war and natural resource exploitation abstract we build a theoretical framework that allows for endogenous conflict behaviour i e fighting efforts and for endogenous natural resource exploitation i e speed ownership and investments while depletion is spread in a balanced hotelling fashion during peace the presence of conflict creates incentives for rapacious extraction as this lowers the stakes of future contest this voracious extraction depresses total oil revenue especially if world oil demand is relatively elastic and the government s weapon advantage is weak some of these political distortions can be overcome by bribing rebels or by government investment in weapons the shadow of conflict can also make less efficient nationalized oil extraction more attractive than private extraction as insecure property rights create a holdup problem for the private firm and lead to a lower license fee furthermore the government fights less intensely than the rebels under private exploitation which leads to more government turnover without credible commitment to future fighting efforts private oil depletion is only lucrative if the government s non oil office rents are large and weaponry powerful which guarantees the government a stronger grip on office and makes the holdup problem less severe

the solution to the tullock rent seeking game when r 2 mixed strategy equilibria and mean dissipation rates in tullock s rent seeking model the probability a player wins the game depends on expenditures raised to the power r we show that a symmetric mixed strategy nash equilibrium exists when r 2 and that overdissipation of rents does not arise in any nash equilibrium we derive a tight lower bound on the level of rent dissipation that arises in a symmetric equilibrium when the strategy space is discrete and show that full rent dissipation occurs when the strategy space is continuous our results are shown to be consistent with recent experimental evidence on the dissipation of rents

implications of ethnic diversity ethnically differentiated societies are often regarded as dysfunctional with poor economic performance and a high risk of violent civil conflict the author distinguishes between dominance in which one group constitutes a majority and fractionalization in which there are many small groups in terms of overall economic performance the research shows that both theoretically and empirically fractionalization is normally unproblematic in democracies although it can be damaging in dictatorships in terms of the risk of civil war the author shows that both theoretically and empirically fractionalization actually makes societies safer while dominance increases the risk of conflict a policy implication is that fractionalized societies are viable and secession should be discouraged

platform pricing in mixed two sided markets when a consumer can appear on both sides of a two sided market such as a user who both buys and sells on ebay the platform may want to bundle the services it provides to two sides i develop a general model for such mixed two sided markets and show that a monopolist platform s incentive to bundle and its optimal pricing strategy are determined by simple formulas using familiar price elasticities of demand which embody the bundling effect and price cost margins adjusted for network externalities which incorporate two sidedness the optimal pricing rule in such markets generalizes the familiar lerner formula

are corruption and taxation really harmful to growth firm level evidence exploiting a unique data set containing information about the estimated bribe payments of ugandan firms the authors study the relationship between bribe payments taxes and firm growth in uganda for the period 1995 97 using industry location averages to circumvent the potential problem of endogeneity and to deal with issues of measurement error they find that both the rate of taxation and the rate of bribery are negatively correlated with firm growth for the full data set a one percentage point increase in the bribery rate is associated with three percentage point reduction in firm growth an effect about three times that of taxation moreover after excluding outliers the authors find that bribery has a much greater negative impact on growth and taxation a considerably smaller one this provides some validation of firm level theories of corruption which posit that corruption retards development even more than taxation does

the big push natural resource booms and growth a simple application of big push reasoning suggests that natural resource booms can be important catalysts for development in poorer countries in this paper we present evidence from seven latin american countries that natural resource booms are sometimes accompa nied by declining per capita gdp we present a model with natural resources increasing returns in the spirit of big push models and expectations to clarify some of the reasons this may happen q 1999 elsevier science b v all rights reserved

on the salience of ethnic conflict ray acknowledges support from the national science foundation under grants 0421852 and 0617827 esteban is a member of barcelona economics xrea and is grateful for support from the generalitat de catalunya and the cicyt sej 2006 00369 this research is part of the polarization and conflict research project cit2 ct 2004 506084 funded by the european commission dg research sixth framework program

on the dynamics of ethnic fractionalization does fractionalization change over short periods of time if so are there any substantial implications for economic performance to answer such questions we construct a new panel data set with measures of ethnic linguistic and religious fractionalization for 26 former communist countries covering the period from 1989 to 2002 our fractionalization measures show that transition economies became more ethnically homogeneous over such a short period of time although the same did not happen for linguistic and religious diversity in line with the most recent literature there seems to be no effect of exogenous diversity on macroeconomic performance that is on per capita gdp growth however we find that dynamic endogenous ethnic diversity is negatively related to growth although this is still not the case for linguistic and religious diversity these findings are robust to different specifications polarization measures and instrument sets as well as to a composite index of ethnic linguistic religious fractionalization

