micro incentives and municipal behavior political decentralization and fiscal federalism in argentina and mexico summary this article analyzes the mixed results of political and fiscal decentralization in latin america by comparing taxing and spending policies in six cities in argentina and mexico consistent with previous studies we find that decentralization has been frustrated by overconcentration of power at the provincial level and large vertical fiscal imbalances though we characterize these as functional elements in a system of redistributive policy making that benefits a wide array of provincial and municipal actors we seek to add a new dimension to the literature by arguing that micro level incentives conditions and circumstances particular to specific places are more important determinants of municipal behavior than macro level structures those policy and institutional changes intended to make officials more responsive to local conditions federalism local elections intergovernmental transfers and own source revenues we conclude that the theory of decentralization relies on a flawed conception of the causal mechanisms that are hypothesized to create responsiveness in local officials

does competition for capital discipline governments decentralization globalization and public policy competition among countries or regions within them to attract mobile capital is often thought to discipline their governments motivating them to invest more in infrastructure reduce waste and corruption and spend less on non productive public goods the result should be convergence on business friendly policies we argue that this requires an assumption units start out very similar that is often unrealistic if units are heterogeneous in natural resources geographical location inherited human capital or infrastructure capital mobility often weakens discipline on the poorlyendowed units this may help explain disappointing results of liberalizing capital flows within russia and sub saharan africa jel f36 h73 h87

revisiting jevons s paradox of energy rebound policy implications and empirical evidence in consumer oriented financial incentives from the japanese automobile market 2006 2016 abstract while the fuel economy of japanese automobiles has improved by 40 in the past decade gasoline consumption in the transportation sector from 2007 to 2016 only decreased by 4 we seek to explain this discrepancy by investigating japanese fuel economy standards and the financial incentives given to consumers of fuel efficient cars to do so this study explores whether japanese policies caused such a rebound effect by employing the difference in difference framework we find that these policies contribute to energy rebound effect by enabling higher fuel consumption at lower costs and thus causing higher energy usages we provide evidence that policies can increase not only fuel usage but also fuel costs the main driving force behind the rebound effect is the increase in the sales of hybrid vehicles induced by financial incentives

a rentier theory of subnational regimes fiscal federalism democracy and authoritarianism in the argentine provinces levels of subnational democracy vary significantly within countries around the world drawing on fiscal theories of the state the author argues that this variance is often explained by a type of rentierism that is not geographically determined by natural resources but politically created by certain fiscal federalism arrangements he posits that less democratic regimes are more likely in rentier provinces those that receive disproportionately large central government transfers and practically forgo local taxation intergovernmental revenue sharing rules that produce large vertical fiscal imbalances and favor the economically smaller districts provide their incumbents with generous fiscal federalism rents that allow them to restrict democratic contestation and weaken checks and balances statistical evidence from a panel data set of the argentine provinces strongly confirms this expectation even after controlling for standard alternative explanations such as level of development sensitivity analysis shows that this finding is extremely robust to alternative panel estimators qualitative and quantitative evidence suggests that the effect of heavy public spending on the economic autonomy of political actors is the main causal mechanism at work

measuring the rebound effect with micro data a first difference approach abstract we provide estimates of the rebound effect for car transport in denmark using a rich data set with individual household data on car use fuel efficiency and car as well as household characteristics a demand model is estimated in first differences the availability of households in the sample that replaced their car during the period of observation combined with information on their driving behaviour before and after the car switch allows us to identify the rebound effect endogeneity is taken into account by using appropriate instruments results include the following first we reject the conventional formulation in which only fuel cost per kilometre matters second the selection equation confirms that higher fuel prices induce households to switch car third the results suggest the presence of a rebound effect that is on the lower end of the estimates available in the literature specifically our best estimate of the rebound effect is some 7 5 10 fourth the fuel price sensitivity of the demand for kilometres appears to be declining with household income but we do not find a significant impact of income on the rebound effect finally simulation results indicate that the small rebound effect and changes in car characteristics in response to higher fuel prices imply that compared to the reference scenario higher fuel prices lead to a substantial reduction in both the demand for kilometres and in demand for fuel

