spectrum auction designs and revenue variations this study examines a sample of 93 national 3g spectrum auctions for the period 2000 2011 to identify the sources of substantial revenue variations an implied reduced form econometric model that recognises the censored nature of the sample relates per capita winning bid per mhz per million populations values to regulator determined auction design characteristics auction competitiveness mobile wireless market conditions and spectrum package attributes identified from tender documents the analysis reveals that among other factors all auction design characteristics independently impact on realized 3g spectrum auction revenues

individual taxpayer response to tax cuts 1982 1984 with implications for the revenue maximizing tax rate abstract this paper measures the response of taxpayers to the u s personal rate reductions from 1982 to 1984 a baseline income distribution is created to describe what level and distribution could be expected in the absence of tax changes comparison of this baseline with actual tax return data shows that at least one sixth and probably one quarter of the revenue ascribable to the rate reductions was recouped by changes in taxpayer behavior the data also show that federal income tax revenue would have been maximized at a tax rate of about 35 percent and total income tax revenue maximized at a total tax rate of about 40 percent

collusion facilitating and collusion breaking power of simultaneous ascending and descending price auctions this article demonstrates that a robust tacit collusion evolves quickly in a collusion incubator environment but is destroyed by the simultaneous descending price auction theories of collusion producing behavior along with the detail of the states on which strategies are conditioned lead to a deeper understanding of how tacit collusion evolves and its necessary conditions these theories explain how the descending price auction destroys the collusion the experiments proceed by conducting simultaneous ascending price auctions in the collusion incubator then once the tacit collusion developed changing to the descending auction the change moved prices from collusive levels to near competitive levels

taxing top ceo incomes we use a firm ceo assignment framework to model the market for ceo effective labor in the model s equilibrium more talented ceos match with and supply more effort to larger firms taxation of ceo incomes affects the equilibrium pricing of ceo effective labor and hence spills over and affects firm profits absent the ability to tax profits or a direct concern for firm owners a standard prescription for high marginal income taxes emerges however given such an ability or concern the optimal marginal tax rates are much lower

multiple object auctions with budget constrained bidders in the last few years governments in many parts of the world have aggressively sought to privatize socially held assets this wave of privatization has included the sale of industrial enterprises in the former soviet union and eastern europe the sale of public transportation systems in britain and scandinavia and the sale of radio spectra in the u s both the enormity and the importance of these sales have naturally led to an examination of how best to accomplish this task auctions have been proposed and have frequently been used as time honoured convenient and attractive mechanisms for such sales this in turn has led to a revival of interest in the theory of auctions particularly those involving multiple objects the magnitude of these privatization sales has meant that in many instances it is realistic to consider that buyers may run up against liquidity or borrowing constraints the presence of these financial constraints introduces important differences into traditional auction theory for instance pitchik and schotter 1986 and che and gale 1996 1998 have shown that when bidders are subject to such constraints the conclusion of the celebrated revenue equivalence theorem no longer holds when multiple objects are auctioned in the presence of budget constraints it may be advantageous for a bidder to bid aggressively on one object with a view to raising the price paid by his rival and depleting his budget so that the second object may then be obtained at a lower price in effect a bidder may wish to raise a rival s costs in one market in order to gain advantage in another thus unlike in traditional auction theory a particular bidder s payoff is affected by the price paid by a rival bidder it is important to note that this effect comes into play only when several objects are sold

bidding behaviour in multi unit auctions an experimental investigation we present laboratory experiments of five different multi unit auction mechanisms two units of a homogeneous object were auctioned off among two bidders with flat demand for two units we test whether expected demand reduction occurs in open and sealed bid uniform price auctions we also test revenue equivalence for these auctions as well as for the ausubel the vickrey and the discrim inatory sealed bid auction furthermore we compare the five mechanisms with respect to the efficient allocation of the units auctions play a more and more important role in everyday business life an increasing number of important markets are organised as auctions and auction design is probably one of the most successful applications of economic theory to practice among the prominent examples are the spectrum auctions in the us and in europe treasury auctions in the us the design of electricity spot markets oil and timber sales as well as the massive use of procurement auctions both by the public sector and by private firms the spectrum auctions across the world have demonstrated that carefully designed auctions raise high revenues and often succeed in implementing efficient allocations

collusion via signalling in simultaneous ascending bid auctions with heterogeneous objects with and without complementarities collusive equilibria exist in simultaneous ascending bid auctions with multiple objects even with large complementarities in the buyers utility functions the bidders collude by dividing the objects among themselves while keeping the prices low in the most collusive equilibrium the complementarities are never realized the scope for collusion however narrows as the ratio between the number of bidders and the number of objects increases

