolist who uses this information optimally

capture and governance at local and national levels 135 despite the importance of this issue not much systematic research appears to have been devoted to assessing the relative susceptibility of national and local governments to interestgroup capture here we describe a model of two party electoral competition with probabilistic voting behavior and lobbying by specialinterest groups based on david baron 1994 and gene grossman and elhanan helpman 1996 that helps identify determinants of relative capture at different levels of government these include relative levels of voter awareness and interest group cohesiveness electoral uncertainty electoral competition heterogeneity of districts with respect to inequality and the electoral system while some of these uphold the traditional madisonian presumption others are likely to create a tendency for lower capture at the local level so the net effect is theoretically ambiguous this suggests that the extent of relative capture may be context specific and needs to be assessed empirically

endogenous federal grants and crowd out of state government spending theory and evidence from the federal highway aid program contrary to simple theoretical predictions existing evidence suggests that federal grants do not crowd out state government spending a legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and preferences for public goods this correlation has likely biased existing work against measuring crowd out to correct for such endogeneity the model motivates instruments based on the political power of state congressional delegations exploiting this exogenous variation in grants the instrumental variables estimator reports crowd out that is statistically and economically significant this endogeneity may explain the flypaper effect a nonequivalence between grant receipts and private income jel d70 h40 h77

the harambee movement and efficient public good provision in kenya abstract those familiar with kenya since independence will know of the importance of the harambee system the term harambee has come to mean the provision of goods usually social infrastructure through the voluntary cooperation of members of the community provision of public goods in this way is an important alternative to the more normal method provision through tax finance here we compare these two methods of provision with a view towards determining first the circumstances under which harambee might be more effective and second what policies might be pursued to best utilize this system

tiebout equilibria in local public good economies with spillovers abstract this paper analyzes the effects of spillovers on the equilibrium population distribution across jurisdictions in a local public good economy with free mobility spillovers are parametrized by a matrix ij where ij 0 1 when spillovers are symmetric and close to 0 or 1 pure local public goods and pure public goods all equilibrium jurisdiction structures are symmetric however any population distribution can be sustained in equilibrium for some value of the spillover parameter in the class of utility functions with additive externalities we identify the unique family of utility functions for which equilibria are symmetric except for an isolated value of this is a class of utility functions which are linear in the public good and a power function of the private good u c a 1 c with this specification of utility we show that an increase in results in a more fragmented equilibrium population distribution and that when spillovers are asymmetric and large a jurisdiction which is more centrally located i e benefits more from the public goods provided in other jurisdictions has a larger population in equilibrium

nash equilibrium existence and uniqueness in a club model abstract we model a single club heterogeneous consumer exogeneous income economy as an aggregative public good game under common assumptions if club quality functions are homogeneous of positive degree in the club facility investment and use an unique nash equilibrium exists

new products quality changes and welfare measures computed from estimated demand systems this paper examines the construction of a price index based on an estimated demand system in principle the method examined can produce a price index that takes account of the introduction of new p

does political reservation for minorities affect child labor evidence from india summary this paper examines the impact of state level political reservation for two minority groups scheduled castes and scheduled tribes on the incidence of child labor in india we estimate the effect of political reservation on the incidence of child labor by exploiting the state variation in the share of seats reserved for the two minority groups in state legislative assemblies mandated by the constitution of india using data from state and household level surveys on fifteen major indian states we find that at the household level schedule tribe reservation decreases the incidence of child labor while scheduled caste reservation increases the total number of children working we examine these impacts on the general as well as the disadvantaged group population independently and across the gender of children we also explore potential explanations for the differential impact of sc and st political reservation including geographic isolation caste fragmentation support for the congress party and decentralization of power our results survive a variety of robustness checks

stepping into formal politics women s engagement in formal political processes in irrigation in rural india summary gender quotas decentralization of irrigation management and reliance on mgnrega for labor provision challenge the traditional patriarchal canal management system by institutionalizing women as formal decision makers and members of the irrigation labor force in northern india based on a survey of 592 women in rural himachal pradesh this paper quantitatively analyses how these policies affect women s engagement in formal political processes results indicate that factors from the private and individual domains influence female participation in formal political processes most importantly india s gender inclusive policies provide women with the opportunity to legitimately engage in formal political processes governing resource management