fiscal federalism and redistributive politics abstract we consider the interaction between redistributive politics at central and local levels in a federal system and characterize the factors influencing success in redistributive politics in both federal and unitary systems we examine how the political characteristics of different states and groups give them better or worse outcomes in a federal system as opposed to a unitary system we examine possibilities of multiple equilibria with divided government between the two layers we analyze the choice between block grants and matching grants we also examine the impact of federalism on the incentives for geographic mobility

the effect of standards and fuel prices on automobile fuel economy an international analysis abstract there is an intense debate over whether fuel economy standards or fuel taxation is the more efficient policy instrument to raise fuel economy and reduce co 2 emissions of cars the aim of this paper is to analyze the impact of standards and fuel prices on new car fuel economy with the aid of cross section time series analysis of data from 18 countries we employ a dynamic specification of new car fuel consumption as a function of fuel prices standards and per capita income it turns out that standards have induced considerable fuel savings throughout the world although their welfare impact is not examined here if standards are not further tightened then retail fuel prices would have to remain at high levels for more than a decade in order to attain similar fuel savings finally without higher fuel prices or tighter standards one should not expect any marked improvements in fuel economy under business as usual conditions

bailouts budget constraints and leviathans comparative federalism and lessons from the early united states recent research on federations particularly in the developing world emphasizes the importance of hard budget constraints and a strong central government to attenuate intergovernmental economic conflicts such research fails on two counts first it does not explain how hard budget constraints emerge or become self enforcing second it does not take into account the insight of the market preserving federalism literature that central governments strong enough to impose restraint on regions are likely too powerful to be checked in a manner consistent with the longterm health of markets unfortunately the market preserving federalism literature itself provides little insight into how to move from a market distorting to a market preserving equilibrium this article answers these theoretical shortcomings with reference to the evolution of political competition at the regional level and the representation of those regions at the national level more specifically whereas regional competition determines the s

state corroding federalism competition among local governments in a decentralized political system is often thought to discipline lazy or corrupt officials improving public good provision and increasing welfare some scholars note possible distortions due to spillovers or a race to the bottom but suggest that central transfers or regulations can remedy these both arguments take for granted a framework of constitutional order in which the central government can collect taxes allocate transfers and enforce regulations autonomously but what if it can t we show that if central enforcement capacity is endogenous interjurisdictional competition may itself erode the center s ability to channel competition in welfare enhancing directions regional governments may compete for capital by shielding firms from central tax collectors bankruptcy courts or regulators the equilibrium result is weaker central law enforcement and usually lower welfare interjurisdictional competition corrodes the state we illustrate with three examples from russia china and the us of cases in which such competition apparently encouraged subnational politicians to help firms evade central taxes or regulations

competition and outsourcing with scale economies scale economies are commonplace in operations yet because of analytical challenges relatively little is known about how firms should compete in their presence this paper presents a model of competition between two firms that face scale economies i e each firm s cost per unit of demand is decreasing in demand a general framework is used which incorporates competition between two service providers with price and time sensitive demand a queuing game and competition between two retailers with fixed ordering costs and pricesensitive consumers an economic order quantity game reasonably general conditions are provided under which there exists at most one equilibrium with both firms participating in the market we demonstrate in the context of the queuing game that the lower cost firm in equilibrium may have a higher market share and a higher price an enviable situation we also allow each firm to outsource their production process to a supplier even if the supplier s technology is no better than the firms technology and the supplier is required to establish dedicated capacity so the supplier s scale can be no greater than either firm s scale we show that the firms strictly prefer to outsource we conclude that scale economies provide a strong motivation for outsourcing that has not previously been identified in the literature

the politics of federalism in argentina and its implications for governance and accountability summary this paper contributes to an agenda that views the effects of federalism and decentralization as dependent on the incentives of national and subnational political actors it studies the mechanisms by which subnational actors affect decisions at the central level in the context of a highly decentralized middle income democracy argentina in this federal country provincial actors and concerns weigh heavily on national decisions most argentine provinces are dominated by entrenched elites with limited political competition weak division of powers and clientelistic political linkages provincial dominance and national relevance reinforce each other dragging argentine politics toward the practices and features of its most background regions

