efficient and durable decision rules with incomplete information we compare six concepts of efficiency for economies with incomplete information depending on the stage at which individuals welfare is evaluated and on whether incentive constraints are recognized an example is shown in which an incentive efficient decision rule may be unanimously rejected by the individuals in the economy we define durable decision rules which can resist such unanimous rejection and show that efficient durable decision rules exist

the infant export industry argument when actual consumption experiences are required to learn about a commodity s qualities subsidization of infant exporters can be justified as a first best policy measure this paper develops a dynamic model of optimal foreign market cultivation and examines the type and magnitude of trade intervention that is warranted and how this intervention adjusts over time it also focuses on changing production consumption and trade patterns as well as on welfare implications for individuals and society as the subsidization process unfolds international borrowing is allowed and is shown to cushion against severe welfare losses in the early phases of export subsidization l argument en faveur de la protection d une industrie d exportation dans la phase initiale de son developpement quand on ne peut apprecier les qualites d un bien qu en le consommant effectivement on peut defendre comme politique optimale les subventions aux exportateurs dans la phase initiale de production de leur bien ce memoire developpe un modele dynamique de mise en valeur optimale des marches etrangers et examine quel type d intervention est justifiee quelle intensite de support est necessaire et a quel moment cette aide doit etre modifiee a mesure que le temps passe l auteur examine aussi les implications pour la structure de la production de la consommation et du commerce de ce type d intervention ainsi que ses effets sur le niveau de bien etre des individus et de la collectivite l emprunt international permet d amortir le choc de pertes de bien etre importantes dans les phases initiales de la subvention des exportations

country of origin effects on product evaluations this article reviews the literature regarding the effect of country of origin on buyer evaluations of products the issue is important for countries especially resource poor developing countries that need to increase manufactured exports and for firms that source products in countries different from where sold marketing inferences are drawn and implications for future research are developed

the effect of capital gains taxation on home sales evidence from the taxpayer relief act of 1997 the taxpayer relief act of 1997 tra97 significantly changed the tax treatment of housing capital gains in the united states before 1997 homeowners were subject to capital gains taxation when they sold their houses unless they purchased replacement homes of equal or greater value since 1997 homeowners can exclude capital gains of 500 000 or 250 000 for single filers when they sell their houses such dramatic changes provide a good opportunity to study the lock in effect of capital gains taxation on home sales using 1982 2008 transaction data on single family houses in 16 affluent towns within the boston metropolitan area i find that tra97 reversed the lock in effect of capital gains taxes on houses with low and moderate capital gains specifically the semiannual sales rate of houses with positive gains up to 500 000 increased by 0 40 0 62 percentage points after tra97 representing a 19 24 percent increase from the pre tra97 baseline sales rate in contrast i do not find tra97 to have a significant effect on houses with gains above 500 000 moreover the short term effect of tra97 is much larger than the long term effect suggesting that many previously locked in homeowners took advantage of the exclusions immediately after tra97 in addition i exploit the 2001 and 2003 legislative changes in the capital gains tax rate to estimate the tax elasticity of home sales during the post tra97 period the estimation results suggest that a 10 000 increase in capital gains taxes reduces the semiannual home sales rate by about 0 1 0 2 percentage points or 6 13 percent from the post tra97 average sales rate

export industry policy and reputational comparative advantage abstract country of origin reputations are endogenized in this paper and it is shown that otherwise identical countries can be correctly perceived as differing in their percentage of high quality producers these self fulfilling reputations determine not only the average quality of a country s exports but also the type of products in which a country specializes hence the pattern of international trade can be determined by this reputational comparative advantage an inferior country of origin reputation leads to lower national welfare therefore several trade and industrial policies that can improve country of origin reputation are examined