auctions for social lending a theoretical analysis prosper today the second largest social lending marketplace with nearly 1 5 million members and 380 million in funded loans employed an auction mechanism amongst lenders to nance each borrower s loan until 2010 given that a basic premise of social lending is cheap loans for borrowers how does the prosper auction do in terms of the borrower s payment when lenders are strategic agents with private true interest rates we rst analyze the prosper auction as a game of complete information and fully characterize its nash equilibria and show that the uniform price prosper mechanism while simple can lead to much larger payments for the borrower than the vcg mechanism we next compare the prosper mechanism against the borrower optimal auction in an incomplete information setting and conclude by examining the prosper mechanism when modeled as a dynamic auction and provide tight bounds on the price for a general class of bidding strategies

collusion in second price auctions with heterogeneous bidders abstract we show that efficient collusion by any subset of bidders in second price private value auctions is possible even when the bidders are heterogeneous an important property of efficient collusion is that a bidder s net payoff from participating in collusion is independent of her valuation we show that the cooperative game whose characteristic function evaluated at a coalition is the ex ante collusive surplus of that coalition has a nonempty core a feature of more technical interest is the mechanism characterization when the private information of agents does not enter in a linear or even piecewise linear manner

collusion and equilibrium selection in auctions we study bidder collusion and test the power of payoff dominance as an equilibrium selection principle in experimental multi object ascending auctions in these institutions low price collusive equilibria exist along with competitive payoff inferior equilibria achieving payoff superior collusive outcomes requires complex strategies that depending on the environment may involve signalling market splitting and bid rotation we provide the first systematic evidence of successful bidder collusion in such complex environments without communication the results demonstrate that in repeated settings bidders are often able to coordinate on payoff superior outcomes with the choice of collusive strategies varying systematically with the environment auctions for timber cars oil drilling rights and spectrum bandwidth are just a few examples of markets where multiple heterogeneous lots are offered for sale simultaneously in multi object ascending auctions the applied issue of collusion and the theoretical issue of equilibrium selection are closely linked in these auctions bidders can profit by splitting the markets by acting as local monopsonists for a disjoint subset of the objects the bidders lower the price they must pay as opposed to the sealed bid auction the ascending auction format provides bidders with the opportunity to coordinate tacitly on dividing markets and to punish non collusive bidding thus low price collusive equilibria co exist along with high price competitive equilibria even in a non repeated setting brusco and lopomo 2002 if there are complementarities in bidder values across objects and auctions are repeated bidders may further benefit by splitting the markets over time and taking turns in buying packages at low prices these opportunities make the multi object ascending auction an ideal institution for the study of equilibrium selection assuming that communication between the bidders is limited to the bidding any splitting of the markets must be tacitly coordinated in the early stages of the auction thus achieving payoff superior collusive outcomes requires complex strategies that depending on the environment may involve signalling market splitting and bid rotation while such tacit coordination is possible in theory it is an empirical question of whether it may be achieved in practice

a study of collusion in first price auctions this paper examines the bidding for school milk contracts in florida and texas during the 1980s in both states firms were convicted of bid rigging the data and legal evidence suggest that the cartels in the two states allocate contracts in different ways one cartel divides the market among members while the other cartel also uses side payments to compensate members for refraining from bidding we show that both forms of cartel agreements are almost optimal provided the number of contracts is sufficiently large in the auction the cartel bidder may face competition from non cartel bidders the presence of an optimal cartel induces an asymmetry in the auction the selected cartel bidder is bidding as a representative of a group and has on average a lower cost than a non cartel bidder the data support the predicted equilibrium bidding behaviour in asymmetric auctions in accordance with optimal cartels

collusive bidder behavior at single object second price and english auctions models of collusive bidder behavior at single object second price and english auctions are provided the ind ependent private values model is generalized to permit the formulatio n of coalitions and a strategic response by the auctioneer cooperati ve strategies are found to be dominant in these models coalitions of any size are viable and the payoff to each member increases with th e size of the coalition in addition the collusive strategies of the coalition represent a noncooperative equilibrium the optimal respon se of the auctioneer is to establish a reserve price that is a functi on of the coalition s size these and other features of the model are found to be consistent with the essential features of actual behavio r copyright 1987 by university of chicago press

do tax reforms affect firm performance and executive remuneration evidence from a compressed wage environment the agency framework predicts a strong positive relationship between executive effort pay and firm performance we study how changes in norwegian payroll tax legislation and earnings tax which influence ceos return on effort affect firm performance and executive earnings for over 11 800 firms both reduced payroll tax and reduced marginal earnings tax increase firm performance measured by firms operating margins in the latter case total pay increases but contingent on the return on firm performance the fixed wage drops the sensitivity of the remuneration scheme to the earnings tax depends on ceo productivity and effort costs