estimating the armington elasticity the importance of study design and publication bias abstract a key parameter in international economics is the elasticity of substitution between domestic and foreign goods also called the armington elasticity yet estimates vary widely we collect 3524 reported estimates of the elasticity construct 32 variables that reflect the context in which researchers obtain their estimates and examine what drives the heterogeneity in the results to account for model uncertainty we employ bayesian and frequentist model averaging to correct for publication bias we use newly developed non linear techniques our main results are threefold first there is publication bias against small and statistically insignificant elasticities second differences in results are best explained by differences in data aggregation frequency size and dimension third the elasticity implied by the literature after accounting for both publication bias and study quality lies in the range 2 5 5 1 with a median of 3 8

strategic transfers and private provision of public goods abstract this paper considers strategic monetary transfers between two agents when these contribute to a mutual public good if the agents differ in their contribution productivity then the less productive agent has an incentive to make large unconditional transfers to the more productive agent although agents move simultaneously in each stage of the game the less productive agent becomes a stackelberg leader furthermore the generic subgame perfect equilibrium is characterized by full specialization

randomized evaluations of educational programs in developing countries some lessons this paper reviews recent randomized evaluations of educational programs in developing countries including programs to increase school participation to provide educational inputs and to reform education it then extracts some lessons for education policy and for the practice and political economy of randomized evaluations

retrospectives on the genius behind david ricardo s 1817 formulation of comparative advantage last year marked the 200th anniversary of ricardo s famous four numbers paragraph on comparative advantage which is one of the oldest analytical results in economics following the lead of james mill 1821 these four numbers have been interpreted as unit labor coefficients this interpretation has provided the basis for the development of the ricardian model from john stuart mill 1852 to eaton and kortum 2002 however if we accept the labor unit interpretation of these numbers ricardo s exposition in his 1817 principles of political economy and taxation makes little logical sense building on sraffa s 1930 interpretation of ricardo s numbers as labor embodied in trade our discussion reveals the amazing simplicity and generality of ricardo s comparative advantage formulation and gains from trade logic

global growing area elasticities of key agricultural crops estimated using dynamic heterogeneous panel methods we estimate the short and long run global response of corn soybeans wheat and rice growing areas to output price changes allowing responses to vary across countries using methods from the panel time series literature our estimates of growing area response are considerably lower than estimates obtained using more traditional models previous findings appear biased due to the assumption of homogeneous response across countries our aggregate estimates of short and long run elasticities of four crop growing areas with respect to average price are 0 024 and 0 143 respectively crop specific results indicate that both corn and soybean growing areas are generally more responsive than wheat and rice for corn and soybeans the long run own price growing area elasticities are 0 274 and 0 793 respectively the long run own price elasticities for wheat and rice are 0 279 and 0 045 respectively the short run own price elasticities for corn and soybeans are 0 133 and 0 199 respectively which are higher than wheat 0 037 and rice 0 00001

local politics political institutions and public resource allocation abstractthis article examines how political institutions and local power structures interact with and influence local public resource allocation in the indian state of karnataka we use data from 80 village councils and 225 villages to examine how this local political economy influences the allocation of public resources our empirical strategy exploits a unique policy of political representation in karnataka that mandates representation or reserves seats in local governments for both historically disadvantaged groups and politically dominant groups these policy induced differences in the caste composition of these village councils therefore allow us to examine whether and how the form of such local politics distorts local public resource allocation representation in village councils is a nonlinear function of the demographic shares of these groups controlling for the latter allows us to identify the role of local power structures through the effect of social identities and the associated relative ba

peer effects in endogenous networks abstract this paper presents a model of strategic network formation with local complementarities in effort levels and positive local externalities results are obtained for a general class of payoff functions which subsumes the linear quadratic specification frequently used in theoretical and applied work we assume homogeneous agents and characterize equilibria for two sided and one sided link formation pairwise nash equilibrium networks are nested split graphs which are a strict subset of core periphery networks we highlight the relevance of the convexity of the value function for obtaining these structures more central agents are shown to exert more effort and obtain higher gross payoffs in equilibrium however net of linking cost central agents may obtain strictly lower net payoffs the curvature of the value function is also important for efficiency considerations these findings are relevant for many social and economic phenomena such as educational attainment criminal activity labor market participation and r d expenditures of firms

the politics of public good provision evidence from indian local governments this paper uses village and household survey data from south india to examine how political geography and politician identity impacts on public good provision we provide evidence that the nature of this relationship varies by type of public good for high spillover public goods residential proximity to elected representative matters in contrast for low spillover public goods sharing the politician s group identity is what matters jel d78 h40