quantitative restrictions in the presence of cost based informational asymmetries this study introduces a cost based informational asymmetry into a two period model where a domestic incumbent firm s behavior in the first period affects the entry decision of a foreign firm in the second period the effects of import quota policy within this environment are examined and compared to the standard full information effects when quota quantities are set exogenously the standard effects of quota policy may be significantly altered depending on whether or not policy induces the domestic firm to signal cost structure for example higher quotas may discourage foreign entry because of the induced signaling effects of quota policy recognition that incomplete information is the rule rather than the exception when decisionmakers interact in an international setting has stimulated an emerging literature on the effects of trade policy in the presence of informational failures particularly germane to the present study are those papers that introduce an informational asymmetry into an international model of imperfect competition the majority of this literature examines the sensitivity of optimal strategic trade policy to information failures within a brander spencer 1985 model where the domestic and foreign firms compete for export sales to a third market and either the domestic or foreign government employs export subsidies collie and hviid 1993 qiu 1994 maggi 1995 brainard and martimort 1997 wright 1998 collie and hviid 1994 on the other hand allow for domestic consumption and consider optimal import policy in the presence of a foreign monopolist analysis that focuses on the positive effects of trade policy in the presence of informational failures is more limited one such example is a study by hartigan 1994 which considers the effects of antidumping duties to date however there has been no analysis of how and whether the introduction of an informational failure alters the effects of quantitative restrictions to trade the aim of the present study is to extend the existing literature by examining the effects of a quantitative restriction to trade in the presence of a cost based informational asymmetry within a standard two period entry model 2 during the initial time period a domestic firm supplies the home market and

the taxpayer relief act of 1997 and homeownership is smaller now better i introduction while there is a lengthy literature on the u s tax code s mortgage interest deduction and property tax deduction less attention has been paid to the capital gains tax treatment of owner occupied housing prior to 1997 the u s federal income tax code allowed home sellers to roll over capital gains taxes from the sale of a home if they bought up that is if they purchased another house within 2 years that was at least as expensive as their previous home in 1996 the u s office of management and budget omba estimated tax expenditures of 14 4 billion from this deferral rollover of capital gain taxation home sellers over the age of 55 were treated differently than those under 55 as they received a one time capital gains tax exclusion from the sale of an owner occupied home of up to 125 000 a tax expenditure of 5 2 billion 1 to give some perspective the tax expenditure associated with the deductibility of state and local property taxes was estimated to be 15 9 billion and the expenditure from the deductibility of mortgage interest payments was 47 5 billion in 1996 1 the passage of the taxpayer relief act of 1997 tra97 eliminated the differential treatment of home sellers over and under the age of 55 after 1997 the first 250 000 500 000 in capital gains from the sale of a single married owner occupier s primary residence is tax exempt regardless of the home seller s age and whether they purchase more or less housing following the sale of their residence for most home sellers this effectively eliminates capital gains taxation from the sale of a primary residence as the median home price was less than the exclusion amount 2 in addition tra97 lowered the marginal tax rate applied to long term capital gains from any assets including housing incentives created by the federal tax code prior to 1997 for home sellers under the age of 55 to purchase a more expensive house than their previous one or buy up to defer capital gains taxes have been of particular interest to economists if instead a home seller bought a less expensive home or bought down and had a capital gain taxes were paid on the difference between the values of the two homes up to the maximum of the capital gain thus for home sellers incentives to buy more expensive homes were created in addition to the incentive to buy up the differential tax treatment of home sellers under 55 from those older than 55 may lead to a lock in effect the incentive for a homeowner under 55 to defer selling her home if she desires a less expensive one consistent with shan 2011 this creates mismatch in the housing market as homeowners choose to reside in homes that no longer reflect their housing demand in an effort to avoid taxation of capital gains this being the case the post tra97 taxation of capital gains is expected to increase the likelihood that a homeowner younger than 55 moves to less expensive housing while it is true that home sellers over the age of 55 were affected by tra97 as it increased the level of capital gains exempt from taxation and lowered capital gains tax rates we do not expect the impact of these changes to lead to as significant behavioral changes for home sellers older than 55 as the behavioral changes for those under 55 3 exploiting the fact that tra97 differentially affects those over and under 55 allows identification of some of the effects it has had on the housing market specifically this allows us to see if home sellers under the age of 55 who are no longer locked in to their current level of housing consumption bought less expensive housing or moved down after 1997 reducing mismatch rather than focusing on all home sellers under the age of 55 to provide better comparison with home sellers over the age of 55 we focus on home sellers between the age of 50 and 54 and compare with home sellers between the ages of 56 and 60