implementation of reduced form auctions a geometric approach an auction is a mechanism for allocating a single indivisible object to one of several competing bidders the winner is the bidder who is awarded the object the rules of the auction specify two functions the first is the probability with which a bidder wins as a function of everyone s bids the second is the payment each bidder makes to the seller as a function of all the bids and whether or not he wins for instance a first price auction awards the object to the highest bidder with probability one providing there are no tie bids the winner pays his bid and the losers pay nothing the bidders in an auction differ significantly these differences are captured by the bidder s type a type may be the bidder s personal valuation of the object for sale his degree of risk aversion or perhaps his information about the object maskin and riley 1984 discuss a number of different economically meaningful examples of bidder types from the viewpoint of the seller and the other bidders each bidder s type is a random variable in this analysis we confine attention to auctions in which the types are independently and identically distributed according to a known probability distribution the revelation principle asserts that every auction is strategically equivalent to an auction in which bidders bid by announcing their type and no bidder has any incentive to lie such an auction is called an incentive compatible direct auction we will confine our attention to the probability functions for direct auctions and let the incentive compatibility conditions restrict the payment functions each bidder can compute the probability that he wins conditional on his own type by averaging over the types of the other bidders the function relating a bidder s type to his probability of winning is the reduced form of the auction the literature on optimal auctions usually addresses the problem of maximizing expected revenue for the seller for this purpose all the relevant information about the probability function of an auction is contained in its reduced form it is the reduced form that determines each bidder s behavior and hence the seller s expected revenue in a symmetric auction each bidder s reduced form is identical so that expected revenue is a functional defined on reduced forms which are functions of one variable namely types this makes the seller s problem somewhat tractable to design an auction a seller must be able to recognize a reduced form and recover the underlying auction reduced forms satisfy an intuitive feasibility condition given a set of types the

bounds on elasticities with optimization frictions a synthesis of micro and macro evidence on labor supply how can price elasticities be identified when agents face optimization frictions such as adjustment costs or inattention i derive bounds on structural price elasticities that are a function of the observed effect of a price change on demand the size of the price change and the degree of frictions the degree of frictions is measured by the utility losses agents tolerate to deviate from the frictionless optimum the bounds imply that frictions affect intensive margin elasticities much more than extensive margin elasticities i apply these bounds to the literature on labor supply the utility costs of ignoring the tax changes used to identify intensive margin labor supply elasticities are typically less than 1 of earnings as a result small frictions can explain the differences between micro and macro elasticities extensive and intensive margin elasticities and other disparate findings pooling estimates from existing studies i estimate a hicksian labor supply elasticity of 0 33 on the intensive margin and 0 25 on the extensive margin after accounting for frictions

marginal tax rates and income new time series evidence this paper estimates the dynamic effects of marginal tax rate changes on income reported on tax returns in the united states over the 1950 2010 period after isolating exogenous variation in average marginal tax rates in structural vector autoregressions using a narrative identification approach i find large positive effects of tax cuts in the top 1 of the income distribution in contrast to earlier findings based on tax return data i also find large effects in other income percentile brackets a hypothetical tax reform cutting marginal rates only for the top 1 leads to sizeable increases in top 1 incomes and has a positive effect on real gdp there are also spillover effects to incomes outside of the top 1 but top marginal rate cuts lead to greater inequality in pre tax incomes

the vulnerability of auctions to bidder collusion previous work has addressed the relative vulnerability of different auction schemes to collusive bidding the common wisdom is that ascending bid and second price auctions are highly susceptible to collusion we show that the details of ascending bid and second price auctions including bidder registration procedures and procedures for information revelation during the auction can be designed to completely inhibit or unintentionally facilitate certain types of collusion if auctions are designed without acknowledging the possibility of collusion then the design will ignore key features that impact the potential success of colluding bidders

ceo pay and appointments a market based explanation for recent trends ceos increased from an average of 700 000 in 1970 in 2002 constant dollars to over 2 2 million in 2000 1 during the same period the ratio of ceo cash compensation to average pay for production workers increased from about 25 in 1970 to nearly 90 in 2000 2 the most prevalent explanation in the popular press for this trend is the fat cat theory a variant of which has been espoused among academics by lucian bebchuk et al 2002 3 accord

taxation and executive compensation evidence from stock options abstract understanding the effects of taxes on executive compensation provides insight into the process determining this compensation and is a key input to top income tax rate policy a 2010 tax reform in canada which greatly increased the effective tax rate on stock option compensation for a subset of firms provides a natural experiment with which to address this issue difference in differences estimates suggest that this tax increase resulted in an immediate reduction in both stock option grants and the fraction of total compensation made up of stock options with limited if any substitution towards other components of compensation

rules and games this paper reconsiders the relationship between the rules of a game and its outcomes we develop a notion of rule reform that leads to the selection of pareto improved equilibria points we then apply this notion to a series of naturally occurring fishing rules including examples from malaysia india brazil turkey and canada we show that reforming a game is conceptually akin to reforming an economy

equilibrium reserve prices in sequential ascending auctions abstract we study a model where bidders have perfectly correlated valuations for two goods sold sequentially in two ascending price auctions the seller sets a reserve price before the beginning of each auction despite the lack of commitment by the seller we characterize an equilibrium and study its properties strategic non disclosure of information takes the form of non participation in the early auction by low valuation bidders while high valuation bidders bid up to their true valuations some buyers who would profitably buy at the reserve price refrain from participating in order to decrease the second auction reserve price