the creation of effective property rights traditionally general equilibrium models have taken effective property rights to be given and have been concerned only with analyzing the allocation of resources among productive uses and the distribution of the resulting product but this formulation of the economic problem is incomplete because it neglects that the appropriative activities by which people create the effective property rights that inform allocation and distribution are themselves an alternative use of scare resources this paper develops two canonical general equilibrium models of resource allocation and income distribution that allow for the allocation of time and effort to the creation of effective property rights to valuable resources in one model the valuable resources are initially in common pool in the other models the analysis reveals how the amount of time and effort that agents allocate to the creation of effective property rights on the technology of production and on the scale of the economy the paper also analyses the security of initial claims to valuable resources and speculates about why initial claims are perfectly secure

voracious transformation of a common natural resource into productive capital i analyze a power struggle where competing factions have private financial assets and deplete a common stock of natural resources with no private property rights i obtain a feedback nash equilibrium to the dynamic common pool problem and obtain political variants of the hotelling depletion rule and the hartwick saving rule resource prices and depletion occur too fast so substitution away from resources to capital occurs too fast and the saving rate is too high the power struggle boosts output but depresses sustainable consumption genuine saving is nevertheless zero in a fractionalized society world bank estimates may be too optimistic

platform competition in two sided markets many if not most markets with network externalities are two sided to succeed platforms in industries such as software portals and media payment systems and the internet must get both sides of the market on board accordingly platforms devote much attention to their business model that is to how they court each side while making money overall this paper builds a model of platform competition with two sided markets it unveils the determinants of price allocation and end user surplus for different governance structures profit maximizing platforms and not for profit joint undertakings and compares the outcomes with those under an integrated monopolist and a ramsey planner jel l5 l82 l86 l96

environmental depletion governance and conflict t he link between natural resource dependence and internal conflict has been approached from a variety of angles in a large and growing interdisciplinary literature while there is an expanding consensus as to what matters the most for such intra state violence episodes the feasibility discontent dichotomy still appears to characterize a disciplinary divide between economists and political scientists this paper attempts to help bridge the gap by allowing for both intrinsic and extrinsic motivations of potential rebels simple non cooperative bargaining yields a nonlinear impact of regulatory quality on the likelihood of conflict and shows that corruption and resource depletion jointly affect the outcome the empirical analysis that follows looks at the effect of environmental depletion and government corruption on the emergence of civil conflicts using a large panel dataset resource depletion the quality of governance and their interaction are found to be significant determinants of civil conflict incidence results are robust to several steps taken to address potential endogeneity concerns

fertilizer adoption by smallholders in the brazilian amazon farm level evidence multiple constraints prevent smallholders from adopting fertilizers even with regional supply of agricultural inputs expanding and soils being weared out using comprehensive farm level data from the eastern brazilian amazon we found that market proximity had a significant positive correlation with fertilizer adoption even after controlling for liquidity land tenure education experience and access to rural extension services nevertheless few smallholders completely replaced nutrients from vegetation with fertilizers instead we found that a hybrid system that combines nutrients from vegetation and fertilizers was approximately twice as common as exclusive fertilizer use we suggest that the option for this diversified nutrient portfolio may result not only from a lack of capital or knowledge regarding return on fertilizer use but also from the need to adapt to the economic constraints facing smallholders and minimize risk results indicate that a rural extension program aimed at supporting a rapid and complete replacement of ashes from vegetation by fertilizers could prove unsuccessful for amazonian smallholders

the curse of natural resources in fractionalized countries abstract this paper develops a model that can explain why natural resources are a blessing for some countries but a curse for others in this model natural resources cause fighting activities between rivalling groups fighting reduces productive activities and weakens property rights making productive activities even less attractive the aggregate production decrease exceeds the natural resources direct positive income effect if and only if the number of rivalling groups is sufficiently large the model thus predicts that natural resources lower incomes in fractionalized countries but increase incomes in homogenous countries empirical evidence supporting this prediction is provided

natural resources and income inequality the role of ethnic divisions we hypothesize that natural resources raise income inequality in ethnically polarized societies but reduce income inequality in ethnically homogenous societies and we present empirical evidence in support of this hypothesis