the law of the few the law of the few refers to the following empirical phenomenon in social groups a very small subset of individuals invests in collecting information while the rest of the group invests in forming connections with this select few in many instances there are no observable dierences in characteristics between those who invest in information and those who invest in forming connections this paper shows that the law of few naturally emerges in environments with identical rational agents we develop a strategic game in which players have the opportunity to invest in collecting information as well as in investing in bilateral connections with others we find that every strict equilibrium of this game exhibits the law of the few we also show that this pattern of social dierentiations is ecient in some cases

ethnic diversity social sanctions and public goods in kenya abstract this paper examines ethnic diversity and local public goods in rural western kenya the identification strategy relies on the stable historically determined patterns of ethnic land settlement ethnic diversity is associated with lower primary school funding and worse school facilities and there is suggestive evidence that it leads to poor water well maintenance the theoretical model illustrates how inability to impose social sanctions in diverse communities leads to collective action failures and we find that school committees in diverse areas do impose fewer sanctions on defaulting parents we relate these results to the literature on social capital and economic development and discuss implications for decentralization in less developed countries

welfare effects of criminal politicians a discontinuity based approach abstract this paper uses unique data on the criminal records of indian bureaucrats to examine the relationship between politicians criminality and consumption crime and corruption the identification relies on a regression discontinuity design by which individuals living in districts where a criminal politician was barely elected are compared with individuals living in districts where a criminal politician barely lost the results show that criminal politicians decrease consumption by vulnerable sections of society the monthly per capita expenditure of scheduled castes scheduled tribes or other backward classes decreases by 19 percent this paper suggests that the effect of criminal politicians on criminality and corruption may explain this result

community composition and collective action analyzing initial mail response to the 2000 census this paper analyzes how community heterogeneity influences resident decisions to undertake actions generating public benefits the decision in question is completing and returning the 2000 census questionnaire an action which secures a significant amount of federal grants for the community the model developed to explain this action allows members of societal groups to differentially value public benefits that accrue to other group members racial generational and socioeconomic class heterogeneity all predict significantly lower response rates at the county level the potential for endogenous sorting into heterogeneous counties implies that the magnitude of true behavioral effects exceeds these estimates

a dynamic model of acreage allocation with general and crop specific soil capital we develop an empirically tractable model of acreage allocation decisions in which farmers consider impacts of current crop production 00 future soil productivity because of the soil productivity effects future crop prices are shown to affect current acreage allocations government programs which alter farmers expectations of future crop prices relative to current prices also alter farmers consideration of soil productivity effects of current acreage allocations reduced form and structural versions of our model are shown to yield reasonable parameter estimates

can the west save africa in the new millennium the western aid effort toward africa has surged due to writ ings by well known economists a celebrity mass advocacy campaign and decisions by western leaders to make africa a major foreign policy priority this survey contrasts the predominant transformational approach west comprehensively saves africa to occasional swings to a marginal approach west takes one small step at a time to help individual africans evaluation of one step at a time initiatives is generally easier than that of transformational ones either through controlled experiments although these have been oversold or simple case studies where it is easier to attribute outcomes to actions we see two themes emerge from the literature survey 1 escalation as each successive western transformational effort has yielded disappointing results as judged at least by stylized facts since again the econometrics are shaky the response has been to try an even more ambitious effort and 2 the cycle of ideas rather than a progressive testing and discarding of failed ideas we see a cycle in aid ideas in many areas in africa with ideas going out of fashion only to come back again later after some lapse long enough to forget the previous disappointing experience both escalation and cyclicality of ideas are symptomatic of the lack of learning that seems to be characteristic of the transfor mational approach in contrast the marginal approach has had some successes in improving the well being of individual africans such as the dramatic fall in mortality

history social divisions and public goods in rural india we examine the influence of three historically important sources of social divisions on the availability of public goods in rural india colonial power landowner peasant relations as determined by the land tenure system and social fragmentation based on the hindu caste system and the presence of sizable religious minorities using data on public goods from 1991 we find that regions that were under british colonial power in the pre independence period and those where agrarian power was concentrated in the hands of landlords have lower access to these goods as do areas with high levels of social fragmentation jel h41 p16