optimal second degree price discrimination and arbitrage on the role of asymetric information among buyers the traditional theory of second degree price discrimination tackles individual self selection but does not address the possibility that buyers could form a coalition to conduct arbitrage we study the optimal sale mechanism that takes into account both individual and coalition incentive compatibility we show that the monopolist can achieve the same profit regardless of whether or not buyers can form a coalition although marginal rates of substitution are not equalized across buyers of different types in the optimal sale mechanism they fail to realize the gains from arbitrage because of the transaction costs in coalition formation generated by asymmetric information

ascending prices and package bidding further experimental analysis abstract we explore the performance of multi round price guided combinatorial auctions for a previously untested class of value profiles in which synergies arise from shared fixed costs we find that in many cases a simulator that bids straightforwardly does well in predicting auction performance but exceptions arise because human bidders sometimes rely on cues besides prices to guide their package selection and because they sometimes bid aggressively on items for which they have no value in order to increase payments by bidders seeking complementary packages in our experiments this latter behavior not only raises prices but can also improve efficiency by mitigating the threshold problem comparisons between a combinatorial clock auction cca and a simultaneous ascending auction saa are reported

income inequality in the united states 1913 1998 this paper presents new homogeneous series on top shares of income and wages from 1913 to 1998 in the united states using individual tax returns data top income and wages shares display a u shaped pattern over the century our series suggest that the large shocks that capital owners experienced during the great depression and world war ii have had a permanent effect on top capital incomes we argue that steep progressive income and estate taxation may have prevented large fortunes from fully recovering from these shocks top wage shares were flat before world war ii dropped precipitously during the war and did not start to recover before the late 1960s but are now higher than before world war ii as a result the working rich have replaced the rentiers at the top of the income distribution

tacit collusion in auctions and conditions for its facilitation and prevention equilibrium selection in laboratory experimental markets the paper studies bidder behavior in simultaneous continuous ascending price auctions we design and implement a collusion incubator environment based on a type of public symmetrically folded and item aligned preferences tacit collusion develops quickly and reliably within the environment once tacit collusion developed it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game theoretic model the only successful remedy was a non public change in the preference of participants that destroyed the symmetrically folded and item aligned patterns of preferences creating head to head competition between two agents reminiscent of the concept of a maverick

internationalization and the evolution of corporate valuation by documenting the evolution of tobin s q before during and after firms internationalize the authors provide evidence on the bonding segmentation and market timing theories of internationalization using new data on 9 096 firms across 74 countries over the period 1989 2000 they find that tobin s q does not rise after internationalization even relative to firms that do not internationalize instead q rises significantly before internationalization and during the internationalization year but then q falls sharply in the year after internationalization quickly relinquishing the increases of the previous years to account for these dynamics the authors show that market capitalization rises before internationalization and remains high while corporate assets increase during internationalization the evidence supports models stressing that financial internationalization facilitates corporate expansion but challenges models stressing that internationalization produces an enduring effect on q by bonding firms to a better corporate governance system

non bidding equilibrium in an ascending core selecting auction abstract this paper investigates the perfect bayesian equilibrium in an ascending price core selecting auction which is recently used in some countries spectrum license auctions we suppose that there are two identical items two small bidders and one large bidder the small bidders demand only one unit of the item whereas the large bidder wants both units package bidding ensures that the large bidder faces no exposure problem and behaves truthfully however one of the small bidders stops bidding at the beginning in the equilibrium although small bidders generally face the free rider problem and have incentives to underbid once a bidder is the only small one remaining he bids truthfully stopping early induces the remaining bidder to behave truthfully hence each small bidder wants to be the first to stop bidding the free rider problem is considerably mitigated when there are many small bidders

the response of deferred executive compensation to changes in tax rates abstract given the increasing use of stock options in executive compensation we examine how taxes influence the choice of compensation and document that income deferral is an important margin of adjustment in response to tax rate changes to account for this option in the empirical analysis we explore deferral by estimating how executives choice of compensation between current and deferred income depends on changes in tax policy our empirical results suggest a significant impact of taxes on the composition of executive compensation

coping with asymmetries in the commons self governing irrigation systems can work many analysts presume that the appropriators of a common pool resource are trapped in a hobbesian state of nature and cannot themselves create rules to counteract the perverse incentives they face in managing the resource the logical consequence of this view is to recommend that an external authority the government take over the commons but considerable empirical evidence from field and experimental settings holds that appropriators frequently do constitute and enforce their own rules and that these rules work our research agenda is to develop a coherent understanding of the set of conditions that enhance or detract from self organizing capabilities when individuals differ substantially from one another for the sake of concreteness this paper focuses on the asymmetry present in most irrigation systems between those who are physically near the source of water the head enders and those who are physically distant from it the tail enders this paper first explores the interaction between head end and tail end farmers particularly their decisions about whether to devote resources to the upkeep of the irrigation system and how bargaining between the parties can benefit all sides finally we examine empirical evidence from a study of irrigation institutions in nepal and discuss the broader practical significance of our findings

