strategy proofness and efficiency are incompatible in production economies in a production economy where a single private good is produced via a non linear concave technology no direct mechanism satisfies strategy proofness and efficiency if the preference domain contains the class of linear preferences

pareto improving campaign finance policy this paper argues that campaign finance policy in the form of contribution limits and matching public financing can be pareto improving even under very optimistic assumptions concerning the role of campaign advertising and the rationality of voters the optimistic assumptions are that candidates use campaign contributions to convey truthful information to voters about their qualifications for office and that voters update their beliefs rationally on the basis of the information they have seen the argument also assumes that campaign contributions are provided by interest groups and that candidates can offer to provide policy favors to attract higher contributions

eco labelling consequences in general equilibrium a graphical assessment international environmental groups propose to implement new standards of forest management through programs that certify producers who meet criteria to enhance biodiversity or sustainability these producers could earn an eco label that identifies their products for consumers we consider whether a market economy might generate feedbacks that produce undesirable side effects as consumers respond to price changes while the general case is ambiguous the theoretical framework shows the potential that certification may lead to a reallocation of land toward less ecologically sustainable uses with the possibility of sufficient impact to diminish global biodiversity or sustainability of forest products

the impact of campaign expenditures on political competition in the french legislative elections of 1993 we use regression analysis to estimate the effect that campaign money had on the votes of challengers and incumbents in the 1993 elections to the french legislative assembly incumbent candidates can at best expect to win 1 01 of the popular vote for each extra franc they spend per registered voter in their district challengers can expect to win at least twice as much as this simulations show that if campaign spending ceilings were halved incumbents would have gained an extra ten percent of the popular vote over their closest challenging rivals the regression analysis also suggests that voters react negatively to candidates who rely heavily on their own money for their outlays and reward candidates who rely on contributions from private individuals these results suggest that campaign spending ceilings may inhibit political competition and that voters may resist a candidate who relies on narrow sources of funding

determinants of donations in private nonprofit markets abstract we estimate the responsiveness of donations to a number of economic variables including price advertising and the availability of revenue from such other sources as government grants and program service sales utilizing a set of irs data on individual nonprofit organizations in each of seven industries including hospitals and higher education for the years 1982 1994 we find distinct overall patterns as well as notable variation across industries a nonprofit organization s fundraising expenditures are estimated to exert two countervailing effects on donations the direct advertising and information effect augments donations while the indirect effect on the price of donating has a negative effect we do not find evidence that fundraising is carried to the profit maximizing levels in some industries fundraising is substantially short of that level while in other industries it is excessive implying that the marginal return to fundraising is exceeded by the cost focusing on whether revenue from other sources affects donations to a nonprofit organization we find evidence that revenue from either government grants or from the organization s own program sales activity generally does not crowd out private donations to the contrary in most industries there are significant positive effects

efficient strategy proof exchange and minimum consumption guarantees abstract for exchange economies with classical economic preferences it is shown that any strategy proof social choice function that selects pareto optimal outcomes cannot guarantee everyone a consumption bundle bounded away from the origin this result demonstrates that there is a fundamental conflict between efficiency and distributional goals in exchange economies if the social choice rule is required to be strategy proof

caps on political lobbying the cost of political campaigns in the u s has risen substantially in recent years for example real spending on congressional election campaigns doubled between 1976 and 1992 steven d levitt 1995 there are many reasons why increased campaign spending might be socially harmful first increased spending means increased fund raising which may keep politicians from their legislative duties 1 second a lobbyist who makes a large campaign contribution may have undue influence on electoral outcomes on the shaping of legislation or on the outcome of regulatory proceedings 2 that is the socially preferred candidate or legislation may not prevail likewise a lobbyist involved in a regulatory matter or a competition for a government contract may benefit unduly from a legislator s intervention 3 third a perception that campaign contributions purchase influence may lead to increased tolerance of corruption in the private sector a desire to control campaign spending has spawned many initiatives to limit both campaign contributions and spending beginning with the passage of the federal election campaign act feca political action committees pacs can contribute at most 5 000 per election to a candidate while individuals can contribute at most 1 000 restrictions have also been put on in kind contributions making it more difficult to circumvent these limits 4 while direct restrictions on campaign spending have proven difficult to implement recent initiatives aim to impose voluntary spending limits and stricter limits on contributions 5 despite the existing legislation and the proposals to limit contributions little is known about the impact of contribution limits on aggregate expenditures while it is intuitively appealing that aggregate expenditures would drop we challenge that intuition here we study a lobbying game and show that a cap on individual lobbyists expenditures may have the perverse effect of increasing aggregate expenditures and loweri this abstract was borrowed from another version of this item

