measuring inflation expectations a survey data approach expectations of inflation can be important determinants of actual inflation because they influence the process of wage bargaining price setting speculative buying and financial investing decisions englander and stone 1989 a central bank given its primary objective of price stability therefore takes a natural interest in inflationary expectations of economic agents in fact as illustrated by the theoretical work of e g kydland and prescott 1977 and barro and gordon 1983 inflationary expectations of the public are an important factor determining the success of the central bank in achieving its policy goal measures of inflation expectations can be used for monetary policy purposes for example as information variables in the sense defiined by friedman 1993 or as intermediate targets in the so called direct inflation targeting strategy svensson 1996 fuhrer 1997

price wars and price collusion in china s airline markets in the absence of an effective antitrust law both fare wars and price collusion have been pervasive in china s airline markets causing concern for both airlines and consumers a study of monthly airfare data from 2002 to 2004 confirms that fare wars occur periodically as well as price collusion both tend to be short lived the fact that collusion is more likely to occur in january and april when demand is high as revealed by china eastern s and china southern s price war and collusion models has been confirmed by interview information obtained from the airlines sales managers however there is also evidence in these models suggesting that collusion can be more easily formed when demand is low high airport concentration measured by the hhi may facilitate collusion in certain circumstances but it may also lead to more price wars under other conditions concentration in both airports and routes does not appear to systematically affect the occurrence of fare wars and collusion in all the models estimated we also reject the possibility that mutual forbearance due to multimarket contact plays any important anti competitive role in china s airline markets

planning under incomplete information and the ratchet effect abstract central planning of production is usually performed under asymmetric information the firm in general has more information about its productive possibilities than the central planner from now on for short cp this justifies the use of incentives schemes in which the cp does not directly fix activity levels casual observation of such existing schemes suggests that the time dimensions is crucial for their working typically the cp revises the incentive scheme over time to take into account the information provided by the firm s performance managers of centrally planned economies as well as economists have long recognized that this revision induces firms to underproduce in order to avoid demanding schemes in the future this is the ratchet effect it is purpose of the present paper to study the ratchet effect under the non commitment assumption which we believe to be more realistic the inadequacy of conceptual tools made if difficult in the past to consider such an assumption now basic research on dynamic games with incomplete information recently resulted in new ideas which look particularly relevant for a theoretical analysis of the problem

urban land supply natural and contrived restrictions abstract both large bodies of water and local governments restrict the supply of urban land in this paper we measure water s restriction on supply and test its effect on land price we then extend hamilton s and fischel s pioneering work on governmental restriction providing an improved test of the monopoly zoning hypothesis that such restriction further affects land price regression analysis of data from 45 urban areas suggests that the two restrictions combine to explain 40 of typical interurban price differentials

airport congestion when carriers have market power this paper analyzes airport congestion when carriers are nonatomistic showing how the results of the road pricing literature are modified when the economic agents causing congestion have market power the analysis shows that when an airport is dominated by a monopolist congestion is fully internalized yielding no role for congestion pricing under monopoly conditions under a cournot oligopoly however carriers are shown to internalize only the congestion they impose on themselves a toll that captures the uninternalized portion of congestion may then improve the allocation of traffic the analysis is supported by some rudimentary empirical evidence

quantification and characteristics of household inflation expectations in switzerland inflation expectations are a key variable in conducting monetary policy however these expectations are generally unobservable and only certain proxy variables exist such as surveys on inflation expectations this article offers guidance on the appropriate quantification of household inflation expectations in the swiss consumer survey where answers are qualitative in nature we apply and evaluate different variants of the probability approach and the regression approach we demonstrate that models that include answers on perceived inflation and allow for time varying response thresholds yield the best results and we show why the originally proposed approach of fluri and sporndli 1987 has resulted in heavily biased inflation expectations since the mid 1990s furthermore we discuss some of the key features of swiss household inflation expectations i e the fact that there has been a shift in expectation formation since 2000 expectations are better anchored and less adaptive and there is lower disa

