network regulation and regulatory institutional reform revisiting the case of australia it is well understood that the success of liberalizing the electricity supply industry depends crucially on the quality and design of the regulatory and institutional framework this paper analyses the regulatory arrangements that underpin the work of the australian energy regulator aer these arrangements are contrasted with the regulatory structure of electricity provision in norway a key difference between the reform processes in the two countries relates to the lack of privatization in norway and the co existence of private and publicly owned generators and distributors in australia this comparative analysis allows us to make several recommendations to improve regulatory arrangements in australia these include greater independence for the aer better coordination among regulatory institutions greater use of benchmarking analysis greater customer involvement and improving market transparency and privatization of government owned corporations however the success of privatization will hinge upon the effectiveness of the regulatory environment

institutionalizing the triple helix research funding and norms in the academic system abstract what are the institutional mechanisms that enable or hinder the development of new forms of knowledge production this issue has been slightly neglected in the discussion of the triple helix to redress this shortcoming the authors suggest an institutionalist complement to the triple helix model the article analyzes the institutional regulation of academic research with a special emphasis on how norms in the academic system are constituted via research funding it is argued that funding is a key mechanism of change in the norm system since its reward structure influences the performance and evaluation of research the empirical analysis is based on the public financing of technical research in sweden with comparisons made with other countries the structure of research funding has been reformed in all the countries studied in addition to continuing recognition for scientific merit the reforms have had the effect of emphasizing the commercial potential and the societal relevance of the research supported the two dominant models of research funding an intra academic model and a top down interventionist model seem to be replaced partly with a catalytic one however there are counteracting tendencies some agencies still reproduce a model of reputational control and a collegial orientation among researchers it is concluded therefore that the forces of change and continuity are engaged in a process of negotiation about the normative regulation of academic research

natural resources and sub national economic performance does sub national democracy matter abstract the differentiation in the impact of resources on economic growth is often explained by the specifics of institutional factors the aim of this paper is to investigate how sub national political differences influence the effect of natural resources on economic growth using a dataset of russian regions this paper demonstrates that sub national democratization influences the growth effects of resources and considers possible mechanisms for this influence the paper finds that in russia natural resources are only capable of promoting growth in the regions with non democratic political systems that at the same time have an efficient and non corrupt bureaucracy

macro shocks and costly political action in non democracies this paper presents a theory of political instability in autocracies where the disenfranchised express their political preferences for a leadership replacement through costly political action we focus on the business regulatory environment as an arena for autocratic rent creation as a source of information asymmetry between the autocrat and the disenfranchised and as a potential political grievance for the disenfranchised within this context we revisit the role of macro shocks as a catalyst for political instability and propose a novel informational channel through which macro shocks may trigger costly political action when the autocrat chooses to create rents through regulation that deteriorates the mean macroeconomic outcome we then provide an empirical investigation of our theoretical hypotheses employing fixed effects panel regressions and an instrumental variable strategy over a sample of non democratic countries consistent with our theoretical hypotheses we demonstrate that adverse economic shocks increase the probability of mass protest episodes but that the magnitude of the effect depends on the extent to which business regulation is market distorting

do switching costs make markets less competitive abstract the conventional wisdom in economic theory holds that switching costs make markets less competitive this article challenges this claim the authors formulate an empirically realistic model of dynamic price competition that allows for differentiated products and imperfect lock in they calibrate this model with data from frequently purchased packaged goods markets these data are ideal in the sense that they have the necessary variation to identify switching costs separately from consumer heterogeneity equally important consumers exhibit inertia in their brand choices a form of psychological switching cost this makes the results applicable to the broad range of products that are distinctly identified i e branded rather than just to products for which there is a product adoption cost or explicit switching fee in the simulations prices are as much as 18 lower with than without switching costs more important equilibrium prices do not increase even in the presence of switching costs that

overcoming coordination failure in a critical mass game strategic motives and action disclosure abstract we study whether coordination failure is more often overcome if players can disclose their actions at a lower cost in an experiment subjects first choose their action and then choose whether to disclose this action to other group members and disclosure costs are varied between treatments we find that no group overcomes coordination failure when action disclosure costs are high but half of the groups do so when the costs are low simulations with a belief learning model can predict which groups will overcome coordination failure but only if it is assumed that players are either farsighted risk seeking or pro social to distinguish between these explanations we collected additional data on individual preferences and the degree of farsightedness we find that in the low cost treatment players classified as more farsighted more often deviate from an inefficient convention and disclose this action while the effect of risk and social preferences is not significant

the triple helix an evolutionary model of innovations abstract the lock in model by arthur arthur w b 1988 competing technologies in dosi g freeman c nelson r silverberg g soete l eds technical change and economic theory pinter london pp 590 607 can be extended to the case of two and even three sources of random variation thus one can model a triple helix of university industry government relations in the case of two sources the stabilization of a technological trajectory is enhanced while in the case of three a complex regime can be generated conditions for lock in lock out return to equilibrium substitution etc are specified in relation to the assumed complexity of the dynamics under study and with reference to the stage of development that is before or after lock in some normative implications of the triple helix model of innovations can be specified