estimating the effect of campaign spending on senate election outcomes using instrumental variables o examine the traditional view that challenger spending is more effective than incumbent spending 7 i reestimate the effects of spending using instrumental variables that affect a candidate s ability to raise campaign funds such as candidate wealth levels hhen the endogeneity of candidate spending levels is properly taken into account the marginal effects of incumbent and challenger spending are roughly equal in contrast to previous research showing that because of higher marginal returns to challenger spending the incumbent s spending advantage cannot explain high incumbent reelection rates this article shows that in an average senate election the incumbent s spending advantage yields a 6 increase in the incumbent s vote share that incumbent spending wins elections has direct implications regarding the consequences of campaign finance reform my findings imply that equalizing spending levels may significantly increase incumbent defeat rates and caps on candidate spending may improve the chances of challengers in american congressional elections incumbents routinely win reelection even in the 1994 republican landslide change in the partisan makeup of congress occurred mainly through open seats switching from the democrats to the republicans a common explanation for high congressional reelection rates is the large campaign spending advantage enjoyed by incumbents it is widely believed that challenger spending is very important but there is surprisingly little evidence in the academic literature that incumbent campaign spending has an important effect on congressional election outcomes in light of the substantial effort incumbents devote to fundraising as well as some nagging methodological questions about existing academic studies the effect of incumbent spending on election outcomes remains an unresolved issue accurately measuring how incumbent spending leads to votes is of obvious importance politicians want to win elections and so if money matters then this will influence their behavior if campaign spending effects are trivial then concerns about politicians being

eco labeling and horizontal product differentiation this paper investigates the impact of eco labels on the abatement of emissions in a market with horizontal product differentiation a distinction is made between an end of pipe abatement method and a clean technology approach in the former case underinvestment is likely to occur even if the marginal willingness to pay for abatement of consumers is equal to the social marginal benefit of abatement the level of abatement depends on the number of firms and on the number of consumers for a large market with few firms overinvestment in abatement is also possible clean technology abatement achieves a first best level regardless of market size if all consumers have a marginal willingness to pay for abatement equal to its social benefit

spatial interactions in multiple use forestry and substitution and wealth effects for the single stand abstract forestry models often ignore spatial relationships between forest stands this paper isolates the effects of stand interactions in multiple use forestry through a straightforward extension of the single stand model effects of stand interactions decompose into wealth and substitution effects and may cause time varying patterns of resource use for a forest stand simulations illustrate that a stand s role even in steady state may alternate an emphasis on timber with an emphasis on nontimber optimal management plans differ substantially depending on whether the manager values nonmarket goods from neighboring stands the model offers insights for improving heuristic forest level optimization models in current usage

some talk money in politics a partial review of the literature the financing of political campaigns is an area of active scholarly study i review some of the recent literature and discuss important methodological issues that arise in empir ical research on campaign expenditures and campaign contributions the effects of campaign expenditures and advertising on candidate and ballot measure elections are summarized as are the impacts of contributions on contributors welfare many states have changed their campaign finance laws in the past few years and i describe work that exploits variations in these laws a discussion of the strategies used by interest groups to allocate their campaign contributions provides insights into contributors motives

a note on strategyproofness in edgeworth box economies abstract this paper considers the problem of dividing a bundle of two private goods between two agents whose preferences are continuous convex and strictly increasing it is shown that every strategyproof scheme that is continuous in the preferences must let one agent choose his best bundle from some exogenous set

labour and environmental standards the lemons problem in international trade policy environmental and labour standards have become an important international trade issue this article examines and ranks alternative trade policy responses available to an importing country with concerns over such standards while a full import embargo may sometimes be preferable to allowing unrestricted access to unlabeled noconforming imports a partial embargo that allows imports which demonstrably conform to the standard is always a better policy and labeling solutions which separate conforming and non conforming imports are typically better still consequently full import embargoes based on non conformity with labour or environmental standards are poor policy choices and should generally remain prohibited by wto rules