the role of export subsisies when product quality is unknown abstract we explore the role of export subsidies when foreign goods are initially of unknown quality to domestic consumers absent export subsidies entry of high quality firms may be blocked by their inability to sell at prices reflecting their true quality export subsidies can break this entry barrier and increase welfare moreover even when high quality firms find it possible to signal their quality to consumers through an introductory pricing strategy a rolefor government policy can arise the signal low introductory price transfers surplus from foreign producers to domestic consumers and can be avoided with an appropriate export tax subsidy policy

the multinational firm direct investment is incorporated into a simple general equilibrium model of international trade the analysis focuses on an attempt to endogenize the internalization decision it is argued that a reasonable approach assumes that arm s length contracts must be simple so that complex arrangements require internalization the model relates direct investment to the degree of underlying uncertainty and to fundamental trade determinants such as relative factor endowments the behavior of the model contrasts sharply with that of the markusen helpman model which takes internalization for granted

market structure and the timing of technology adoption with network externalities abstract the paper shows that in the presence of network externalities consumers adopt conventional technologies too early the waiting option for a newly emerging technology is not exercised enough this problem is aggravated when the new technology is provided by a single producer with market power because any positive value created via waiting by current consumers will be ex post appropriated by the monopolist therefore the monopolist s power to extract surplus operates against his own interests in this dynamic setting the paper also shows how the producer of a new technology can partially overcome the problem of too little waiting by using licensing as a commitment device

country of origin effects for uni national and bi national products this study examines the effects of country of origin and brand name cues on consumer evaluations of uni national and bi national products and estimates the perceived values of such cues from personal interviews with a regional quota sample of household residents the study found the salience of country of origin in product evaluations under within subject experimental design finally managerial implications are discussed in regards to international branding and sourcing strategies

a theory of collective reputations with applications to the persistence of corruption and to firm quality the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by his past behaviour and because his track record is observed only with noise by the group s past behaviour as well the paper thus studies the joint dynamics of individual and collective reputations and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality 1 collective reputations collective reputations play an important role in economics and the social sciences countries ethnic racial or religious groups are known to be hard working honest corrupt hospitable or belligerent some firms enjoy substantial rents from their reputations for producing high quality products some departments are reported to treat their faculty or students fairly the paper is a first attempt at modelling the idea of group reputation as an aggregate of individual reputations a member s current incentives are affected by her past behaviour and because her track record is observed only with noise by the group s past behaviour as well the paper studies the joint dynamics of individual and collective reputations in a model in which current generations are progressively replaced by new ones and derives the existence of stereotypes from history dependence rather than from a multiplicity of equilibria or from the existence of a common trait as is usually done in the literature see section 2 for a detailed comparison with the literature it shows that new members of an organization may suffer from an original sin of their elders long after the latter are gone and it derives necessary and sufficient conditions under which group reputations can be rebuilt last the paper applies the theory to analyse when a large firm can maintain a reputation for quality let us spell out the building blocks of our theory in more detail a a group s reputation is only as good as that of its members each member is characterized by individual traits such as talent diligence or honesty past individual behaviour conveys information about these traits and generates individual reputations

infant industry protection reconsidered the case of informational barriers to entry in industries with imperfect consumer information the lack of a reputation puts latecomers at a competitive disadvantage vis a vis established firms we consider whether the existence of such informational barriers to entry provides a valid reason for temporarily protecting infant producers of experience goods and services our model incorporates both moral hazard in an individual firm s choice of quality and adverse selection among potential entrants into the industry we find that infant industry protection often exacerbates the welfare loss associated with these market imperfections