rent seeking and resource booms abstract this paper develops a model of rent seeking in which the opportunity cost of rent seeking is foregone entrepreneurship it provides conditions under which resource booms tend to lead to an increase in rent seeking activity and those in which they induce entrepreneurship we identify an important difference between the two activities which leads resource booms to bias gains in favour of rent seeking over entrepreneurship but we also show that this bias depends on the nature of the initial equilibrium

why do some resource abundant countries succeed while others do not on average resource abundant countries have experienced lower growth over the last four decades than their resource poor counterparts but the most interesting aspect of the paradox of plenty is not the average effect of natural resources but its variation for every nigeria or venezuela there is a norway or a botswana why do natural resources induce prosperity in some countries but stagnation in others this paper gives an overview of the dimensions along which resource abundant winners and losers differ in light of this it then discusses different theory models of the resource curse with a particular emphasis on recent developments

environmental performance in socially fragmented countries social fragmentation is often associated with reduced co operative behaviour which undermines public goods provision such as environmental protection the few studies linking social fragmentation and environmental performance have been confined to using ethnic fractionalisation as the only measure of social heterogeneity in this paper we contribute to the literature in a twofold manner first we bring into the analysis alternative measures of social fragmentation i e religious fractionalisation ethnic religious polarisation that have received considerable attention in development economics in recent years second this is the first study to our knowledge that makes use of a large panel dataset of several environmental indicators to explore links between ethnic religious diversity and the environment we find that all indices of social fragmentation are negatively linked to measures of environmental quality although for some of them the size of the effect is larger in the case of polarisation

do natural resource revenues hinder financial development the role of political institutions we hypothesize that natural resource revenues may deteriorate contract enforcement if political institutions are weak as poor contract enforcement leads to low financial development resource revenues may hinder financial development in countries with poor political institutions but not in countries with comparatively better political institutions we provide empirical support for this hypothesis based on within country variation in our sample covering the period 1970 2005 and 133 countries our results are robust to the use of additional control variables different samples and alternative measures of financial development and political institutions

resource shocks and human capital stocks brain drain or brain gain abstract based on the paradox of plenty resource abundant countries tend to be vulnerable for lower economic prosperity along with instable political institutions as well as corruption this paper sheds light on the relationship between resource abundance and the selectivity of migration first i combine a dutch disease model with a roy borjas model in order to elaborate on the relationship between resource shocks and migrant selectivity theoretically thereby i predict that resource booms give rise to brain drain effects which are mediated through distributional effects under certain conditions second i provide empirical evidence for the effect of resource shocks on migrant selectivity based on a structural equation model in order to disentangle effects on income inequality and migrant selectivity the results show that resource shocks especially oil booms strengthen brain drain effects in a sample with 116 source and 23 destination countries between 1910 and 2009

natural resources and the quality of economic development abstract are natural resources a blessing or a curse for human development this article attempts to answer the question by distinguishing between a dependence on natural resources and an abundance of the same dependence is measured in terms of exports of metals and fuel while resource abundance is calculated on the basis of the subsoil assets per square kilometre and per capita results show the existence of a negative correlation between metals and ore exports and human development while subsoil assets measures are rather positively related these effects are particularly significant in countries with a comparatively lower institutional quality the cases of botswana the democratic republic of congo and equatorial guinea briefly examined suggest however that the effects of natural resources on human and economic development can be very different and strictly related to specific national political and institutional characteristics

ethnic diversity and economic development abstract this paper analyzes the role that different indices and dimensions of ethnicity play in the process of economic development firstly we discuss the advantages and disadvantages of alternative data sources for the construction of indices of religious and ethnic heterogeneity secondly we compare the index of fractionalization and the index of polarization we argue that an index of the family of discrete polarization measures is the adequate indicator to measure potential conflict we find that ethnic religious polarization has a large and negative effect on economic development through the reduction of investment and the increase of government consumption and the probability of a civil conflict

extending the concept of the resource curse natural resources and public spending on health this paper extends the concept of the resource curse by studying whether and through which transmission channels natural resource wealth affects social spending even though the availability of vast natural capital reserves has commonly been linked to the neglect of human development most of the literature has continued to focus on economic performance this paper is the first to empirically investigate the link between natural resource wealth and public health expenditures in light of the hypothesis that resource wealth as a source of unearned state income enhances state autonomy and increases volatility which leads to policies that fail to prioritize human development using a large panel dataset of world countries covering the period from 1995 to 2009 we find a robust significant inverse relationship between natural resource dependence and even abundance and public health spending over time the effect remains significant after controlling for state autonomy volatility and other factors these findings have implications for national authorities as well as the extractive industry governments should be made accountable for natural resource wealth and correct taxation could provide additional resources earmarked for health the extractive industry could increase their investments in sustainable corporate social responsibility operations specifically in the health sector