willingness to pay for environmental practices implications for eco labeling consumer survey data collected in former west and east berlin after the unification of germany are used to address the issue of willingness to pay wtp for foods produced with techniques consistent with environmental stewardship results show differences in the wtp between residents of the two former german states attributed to area of residence residents of eastern city districts were generally less willing to pay a premium for foods produced with environmental friendly methods which suggests that marketing of such foods will be more successful in western districts unless educational efforts can be used to bridge the gap in the stated wtp

rent seeking and market structure comment if the firms in an industry are to be successful in raising money to influence government two conditions must be met 1 there must be sufficient rents available from government decisions regarding that industry to make such expenditures worthwhile and 2 the industry must be sufficiently concentrated to avoid a free rider problem in fund raising this argument though seemingly intuitively appealing has been under recent empirical attack this paper seeks to restore the parapets

can ecolabeling schemes preserve the environment a three stage game of production technology signal and price competition is developed to study the impact of eco labeling in a duopoly model of vertical product differentiation the production technology and the subsequent pollution level are non observable by consumers the only way to inform consumers about the environmental quality of the product is to stick an ecolabel on it however a polluting firm may also usurp the ecolabel by incurring a certain cost by assuming that consumers are altruistic and willing to pay for environmental quality we show that ecolabels can reduce the pollution level finally and importantly under restrictive conditions on labeling cost ecolabeling can constitute to some extent an environmentally effective and economically efficient policy however ecolabeling cannot alone internalize the whole negative externality until the optimum point

the habit of giving i introduction habit formation is thought to exert great influence on behavior it has been proffered as a potential answer to questions as disparate as the size of the equity premium abel 1990 optimal purchases of insurance ben arab briys and schlesinger 1996 labor force participation woittiez and kapteyn 1998 the relationship between savings and growth rates carroll overland and well 2000 responsiveness to monetary policy fuhrer 2000 the importance of brand loyalty gupta chintagunta and wittink 1997 and the existence of a gateway effect between alcohol and illegal drug use pacula 1998 yet there is scant discussion in the economics literature about long term habit forming most studies focus on shorter term intertemporal relationships like changes in annual consumption see inter alia naik and moore 1996 dynan 2002 carrasco labeaga and lopez salido 2005 the importance of early influences on later risk taking malmendier and nagel 2007 and motivations for purchasing different goods portolese dias 2004 has been hypothesized yet there is little direct evidence on the long term impact of shocks to behavior early in life particularly in the way that preferences form and evolve one recent exception is the study of bronnenberg dube and gentzkow 2010 who use variation in consumers previous states of residence to show that early exposure to particular brands of package goods affects purchasing behavior decades later charities in particular care about building relationships with their donors and expend a great deal of effort in the pursuit of small gifts with the expectation that they may lead to larger gifts in the future universities seem to be convinced that this strategy is effective and with 8 7 billion raised from alumni in 2008 the stakes are high council for aid to education 2009 the dean of alumni affairs at columbia university stated that it isn t about the dollars and that the purpose of getting young alumni to donate is to create a habit of giving durkin 2005 fundraising professionals agree one consultant explained i would never say that a small gift is not important because it s building that relationship if you don t build those relationships today you may not have their interest when the day comes that they can give those 101 million donations westmoreland 2008 this sentiment was echoed by an expert on senior class giving at the council for advancement and support of education who explained that the goal of these programs is not to raise money but to begin a pattern of behavior ensign 2010 there is scant evidence that this belief is justified while a number of studies have documented a positive correlation between giving when young and giving when older see monks 2003 turner meserve and bowen 2001 this may be driven by a number of factors that have nothing to do with building a relationship this correlation may actually represent spurious state dependence that arises from unobserved heterogeneity like the alumnus s affinity for the school this is contrasted with true state dependence in which a donation in one period affects preferences for donating in a later period while participation rates are a factor in university rankings it seems evident that development officials assume that habit forming in charitable contributions exists and justifies the pursuit of small gifts when alumni are young with the expectation that this will lead to larger gifts in the future these beliefs hinge on the idea that a habit can form by the simple act of making a gift and that the amount given is possibly irrelevant in essence the proponents of this idea believe that giving regularly when young will cause the individual to be in a state of focus for giving when older willing to make a larger gift perhaps because they are accustomed to giving to the charity in each year standard models of habit forming in which the amount given in an earlier period affects a stock variable and the individual incurs disutility from deviating from this level do not account for this phenomenon