rebound effect of efficiency improvement in passenger cars on gasoline consumption in canada abstract the fossil fuel driven transport sector has been one of the major contributors to co2 emission across the world keeping it on the energy policy agenda for the past three decades canada ranks second in gasoline consumption among oecd countries and canadian gasoline expenditure share has been increasing since the 1990s fuel efficiency policies aim to decrease gasoline consumption however the effect can be mitigated by changes in consumer behavior such as traveling more distances a rebound effect thus the effectiveness of fuel efficiency policy is dependent on the magnitude of the rebound effect in this paper we estimate the rebound effect for personal transportation in canada using data from the household spending survey for the period 1997 2009 the model includes a system of expenditure share equations for gasoline other energy goods and non energy goods specified by aids and quaids models and estimated by the nonlinear sur method our estimation results show a rather high average rebound effect of 82 88 but with significant heterogeneity across income groups provinces and gasoline prices specifically the rebound effect ranges from 63 to 96 across income groups and provinces and increases with gasoline prices

federalism as a commitment to reserving market incentives the authors advance a new perspective in the study of federalism their approach views federalism as a governance solution of the state to credibly preserving market incentives market incentives are preserved if the state is credibly prevented from compromising on future economic success and from bailing out future failures the salient features of federalism decentralization of information and authority and interjurisdictional competition help provide credible commitment or these purposes in addition the authors suggest that some federalism are self sustaining

back rooms or ballot boxes candidate nomination in argentina how political parties select their candidates for public office profoundly affects the types of people who are elected as well as how these people behave in office this selection process also provides important insights on how parties function internally and on where political power is located within a country only a few comparative studies of nomination procedures exist and none explain why some parties at some points in time select candidates via direct primaries and others do not the authors analyze an original data set of 610 district level nomination processes for the biennial argentine chamber of deputies elections held between 1983 and 2001 they conclude that several specific institutional and partisan features have a prominent effect on the probability that a political party will choose its candidates at the ballot box direct primary rather than in a smoke filled back room elite arrangement

the role of inventory in delivery time competition the paper operationalizes the notion of shortage cost by considering the behavior of customers and competing firms and examines the role of inventory in response time competition we start with a single firm production control model in which customers are characterized by their preferences of price quality and delivery time the optimal production inventory policy and the optimal choice between make to order and make to stock operations are determined in simple newsboy like formulas the basic model is then extended to an n firm market game in which firms compete for orders from the aspect of early delivery one could think of this setting as an oligopoly racing market the analysis shows that competition can breed a demand for produce to stock just as other economic phenomena such as economies of scale uncertainty or seasonality can induce make to stock and that delivery time competition increases the buyer s welfare while decreasing the producer s welfare

analysing gasoline demand elasticities a survey this paper is a survey of studies on gasoline demand although there are very many dxerent studies in this eld which sometimes appear to arrive at contradictory results we find that with proper stratification of studies by model and data type much of the contict turns to consensus in this survey we classtfy studies by data type and by ten d erent categories of model and with the exception of estimates on seasonal data which tend to be unstable and of certain inappropriate model formulations we find a fair degree of agreement concerning average short run and even long run income and price elasticities

the making of policy institutionalized or not this paper develops a framework for analyzing different policymaking styles their causes and their consequences in latin america finding that lower institutionalization and greater use of alternative political technologies apts are more likely the lower the cost of using these technologies the higher the potential damage they can cause the lower the wealth of the economy and the more asymmetric the distribution of de jure political power moreover strategic complementarity exists in the use of alternative political technologies for instance bribes by the rich and protests by the poor are likely to be countervailing forces and will both occur in polities with weaker political institutions