location costs product quality and implicit franchise contracts abstract in the literature on international trade only little attention has been given to informational asymmetries between firms and consumers with respect to product quality the few economic models that analyze the question of how asymmetric information about product quality might affect trade flows treat product quality as exogeneous in contrast our model takes product quality as an endogeneous variable i e firms can choose the quality they wish to produce in this case location costs can signal product quality under certain conditions and thereby affect international trade flows more specifically intra industry trade in vertically differentiated experience goods can be determined by information asymmetries about product quality

the boundaries of multinational enterprises and the theory of international trade this paper begins with a review of empirical evidence on multinational firms conceptual underpinnings of a theory are developed relying in particular on the notion of knowledge capital as a mobile joint input into geographically separated production facilities this idea is embedded in a simple two country general equilibrium model that supports multinational production in equilibrium under conditions consistent with the empirical evidence the final section examines internalization and shows why certain properties of knowledge capital also imply a preference for transferring technologies internally within the firm rather than through arm s length markets

tying in international trade evidence on countertrade this paper provides an empirical analysis of countertrade based on 230 transactions whose details were collected from trading houses and firms involved in countertrade section 2 describes the data base and states the stylised facts of countertrade that need to be explained section 3 gives a critical review of the most frequent explanations of countertrade and confronts them with the data in section 4 i examine whether evidence of the theoretical gains from tying trade flows can be found in the data the potential gains from tying considered in this section are those generated by restoring price flexibility in the presence of some market distortions and those generated by preventing contractual hazards associated with information asymmetry and ex post bilateral monopoly section 5 discusses the implications of the findings of the paper for trade policy and the gatt author

licensing versus direct investment a model of internalization by the multinational enterprise a firm must decide whether to serve a foreign market by exporting building a foreign branch plant or licensing the production to an existing foreign producer the existence of reputations implies that any licensing agreement must provide a licensee with the incentive to maintain the reputation this creates a motive for the firm to internalize transactions by building a branch plant i e by becoming a multinational the model reflects a more general notion that the inability of the firm to control a licensee s agent s actions can provide incentives for multinational activity the paper explores the determinants of the firm s mode of operation as well as the consequences of certain government policies

capital gains taxation and residential mobility in sweden abstract theoretical studies have shown that capital gains taxes in the housing market may create lock in effects but so far no empirical evidence has been presented regarding the size of these effects for a panel of swedish house owners in 1984 1990 we show that lock in effects only appear for households with income reductions the size of these lock in effects crucially depends on the magnitude of the income loss the theoretical model and features of the swedish tax system imply that lock in effects depend on the degree of mismatch in the current residence and whether the households buy up or buy down

social acceptance of renewable energy innovation an introduction to the concept this paper introduces the special issue on social acceptance of renewable energy innovation it is a collection of best papers presented at an international research conference held in tramelan switzerland in february 2006 while there are ambitious government targets to increase the share of renewable energy in many countries it is increasingly recognized that social acceptance may be a constraining factor in achieving this target this is particularly apparent in the case of wind energy which has become a subject of contested debates in several countries largely due to its visual impact on landscapes this paper introduces three dimensions of social acceptance namely socio political community and market acceptance factors influencing socio political and community acceptance are increasingly recognized as being important for understanding the apparent contradictions between general public support for renewable energy innovation and the difficult realization of specific projects the third dimension market acceptance has received less attention so far and provides opportunities for further research particularly from management scholars

moral hazard as an entry barrier in an experience goods industry an entrant who could make positive profits by providing a better deal to buyers than do incumbents may cheat buyers by providing goods of low quality to make even greater profits if buyers foresee this possibility they will be unwilling to buy from an entrant as a result moral hazard in a seller s choice of the quality of an experience good can lead to a barrier to entry in particular since hit and run entry is likely to lead to low quality choice the threat of such entry may not discipline the pricing of incumbents we also show that the temptation to dishonest entry the moral hazard problem is stronger if buyers are already receiving some consumer surplus as a result there is a first entrant advantage because the first entrant faces less temptation to provide inefficiently low quality than do subsequent entrants and with rational buyers this works to his advantage the scale of entry may affect quality incentives and therefore introductory offers may assure buyers of an entrant s quality but this cannot happen under a suitable definition of constant returns