the elasticity of taxable income with respect to marginal tax rates a critical review this paper critically surveys the large and growing literature estimating the elasticity of taxable income with respect to marginal tax rates using tax return data first we provide a theoretical framework showing under what assumptions this elasticity can be used as a sufficient statistic for efficiency and optimal tax analysis we discuss what other parameters should be estimated when the elasticity is not a sufficient statistic second we discuss conceptually the key issues that arise in the empirical estimation of the elasticity of taxable income using the example of the 1993 top individual income tax rate increase in the united states to illustrate those issues third we provide a critical discussion of selected empirical analyses of the elasticity of taxable income in light of the theoretical and empirical framework we laid out finally we discuss avenues for future research jel h24 h31 j22

weak cartels and collusion proof auctions abstract we study private value auctions in which bidders may collude without using side payments in our model bidders coordinate their actions to achieve an outcome that interim pareto dominates the noncooperative outcome we characterize auctions that are collusion proof in the sense that no such coordination opportunities exist and show that the efficient and revenue maximizing auctions are not collusion proof unless all bidders exhibit a concave distribution of valuations we then solve for revenue maximizing collusion proof auctions if distributions of valuations are symmetric and single peaked the optimal selling mechanism is a standard auction with a minimum bid followed by sequential negotiation in case no bidder bids above the minimum bid

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

the effect of marginal tax rates on taxable income a panel study of the 1986 tax reform act this paper uses a treasury department panel of more than 4 000 taxpayers to estimate the sensitivity of taxable income to changes in tax rates on the basis of a comparison of the tax returns of the same individual taxpayers before and after the 1986 tax reform the analysis emphasizes that the response of taxable income involves much more than a change in the traditional measures of labor supply the evidence shows an elasticity of taxable income with respect to the marginal net of tax rate that is at least one and could be substantially higher the implications for recent tax rate changes are discussed

jump bidding and overconcentration in decentralized simultaneous ascending auctions abstract a model of english auctions is proposed to incorporate the possibility of jump bidding when two objects are sold separately via such auctions bidders signal their willingness to pay via jump bids thereby forming rational expectations of the prices without relying on any central mediator hence a multi item bidder does not suffer the exposure problem of having to buy an item while he is uncertain about the price of its complement single item bidders however free ride one another in competing against a multi item bidder consequently the auctions overly concentrate the goods to a multi item bidder and never overly diffuse them to single item bidders

do taxes matter lessons from the 1980 s the response of the economy to two major although in important respects offsetting tax reforms has been much smaller than ardent supply side revolutionaries expected thus suggesting that a reassessment of the grounds for revolt is in order this paper offers such a reassessment by first discussing how the evidence from the tax reforms of 1981 and 1986 reflects on our understanding of the response to taxation with particular reference to savings and capital gains realizations i then reconstruct a 1992 view about how taxes affect behavior a unifying theme is that the tax system does much more than alter the relative prices of real variables it also provides incentives to misreport income restructure financial claims time transactions change the legal form of organization and so on for this reason observed low tax elasticities of real variables may be due to either low elasticities of substitution or the fact that tax policy changes opportunity sets in complex ways disentangling these explanations requires an emphasis on the transaction based nature of the tax system and the administration and enforcement of tax laws this abstract was borrowed from another version of this item

the english auction with differentiated commodities abstract we study economies with indivisibilities that satisfy the gross substitutes gs condition we define an excess demand set with the property that increasing the prices of all goods in excess demand eventually leads to the smallest walrasian prices this procedure is a generalization of the auction studied by g demange d gale and m j sotomayor polit econ 94 1986 863 872 in our auction truthful revelation of demand is a perfect bayesian equilibrium if the smallest walrasian prices correspond to the vickrey clarke groves payments however no dynamic auction can reveal sufficient information to implement the vickrey mechanism if all gs preferences are allowed journal of economic literature classification numbers d4 d44 d5 d51

bid rotation and collusion in repeated auctions this paper studies bidder collusion with communication in repeated auctions when no side transfer is possible it presents a simple dynamic bid rotation scheme which coordinates bids based on communication history and enables intertemporal transfer of bidders payoffs the paper derives a sufficient condition for such a dynamic scheme to be an equilibrium and characterizes the equilibrium payoffs in a general environment with affiliated signals and private or interdependent values with ipv it is shown that this dynamic scheme yields a strictly higher payoff to the bidders than any static collusion scheme which coordinates bids based only on the current reported signals

are ceos really paid like bureaucrats a common view is that there is little correlation between firm performance and ceo pay using a new fifteen year panel data set of ceos in the largest publicly traded u s companies we document a strong relationship between firm performance and ceo compensation this relationship is generated almost entirely by changes in the value of ceo holdings of stock and stock options in addition we show that both the level of ceo compensation and the sensitivity of compensation to firm performance have risen dramatically since 1980 largely because of increases in stock option grants