public good provision in indian rural areas the returns to collective action by microfinance groups self help groups shgs are the most common form of microfinance in india the authors provide evidence that shgs composed of women only undertake collective actions for the provision of public goods within village communities using a theoretical model this paper shows that an elected official whose aim is to maximize re election chances exerts higher effort in providing public goods when private citizens undertake collective action and coordinate their voluntary contributions towards the same goods this effect occurs although government and private contributions are assumed to be substitutes in the technology of providing public goods using first hand data on shgs in india the paper tests the prediction of the model and shows that in response to collective action by shgs local authorities tackle a larger variety of public issues and are more likely to tackle issues of interest to shgs the findings highlight how the social behavior of shgs can influence the governance of rural indian communities

community based development and poverty alleviation an evaluation of china s poor village investment program we conduct the first systematic evaluation of the world s largest community based development program china s flagship poverty alleviation program began in 2001 which finances public investments in designated poor villages based on participatory village planning we use matching methods and a panel household and village data set with national coverage to compare changes from 2001 to 2004 in designated poor villages that began plan investments and in designated poor villages that had yet to begin plan investments we find that the program significantly increased both government and village financed investments while the program did not increase the income or consumption of poorer households it did increase the income and consumption of richer households by 6 1 to 9 2 we also find suggestive evidence that governance matters in the distribution of program benefits relative gains were greater for richer households in villages with more educated leaders and higher quality village committees delivered greater benefits to both richer and poorer households

network security and contagion abstract we develop a theoretical model of security investments in a network of interconnected agents network connections introduce the possibility of cascading failures due to an exogenous or endogenous attack depending on the profile of security investments by the agents we provide a tractable decomposition of individual payoffs into an own effect and an externality which also enables us to characterize individual investment incentives recursively by considering the network with one agent removed at a time using this decomposition we provide characterization of equilibrium and socially optimal investment levels as a function of the structure of the network highlighting the role of a new set of network centrality measures in shaping the levels of equilibrium and optimal investments when the attack location is endogenized by assuming that the attacker chooses a probability distribution over the location of the attack in order to maximize damage similar forces still operate but now because greater investment by an agent shifts the attack to other parts of the network the equilibrium may involve too much investment relative to the social optimum

can mandated political representation increase policy influence for disadvantaged minorities theory and evidence from india accountable governments often fail to reflect the interests of disadvantaged minorities this paper exploits the institutional features of political reservation as practiced in indian states to examine the role of mandated political representation in providing disadvantaged groups influence over policy making ifind that political reservation has increased transfers to groups which benefit from the mandate this finding also suggests that complete policy commitment may be absent in democracies as is found in this case jel d72 d78 hl 1 h50

worldwide acreage and yield response to international price change and volatility a dynamic panel data analysis for wheat rice corn and soybeans this study estimates a worldwide aggregate supply response for key agricultural commodities namely wheat rice corn and soybeans by employing a newly developed multi country crop and calendar specific seasonally disaggregated model with price changes and price volatility applied accordingly the findings reveal that although higher output prices serve as incentives to improve global crop supply as expected output price volatility acts as a disincentive depending on the crop the results show that own price supply elasticities range from about 0 05 to 0 40 output price volatility however has negative correlations with crop supply implying that farmers shift land other inputs and yield improving investments to crops with less volatile prices simulating the impact of price dynamics since 2006 we find that price risk has reduced the production response of wheat in particular and to a lesser extent rice thus dampening price incentive effects the simulation analysis shows that the increase in own crop price volatility during the 2006 2010 period has dampened yield by about 1 2 for the crops considered

the uniqueness of nash equilibrium in the private provision of public goods abstract this note provides an alternative elementary proof of bergstrom blume and varian s well known result on the uniqueness of nash equilibrium in the private provision of a public good when all goods are normal

mandated political representation and redistribution mandated political representation for minorities involves earmarking certain electoral districts where only minority group candidates are permitted to contest such quotas have been implemented in india for certain social groups and for women although gender quotas in the legislature are popular in several other countries this paper builds a political economy model to analyze the effect of such affirmative action on redistribution in equilibrium our model predicts that in situations where the minority group is economically disadvantaged and where voters favor candidates from their own group such a quota actually reduces transfers to poorer groups moreover redistribution in reserved districts leads to a rise in within minority group inequality

low level versus high level equilibrium in public utility services abstract heterogeneity of public utility services is common in developing countries in a high level equilibrium the quality of utility services is high consumer willingness to pay for services is high the utility is well funded and staff well paid in order to induce high quality of performance in a low level equilibrium the opposite is the case which alternative occurs depends on both the quality of utility management and public perceptions about service quality if a utility administration has the potential to offer high quality service and the public is aware of this high quality equilibrium also requires the public s service payments to be high enough to fund the needed pay incentives for the utility staff when the public lacks knowledge about the utility administration s quality the public s initial beliefs about the utility administration s quality will also influence their willingness to pay sufficiently for a high quality equilibrium to be realized this paper shows that with low confidence only a low level equilibrium may exist while with higher initial confidence a high level equilibrium becomes possible intermediate in between the low and high level outcomes can also occur in early periods with high level outcomes later on