experimentation in two sided markets we study optimal experimentation by a monopolistic platform in a two sided market the platform provider is uncertain about the strength of the externality each side is exerting on the other setting participation fees on both sides it gradually learns about these externalities by observing actual participation levels this provides an informational rationale for introductory pricing with the platform provider charging a fee below the myopically optimal level on at least one side of the market if the externality that the other side exerts is sufficiently well known and weaker than the externality it experiences the platform provider extracts surplus from that side by charging it a fee above the myopically optimal level this interplay between learning and surplus extraction is crucial to the market outcome and its dynamics

pasture conversion and competitive cattle rents in the amazon the economic incentives for conversion to pasture in mato grosso brazil are investigated using pastureland rents pastureland rents are estimated from physical and geographic determinants and verified by predicting the location of conversion to pasture between 2001 and 2004 results indicate that a one hundred dollar increase in mean cattle rent increases the probability of conversion to pasture from 8 6 to 11 1 the use of economic rent allows the direct study of fiscal policy levers on land conversion behavior expanding policy discussions beyond the role of roads and road improvement towards the use of excise and conversion taxes or conservation subsidies

natural resource access and local economic growth abstract we explore the existence of a local resource curse related to brazil s oil using oil price annual changes interacted with measures of local proximity to oil reserves we find that oil royalty receiving locations in brazil that are closer to an oil field are characterized by a higher level of income per capita when controlling for a range of potentially confounding factors furthermore in a panel setting we find that better geographical access to oil fields generates a greater positive effect of oil prices on local income per capita moreover this positive impact of oilfield proximity on the effect of oil prices is enhanced in oil rich states importantly these effects appear to be independent of the amount of oil royalties suggesting the role of an indirect linkage effect

social capital innovation and growth evidence from europe this paper investigates the interplay between social capital innovation and economic growth in the european union we identify innovation as an important mechanism that transforms social capital into economic growth in an empirical investigation of 102 european regions in the period 1990 2002 we show that higher innovation performance is conducive to economic growth and that social capital affects growth indirectly by fostering innovation our estimates suggest that there is only a limited role for a direct effect of social capital on economic growth

industrial policy in an imperfect world theoretical analyses of industrial policy normally restrict the range of possible outcomes by abstracting from either market or government failures this paper thus studies industrial policy and its effectiveness in a model that includes both market and government imperfections we introduce a public agency responsible for industrial policy into the model of hausmann and rodrik 2003 and assume that this agency has limited information and is partly politically motivated we further extend the model to allow the public agency to communicate with entrepreneurs and the entrepreneurs to engage in rent seeking we find that industrial policies are ineffective if the public agency is poorly informed but that they are not necessarily ineffective if the public agency is highly politically motivated given a highly politically motivated public agency industrial policies are effective if and only if the institutional setting ensures that such policies are modest e g by restricting the public agency s budget moreover our model helps us to understand why the same industrial policies that have failed elsewhere have been relatively successful in south korea and taiwan

ethnic diversity civil war and redistribution in a game theoretic framework we analyse the circumstances under which self enforcing redistribution and power sharing coalitions can be used to peacefully resolve ethnic conflict the existence of a pacific equilibrium depends crucially on ethnic diversity the number of ethnic groups the risk of civil war is comparatively high at intermediate levels of ethnic diversity the risk is low if a society is either very homogeneous or very diverse predictions of the model are consistent with evidence on the incidence of civil war

ethnic diversity social sanctions and public goods in kenya abstract this paper examines ethnic diversity and local public goods in rural western kenya the identification strategy relies on the stable historically determined patterns of ethnic land settlement ethnic diversity is associated with lower primary school funding and worse school facilities and there is suggestive evidence that it leads to poor water well maintenance the theoretical model illustrates how inability to impose social sanctions in diverse communities leads to collective action failures and we find that school committees in diverse areas do impose fewer sanctions on defaulting parents we relate these results to the literature on social capital and economic development and discuss implications for decentralization in less developed countries