procuring fast delivery sole sourcing with information asymmetry this paper studies a queuing model in which a buyer sources a good or service from a single supplier chosen from a pool of suppliers the buyer seeks to minimize the sum of her procurement and operating costs the latter of which depends on the suppliers lead time the selected supplier can regulate his lead time but faster lead times are costly although the buyer selects the supplier to source from possibly via an auction and dictates the contractual terms the buyers bargaining power is limited by asymmetric information the buyer only has an estimate of the suppliers costs while the suppliers know their costs precisely we identify a procurement mechanism that minimizes the buyers total cost procurement plus operating this mechanism is not simple it is a numerically derived nonlinear menu of contracts therefore we study several simpler mechanisms e g one that charges a late fee and one that specifies a fixed lead time requirement no menus no nonlinear functions we find that simple mechanisms are nearly optimal generally within 1 of optimal because asymmetric information conveys significant protection to the supplier i e the supplier is able to retain most of the benefit of having a lower cost renegotiation is another concern with the optimal mechanism because it does not minimize the supply chains cost the firms can be both better off if they throw away the contract and start over interestingly we find that the potential gain from renegotiation is relatively small with either the optimal or our simple mechanisms we conclude that our simple mechanisms are quite attractive along all relevant dimensions buyers performance supply chain performance simplicity and robustness to renegotiation

beyond the fiction of federalism macroeconomic management in multitiered systems recent research on federalism is extremely divided while some tout the benefits of market preserving federalism others point to the fragmentation and incoherence of policy in federal states this research bridges the divide by analyzing the political and fiscal structures that are likely to account for the highly divergent economic experiences of federal systems around the world to test these propositions the authors use an original data set to conduct analyses of budget balance and inflation in fifteen federations around the world from 1978 through 1996 the empirical research suggests that the level of fiscal decentralization the nature of intergovernmental finance and vertical partisan relations all influence macroeconomic outcomes the findings have broad implications for the widespread move toward greater decentralization and for the theoretical literatures on federalism and macroeconomics

vehicle miles not traveled fuel economy requirements vehicle characteristics and household driving abstract a major concern with addressing the negative externalities of gasoline consumption by regulating fuel economy rather than increasing fuel taxes is that households respond by driving more this paper exploits a discrete threshold in the eligibility for cash for clunkers to show that fuel economy restrictions lead households to purchase vehicles that have lower cost per mile but are also smaller and lower performance whereas the former effect can increase driving the latter effect can reduce it results indicate that these households do not drive more suggesting that behavioral responses do not necessarily undermine the effectiveness of fuel economy restrictions at reducing gasoline consumption

rebound effect of transportation considering additional capital costs and input output relationships the role of subsistence consumption and unmet demand abstract the anticipated carbon mitigation through energy saving technology progress might be partially or even totally offset due to rebound effect a better understanding of rebound effect especially the underling mechanisms has important implications for energy efficiency policies to achieve the goal of sustainability previous studies usually ignore additional capital costs for adopting energy efficient equipment and indirect carbon emissions for providing new consumption bundles also the precise mechanisms of how living standard affects rebound effect are unknown using almost ideal demand system aids model and input output relationships among sectors this paper builds a method to estimate the rebound effect that allows for additional capital costs and carbon emission changes of all other goods and services due to backward forward linkages we find that rebound effect is over 100 for transportation in rural china even though additional capital costs would indeed reduce the magnitude and the results are quite robust to alternative settings as for the mechanisms rebound effect is divided into substitution and income channels by slutsky decomposition here we show that both of these two channels are dependent on living standard because of subsistence consumption and unmet demand carbon emissions of poor households will rebound more through income channel of unmet demand while rich households usually do not restricted by subsistence consumption and thus through substitution channel rebound of carbon emissions would be larger for rich households the opposite directions of mechanisms dig more information about the nonlinearity of rebound effect to income levels furthermore given the estimating results this paper gains several insights in terms of welfare benefits rather than just focuses on carbon reduction

