the value of value pricing of roads second best pricing and product differentiation abstract some road pricing demonstrations use value pricing in which travelers can choose between a free but congested roadway and a priced roadway recent research has uncovered a potentially serious problem for such demonstrations second best tolls may be far lower than those typically charged and from a welfare perspective the latter may be worse than not pricing at all that research however assumes that all travelers are identical and it therefore neglects the benefits of product differentiation using a model with two user groups we find that accounting for heterogeneity in value of time is important in evaluating constrained policies and improves the relative performance of policies that offer differential prices

road pricing with optimal mass transit abstract this paper considers the second best policy problem that arises when auto travel is priced below its marginal cost and there is a substitute mass transit mode using analytical methods a global comparison is made between the second best levels of transit service and the fare and their first best levels the fact that the results are global permits an application to road pricing not possible with the local results of kraus 2003

growth of firms in developing countries evidence from cote d ivoire the paper presents evidence in support of a particular growth process of firms that is consistent with a missing middle in the size distribution of manufacturing firms in african countries firm growth is explained by size and age effects as a result of efficiency exploiting through scale enlargements and learning but is strongly moderated by reputation effects and formal legitimation which facilitate access to output markets and resources complementing the model with data on growth obstacles as perceived by the owners of firms medium sized firms are found to be strongly hurt by insufficient access to infrastructure and financial services

entrepreneurship selection and performance a meta analysis of the impact of education in developing economies this meta analytical review of empirical studies of the impact of schooling on entrepreneurship in selection and performance in developing economies looks at variations impact across specific characteristics of the studies a marginal year of schooling in developing economies raises enterprise income by an average of 5 5 percent which is close to the average return in industrial countries the return varies however by gender rural or urban residence and the share of agriculture in the economy furthermore more educated workers typically end up in wage employment and prefer nonfarm entrepreneurship to farming the education effect that separates workers into self employment and wage employment is stronger for women possibly stronger in urban areas and also stronger in the least developed economies where agriculture is more dominant and literacy rates are lower

the informal sector elephant abstract different analysts have used the term informal sector to mean different things a data set with 2 200 small enterprises chosen using random procedures in seven countries makes it possible to test the relationships between different measures the analysis finds only limited parallels between definitions based on size on registration on conformity to fiscal and other regulations and on degrees of modernization wide variations appear from one country to another the term may be appropriate for examination of individual countries especially if the analyst defines it precisely but its use in multicountry analysis is fraught with difficulties

deciding to provide local decisions on providing social welfare fiscal federalism predicts local governments will avoid social welfare expenditures owing to capital mobility across local jurisdictions yet census of governments data consistently show that many local governments provide one or more social welfare functions and moreover many jurisdictions provide these functions without federal or state intergovernmental support this article finds evidence that while local expenditures are largely driven by fiscal capacity and federal and state assistance local decisions on providing social welfare functions and participating in intergovernmental revenues are primarily affected by degree of capital mobility and by local political factors consequently local governments exercise much greater autonomy over social welfare policymaking than fiscal federalism suggests

on revenue recycling and the welfare effects of second best congestion pricing in a monocentric city abstract this paper examines congestion taxes in a monocentric city with pre existing labor taxation when road toll revenue is used to finance labor tax cuts 35 of the optimal road tax in our numerical model does not reflect marginal external congestion costs but rather functions as a ramsey mirrlees tax i e an efficiency enhancing mechanism allowing for an indirect spatial differentiation of the labor tax this adds a quite different motivation to road pricing since welfare gains can be produced even in absence of congestion we find that the optimal road tax is non monotonic across space reflecting the different impacts of labor supply elasticity and marginal utility of income which both vary over space the relative efficiencies of some archetype second best pricing schemes cordon toll flat kilometer tax are high 84 and 70 respectively when road toll revenue is recycled lump sum the optimal toll lies below its pigouvian level extensions in a bimodal framework show that the optimality of using road toll revenue to subsidize public transport depends on the initial inefficiency in public transport pricing

policies for a heterogeneous informal sector in latin america abstract the concept of the informal sector has gained increasing acceptance in latin america some 30 million persons now work outside the modern economy in low productivity jobs with marginal incomes many of them are living in poverty international and national policy makers have become aware of the political and economic consequences of this phenomenon and are seeking ways to improve returns and incomes the sector however is composed of different kinds of activities each with its own problems which need to be addressed in different ways policy planners should bear this in mind as they seek solutions the paper recommends three types of measures providing productive assistance to informal enterprises supporting informal sector workers and revising regulations that govern informal sector activities