on the taxation of polluting products in a differentiated industry this paper studies the provision of environmental quality in an imperfectly competitive market it uses a vertical differentiation model in which the free entry equilibrium results in an under provision of quality the following main results are obtained first a commodity tax may have a significant impact on the market structure in this setting it tends to increase the number of active firms second through its impact on market structure a commodity tax may be welfare improving even though quality creates a positive externality third a commodity tax may bring about an equilibrium that is arbitrarily close to a pareto efficient allocation

spreading versus concentrating damages environmental policy in the presence of nonconvexities abstract this paper examines the role of nonconvexities in externality control from a policy perspective nonconvexities can arise from a number of sources and can significantly alter the optimal solution to an externality problem for instance it may be socially desirable to concentrate externality damages in one area and prohibit them in another rather than spread the effects of the externality across a number of sites if this solution is optimal a pollution tax will not achieve the social optimum but a system of marketable permits will

money talks deterring quality challengers in congressional elections j 4t e examine the role of incumbent fundraising in deterring strong challengers we construct vf v a signaling model in which incumbents can use fundraising strategically to ward off w v quality challengers we show however that only under very limited circumstances will there be an observable relationship between fundraising and challenger quality therefore previous empirical tests for deterrence have systematically underestimated the effects of fundraising in decreasing electoral competition our analysis also suggests that by making fundraising easily observable federal election commission regulations may encourage candidates to overinvest time and resources accumulating large war chests instead of governing

brother can you spare a dime peer pressure in charitable solicitation abstract while the effects of peer pressure in charitable giving have been of considerable interest to social scientists there is little empirical evidence on the magnitude of these effects a correlation between giving or volunteering by one s peers and one s own giving can be driven by self selection into groups common shocks that inspire both the solicitor to ask and the individual to give or social influence using data from a university this paper analyzes whether alumni are more likely to give and give larger amounts when they are solicited by someone with whom they have social ties freshman year roommate assignments and the structure of the university s giving campaigns are used to overcome problems of selection and common shocks social ties play a strong causal role in the decision to donate and the average gift size additionally a solicitor s request is much more effective if he or she shares characteristics such as race with the alumnus being solicited

how the electoral college influences campaigns and policy the probability of being florida this paper analyzes how us presidential candidates should allocate resources across states to maximize the probability of winning the election by developing and estimating a probabilistic voting model of political competition under the electoral college system actual campaigns act in close agreement with the model there is a 0 9 correlation between equilibrium and actual presidential campaign visits across states both in 2000 and 2004 the paper shows how presidential candidate attention is affected by the states number of electoral votes forecasted state election outcomes and forecast uncertainty it also analyzes the effects of a direct national popular vote for president

efficient multiple use forestry may require land use specialization considered at the landscape scale economically efficient multiple use of forests may require land use specialization if managers attempt to satisfy legitimate multiple use demands from society by managing all lands for all outputs both commodity and amenity values of the forest may be inappropriately supplied and management inputs may be inefficiently deployed these results run counter to some of the prescriptions called new forestry

the production of eco labels eco labeling is a market based technique for conveying information about consumers demands for environmental protection most criticisms of eco labeling have concentrated on demand side issues the potential for firms or countries to use eco labels to manipulate market power and the difficulty of creating credible labels in this paper we argue that fundamental problems also arise on the production side specifically we argue that both increasing returns to scale and complexities in production imply that it will be possible to market only a small percentage of environmental attributes through the use of eco labels we present evidence for our hypotheses from a detailed survey of 100 randomly selected consumer products