energy efficiency versus gains in consumer amenities an example from new cars sold in sweden technological developments that increase energy efficiency result in net energy saving benefits provided the increased efficiency is not offset by enhanced consumer amenities this paper analyzes the technology development consumer amenities trade off for new cars sold in sweden between 1975 and 2010 we combine lessons learned from the policies in place and interviews with key actors in the car purchasing process with statistical modeling of trends in vehicle attributes and technological development until 2007 consumer amenities were continuously enhanced offsetting most of the efficiency gains of technological development there was no strong policy push toward energy efficiency in recent years two major shifts have occurred first there has been a shift in the majority of new cars sold from gasoline powered engines to diesel engines flex fuel vehicles have also contributed to a decline in the sales share of pure gasoline engines the observed shift of fuels especially to flex fuels has been encouraged by policies second after 2007 there have been major technological improvements while attributes related to consumer amenities have remained flat reversing the trends so that 77 of the technological development resulted in actual reduction of specific fuel consumption eu targets tax reforms and consumer awareness have contributed to this trend change

revenue management of a make to stock queue motivated by recent electronic marketplaces we consider a single product make to stock manufacturing system that uses two alternative selling channels long term contracts and a spot market of electronic orders at time 0 the risk averse manufacturer selects the long term contract price at which point buyers choose one of the two channels the resulting long term contract demand is a deterministic fluid while the spot market demand is modeled as a stochastic renewal process an exponential reflected random walk model is used to model the spot market price which is correlated with the spot market demand process the manufacturer accepts or rejects each electronic order and long term contracts and accepted electronic orders are backordered if necessary the manufacturer s control problem is to select the optimal long term contract price as well as the optimal production i e busy idle and electronic order admission policies to maximize revenue minus inventory holding and backorder costs under heavy traffic conditions the problem is approximated by a diffusion control problem and analytical approximations are used to derive a policy that is simple and reasonably accurate and robust

inventory control with information about supply conditions this paper presents an inventory control model which includes a markovian model of the supply system as that system evolves over time so do the replenishment leadtimes the optimal policy has the same structure as in standard models but its parameters change dynamically to reflect current supply conditions in this setting contrary to conventional wisdom a longer leadtime does not necessarily imply more inventory the leadtime is important but so is a concept we call order coverage

an empirical study on the behavior of hybrid electric vehicle purchasers abstract this paper empirically examines the factors influencing consumers choices concerning the purchase of hybrid electric vehicles hevs in addition the paper investigates whether purchasing hevs causes a rebound effect through which purchasers of hevs increase their annual vehicle mileage the results suggest that consumers who are more attentive to fuel economy may be inclined to choose hevs moreover the existence of the direct rebound effect is confirmed by the finding that the purchase of an hev leads to an increase in annual mileage per household greater mileage increases future fuel cost savings from using an hev relative to a conventional vehicle and thus potentially leads to increased fuel cost savings that offset the extra cost of choosing an hev however if the purchase of hevs leads to a considerable increase in annual mileage overall annual automotive co2 emissions per household may be significantly increased by using hevs

cap and trade taxes and distributional conflict enacting market based environmental regulation such as emissions taxes and cap and trade programs often create rents that are contested by agents in this paper we create a framework that compares social welfare from alternative market based environmental policy instruments under the presence of rent seeking we show that contrary to the commonly held view non revenue raising instruments nrris are in many cases preferable over revenue raising instruments rris we find that the choice of instrument depends on the size of a potential revenue recycling effect and the level of preassigned rents

the subnational politics of economic adjustment provincial politics and fiscal performance in argentina existing research has failed to address the impact of subnational politics on economic adjustment this article attempts to fill this gap by outlining theoretical reasons for anticipating policy divergences across levels of government and by offering three hypotheses to account for variation at the subnational level the authors explore these ideas on the basis of the argentine experience the study traces the impact of subnational policy on argentine economic adjustment and tests hypotheses about subnational policy variation on the basis of provincial fiscal data the authors findings underline the importance of subnational policy choice for national performance and suggest a revised understanding of the role of political competition in the economic adjustment process the authors find considerable evidence that interactions between party competition and the structure of the public sector shape provincial fiscal performance and thereby condition the capacity for economic adjustment at the national level