the voracity effect abstract we analyze an economy that lacks a strong legal political institutional infrastructure and is populated by multiple powerful groups powerful groups dynamically interact via a fiscal process that effectively allows open access to the aggregate capital stock in equilibrium this leads to slow economic growth and a voracity effect by which a shock such as a terms of trade windfall perversely generates a more than proportionate increase in fiscal redistribution and reduces growth we also show that a dilution in the concentration of power leads to faster growth and a less procyclical response to shocks jel f43 o10 o23 o40

efficiency enhancing taxation in two sided markets this paper examines the efficient provision of goods in two sided markets and characterizes optimal specific and ad valorem taxes we show that i a monopoly may have too high output compared to the social optimum ii output may be reduced by imposing negative value added taxes subsidy or positive specific taxes

conflict and distribution abstract we develop a behavioral model that links the level and pattern of social conflict to the societywide distribution of individual characteristics the model can be applied to groups that differ in characteristics such as wealth ethnicity religion and political ideology we settle questions of existence and uniqueness of conflict equilibrium conflict is seen to be closely connected with the bimodality of the underlying distribution of characteristics however in general the conflict distribution relationship is nonlinear and surprisingly complex our results on conflict patterns also throw light on the phenomena of extremism and moderation journal of economic literature classification numbers d63 d72 d74

heavily skewed pricing in two sided markets a common feature in two sided markets is the prevalence of heavily skewed pricing strategies in which price markups are much higher on one side of the market than the other we show that maximal skewed pricing is profit maximizing under constant elasticity of demand the most elastic side of the market is used to generate maximum demand by providing it with platform services at the lowest possible price full participation of the high elasticity low price side of the market attracts the other side as this side is less price elastic the platform is able to extract high prices

ethnicity and conflict an empirical study this paper examines the impact of ethnic divisions on conict the empirical specication is informed by a theoretical model of conict esteban and ray 2011 in which equilibrium conict is related to just three distributional indices of diversity ethnic polarization ethnic fractionalization and a greenberg gini index constructed across ethnic groups our empirical ndings verify that these distributional measures are signicant correlates of conict the underlying theory permits us to use these results to make inferences about the relative importance of public goods in conict as well as the extent of within group cohesion in conictual activity these eects are further strengthened as we introduce country specic measures of group cohesion and the relative importance of public goods and combine them with the distributional measures exactly as specied by the theory

linking conflict to inequality and polarization in this paper we study a behavioral model of conflict that provides a basis for choosing certain indices of dispersion as indicators for conflict we show that a suitable monotone transform of the equilibrium level of conflict can be proxied by a linear function of the gini coefficient the herfindahl hirschman fractionalization index and a specific measure of polarization due to esteban and ray jel classification d74 d31

transport infrastructure investment implications for growth and productivity theory and evidence on the effects of public investment on growth and productivity are reviewed it is concluded that on average public capital has positive impacts on output and private investment partly offset by the effects of the taxation needed to finance it a possible future shortfall in public capital in the uk is highlighted the paper also reviews the contribution of transport infrastructure to productivity and considers implications for cost benefit analysis it is suggested that there is a case for greater uk investment in roads but ideally this should be implemented along with an efficient national road pricing scheme

ecosystem service value and agricultural conversion in the amazon implications for policy intervention we explore the welfare implications of agricultural expansion in the brazilian amazon by comparing spatially explicit estimates of soybean rents and the value of ecosystem services although these estimates are generated from different datasets models and estimation techniques the values are comparable such that the value of ecosystem services is greater than soybean rents for about 61 of the total area and 24 of the area where soybean rents are positive if protected areas are well enforced based on the balance between the benefits and costs of conversion failure to value ecosystem services reduces total social welfare by 7 13 billion dollars annually relative to an optimum policy instruments that internalize the value of ecosystem services via protected lands land conversion taxes conservation subsidies or excise taxes can avoid much of this loss regardless of intervention regime policy makers should be cognizant of the diminishing net benefits of converting natural ecosystems to agriculture realizing the final 3 8 requires the conversion of an additional 15 natural ecosystems to soybean production

rule of law and the resource curse abundance versus intensity we examine the resource curse using new data on historic resource stocks and an improved econometric methodology the paper distinguishes between resource abundance stocks and extractive intensity flows focusing on relationships between resources and rule of law previously unavailable information on past resource stocks is estimated we find that economically large initial natural resource stocks are associated with subsequent lower levels of rule of law and do not directly affect growth while raw resource exports do not have a significant effect on rule of law when stocks are included in the analysis but do affect average growth rates sample size is maximized through the use of an emis expectation maximization with importance sampling algorithm to replace missing data minimizing the bias and inefficiency associated with listwise deletion which commonly eliminates half or more of the available data in this setting