taxes and executive stock options abstract in the sixties the qualified stock option was the predominant form of long term incentive compensation contract for major industrial firms in the u s in the early seventies these same firms replaced their tax qualified stock option plans with non qualified sttock options and later modified these plans to include a variety of new contingent compensation arrangements some of which were based on accounting numbers instead of stock prices this paper develops the hypothesis that tax considerations play an important role in explaining the form of compensation contracts the pattern and timing of changes in the compensation plans of the top 100 industrial firms provides evidence consistent with the tax hypothesis

coordination in split award auctions we analyze split award procurement auctions in which a buyer divides full production between two suppliers or awards all production to a single supplier and suppliers have private cost information an intriguing feature of split awards is that the equilibrium bids are implicitly coordinated because a split award price is the sum of offered split prices each supplier can unilaterally veto a split award by bidding very high for the split the need to coordinate is reflected in a split price that does not vary with private information we also explore conditions under which split award auctions may be preferred to winner take all auctions

budget constraints and demand reduction in simultaneous ascending bid auctions the possibility even if arbitrarily small of binding budget constraints in simultaneous ascending bid auctions induces strategic demand reduction and generates significant inefficiencies under mild conditions on the distributions of the bidders values unconstrained bidders behave as if they were liquidity constrained even as the probability that bidders are budget constrained goes to zero

property rights regimes and natural resources a conceptual analysis the term common property resource is an example of a term repeatedly used to refer to property owned by a government or by no one it is also used for property owned by a community of resource users such usage leads to confusion in scientific study and policy analysis in this paper we develop a conceptual schema for arraying property rights regimes that distinguishes among diverse bundles of rights ranging from authorized user to claimant to proprietor and to owner we apply this conceptual schema to analyze findings from a variety of empirical settings including the maine lobster industry

an equilibrium analysis of the simultaneous ascending auction we provide a bayes nash equilibrium analysis of the simultaneous ascending auction saa when local bidders interested in a single item compete against global bidders interested in aggregating many items we first assume that each local bidder values only a specific item e g the license for the region where it has monopoly power and that global bidders valuation functions are convex for this environment we show that a global bidder faces an exposure problem with adverse consequences for revenue and efficiency in the limit when the number of items grows large the saa is revenue and efficiency equivalent to the vickrey clarke groves vcg mechanism we extend our analysis to include the case where items are substitutes for local bidders so that price arbitrage will occur as observed in many spectrum auctions this environment which combines substitutes and complements results in an aggravated exposure problem consequently the saa is no longer efficient and may yield dramatically lower revenues than the vcg mechanism finally we relax the assumption that global bidders valuation functions are convex by considering an environment with medium sized global bidders who demand fewer than all items we show that global bidders divide the market at low prices when market sharing is feasible while they engage in mutually destructive bidding when there is a fitting problem in both cases the saa again underperforms relative to the vcg mechanism

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

a note on the wallet game with discrete bid levels abstract it is well known that in the wallet game with two bidders bidding twice the individual signal is an equilibrium we prove that this strategy is never an equilibrium in a japanese english auction once discrete bid levels are introduced we also discuss the implications of this result

proxies for the corporate marginal tax rate abstract this paper focuses on how best to measure the corporate marginal tax rate which is an important input into financial analysis of the cost of capital financing policy corporate hedging and corporate reorganizations the results indicate that the simulated tax rate used by shevlin 1990 and graham 1996 although difficult to calculate is the best available proxy for the true marginal tax rate if the simulated rate is unavailable an easy to calculate trichotomous variable or the statutory marginal tax rate which captures the progressivity in the tax schedule are reasonable alternatives better than most commonly used tax variables

adjustment costs firm responses and micro vs macro labor supply elasticities evidence from danish tax records we show that the effects of taxes on labor supply are shaped by interactions between adjustment costs for workers and hours constraints set by firms we develop a model in which firms post job offers characterized by an hours requirement and workers pay search costs to find jobs we present evidence supporting three predictions of this model by analyzing bunching at kinks using danish tax records first larger kinks generate larger taxable income elasticities second kinks that apply to a larger group of workers generate larger elasticities third the distribution of job offers is tailored to match workers aggregate tax preferences in equilibrium our results suggest that macro elasticities may be substantially larger than the estimates obtained using standard microeconometric methods

bundling and optimal auctions of multiple products we study the optimal i e revenue maximizing auction of multiple products we make three major points first we extend the relationship between price discrimination and optimal auctions from the single product case to the multiple product case a monopolist setting prices for multiple products may offer discounts on purchases of bundles of products similarly the optimal auction of multiple products facilitates price discrimination by allocating products inefficiently to customers who are willing to purchase both products second we demonstrate that optimal auctions are qualitatively distinct from monopoly sales of multiple products because of uncertainty about the values of other consumers two products are bundled probabilistically in an optimal auction for a customer who is willing to buy both of them a customer may then receive a discount on a lower valued product without receiving a higher valued product third we show that in an optimal auction of two products the allocation of one product may vary with the amount of competition for the other product