are there increasing returns to pollution abatement empirical analytics of the environmental kuznets curve in pesticides abstract according to the environmental kuznets curve ekc hypothesis economic growth and the reduction of environmental degradation are compatible goals an inverted u shaped relationship between economic performance and environmental pollution suggests that empirically an economy is associated with smaller levels of pollution after some threshold income point one potential explanation for the empirical evidence of an ekc is increasing returns to pollution abatement where the abatement efficiency rises with an increase in the scale of abatement doubling the clean up efforts more than doubles the abatement of pollution as this efficiency gain makes abatement less expensive pollution might fall as more abatement is undertaken this study tests the hypothesis that there are increasing returns to abating pollution empirical evidence on environmental risks in the us agricultural sector since 1970 support the existence of increasing returns in addition i estimate the productivity of pollution abatement using refined empirical productivity measurement methods and explicitly control the level of technology the results show the importance of including an environmental productivity variable in the ekc framework

market structure and campaign contributions does concentration matter a reply economic rents may be obtained through the process of market competition or be obtained by resorting to governmental protection rational firms choose the least costly alternative collusion to obtain governmental protection will be less costly the higher the concentration ceteris paribus however high concentration in itself is neither necessary nor sufficient to induce governmental protection

campaign finance and voter welfare with entrenched incumbents two candidates compete for elective office each candidate has information she would like to reveal to the voters but this requires costly advertising the candidates can solicit contributions from interest groups to finance such advertising these contributions are secured by promises to perform favors for the contributors should the candidate win the election voters understand this and elect the candidate they like best taking into account their expectations about promises to special interests there is an incumbency advantage in fundraising which is sometimes so great that the incumbent faces no serious opposition at all introducing partial public financing through matching funds improves voter welfare in districts that have advertising under the decentralized system while it can reduce welfare in other districts the optimal policy must strike a balance between these two effects

why is there so little money in u s politics in this paper we argue that campaign contributions are not a form of policy buying but are rather a form of political participation and consumption we summarize the data on campaign spending and show through our descriptive statistics and our econometric analysis that individuals not special interests are the main source of campaign contributions moreover we demonstrate that campaign giving is a normal good dependent upon income and campaign contributions as a percent of gdp have not risen appreciably in over 100 years if anything they have probably fallen we then show that only one in four studies from the previous literature support the popular notion that contributions buy legislators votes finally we illustrate that when one controls for unobserved constituent and legislator effects there is little relationship between money and legislator votes thus the question is not why there is so little money politics but rather why organized interests give at all we conclude by offering potential answers to this question this abstract was borrowed from another version of this item

strategyproof collective choice in economic and political environments this paper surveys some recent results characterizing strategyproof collective choice rules when preferences satisfy conditions that are meaningful in economic or political environments

electoral and financial effects of changes in committee power the gramm rudman hollings budget reform the tax reform act of 1986 and the money committees in the house most rational choice theories of legislatures locate the source of committee power in the restrictive procedural rules that enforce committee jurisdictions however there is no empirical support for this claim further there is little evidence for the natural implication that membership on more powerful committees confers electoral benefits i address these puzzles by exploiting the occurrence of major budget and tax reforms in the mid eighties these reforms provide a natural experiment for measuring the electoral and financial consequences of changes in committee power i show that the procedural rule changes instituted by the gramm rudman hollings budget reform caused an increase in campaign contributions to members of the budget committee and led to a reduction in the vote share of members of the appropriations committee this heretofore unrecognized effect of the gramm rudman hollings budget reform on the welfare of members of the house rivals that of a more widely recognized policy shock th

electoral competition and special interest politics have fixed positions on some issues but vary their positions on others in order to attract votes and campaign contributions in this context we examine whether special interest groups are governed by an electoral motive or an influence in their campaign giving and how their contributions affect the equilibrium platforms we show that each party is induced to behave as if it were maximizing a weighted sum of the aggregate welfares of informed voters and members of special interest groups the party that is expected to win a majority of seats caters more to the special interests

does negative advertising affect giving behavior evidence from campaign contributions abstract this paper contributes to a growing literature that explains why individuals contribute to political campaigns we build a panel dataset that follows contributors from primary to general elections to quantify the persistence of giving in political contests those who gave to winning candidates in the primary were most likely to contribute again in the general election next we use an instrumental variable strategy to document that within party negative advertising decreases the probability that individuals contribute to their preferred party in the general election regardless of whether they initially contributed to a winning or losing primary candidate