eight questions about corruption this paper will discuss eight frequently asked questions about public corruption 1 what is corruption 2 which countries are the most corrupt 3 what are the common characteristics of countries with high corruption 4 what is the magnitude of corruption 5 do higher wages for bureaucrats reduce corruption 6 can competition reduce corruption 7 why have there been so few recent successful attempts to fight corruption 8 does corruption adversely affect growth

natural resources education and economic development economic growth since 1965 has varied inversely with the share of natural capital in national wealth across countries four main channels of transmission from abundant natural resources to stunted economic development are discussed a the dutch disease b rent seeking c overconfidence and d neglect of education public expenditure on education relative to national income expected years of schooling for girls and gross secondary school enrolment are all shown to be inversely related to the share of natural capital in national wealth across countries natural capital appears to crowd out human capital thereby slowing down the pace of economic development

natural resources rent seeking and welfare abstract a new and very simple mechanism to explain why natural resource abundance may lower income and welfare is developed in a model with rent seeking a greater amount of natural resources increases the number of entrepreneurs engaged in rent seeking and reduces the number of entrepreneurs running productive firms with a demand externality it is shown that the drop in income as a result of this is higher than the increase in income from the natural resource more natural resources thus lead to lower welfare

resource abundance and economic growth in the united states abstract it is a common assumption that regions within the same country converge to approximately the same steady state income levels the so called absolute convergence hypothesis focuses on initial income levels to account for the variability in income growth among regions empirical data seem to support the absolute convergence hypothesis for us states but the data also show that natural resource abundance is a significant negative determinant of growth we find that natural resource abundance decreases investment schooling openness and r d expenditure and increases corruption and we show that these effects can fully explain the negative effect of natural resource abundance on growth

oil and entrepreneurship economic theory predicts that rents produced from natural resources especially oil and gas can increase opportunities for entrepreneurship but they may also reduce engagement in entrepreneurial activities as they change incentives towards rent seeking using global entrepreneurship monitor gem annual surveys this study provides empirical evidence that more per capita profit from oil and gas reduces entrepreneurship only in corrupt environments the more the corruption is the larger is the impact the results have important implications for policy makers especially in resource rich developing countries

the economics of cropland conversion in amazonia the importance of agricultural rent abstract we use spatially efficient logit models to explore the role of economic incentives on the expansion of cropland in the mato grosso region between 2001 and 2004 an empirical measure for agricultural economic rent is used to quantify the desirability of a particular plot of land which previous research proxies with variables such as distance to roads or urban areas and simple climatic and edaphic variables results indicate that the measure for economic rent provides additional information and explanatory power to one of the most commonly used proxies distance to roads as predicted by economic theory it is not simply access or variation in transportation costs that drives the spatial determinants of agricultural expansion but the expected total returns from the venture this suggests that spatially explicit rent models can be used to simulate the location and quantity of land use change in an economically consistent framework such a framework lays the foundation for an enhanced methodology that can evaluate the ability of fiscal policy levers to influence the location of agricultural conversion with the ultimate aim of balancing economic and environmental goals

oil and women a re examination abstract in a seminal article ross 2008 reports a negative correlation between oil production and women s representation in the labour force and politics across countries this article re examines these relationships exploiting variations in oil endowments to address endogeneity concerns we confirm that oil production causes decline in women s representation additionally we show that consistent with dutch disease effects oil production decreases women s employment in the traded sector however it also leads to an increase in women s employment in the nontraded sector we explore some social consequences of oil production and show that it results in women marrying earlier and having more children

monopoly ramsey and lindahl in rochet and tirole 2003 abstract rochet and tirole rochet j c tirole j 2003 platform competition in two sided markets journal of the european economic association 1 4 990 1029 consider the consumer ramsey problem in a model of two sided markets i extend their analysis to the social ramsey and lindahl problems comparing the solutions to all three to monopoly pricing

barriers to investment in polarized societies i present a tractable dynamic model of political economy where disagreements about the composition of public spending result in implementation of short sighted policies the relative price of investment to consumption is excessively large in equilibrium due to over taxation investment rates are too low which slows down growth along the transition in the long run this results in output consumption and welfare being inefficiently low the larger is the degree of polarization the greater is the inefficiency political stability mitigates the effects of polarization by making the incumbent internalize the dynamic inefficiencies introduced by the choice of growth retarding policies