what happens when you tax the rich evidence from executive compensation this paper examines the responsiveness of taxable income to changes in marginal tax rates using detailed compensation data on several thousand corporate executives from 1991 to 1995 the data confirm that the higher marginal rates of 1993 led to a significant decline in taxable income indeed this small group of executives may account for as much as 20 percent of the aggregate change in wage and salary income for approximately the one million richest taxpayers over this time period one person alone can account for more than 2 percent the decline however is almost entirely a short run shift in the timing of compensation rather than a permanent reduction in taxable income the short run elasticity of taxable income with respect to the net of tax share exceeds one in this sample but the elasticity after one year is at most 0 4 and probably closer to zero breaking out the tax responsiveness of different types of compensation shows that the large short run responses come almost entirely from a large inc

an evaluation of alternative measures of corporate tax rates abstract this paper examines the ability of financial statement measures of average and marginal tax rates mtr to capture tax attributes utilizing firm level tax and financial data the results suggest commonly used average tax rate measures provide little insight about statutory tax burdens and may introduce substantial bias into analyses of tax incidence financial statement based proxies for mtr particularly those based on simulation methods are found to perform well in estimating current year tax rates both current year and present value mtr are found to be highly correlated with an easily constructed binary proxy of firms tax status

generalized reduced form auctions a network flow approach we develop a network flow approach for characterizing interim allocation rules that can be implemented by ex post allocations our method can be used to characterize feasible interim allocations in general multi unit auctions where agents face capacity constraints both ceilings and floors applications include a variety of settings of practical interest ranging from individual and group specific capacity constraints set aside sale partnership dissolution and government license reallocation

the case for a progressive tax from basic research to policy recommendations the fair distribution of the tax burden has long been a central issue in policyhe fair distribution of the tax burden has long been a central issue in policymaking a large academic literature has developed models of optimal tax making a large academic literature has developed models of optimal tax theory to cast light on the problem of optimal tax progressivity in this theory to cast light on the problem of optimal tax progressivity in this paper we explore the path from basic research results in optimal tax theory to paper we explore the path from basic research results in optimal tax theory to formulating policy recommendations formulating policy recommendations models in optimal tax theory typically posit that the tax system should maximize a models in optimal tax theory typically posit that the tax system should maximize a social welfare function subject to a government budget constraint taking into account social welfare function subject to a government budget constraint taking into account that individuals respond to taxes and transfers social welfare is larger when resources that individuals respond to taxes and transfers social welfare is larger when resources are more equally distributed but redistributive taxes and transfers can negatively are more equally distributed but redistributive taxes and transfers can negatively affect incentives to work save and earn income in the fi rst place this creates the clasaffect incentives to work save and earn income in the fi rst place this creates the classical trade off between equity and effi ciency which is at the core of the optimal income sical trade off between equity and effi ciency which is at the core of the optimal income tax problem in general optimal tax analyses maximize social welfare as a function of tax problem in general optimal tax analyses maximize social welfare as a function of individual utilities the sum of utilities in the utilitarian case the marginal weight for individual utilities the sum of utilities in the utilitarian case the marginal weight for a given person in the social welfare function measures the value of an additional dollar a given person in the social welfare function measures the value of an additional dollar of consumption expressed in terms of public funds such welfare weights depend on of consumption expressed in terms of public funds such welfare weights depend on the level of redistribution and are decreasing with income whenever society values the level of redistribution and are decreasing with income whenever society values more equality of income therefore optimal income tax theory is fi rst a normative more equality of income therefore optimal income tax theory is fi rst a normative theory that shows how a social welfare objective combines with constraints arising from theory that shows how a social welfare objective combines with constraints arising from limits on resources and behavioral responses to taxation in order to derive specifi c limits on resources and behavioral responses to taxation in order to derive specifi c

using tax return data to simulate corporate marginal tax rates abstract we document that simulated corporate marginal tax rates based on financial statement data shevlin t 1990 estimating corporate marginal tax rates with asymmetric tax treatment of gains and losses the journal of the american taxation association 11 51 67 graham j 1996a debt and the marginal tax rate journal of financial economics 41 41 73 are highly correlated with simulated rates based on corporate tax return data we provide algorithms that can be used to estimate the book or tax simulated rates when they are not available we find that the simulated book marginal tax rate does a better job of explaining financial statement debt ratios than does the analogous tax return variable and discuss how the book simulated rate is likely to be an appropriate measure in settings with global long term considerations

dividend taxes and income shifting this paper analyzes whether a dividend tax cut for owner managers of closely held corporations encourages income shifting income generation or both we use rich swedish administrative micro data from 2000 to 2011 comprising detailed firm and individual level information we find robust evidence of extensive income shifting across tax bases in response to the 2006 swedish dividend tax cut owner managers of closely held corporations reclassify earned income as dividend income but do not increase total income the response is more pronounced for owner managers with tax incentives and with easier access to income shifting through a high ownership share