second best congestion pricing the case of an untolled alternative abstract this paper deals with second best one route congestion pricing in case of an untolled alternative using a two link network simulation model the effects of various demand and cost parameters on the relative efficiency of one route tolling are analyzed it is investigated whether the existence of costs of congestion charging may be a reason for one route tolling to be more overall efficient than two route tolling finally the efficiency of revenue maximizing one route and two route tolling is discussed

the effect of minimum wages on actual wages in formal and informal sectors in costa rica summary as in many economies wage gaps between formal and informal sectors have been persistent in costa rica using 12 years of microdata we test whether increases in minimum wages raise actual wages we find they not only raise wages in large urban and rural enterprises traditionally referred to as formal but they also raise wages of workers covered by minimum wage legislation in what are traditionally regarded as informal sectors where the legislation is often considered not to be enforced small urban and small rural enterprises furthermore minimum wages raise wages in these informal sectors more than in larger firms and hence work to reduce wage differentials between the larger and smaller firms however minimum wages have no significant impact on wages in the informal sector not covered by minimum wage legislation the self employed

economic constraint and political choice in urban policymaking this paper presents a new conceptual scheme in understanding urban policymaking the proposed political choice model synthesizes the urban literature in economic constraint political institutions and public policy i argue that local politics operates within the general context of structural constraint and can be differentiated by policy arenas however within each arena noneconomic factors generate a wide range of policy alternatives which may or may not reinforce the policy thrust of the structural constraint for the city as a whole hence urban policymaking can be the result of political choice as well as economic consideration

theories of the local welfare role this article investigates four competing explanations of variation in the extent of local governments welfare activity a need responsiveness explanation a fiscal capacity explanation a crimeoriented version of social disturbance theory and a community homogeneity thesis using census data for a national sample of u s cities in 1977 the analysis shows that once the powerful effects of intergovernmental influence and functional scope are taken into account only the fiscal capacity and social disturbance explanations are empirically supported the social disturbance explanation is supported whether a simple homicide incidence indicator or a more complex indicator reflecting the interaction of race and crime is used

the value of scarce water measuring the inefficiency of municipal regulations abstract rather than allowing urban water prices to reflect scarcity rents during periods of drought induced excess demand policy makers have mandated command and control approaches primarily rationing the use of water outdoors while such policies are ubiquitous and likely inefficient economists have not had access to sufficient data to estimate their economic impact using unique panel data on residential end uses of water in 11 north american cities we examine the welfare implications of urban water rationing in response to drought using estimates of expected marginal prices that vary both across and within markets we estimate price elasticities specific to indoor and outdoor water use our results suggest that current policies do target water uses that households themselves are most willing to forgo nevertheless we find that rationing outdoor water in cities has costly welfare implications primarily due to household heterogeneity in willingness to pay for scarce water we find that replacing rationing policies with a market clearing drought price would result in welfare gains of more than 29 of what households in the sample spend each year on water

the institutional framework and economic development the compound growth rates of per capita output and farrell type efficiency measures for 115 market economies over the period 1960 80 were compared with measures of political civil and economic liberty it was found that the institutional framework has significant and large effects on the efficiency and growth rate of economies politically open societies which subscribe to the rule of law to private property and to the market allocation of resources grow at three times the rate and are two and one half times as efficient as societies in which these freedoms are abridged

the place of home based enterprises in the informal sector evidence from cochabamba new delhi surabaya and pretoria home based enterprises hbes are an accepted component in the informal sector in rapidly developing cities however they have generally received quite a bad press especially through a concentration on the exploitation evident in piece rate homework from our work in low income neighbourhoods in cochabamba bolivia new delhi india surabaya indonesia and pretoria south africa we assess hbes with respect to the characteristics of the informal sector put forward in the literature we examine our samples of hbes against such characteristics as small scale low operator incomes informal labour relations and non separation of production and consumption we find that they largely conform to expectations incomes are low but they are very significant in poverty alleviation though many hbes require few skills a few compete effectively in international markets