two sided markets a progress report the paper provides a road map to the burgeoning literature on two sided markets and presents new results it identifies two sided markets with markets in which the structure and not only the level of prices charged by platforms matters the failure of the coase theorem is necessary but not sufficient for two sidedness the paper builds a model integrating usage and membership externalities that unifies two hitherto disparate strands of the literature emphasizing either form of externality and obtains new results on the mix of membership and usage charges when price setting or bargaining determine payments between end users

corruption income and the environment an empirical analysis abstract in response to the recent growth of a largely theoretical body of literature analysing the linkages between corruption and pollution this paper subjects the corruption pollution relationship to a detailed empirical examination a distinction is drawn between the direct impact of corruption on pollution and the indirect impact which operates through corruption s impact on per capita income and the resultant impact of income on pollution using data for 94 countries covering the period 1987 2000 both direct and indirect impacts of corruption on air pollution emissions are estimated for both sulfur dioxide and carbon dioxide corruption is estimated to have a positive direct impact on per capita emissions indirect effects are found to be negative and larger in absolute value than direct effects for the majority of the sample income range as a result the total effect of corruption on emissions is negative for all but the highest income countries in the sample

optimal quality threshold of admission in a two sided farmers market we develop a two sided model for a farmers market where farmers value the number of consumers and consumers value the number of farmers and the average product quality in the market consumer preference over product quality provides an incentive for the farmers market to exclude farmers of the lowest product quality using the model we identify what factors the farmers market has to consider in determining the optimal quality threshold of admission an issue that has not received any formal study those factors include the network effects between farmers and consumers consumer preference over product quality and variety and the quality spread among farmers we also outline an empirical estimation strategy in order to make use of the model developed in this study

environmental degradation as engine of undesirable economic growth via self protection consumption choices we analyze growth dynamics in an economy where the well being of economic agents depends on three goods leisure a free access environmental good and a private good that can be consumed as a substitute for the environmental resource the processes of production and consumption of the private good by each agent impose negative externalities on other agents through the depletion of the environmental good this paper shows that in such context the existence of private substitutes for environmental goods may fuel an undesirable economic growth process this process is driven by the continuous increase in agents needs for private consumption generated by the progressive reduction in free consumption of the environmental good

kleptocracy and divide and rule a model of personal rule many developing countries have suffered under the personal rule of kleptocrats who implement highly inefe cient economic policies expropriate the wealth of their citizens and use the proceeds for their own glorie cation or consumption we argue that the success of kleptocrats rests in part on their ability to use a divide and rule strategy made possible by the weakness of institutions in these societies members of society need to cooperate in order to depose a kleptocrat yet such cooperation may be defused by imposing punitive rates of taxation on any citizen who proposes such a move and redistributing the benee ts to those who need to agree to it thus the collective action problem can be intensie ed by threats which remain off the equilibrium path in equilibrium all are exploited and no one challenges the kleptocrat kleptocratic policies are more likely when foreign aid and rents from natural resources provide rulers with substantial resources to buy off opponents when opposition groups are shortsighted when the average productivity in the economy is low and when there is greater inequality between producer groups because more productive groups are more dife cult to buy off jel o12 h00

more oil less democracy evidence from worldwide crude oil discoveries this article exploits variations in the timing and size of oil discoveries to identify the impact of oil wealth on democracy i find that discovering 100 billion barrels of oil approximately the initial endowment of iraq pushes a country s democracy level almost 20 percentage points below trend after three decades the estimated effect is larger for oilfields with higher quality oil and lower exploration and extraction costs however the estimates become less precise when oil abundance is measured by oil discovery per capita suggesting politicians may care about the level instead of the per capita value of oil wealth

dodging bullets the heterogeneous effect of political violence on greenfield fdi the relationship between political violence and greenfield foreign direct investment is contingent on the type of violence characteristics of the investment receiving sector and extent to which the investing firm is geographically diversified this paper presents an analysis with a dynamic fixed effects model for a panel of 90 developing countries from 2003 to 2012 the analysis shows that nationwide political conflict is negatively associated with total and non resource related greenfield foreign direct investment but not with resource related greenfield foreign direct investment the insensitivity to political conflict of multinational firms in the resource sector is associated with the high profitability of natural resource extraction and the companies geographic constraints on location choice during the period of estimation in the non resource sector the less geographically diversified firms are most sensitive to the risk of conflict