how to deal with the rebound effect a policy oriented approach policy makers and environmental agencies have echoed concerns brought forward by academics about the need to address the rebound effect for achieving absolute energy and environmental decoupling however such concerns have generally not been translated into tangible policy action the reasons behind this inaction are not fully understood and much remains unknown about the status of the rebound effect issue on the policy agenda and policy pathways available such knowledge gaps may hamper the development of effective policies to address this issue in this paper we examine the extent to and ways in which the rebound effect is considered in policy documents and analyse thirteen specific policy pathways for rebound mitigation the effectiveness of the pathways is scrutinised and conclusions are offered to mitigate rebound effects the main policy conclusions of the paper are that an appropriate policy design and policy mix are key to avoiding undesired outcomes such as the creation of additional rebound effects and environmental trade offs from the discussion economy wide cap and trade systems as well as energy and carbon taxes when designed appropriately emerge as the most effective policies in setting a ceiling for emissions and addressing energy use across the economy

who delivers partisan clients in the argentine electoral market why do some parties fail to benefit from patronage in pork ridden political systems this article analyzes the interaction between patronage and partisanship to explain why some incumbents are more likely to benefit from pork politics than others we explain such differences by focusing on political parties access to resources supply side and voters dependence on fiscal largesse demand side we show how these differences affect the patron s choice of public sector wages and employment we use subnational level data to show different electoral returns from patronage for the two major political coalitions in argentina peronism and the ucr alianza and their effect on preferences over public sector wages and employment w hy do some political parties fail to benefit from patronage in pork ridden political systems this article analyzes the interaction between patronage and partisanship to explain why some incumbents are more likely to benefit from pork politics than others we explain returns to patronage by highlighting differences in the political parties access to resources supply side and the voter s dependence on public sector jobs demand side we propose that just as political parties cater their policies to particular groups of voters they pursue different strategies when allocating pork in exchange for support on the supply side we highlight the importance of partisan biases in the fiscal and electoral institutions that regulate the access and distribution of public resources on the demand side we show that patronage is a distributive mechanism that provides different returns to voters with different skills and labor market expectations

state capacity and health outcomes comparing argentina s and chile s reduction of infant and maternal mortality 1960 2013 summary there is substantial quantitative evidence linking higher state capacity to better health outcomes but scant attention has been paid to the specific mechanisms through which this causal influence operates the problem is compounded by the considerable diversity of ways in which the influence of the state on development outcomes has been conceptualized making it hard for practitioners to extract policy lessons from this literature in this study i seek to help to address both of these problems through a historical comparative examination of the ways in which state capacity affected infant and maternal mortality reduction in argentina and chile over the last half century i show that chile s greater investment in health specific state capacities was behind the remarkable historical reversal of fortune between these two countries in terms of infant and maternal mortality levels from 1960 to the present as well as behind chile s notorious reduction in the territorial inequality of these outcomes i show the key difference between the two countries was the quality reach and homogeneity of their respective public health systems from a theoretical standpoint i argue that the notions of bureaucratic quality and infrastructural power are both necessary and complementary perspectives through which to conceptualize state capacity and understand its causal influence over health and other desirable developmental outcomes in turn this suggests that a useful way to specify calls for better governance and to achieve better long run health performance may be to invest in the public health system s technical bureaucratic autonomy and in its system wide planning and coordination capacities

the populist road to market reform policy and electoral coalitions in mexico and argentina governing parties face two fundamental tasks they must pursue policies effectively and they must win elections their national coalitions therefore generally include two types of constituencies those that are important for policy making and those that make it possible to win elections in effect governing parties must bring together a policy coalition and an electoral coalition this distinction sheds light on how the transitional costs of major economic policy shifts can be made sustainable in electoral terms it also provides a starting point for analysis of how two of latin america s most important labor based parties the peronist party in argentina and the partido revolucionario institucional pri in mexico maintained electoral dominance while pursuing free market reforms that adversely affected key social constituencies peronism and the pri are conceived of as having encompassed historically two distinctive and regionally based subcoalitions a metropolitan coalition that gave support to the parties development strategies and a peripheral coalition that carried the burden of generating electoral majorities this framework permits a reconceptualization of the historic coalitional dynamics of peronism and the pri and sheds light on the current process of coalitional change and economic reform