crop supply dynamics and the illusion of partial adjustment we use field level data to estimate the response of corn and soybean acreage to price shocks our sample contains more than 8 million observations derived from satellite imagery and includes every cultivated field in iowa illinois and indiana we estimate that aggregate crop acreage responds more to price shocks in the short run than in the long run and we show theoretically how the benefits of crop rotation generate this response pattern in essence farmers who change crops due to a price shock have an incentive to switch back to the previous crop to capture the benefits of crop rotation our result contradicts the long held belief that agricultural supply responds gradually to price shocks through partial adjustment we would not have obtained this result had we used county level panel data standard econometric methods applied to county level data produce estimates consistent with partial adjustment we show that this apparent partial adjustment is illusory and we demonstrate how it arises from the fact that fields in the same county are more similar to each other than to fields in other counties this result underscores the importance of using models with appropriate micro foundations and cautions against inferring micro level rigidities from inertia in aggregate panel data our preferred estimate of the own price long run elasticity of corn acreage is 0 29 and the cross price elasticity is 0 22 the corresponding elasticities for soybean acreage are 0 26 and 0 33 our estimated short run elasticities are 37 larger than their long run counterparts

don t touch my road evidence from india on affirmative action and everyday discrimination summary this article investigates whether affirmative action in the form of electoral quotas affects group based discrimination the redistributive effect of quotas is subject to debate and their ultimate target is discrimination to identify the effect of electoral quotas i take advantage of their rotation across space and over time in india to proxy discrimination i use a measure of caste based exclusion from a public infrastructure namely streets in 2006 44 5 household members of the marginalized castes labeled scheduled castes sc still suffered from caste based exclusions i document that ongoing sc quotas reduce the likelihood of caste based exclusion for members of the scs by about one fifth the results also imply that the effect is not persistent it disappears with the end of the sc quota from a policy maker s perspective these results are mixed since electoral quotas do affect everyday discrimination even if the effect does not last these results are consistent with a temporary change in the behavior of members of the dominant castes after a one shot electoral quota these results are inconsistent with either a change in the stereotypes held by members of the dominant castes or a change in the aspirations of members of the lower castes

an empirical analysis of acreage effects of participation in the federal crop insurance program the extent to which crop insurance programs have resulted in additional land being brought into production has been a topic of considerable debate we consider multiequation structural models of acreage response insurance participation crp enrollment and input usage our analysis focuses on corn and soybean production in the corn belt and wheat and barley production in the upper great plains our results confirm that increased participation in insurance programs provokes statistically significant acreage responses in some cases though the response is very modest in every case in the most extreme cases 30 decreases in premiums as a result of increased subsidies provoke acreage increases ranging from 0 2 to 1 1 a number of policy simulations involving increases in premium subsidies are considered

the political economy of benefits and costs a neoclassical approach to distributive politics this essay offers a rational political explanation for the notorious inefficiency of pork barrel projects with an optimization model of legislative behavior and legislative institutions the model emphasizes the economically arbitrary from a welfare point of view importance of the geographic incidence of benefits and costs owing to the geographic basis for political representation we explore the implications of a legislator s objective function and derive conditions under which a representative legislature will select an omnibus of projects each of which exceeds the efficient scale

the spillover effects of affirmative action on competitiveness and unethical behavior we conduct an artefactual field experiment to examine various spillover effects of affirmative action policies in the context of castes in india we test a if individuals who enter tournaments in the presence of affirmative action policies remain competitive after the policy has been removed and b whether having been exposed to the policy generates unethical behavior and spite against subjects from the category who has benefited from the policy we find that these policies substantially increase the confidence and the competitiveness of the backward caste members however we find no spillover effect on confidence and competitiveness once affirmative action is withdrawn any gain in competitiveness due to the policy is then entirely wiped out furthermore the strong existing bias of the dominant category against the backward category is not significantly aggravated by affirmative action except when individuals learn that they have lost the previous competition