trade and insurance with adverse selection this paper considers a small open economy with a safe sector and a risky sector the probability of success in the risky activity differs across individuals and is private information it is shown that policies that sustain informationally constrained pareto optima should not include tariffs a laissez faire competitive equilibrium if it exists is pareto optimal these results contrast with previous literature on the role of tariffs as insurance where private risk markets are assumed away in an ad hoc manner

domestic industrial structure and export quality country of origin may provide a signal of product quality if consumers are on average correct in thei r assessments of product quality from a given country then a lemons effect emerges a firm which pays the full cost of quality improvem ent will receive only diluted benefits in return while competitors gain by free riding the resulting international trade equilibrium i s suboptimal for the exporting country the country may be able to ra ise its welfare by use of export quality standards or by internalizi ng the externality by limiting export licenses or by industrial conso lidation copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

optimal export policy in the presence of informational barriers to entry and imperfect competition abstract this paper examines government intervention to help exporters overcome informational barriers to entry into foreign markets foreign consumers know the quality of a local good but not that of the imported substitute an exporter who chooses high quality needs to signal this choice to foreign consumers via a high introductory price export policy affects both the signaling distortion and competition between exporter and incumbent the signaling distortion may call for an export subsidy competition for an export tax which policy is adopted in equilibrium depends on industry characteristics over time the export tax tends to rise as the signaling distortion disappears

trade policy with risky investment in quality consider a new export market in which firms can invest in quality but may fail to achieve quality quality of the export good then varies across firms having endogenous whether to invest and exogenous determined by nature aspects previous works suggest that the market outcome and socially optimal policy depend on whether quality is exogenous or endogenous it is shown that the previous differences are driven by the demand and cost parameterizations not by the endogeneity of quality previous works also suggest subsidies to raise welfare subsidies are found to lower welfare while a tax may raise welfare

bayesian learning in an infant industry model abstract most analyses of the infant industry argument assume that production early on benefits subsequent production in deterministic fashion this paper presents an alternative framework for evaluating the infant industry argument that focuses on imperfect information as a barrier to entry initial entrants provide information of social value by reducing uncertainty for potential followers about the suitability of local conditions in contrast to earlier work i show that factors that increase the informational barrier to entry may lower the optimal subsidy to the infant industry and that the standard test of the success of infant industry policy is not always valid 1997 elsevier science b v

quantification of sanitary phytosanitary and technical barriers to trade for trade policy analysis this paper presents promising methodologies for modeling and quantifying non tariff barriers ntb to trade in the agricultural and food sectors we limit the analysis to sanitary phytosanitary and technical regulations that can have an impact on trade and to methods that provide some quantitative estimates of the impact of such barriers on market equilibrium trade flows economic efficiency and welfare given the heterogeneous nature of these regulations a unifying methodology does not exist quantification of the effects of such measures has focused on a particular product and has relied on methods that belong to different fields of the economic literature we provide a concise description and evaluation of the various methods available for a more comprehensive assessment of the impact of ntbs on trade and welfare we conclude by identifying promising areas for future applied research

anonymous market and group ties in international trade abstract history provides many examples of cohesive groups dispersed over several countries who exploit the ties between their members to gain entry into foreign markets the phenomenon is well established empirically and noteworthy because it suggests the importance of informational barriers in international transactions we present a simple model where output is produced through a joint venture and agents have complete information domestically but are unable to judge the quality of their match abroad a minority of individuals otherwise identical to all others can exploit complete information in international matches between group members if they so choose group ties increase aggregate trade and income but hurt the anonymous market because they deprive it disproportionately of the group s more productive members