collusion via resale the english auction is susceptible to tacit collusion when post auction interbidder resale is allowed we show this by constructing equilibria where with positive probability one bidder wins the auction without any competition and divides the spoils by optimally reselling the good to the other bidders these equilibria interim pareto dominate among bidders the standard value bidding equilibrium without requiring the bidders to make any commitment on bidding behavior or postbidding spoil division

does tax policy affect executive compensation evidence from postwar tax reforms abstract the trends in executive pay and labor income tax rates since the 1940s suggest a high elasticity of taxable income with respect to tax policy by contrast the level and structure of executive compensation have been largely unresponsive to tax incentives since the 1980s however the relative tax advantage of different forms of pay was small during this period using a sample of top executives in large firms from 1946 to 2005 we also find a small short run response of salaries qualified stock options and bonuses paid after retirement to changes in tax rates on labor income even though tax rates were significantly higher and more heterogeneous across individuals in the first several decades following wwii we explore several potential explanations for the conflicting impressions given by the long run and short run correlations between taxes and pay including changes in social norms and concerns about pay equality

side communication yields efficiency of ascending auctions the two items case we analyze an ascending auction with anonymous item prices when there are two items that are substitutes this popular auction format entails increased opportunities for bidders to coordinate bids as the bidding process is longer and since bidders see the other bids and can respond to various signaling this has happened in many real auctions e g in the netherlands 3g telecom auction and in the fcc auctions in the us

collusion in auctions with externalities in standard auctions collusion among buyers eliminates bidding competition despite informational asymmetries collusion can however be imperfect when the situation involves externalities among buyers that is when a buyer is worse off if one rival wins the goon rather than if nobody gets it for intermediate values of the externality and under various objective functions the seller finds it optimal to design an auction that leads in equilibrium to a collusive outcome that is ex post inefficient for the group of buyers an ex ante incentive efficient collusion mechanism for the buyers is characterized in this situation

recent trends in top income shares in the usa reconciling estimates from march cps and irs tax return data although the majority of research on us income inequality trends is based on public use march cps data a new wave of research using irs tax return data reports substantially higher levels of inequality and faster growing trends we show that these apparently inconsistent estimates are largely reconciled if the inequality measure and the income distribution are defined in the same way using internal cps data for 1967 2006 we closely match irs data based estimates of top income shares reported by piketty and saez 2003 our results imply that any inequality increases since 1993 are concentrated among the top 1 percent of the distribution

low revenue equilibria in simultaneous ascending bid auctions low revenue equilibria allow participants in an auction to obtain goods at prices lower than would prevail in a competitive market these outcomes are generated as perfect equilibria of ascending bid multiunit auctions we show that these equilibria are possible under mild conditions conditions that are likely to prevail in many situations where auction formats have recently been adopted we argue that these equilibria could explain the low revenues of some recent auctions and discuss potential remedies to eliminate low revenue equilibria

optimal multi object auctions this paper analyses optimal auctions of several objects in the first model bidders have a binary distribution over their valuations for each object in which case the optimal auction is efficient the optimal auction takes one of two formats either objects are sold in independent auctions or a degree of bundling is introduced in the sense that the probability a bidder wins one object is increasing in her value for the other the format of the optimal auction may depend upon the number of bidders in the second model the restriction to binary distributions is relaxed and the optimal auction is then inefficient

the elasticity of taxable income evidence and implications abstract a central tax policy parameter that has recently received much attention but about which there is substantial uncertainty is the overall elasticity of taxable income we provide new estimates of this elasticity which address identification problems with previous work by exploiting a long panel of tax returns to study a series of tax reforms throughout the 1980s this identification strategy also allows us to provide new evidence on both the income effects of tax changes on taxable income and on variation in the elasticity of taxable income by income group we find that the overall elasticity of taxable income is approximately 0 4 the elasticity of real income not including tax preferences is much lower we estimate small income effects of tax changes on reported income implying that the compensated and uncompensated elasticities of taxable income are very similar we estimate that this overall elasticity is primarily due to a very elastic response of taxable income for taxpayers who have incomes above 100 000 per year who have an elasticity of 0 57 while for those with incomes below 100 000 per year the elasticity is less than one third as large moreover high income taxpayers who itemize are particularly responsive to taxation our estimates suggest that optimal tax structures may feature tightly targeted transfers to lower income taxpayers and a flat or even declining marginal rate structure for middle and high income taxpayers

robustly collusion proof implementation a contract with multiple agents may be susceptible to collusion we show that agents collusion imposes no cost in a large class of circumstances with risk neutral agents including both uncorrelated and correlated types in those circumstances any payoff the principal can attain in the absence of collusion including the second best level can be attained in the presence of collusion in a way robust to many aspects of collusion behavior the collusion proof implementation generalizes to a setting in which only a subset of agents may collude provided that noncollusive agents incentives can be protected via an ex post incentive compatible and ex post individually rational mechanism our collusion proof implementation also sheds light on the extent to which hierarchical delegation of contracts can optimally respond to collusion