winning or losing from dynamic bottleneck congestion pricing the distributional effects of road pricing with heterogeneity in values of time and schedule delay abstract this paper analyses the efficiency and distributional impacts of congestion pricing in vickrey s 1969 dynamic bottleneck model of congestion allowing for continuous distributions of values of time and schedule delay we find that congestion pricing can leave a majority of travellers better off even without returning the toll revenues to them we also find that the consumer surplus losses or gains from tolling are not strictly monotonic in the value of time because they also depend on the value of schedule delays the greatest losses are not incurred by drivers with the lowest value of time but by users with an intermediate value of schedule delays and the lowest value of time for that value of schedule delays for second best pricing with an untolled alternative the pattern of distributional effects is quite similar to that for first best pricing in contrast with results from prior static models users who are indifferent between the two alternative routes are not the ones who gain least from this type of second best pricing our results suggest that in assessing the distributional impacts of road congestion pricing it is important to take into account both the distribution of the value of time and of the value of schedule delays as well as the dynamics of departure time choice

efficient congestion tolls in the presence of unpriced congestion a peak and off peak simulation model abstract this paper develops a congestion pricing model to examine efficient congestion tolls for an urban highway facility that resembles california state route 91 the highway that has been subject to congestion tolls since december 27 1995 two lanes out of six each way are subject to congestion tolls and the other four lanes are not the simulation model combines the economic theories of second best pricing of transportation facilities and peak load pricing and considers both welfare maximizing and profit maximizing cases the simulation results show that the second best peak period toll is quite low and that the welfare gains from the toll are modest compared to a regime in which all lanes are subject to tolls

peak load pricing of a transportation route with an unpriced substitute abstract this paper considers two routes to work which could be two bridges a freeway and a tollroad or roadway travel and subway travel both routes are subject to pure bottleneck and queue congestion if peak load pricing can be imposed on both routes the first best solution is attained however if one route is unpriced then the other route should have a second best time varying toll that is negative at the tails of the rush hour positive near the peak of the rush hour and zero on average if the two routes have the same capacities and if the parameter g is 1 then two thirds of the total traffic should use the priced route and the efficiency gain of second best pricing is two thirds of the efficiency gain of first best pricing

structural estimation of congestion costs abstract we estimate a structural model of congestion costs using a bayesian nash equilibrium approach the individual s preference for traveling depends on the anticipated level of congestion which in turn is determined by travelers decisions of mobility the model is estimated using a french transportation household survey results confirm the presence of incomplete information and show that aversion to congestion is 6 6 lower during peak times than during off peak times a traveler s willingness to pay to save 1 min in traffic is estimated at 0 73 euros during peak times and 0 25 euros during off peak times

transport tax reform commuting and endogenous values of time abstract we consider a model of urban transport with two trip purposes commuting assumed perfectly complementary to labour supply and noncommuting to analyse the effects of transport tax reform on the value of time and marginal external congestion costs higher commuting taxes plausibly reduce time values but higher noncommuting transport prices will typically raise the value of time the intuition for this latter finding is that the reduction in congestion that follows from the tax increase itself raises net wages per hour of work inclusive of commuting time empirical illustrations with belgian data show a potentially large effect of transport tax reform on time values in quite a few of the tax reforms studied traffic levels are reduced but the increase in time values implies that marginal external congestion costs actually increase

funding transportation spending in metropolitan washington dc the costs of alternative revenue sources abstract this paper develops and implements an analytical framework for estimating the efficiency costs of raising additional revenue from taxes on labor property gasoline peak road use and higher transit fares for the washington dc area the model incorporates driving externalities and interactions between the different policies an economic case can be made for using congestion taxes and possibly gasoline and property taxes to raise extra revenue though it should be qualified for example the inelastic demand for driving limits the congestion benefits per dollar of revenue raised and these taxes have adverse employment effects in the same way that a tax on labor income does

another day another dollar enterprise resilience under terrorism in developing countries this study extends the literature on entrepreneurship in developing countries by offering a two stage explanation for the paradoxical observation that enterprise activities often flourish under extreme adversity our findings complement the base of pyramid and peace through commerce attention to the growing role of business in international development by fleshing out the functions of enterprise resilience under terrorism we first explain how terrorism conditions outbreak escalation and reduction may create psychological incentives for enterprise resilience then we show that controlling for ex ante terrorism conditions enterprise resilience yields more favorable economic payoffs at higher levels of terrorism especially for informal entrepreneurs

automobile externalities and policies this paper discusses the nature and magnitude of externalities associated with automobile use including local and global pollution oil dependence traffic congestion and traffic accidents it then discusses current federal policies affecting these externalities including fuel taxes fuel economy and emissions standards and alternative fuel policies summarizing insofar as possible the welfare effects of those policies finally we discuss emerging pricing policies including congestion tolls and insurance reform and summarize the appropriate combination of policies to address automobile externalities