owner occupied housing capital gains and the tax reform act of 1986 abstract previous homeowners face a nonlinear kinked budget constraint because they can avoid paying tax on the capital gain from the sale of their home if they purchase a more expensive home when they move simulation results suggest that the tax reform act of 1986 tra86 has enhanced the importance of the capital gains kink by raising the after tax cost of housing through lower marginal income tax rates while increasing the tax rate on capital gains as a result a reduction in the capital gains tax rate would reduce housing demand as some families currently at the kink would buy a less expensive home our findings also indicate that the level of excess burden increases with the capital gains tax rate but that tra86 reduced the size of implicit price subsidies received by owner occupiers and related deadweight loss by roughly one half however the distribution of benefits and deadweight loss from the favorable tax treatment of housing remains heavily weighted to higher income families in addition the size of the implicit housing subsidy and related distortion is sensitive to the level of mortgage rates

evidence of the empirical relevance of the infant industry argument for the protection of brazilian ethanol production abstract the infant industry argument for protection of import competing industries has a long and almost entirely theoretical history in the literature in this paper the empirical evidence of infant industry dynamics in the brazilian ethanol industry is investigated in brazil ethanol has developed into a primary automotive fuel over the past 18 years this import substitute is attractive because it allows decreased dependence on international oil supplies while at the same time it addresses environmental concerns because it is a clean burning renewable fuel while ethanol was initially a high cost alternative to imported oil observed cost reductions have led to an increased belief that this industry may in fact warrant the subsidization it has received because of infant industry reasons the results of this study suggest that there is no empirical evidence of economies of scale and very little technical change there appears to be no empirical validity to the infant industry argument for subsidization of the brazilian ethanol industry

reputational comparative advantage and multinational enterprise 1 introduction when cultivating a new export market or attempting to expand its share of an existing market an exporter is likely to find that it has been preceded by its reputation minus a readily identifiable brand name quality reputation may solely reflect the country of origin for example when consumers are presented with a large amount of complex product information they may use the country of origin as a heuristic in forming product impressions without considering other product attributes 1 in this article i show that this heuristic decision making process can affect a firm s quality decision and can therefore become self fulfilling hence any bias that consumers have may be well founded however it is only correct because firms respond rationally to it colombia s garment industry provides an interesting example of a self fulfilling unfavorable quality reputation in international trade as described by morawetz 1981 a single colombian garment firm took a contract for 50 000 men s suits that was beyond its capability the poor quality result so tarnished the american importer s name that other high quality importers become wary of colombian sewn garments with the payoff to high quality production reduced colombian garment firms then concentrated on low quality markets and the newly found unfavorable reputation was justified in the model constructed here consumers see only a noisy signal of the product s quality at the time of purchase therefore their posterior beliefs are based on this noisy signal and the country of origin reputations as will be made clear higher quality firms benefit more from an increase in their country s reputation so that a better reputation generates an increase in the percentage of high quality firms in this way the reputation becomes self fulfilling and ex ante identical countries can be correctly perceived as differing in their percentage of high quality producers i next introduce an economy with two sectors one sector produces more complex goods where high quality is not easily verified and is more essential to the product s performance these may be technology intensive products or they may consist of the design and marketing of the goods produced in the other sector in particular high quality production costs and the consumer s value for high quality goods is greater in this sector i show that this sector becomes more profitable as the country of origin reputation increases hence if one country s equilibrium reputation is low and the other country s equilibrium reputation is high then the pattern of specialization and international trade can be determined solely by reputational comparative advantage 2 finally i show that reputational comparative advantage can overshadow a small technological comparative disadvantage in determining the pattern of international trade given this pattern of trade and specialization based on reputational comparative advantage a high reputation firm may expend resources to establish a multinational enterprise mne in the low reputation country for example many mne products require the differing specializations of both the high and low reputation countries although differing in motivation this result accords well with more traditional models of vertical mne 3 however this impetus for mne as well as its more traditional counterparts does not explain why the mne would choose foreign direct investment fdi over a less costly licensing arrangement 4 the quality uncertainty in this model along with the difference in equilibrium reputations allows us to address this question in particular appropriable reputational rents are generated by fdi when the high reputation parent firm procures and internalizes production with a low reputation host firm this fdi breaks the low reputation equilibrium of the host firm and generates reputational rents