tribe or nation nation building and public goods in kenya versus tanzania this article examines how government policies affect ethnic relations by comparing outcomes across two nearby districts one in kenya and one in tanzania using colonial era boundary placement as a natural experiment despite similar geography and historical legacies governments in kenya and tanzania have followed radically different language education and local institutional policies with tanzania consistently pursuing more serious nation building the evidence suggests that nation building has allowed diverse communities in rural tanzania to achieve considerably better local public goods outcomes than diverse communities in kenya to illustrate while kenyan communities at mean levels of diversity have 25 percent less local school funding than homogeneous communities on average the comparable figure in the tanzanian district is near zero the kenya tanzania comparison provides empirical evidence that serious reforms can ameliorate social divisions and suggests that nation building should take a place on policy agendas especially in africa

the us gains from trade valuation using the demand for foreign factor services about 8 cents out of every dollar spent in the united states is spent on imports what if because of a wall or some other extreme policy intervention imports were to remain on the other side of the us border how much would us consumers be willing to pay to prevent this hypothetical policy change from taking place the answer to this question represents the welfare cost from autarky or equivalently the welfare gains from trade in this article we discuss how to evaluate these gains using the demand for foreign factor services the estimates of gains from trade for the us economy that we review range from 2 to 8 percent of gdp

from microlevel decisions to landscape changes an assessment of agricultural conservation policies the growth in conservation programs has created a need for modeling frameworks capable of measuring microlevel behavioral responses and macrolevel landscape changes this paper presents an empirical model that predicts farmers production practices and the resulting levels of agricultural runoffs at more than 42 000 agricultural sites in the upper mississippi river basin under alternative conservation policies results suggest that payments for conservation tillage and crop rotations increase the use of these conservation practices however the acreage response is inelastic and the programs are not likely to be cost effective on their own for addressing hypoxia problem in the gulf of mexico

can gender quotas break down negative stereotypes evidence from changes in electoral rules abstract in this paper we analyze the effect of gender quotas on women s involvement in political activity by using a rich data set providing information on all italian local administrators who were elected from 1985 to 2007 gender quotas were introduced by law in italy in 1993 and were in force until 1995 because of the short period covered by the reform some municipalities never voted under the gender quota regime this allows us to identify a treatment and a control group and to estimate the effects of gender quotas by using a difference in differences estimation strategy our estimates show that women s representation in politics after the reform increased significantly more in municipalities that were affected by the reform than in municipalities that were not affected this result also holds true if we exclude from our analysis elections which took place during the period in which the reform was in force moreover the higher women s representation in gender quota municipalities is not related to the advantages that women who were elected during the reform have obtained from incumbency and does not seem to be driven by differences in temporal trends between southern and northern regions these findings suggest that affirmative actions can be of use in breaking down stereotypes against women

uniqueness of nash equilibrium in private provision of public goods an improved proof our 1986 paper private provision of public goods presents a theorem on the uniqueness of nash equilibrium in the private provision of public goods richard hirth of the university of pennsylvania and clive fraser of warwick have independently suggested that although our theorem is correct our proof is incorrect each writer proposes an alternative method of proof for the theorem with characteristic charity to our own deficiencies we prefer to view our earlier proof as unduly opaque rather than wrong whichever view one takes a more transparent proof is called for the proof presented here follows the same outline as our 1986 proof but explains a step of the argument that was far from obvious in the original proof this proof uses the notation of the 1986 paper and refers to facts that are proved there

noncooperative household demand we study noncooperative household models with two agents and several voluntarily contributed public goods deriving the counterpart to the slutsky matrix and demonstrating the nature of the deviation of its properties from those of a true slutsky matrix in the unitary model we provide results characterising both cases in which there are and are not jointly contributed public goods demand properties are contrasted with those for collective models and conclusions drawn regarding the possibility of empirically testing the collective model against noncooperative alternatives and the noncooperative model against a general alternative

altruism in networks we provide the first analysis of altruism in networks agents are embedded in a fixed network and care about the well being of their network neighbors depending on incomes they may provide financial support to their poorer friends we study the nash equilibria of the resulting game of transfers we show that equilibria maximize a concave potential function we establish existence uniqueness of equilibrium consumption and generic uniqueness of equilibrium transfers we characterize the geometry of the network of transfers and highlight the key role played by transfer intermediaries we then study comparative statics a positive income shock to an individual benefits all for small changes in incomes agents in a component of the network of transfers act as if they were organized in an income pooling community a decrease in income inequality or expansion of the altruism network may increase consumption inequality