the value of switching costs we study a dynamic model with an incumbent monopolist and entry in every subsequent period we first show that if all consumers have the same switching cost then the intertemporal profits of the incumbent are the same as if there was only one period we then study the consequences of heterogeneity of switching costs we prove that even low switching cost customers have value for the incumbent when there are more of them its profits increase as their presence hinders entrants who find it more costly to attract high switching cost customers

can democracy induce development a constitutional perspective we examine the constitutional design required for democratic societies to overcome poverty traps restricting agenda setting by ensuring subsistence levels of consumption and applying simple majority voting as a decision rule will not enable a society to overcome poverty we show that a combination of suitable constitutional rules can however overcome poverty and induce economic well being besides majority voting these rules include rotating agenda setting agenda repetition and tax protection rules we thus highlight the crucial role of democratic institutions for economic development

science policy in changing times are governments poised to take full advantage of an institution in transition while it is widely acknowledged that the institution of science is currently undergoing a major transformation there remains reluctance in many sectors to embrace the changes and maximize the utility of science and its role in economic growth the transformation of science is driven by economic factors rather than those value based accordingly confusion and contradiction in science policy statements become apparent when the structure of science policy and the mechanisms that aim to support collaborative arrangements of science are examined historical and cognitive evidence shows the distinctions of applied and basic research are human constructions and as such have become a handicap to the emerging knowledge based economy it is concluded that if the economic and social benefits of integrated arrangements in knowledge production are to be realized there is a pressing need to modify the current institution of science and the policies that would underlie it 2003 elsevier science b v all rights reserved

switching costs in two sided markets in many markets there are switching costs and network effects yet the literature gen erally deals with these two concepts separately this paper bridges the gap by analyzing their interaction effects or indirect bargain in a dynamic two sided market i show that in a symmetric equilibrium the classic result that the first period price is u shape in switching costs does not emerge but instead switching costs always intensify first period price competition moreover an increase in switching costs on one side decreases the first period price on the other side thus policies that ignore these effects may underestimate the welfare enhancing effects of switching costs

heterogeneous switching costs abstract we consider a two period model where consumers have different switching costs before the market opens an incumbent sells to all consumers after the market opens competitors appear we identify the equilibrium both with stackelberg and bertrand competition and show how the presence of low switching cost consumers benefits the incumbent despite the fact that it never sells to any of them furthermore we identify a free rider effect among consumers

labor coercion and the accumulation of human capital abstract this paper examines the effect of labor coercion on human capital accumulation we use micro data from puerto rico where unskilled laborers were forced to work for landowners during 1849 1874 using variation in municipality level suitability for coffee cultivation and international coffee prices we estimate the response of schooling to exogenous increases in relative demand for unskilled labor in regimes with and without forced labor during the coercive regime increased coffee prices had no effect on individuals literacy rates in coffee growing regions following the abolition of forced labor in 1874 similar changes in coffee prices reduced literacy rates by 12 consistent with a diminished skill premium in the free labor market regime relative to the coercive period

the devil is in the details the successes and limitations of bureaucratic reform in india abstract using a biometric technology to monitor the attendance of public health workers in india resulted in a 15 percent increase in staff presence particularly for lower level staff the monitoring program led to a reduction in low birth weight babies highlighting the importance of improving provider presence but despite the government initiating this reform there was ultimately a low demand by the government to use the higher quality attendance data available in real time to enforce their existing human resource policies e g leave or salary deductions due to logistical challenges and a not unrealistic fear of generating staff discord or increase in staff attrition especially among doctors who showed the least improvement in attendance while we observed some gains from this type of monitoring program technological solutions by themselves will not improve attendance of government staff without a willingness to use the data generated to enforce existing penalties

matching demand and supply in the agricultural knowledge infrastructure experiences with innovation intermediaries abstract the privatization of agricultural research and extension establishments worldwide has led to the development of a market for services designed to support agricultural innovation however due to market and systemic failures both supply side and demand side parties in this market have experienced constraints in effecting transactions and establishing the necessary relationships to engage in demand driven innovation processes to mitigate these constraints a field of intermediary organizations has emerged to assist agricultural entrepreneurs to articulate demand forge linkages with those that can provide innovation support services and manage innovation processes this article aims to give an overview of the different kinds of the so called innovation intermediaries that have emerged in the netherlands and to report on their contributions and the tensions that are being experienced with regard to their functioning the article concludes with a discussion in which it is argued that the state should play a role as a market facilitator by funding such innovation intermediaries