more than food or fuel stakeholder perceptions of anaerobic digestion and land use a case study from the united kingdom anaerobic digestion ad is of growing importance within the uk as it can make an important contribution to the countries energy and climate change targets with the growth of the sector discussions about competing land uses are likely to increase for a better understanding of the synergies between agricultural land its role and bioenergy the perception of the different stakeholders will play an important role the perception of stakeholders related to ad feedstock and energy crop production was investigated through interviews and a stakeholder workshop the results indicated that from an ad operator and feedstock producer perspective on farm ad is more an additional activity integrated into existing agricultural systems than a renewable energy technology the risk of a shift in agricultural practices and large areas to grow energy crops for ad is seen as low for the uk nonetheless land use and related challenges need to be considered as the demand for ad feedstocks increases with the fast growth of the sector considering the synergies between bioenergy and agriculture as well as the motivations and benefits perceived by stakeholders will play an important role in a successful policy design to provide the required emission reduction in both sectors without subverting sustainability

housing capital gains taxation and homeowner mobility evidence from the taxpayer relief act of 1997 abstract we provide new evidence on the impact of housing capital gains taxation on homeowner behavior by examining residential mobility before and after the taxpayer relief act of 1997 tra97 which generated the most sweeping reform of capital gains taxation in the last two decades in addition to lowering marginal tax rates on long term capital gains for all assets tra97 also eliminated any differential treatment of housing gains above and below age 55 allowing all homeowners to qualify for capital gains exclusions utilizing data drawn from the current population survey cps on either side of the law change 1996 and 1998 on homeowners just above 56 58 year olds and below 52 54 year olds the age 55 threshold and a reduced form difference in difference empirical approach our estimates suggest that the repeal of the differential capital gains tax treatment by age embodied in tra97 had an economically important and statistically significant impact on the residential mobility of under 55 homeowners across a variety of specifications the repeal raised the mobility rate by around 1 1 4 percentage points which for a mean mobility rate of 4 percentage points represented an increase in the mobility rate of homeowners in their early 50s by 22 31 furthermore the bulk of this effect was concentrated among highly mobile homeowners who a priori were more likely to have wanted to trade down e g divorced empty nesters those facing higher capital gains tax rates and those living in states that had experienced higher rates of nominal appreciation

the role of r d subsidies when incomplete information is an entry barrier abstract this paper explores the role of r d subsidies in the presence of incomplete information we consider a market for experience goods where a firm s r d investment determines the quality of its product but where quality becomes observable to consumers only through experience with the product in this model externalities emerge in that individual firms cannot fully appropriate the benefits of their quality enhancing investment outlays we show that an r d subsidy can internalize this externality and characterize optimal infant industry intervention in this setting

price signals quality the case of perfectly inelastic demand abstract this paper considers the pricing decision by a seller who has private information about quality demand is perfectly inelastic rectangular for example there may be a single buyer who wants exactly one unit and whose valuation is known by the seller it is noted that contrary to widespread belief separating equilibria do exist in this model allowing some trade of high quality products even when the average quality is low moreover by slightly perturbing demand we can use standard equilibrium refinements to uniquely select the best separating equilibrium outcome since the chosen outcome has a very simple structure regardless of the number of quality levels this model could be a useful workhorse in applications

optimal export policy for a new product monopoly a new welfare enhancing role is identified for a policy of export subsidization in a new product industry an export subsidy policy promotes the rational perception that a high quality export can be provided at a relatively low price thus an export subsidy generates a first order benefit to welfare by enabling a high quality export to be sold at a less distorted high price the subsidy will also introduce

the signalling role of municipal currencies in local development the last decade has seen the burgeoning of several hundred local community currency institutions in cities across the world although residents of these communities claim that local currency promotes local development how it does so has hitherto been unexplored we argue that the introduction of a municipal currency may serve as a signal of demand for local goods where demand uncertainty deters firms from investing in more productive technologies such a signal improves the chances that technology choice will be optimal the introduction of a local currency therefore always improves ex ante efficiency and may lead to ex post efficiency with strictly higher levels of productivity and welfare