green business and blue angels this paper presents a model of a monopolist svoluntary overcompliance with legal environmentalstandards under asymmetric information about thefirm s environmental impacts the key assumptions are the existence of quality premia for environmentalsoundness a positive but imperfect degree ofmonitoring and adaptive consumer expectations conditions necessary for overcompliance to arise in aprofit maximizing equilibrium are derived the effectsof a third party eco labeling system are analyzed itis shown that the existence of an independent labelingauthority increases the likelihood of overcomplianceto be profit maximizing moreover firms might have anincentive to lobby for the introduction of such asystem the effect of consumers risk preferences andan instrument for preventing greenwash companieslying about their environmental performance is alsodiscussed

political competition with campaign contributions and informative advertising this paper presents a theory of political competition with campaign contributions and informative political advertising policy motivated parties compete by selecting candidates and interest groups provide contributions to enhance the electoral prospects of like minded candidates contributions are used to finance advertising campaigns that provide voters with information about candidates ideologies voters update their beliefs rationally given the information they have received the paper uses the theory to analyze the welfare economics of contribution limits such limits are shown to redistribute welfare from ordinary citizens to members of interest groups jel d72 h40

are contributors rational untangling strategies of political action committees empirical public choice literature and casual observation suggest that the behavior of political action committees is remarkably unsophisticated meaning that pacs give to those legislators who would support their interests anyway thus it is suggested that contributor behavior deviates from rational behavior which is a cornerstone of economic analysis in this paper a switching regression model is estimated that allows for strategies of pacs to vary for different contribution recipients i analyze the behavior of farm pacs over three election cycles in contrast to previous findings i find that contributor behavior is not inconsistent with rational behavior contributors who attempt to influence the voting behavior of members of congress give the most money to legislators whose constituency interest suggests that they are likely to be undecided on how to vote and pacs give less money to legislators who represent districts with larger farm populations because those legislators are likely to vote in con

follow the leader theory and evidence on political participation using state by state voting data for u s presidential elections the authors observe that voter turnout is a positive function of predicted closeness to explain the strategic component of political participation they develop a follow the leader model political leaders expend effort according to their chance of being pivotal which depends on the expected closeness of the race at both state and national levels and how voters respond to their effort structural estimation supports this model for example a 1 percent increase in the predicted closeness at the state level stimulates leaders efforts which increases turnout by 0 34 percent

campaign advertising and voter welfare this paper investigates the role of campaign advertising and the opportunity of legal restrictions on it an electoral race is modeled as a signalling game with three classes of players many voters two candidates and one interest group the group has non verifiable insider information on the candidates quality and on the basis of this information offers a contribution to each candidate in exchange for a favorable policy position candidates spend the contributions they receive on non directly informative advertising this paper shows that 1 a separating equilibrium exists in which the group contributes to a candidate only if the insider information about that candidate is positive 2 although voters are fully rational a ban on campaign advertising can be welfare improving and 3 split contributions may arise in equilibrium and if they arise too often they are detrimental to voters

interest group competition and the organization of congress theory and evidence from financial services political action committees we develop a positive theory of how interest group competition shapes the organization of congress and use it to explain campaign contribution patterns in financial services since interest groups cannot enforce fee for service contracts with legislators legislators have an incentive to create specialized standing committees which foster repeated dealing between interests and committee members the resulting reputational equilibrium supports high contributions and high legislative effort for the interests contribution patterns by competing interests in the congressional battle over whether banks can enter new businesses support the theory which also has implications for term limits and campaign reform

inefficiency of strategy proof rules for pure exchange economies abstract in his pioneering article in decision and organization c b mcguire and r radner eds pp 297 336 north holland amsterdam 1972 hurwicz establishes that there is no strategy proof pareto efficient and individually rational rule for pure exchange economies with two agents and two goods provided that the domain includes a sufficiently wide class of classical preferences in this article we extend his result to pure exchange economies with any finite number of agents and goods we establish that i there is no strategy proof pareto efficient and individually rational rule on the class of classical homothetic and smooth preferences and ii there is no strategy proof pareto efficient and symmetric rule on the same class of preferences journal of economic literature classification numbers d78 d71 c72