biofuels and land use change sugarcane and soybean acreage response in brazil scientists and economists are increasingly worried that biofuels production is leading to land use changes in the form of competition with food crops or loss of natural ecosystems i estimate acreage conversion in response to shocks in sugarcane a biofuels feedstock and soybean thought to be affected by united states corn ethanol production prices in brazil at a national and regional level using county level data from 1973 to 2005 i consider a dynamic panel data model of input demand for agricultural land conditioning on price changes of other commodities the short run crop price elasticity of sugarcane acreage in brazil is estimated to be approximately zero whereas the elasticity of soybean acreage is 0 9 when both spot and futures prices change the regional estimates for soybeans show considerable variation and are highest in areas of ecological importance such as the cerrado sugarcane estimates are more homogeneous these results should be taken into account in impact assessments of biofuels

targeted carbon tax reforms abstract in the presence of intersectoral linkages sector specific carbon tax changes can have complex general equilibrium effects in particular a carbon tax on the emissions of a sector can lead to an increase in aggregate emissions we analytically characterise how incremental taxes on the emissions of any set of sectors affect aggregate emissions we show that carbon tax reforms that target sectors based on their position in the production network can achieve a greater reduction in aggregate emissions than reforms that target sectors based on their direct emissions alone we illustrate the effects of carbon tax reforms by calibrating our intersectoral network model to the economies of two countries

futures prices in supply analysis are instrumental variables necessary citation nathan p hendricks joseph p janzen aaron smith futures prices in supply analysis are instrumental variables necessary american journal of agricultural economics volume 97 issue 1 1 january 2015 pages 22 39 https doi org 10 1093 ajae aau062

can social cohesion be harnessed to repair market failures evidence from group lending in guatemala the success of group lending in developing countries has been attributed to the ability of the institution to mitigate asymmetric information problems in credit markets previous research has offered a number of explanations for this phenomenon social ties between borrowing group members internal group pressure to repay loans and peer monitoring this research presents empirical tests on borrowing group data from guatemala which indicate that peer monitoring significantly effects borrowing group performance through stimulating intra group insurance group pressure is found to have a small effect in deterring moral hazard while the effect of social ties among members is statistically insignificant

are smallholder farmers better or worse off from an increase in the international price of cereals citation nakelse t dalton t j hendricks n p hodjo m 2018 are smallholder farmers better or worse off from an increase in the international price of cereals food policy 79 213 223 https doi org 10 1016 j foodpol 2018 07 006

distributional effects in household models separate spheres and income pooling we derive distributional eects for a non cooperative alternative to the unitary model of household behaviour we consider the nash equilibria of a voluntary contributions to public goods game our main result is that in general the two partners either choose to contribute to dierent public goods or they contribute to at most one common good the former case corresponds to the separate spheres case of lundberg and pollak 1993 the second outcome yields local income pooling a household will be in dierent regimes depending on the distribution of income within the household any bargaining model with this non cooperative case as a breakdown point will inherit the local income pooling we conclude that targeting bene ts such as child bene ts to one household member may not always have an eect on outcomes

nash implementation of a proportional solution to international pollution control problems abstract for a very general class of pollution control models involving strictly quasi concave utility functions over consumption and environmental quality and strictly convex emission abatement cost functions a proportional cost sharing mechanism is presented inspired by the ratio equilibrium introduced by 7 it is shown that the proportional solution yields a cost efficient allocation of abatement efforts and that the resulting utility imputation always lies in the stand alone core of the cost sharing game in order to decentralize the proportional cost sharing equilibrium a financial compensation mechanism implementing the proportional solution in complete information nash equilibrium is presented

the cost of segregation in social networks abstract this paper investigates the welfare effect of income redistribution in the private provision of public goods on networks we first show that the welfare effect of income redistribution is determined by bonacich centrality then we develop an index based on the network structure of interactions which roughly speaking measures the welfare effect of income redistribution confined to a component of contributors the proposed index vanishes when applied to large components of contributors that display special segregated interactions which suggests an asymptotic neutrality of redistributive policies

democracy and demography societal effects of fertility limits on local leaders we investigate whether restricting elected leadership positions to candidates with desirable characteristics leads to society wide adoption of those characteristics in a low income democracy with high political participation exploiting quasi experimental variation in fertility limits imposed on village council members in india to curb population growth we find that rural couples significantly decreased fertility in response socially disadvantaged families exhibit the greatest reduction in marginal fertility immediately following the passage of these limits but the decline in the long run stock of children is more evenly spread across socioeconomic groups the limits however also increased the already male biased sex ratio at birth in castes with strong son preference therefore while restricting access to elected office may aid in achieving social objectives it can also worsen inequality