tariff policy and entry with cost based informational asymmetries i introduction how does the presence of incomplete information alter the usual effects of trade policy recognition that incomplete information characterizes most decision making processes that take place within an international setting has stimulated an emerging body of literature which addresses this question particularly germane to the present study are those papers which introduce an informational asymmetry into an international model of imperfect competition the majority of this literature examines the sensitivity of optimal strategic trade policies to information failures within a brander spencer 1985 model where the domestic and foreign firm compete for export sales to a third market and either the domestic or foreign government employs export subsidies examples include works by brainard and martimort 1997 collie and hviid 1993 maggi 1995 and qiu 1994 another study collie and hviid 1994 allows for domestic consumption and considers optimal import tariff policy in the presence of a foreign monopolist in general optimal trade policy in the presence of informational failures is found to differ from that under complete information the emphasis of the present study is not on the conduct of optimal trade policy but rather on how the introduction of an informational asymmetry alters the realized impact of trade policy on quantities and welfare 1 specifically we examine the effects of import tariff policy within a standard two period model of entry where the costs of the domestic firm are proprietary information the incumbent domestic firm recognizes the threat of a potential foreign rival entering exporting to the domestic market where the latter is uninformed of the cost structure of the domestic firm as is well known from the industrial organization literature the incumbent domestic firm may have an incentive to change its time period one behavior so as to signal information on costs to the foreign firm in an effort to deter entry see milgrom and roberts 1982 in specifying the degree of knowledge possessed by domestic policymakers we adopt the premise that informational deficiencies on the part of policymakers are likely to be quite acute in trade policy formation indeed as brander 1995 notes it is reasonable to suppose that governments are less informed on market conditions and firm characteristics than firms themselves in contrast to previous studies however we also assume that policymakers either cannot acquire information or if they are able to cannot respond by altering policy here the formation of trade policy does not reflect or incorporate full information and thus cannot provide signals to the other uninformed party the foreign firm moreover because policymakers cannot alter policy the foreign firm perceives the tariff rate as credibly fixed the inability to incorporate information into trade policy is especially relevant for situations where policymakers are subject to previously negotiated trade agreements here even should uninformed policymakers subsequently acquire information on domestic cost structure they will be unable to respond our emphasis on the realized effects of tariff policy reflects this information structure to conduct optimal policy government must hold complete information on markets and firm characteristics at the time policy is set as in collie and hviid 1993 1994 or be able to acquire it through signaling or a screening mechanism as in qiu 1994 and brainard and martimort 1997 2 when policymakers lack the ability to acquire or respond to such information optimal policy is not a consideration what is of interest to policymakers in this situation is the response of domestic output and imports to a given tariff rate at the outset of the game then there is a tariff rate set previously by domestic policymakers who were uninformed of domestic costs since the foreign firm cannot infer domestic cost structure by merely observing the tariff rate set by uninformed policymakers any signaling that takes place is on the part of the domestic firm

industrial targeting experimentation and long run specialization abstract this paper emphasizes the experimental nature of industrial targeting policies under uncertainty in a small open economy a government promotes entry of new firms in selected industries and updates its beliefs about the country s comparative advantage in a bayesian way this selective targeting policy is analyzed in the framework of a special type of statistical decision problem known as the multi armed bandit the paper analyzes how the costs and benefits of learning about a country s comparative advantage depend on the characteristics of the targeted industries the framework suggests that even an optimally designed industrial targeting policy may eventually steer the country away from specializing according to its true comparative advantage

individual acceptance of the biogas innovation a structural equation model abstract the rapid spread of biogas production in germany has resulted in an increased public debate over this new business branch today the production of biogas is much more controversially debated than several years ago at the same time it could be proven that even among farmers themselves the acceptance of biogas production in some regions is somewhat dampened due to accompanying collateral damages therefore the goal of this paper is to identify relevant influencing factors that determine the acceptance of the innovation biogas among farmers by applying a causal analysis initial results among the five investigated determinants show that not only an individual attitude toward biogas but also the farmers personal innovativeness strongly and significantly influences an individual s acceptance of the innovation biogas