political foundations of the resource curse in this paper we argue that the political incentives that resource endowments generate are the key to understanding whether or not they are a curse we show 1 politicians tend to over extract natural resources relative to the efficient extraction path because they discount the future too much and 2 resource booms improve the efficiency of the extraction path however 3 resource booms by raising the value of being in power and by providing politicians with more resources which they can use to influence the outcome of elections increase resource misallocation in the rest of the economy 4 the overall impact of resource booms on the economy depends critically on institutions since these determine the extent to which political incentives map into policy outcomes countries with institutions that promote accountability and state competence will tend to benefit from resource booms since these institutions ameliorate the perverse political incentives that such booms create countries without such institutions however may suffer from a resource curse

on revenue and welfare dominance of ad valorem taxes in two sided markets abstract a benchmark result in public economics is that it is possible to increase both tax revenue and welfare by making a monopoly subject to ad valorem taxes rather than unit taxes we show that such revenue and welfare dominance does not hold in two sided markets

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

natural resources and the tradeoff between authoritarianism and development abstract why do african and middle eastern countries seem cursed by an abundance of natural resources yet usa australia and norway seem blessed a growing literature has argued that the benevolence or malignance of natural resources depends upon the quality of institutions this paper offers a new explanation based on associational freedom and its interaction with the political system the model predicts that natural resources have an adverse impact on economic performance and transition to democracy in authoritarian regimes but not in democracies it also predicts that repression of associational freedom will be increasing in natural resources in authoritarian regimes i test the model s predictions using fixed effects regressions on an international panel from 1975 to 2000 and find support

natural resources democracy and corruption we study how natural resources can feed corruption and how this effect depends on the quality of the democratic institutions our game theoretic model predicts that resource rents lead to an increase in corruption if the quality of the democratic institutions is relatively poor but not otherwise we use panel data covering the period 1980 to 2004 and 124 countries to test this theoretical prediction our estimates confirm that the relationship between resource rents and corruption depends on the quality of the democratic institutions our main results hold when we control for the effects of income time varying common shocks regional fixed effects and various additional covariates they are also robust across different samples and to the use of various alternative measures of natural resources democracy and corruption

fractionalization polarization and economic growth identifying the transmission channels in this article we examine empirically both the direct and indirect links between ethnic fragmentation and economic growth we find that both ethnic fractionalization and polarization are negatively associated with growth if considered in isolation an effect that is though primarily attributed to their link to other growth related activities i e investment conflict control of corruption fertility we study the corresponding transmission channels and calculate their relative importance in explaining a development curse based on ethnic diversity for both measures of ethnic fragmentation we find the corruption channel to be the most important one

natural resources a curse on education spending abstract in line with the rising interest in harnessing natural resource revenues for economic and human development through productive government investments this paper aims to address an important blind spot in our understanding of the resource curse by contributing innovative insights on how natural resource wealth impacts government priorities and expenditure practices using a large panel dataset of 140 countries covering the period from 1995 to 2009 we find an adverse effect of resource dependence on public education expenditures relative to gdp that is robust to controlling for a range of additional covariates furthermore our findings indicate that this resource curse effect on the government prioritization of education mainly stems from point source natural resources these results are of particular importance for the sustainable management of natural resource wealth in developing countries as they could achieve especially high returns by investing resource revenues in public goods such as education while this paper underlines the importance of institutions and government accountability our findings also raise questions on the role of the private sector as a partner in development as the extractives industry could consider increasing funding for education through corporate social responsibility csr initiatives

armstrong meets rochet tirole on the equivalence of different pricing structures in two sided markets abstract we formally show that lump sum participation fees and per interaction fees charged by a monopoly platform in a two sided market are not interchangeable in the presence of price distortions such as ad valorem taxes

commodity windfalls polarization and net foreign assets panel data evidence on the voracity effect this paper examines the effects that windfalls from international commodity price booms have on net foreign assets in a panel of 145 countries during the period 1970 2007 the main finding is that windfalls from international commodity price booms lead to a significant increase in net foreign assets but only in countries that are ethnically homogeneous in highly ethnically polarized countries net foreign assets significantly decreased to explain this asymmetry the paper shows that in ethnically polarized countries commodity windfalls lead to large increases in government consumption expenditures and political corruption the paper s findings are consistent with theoretical models of the current account that have a built in voracity effect