on the private provision of public goods on networks abstract this paper analyzes the private provision of public goods where consumers interact within a fixed network structure and may benefit only from their direct neighbors provisions we present a proof of the existence and uniqueness of a nash equilibrium for general networks and best reply functions in addition we investigate the neutrality result of warr 38 and bergstrom blume and varian 6 whereby consumers are able to undo the impact of income redistribution as well as public provision financed by lump sum taxes to this effect we show that the neutrality result has a limited scope of application beyond a special network architecture in the neighborhood of the set of contributors

an empirical test of neutrality and the crowding out hypothesis this paper tests warr s neutrality hypothesis that the voluntary provision of a public good is independent of the distribution of income specifically i test the null hypothesis of neutrality against the alternative that total contributions to a public good will be larger the less equally income is distributed to test this hypothesis a new data set is constructed by merging data on total voluntary contributions to individual public radio stations with 1990 census data on the income distribution in each station s listening area i find that voluntary contributions increase as income inequality rises

are we witnessing a paradigm shift in the analysis of political competition this presidential address assesses the crisis of the downsian model of political competition in light of the mounting evidence on policy divergence and evaluates the possibility that the new theories of politicians quality and political selection provide an alternative theoretical conceptualization of political competition based on a critical review of the literature and on the author s works on content analysis of policy speeches income redistribution politicians quality and political legislation cycles this address concludes that multidimensional downsian models of political competition are adequate to explain policy divergence and points out the serious theoretical and empirical problems that models of political selection have to solve

seeking the local state gender caste and the pursuit of public services in post tsunami india summary how do ordinary citizens access the state in the world s largest democracy this paper examines a critical case from india exploring the channels formal and informal through which residents of two tsunami affected villages pursued public services following the 2004 disaster external shocks such as the proliferation of aid and ngos created moments in which individuals interacted differently with public agencies different village level groups attempted to access state resources through distinct sets of intermediaries marginalized groups women and caste minorities appeared most willing and likely to utilize formal government channels while men from the locally dominant caste turned to informal non state channels

diversity and redistribution abstract in this paper we analyze the interaction of income and preference heterogeneity in a political economy framework we ask whether the presence of preference heterogeneity arising for example from different ethnic groups or geographic locations affects the ability of the poor to extract resources from the rich we study the equilibrium of a game in which coalitions of individuals form parties parties propose platforms and all individuals vote with the winning policy chosen by plurality political parties are restricted to offering platforms that are credible in that they belong to the pareto set of their members the platforms specify the values of two policy tools a general redistributive tax which is lump sum rebated or used to fund a general public good and a series of taxes whose revenue is used to fund specific targeted goods tailored to particular preferences or localities our analysis demonstrates that taste conflict first dilutes but later reinforces class interests when the degree of taste diversity is low the equilibrium policy is characterized by some amount of general income redistribution and some targeted transfers as taste diversity increases in society the set of equilibrium policies becomes more and more tilted towards special interest groups and against general redistribution as diversity increases further however the only policy that can emerge supports exclusively general redistribution

identifying supply and demand elasticities of agricultural commodities implications for the us ethanol mandate we present a new framework to identify supply elasticities of storable commodities where past shocks are used as exogenous price shifters in the agricultural context past yield shocks change inventory levels and futures prices of agricultural commodities we use our estimated elasticities to evaluate the impact of the 2009 renewable fuel standard on commodity prices quantities and food consumers surplus for the four basic staples corn rice soybeans and wheat prices increase 20 per cent if one third of commodities used to produce ethanol are recycled as feedstock with a positively skewed 95 percent confidence interval that ranges from 14 to 35 per cent jel q11 q16 q42 q48

climate agreements in a mitigation adaptation game abstract we analyze the strategic interaction between mitigation public good and adaptation private good strategies in a climate agreement we show the fear that adaptation will reduce the incentives to mitigate carbon emissions may be unwarranted adaptation can lead to larger self enforcing agreements associated with higher global mitigation levels and welfare if it causes mitigation levels between different countries to be no longer strategic substitutes but complements we argue that our results extend to many public goods the well known problem of easy riding may turn into easy matching if the marginal utility of public good consumption is strongly influenced by private consumption

the uniqueness of the subscription equilibrium with endogenous labor supply abstract this paper presents a proof of the uniqueness of the nash equilibrium if public goods are financed through private donations and distortionary income taxation