institutions and growth in limited access societies we build a dynamic political economy model with a two class society workers and the elite in which the elite formation the innovation rate and fiscal policy are endogenous the model generates a mapping between institutions and patterns of growth consistent with empirical evidence ex ante when facing constraints in choosing institutions the elite may delegate policy control to some of its members even though such delegation exacerbates the conflict within the elite and causes policy failures committing to such institutional arrangements prevents more harmful outcomes such as rapid entry and subsequent deterioration of the elite s economic and political power

exploring the determinants of best practice benchmarking in electricity network regulation abstract in this paper we use a best practice index constructed from the survey responses of regulators in 40 countries to explore the determinants of the methods used in electricity network regulation drawing from the incentive regulation and institutional economics literature we construct an empirical model to investigate the impact of industry size political and economic institutions on the degree of best practice regulation our results suggest that the existence and experience of an independent regulator is the most important institutional determinant of best practice regulation in addition small numbers of network companies act as a constraint on the use of advanced benchmarking methods finally regional effects are also important these findings lead us to question whether one best practice model is in fact applicable to countries with very different political and economic contexts

a model of market power in customer markets we develop a model for studying dynamic competition in environments with frictions that lead to partial lock in of customers to products the dynamic aspects associated with customer retention and acquisition introduce pricing incentives that do not exist in more traditional static product markets the proposed model while highly stylized maintains certain symmetry properties that allow us to obtain equilibrium existence and uniqueness we then study the comparative statics of the model and derive a closed form relationship between average equilibrium markups and the herfindahl index we illustrate how the model can be used by analyzing mergers in such a dynamic environment

economic backwardness in political perspective government policies and institutions shape economic incentives and via this channel have a first order impact on economic development why then do many societies adopt policies that discourage investment and maintain institutions that cause economic backwardness perhaps politically powerful groups elites are not in favor of economic growth but why it would appear that economic growth would provide more resources for these groups to take over or tax increasing their economic returns so why don t powerful groups always support economic development in this paper we develop a theory of inefficient government policies and institutions all else equal politically powerful groups would welcome superior institutions and technologies but in practice all else is not equal because superior institutions and technologies may reduce their political power and make it more likely that they will be replaced at the center of our theory is therefore the idea that changes in institutions or the introduction of new technologies often create turbulence eroding the political advantages and future economic rents of incumbent elites alternatively new technologies may enrich competing groups increasing their threat to incumbents these considerations make politically powerful groups fear losing power and oppose economic and political change even when such change will benefit society as a whole to understand the mechanism at work and its potential applications consider a concrete example industrialization in the nineteenth century bairoch 1982 estimates that between 1830 and 1913 world manufacturing output increased by a factor of 5 see table 1 panel a nevertheless this process was highly uneven across regions and countries bairoch also calculates that over the same period manufacturing output in developed countries europe and north america increasedbyafactorofover10 whereasitdeclinedinthe third world among developed countries there were

how to make a dis entrepreneur of the schumpeterian entrepreneur the impact of institutional settings on growth fiscal and monetary institutions are conspicuously omitted in the conventional theory of long run economic growth moving from the schumpeterian entrepreneur who adopts new technology because its value according to tobin s q dominates the economic rents of existing capital we argue that the schumpeterian entrepreneur s incentives to innovate change when he is transplanted into the public economy we analyze two alternative institutional settings denoted as long chain and short chain through the long chain model we show that the schumpeterian entrepreneur is driven towards destructive creation of new capital thus becoming a political dis entrepreneur while the quasi contractual short chain model provides incentives to innovate

the dynamics of innovation from national systems and mode 2 to a triple helix of university industry government relations abstract the triple helix of university industry government relations is compared with alternative models for explaining the current research system in its social contexts communications and negotiations between institutional partners generate an overlay that increasingly reorganizes the underlying arrangements the institutional layer can be considered as the retention mechanism of a developing system for example the national organization of the system of innovation has historically been important in determining competition reorganizations across industrial sectors and nation states however are induced by new technologies biotechnology ict the consequent transformations can be analyzed in terms of neo evolutionary mechanisms university research may function increasingly as a locus in the laboratory of such knowledge intensive network transitions

a simple model of inefficient institutions this paper develops a simple model of economic and political institutions that lead to poor aggregate economic performance in the model economy groups with political power the elite choose policies to increase their income and to directly or indirectly transfer resources from the rest of society to themselves the resulting equilibrium is generally inefficient because of three distinct mechanisms 1 revenue extraction 2 factor price manipulation and 3 political consolidation in particular the elite may pursue inefficient policies to extract revenue from other groups they may do so to reduce the demand for factors coming from other groups in the economy thus indirectly benefiting from changes in factor prices finally they may try to impoverish other groups competing for political power the elite s preferences over inefficient policies translate into inefficient economic institutions the notable exception to this general picture emerges when long term investments are important thus creating a commitment holdup problem whereby equilibrium taxes and regulations are worse than the elite would like them to be from an ex ante point of view in this case economic institutions that provide additional security of property rights to other groups can be useful