distributional consequences of airport congestion pricing abstract imposition of airport congestion pricing redistributes welfare among commercial regional and general aviation this article extends daniel s econometrica63 327 370 1995 stochastic bottleneck model with dynamically adjusting traffic rates queuing delays and congestion fees to include elastic demand heterogeneous operating time preferences and heterogeneous layover and queuing time values using parameters from minneapolis st paul airport simulations of congestion pricing determine its effects on equilibrium traffic patterns queuing delays schedule delays airport revenues and social welfare gains by commercial aviation common travelers and airport authorities exceed losses by general and regional aviation the article evaluates several price and rebate programs and proposes several that are self financing and pareto improving

efficiency analysis of cournot competition in service industries with congestion we consider cournot competition in the presence of congestion effects our model consists of several service providers with differentiated services each competing for users who are sensitive to both price and congestion we distinguish two types of congestion effects depending on whether spillover costs exist that is where one service provider s congestion cost increases with the other providers output level we quantify the efficiency of an unregulated oligopoly with respect to the optimal social welfare with tight upper and lower bounds we show that when there is no spillover the welfare loss in an unregulated oligopoly is limited to 25 of the social optimum even in the presence of highly convex costs on the other hand when spillover cost is present there does not exist a constant lower bound on the efficiency of an unregulated oligopoly even with affine cost we show that the efficiency depends on the relative magnitude between the marginal spillover cost and the marginal benefit to consumers this paper was accepted by christian terwiesch operations management

congestion pricing and capacity of large hub airports a bottleneck model with stochastic queues this paper models and estimates congestion prices and capacity for large hub airports the model includes stochastic queues time varying traffic rates and endogenous intertemporal adjustment of traffic in response to queuing delay and fees relative costs of queuing and schedule delays are estimated using data from minneapolis st paul simulations calculate equilibrium traffic patterns queuing delays schedule delays congestion fees airport revenues airport capacity and efficiency gains the paper also investigates whether a dominant airline internalizes delays its aircraft impose it tests game theoretic specifications with atomistic nash dominant stackelberg dominant and collusive airline traffic

a simple auction mechanism for the optimal allocation of the commons efficient regulation of the commons requires information about the regulated firms that is rarely available to regulators e g cost of pollution abatement this paper proposes a simple mechanism that implements the first best for any number of firms a uniform price sealed bid auction of an endogenous number of transferable licenses with a fraction of the auction revenues given back to firms paybacks which rapidly decrease with the number of firms are such that truth telling is a dominant strategy regardless of whether firms behave non cooperatively or collusively the mechanism also provides firms with incentives to invest in socially optimal r d jel d44 d62 d82 q28 regulatory authorities generally find that part of the information they need for implementing an efficient regulation is in the hands of those who are to be regulated regulating externalities such as access to common resources e g clean air water streams fisheries etc is a good example environmental regulators for example know little about firms pollution abatement costs so without communicating with firms they would be unable to establish the efficient level of pollution a number of mechanisms have been proposed for inducing firms to reveal their private information but for different reasons

third degree price discrimination in the presence of congestion externality this paper analyzes third degree price discrimination of a monopoly airline in the presence of congestion externality when all markets are served the model features the business passenger and leisure passenger markets where business passengers exhibit a higher time valuation and a less price elastic demand than leisure passengers our main result is the identification of the time valuation effect of price discrimination which can work in the opposite direction as the well known output effect on welfare this time valuation effect clearly explains why discriminating prices can improve welfare even when this is associated with a reduction in aggregate output

the market effects of zoning undeveloped land does zoning follow the market through restricting the uses of land zoning gives local governments the power to modify the dictates of unconstrained land markets many believe however that the regulations tend to coincide with or anticipate the market solution rather than modify it the validity of this assertion is an empirical question and has not yet been adequately addressed the purpose of this paper is to develop and apply an empirical test of the null hypothesis that zoning follows the market the null hypothesis can be rejected only if land uses under zoning differ from what they would be without zoning the first task in deriving the test is to differentiate between constrained and unconstrained land market allocations it is shown that parameter estimates for hedonic price functions when markets are zoned cannot be interpreted to imply that the regulations constrain market prices it is also shown that sample selection bias is a likely source of specification error in estimating hedonic price functions for zoned land markets since the sample selection of parcels to zone designations is unlikely to be random the selection process must be accounted for in ordinary least squares ols estimation of zone constrained hedonic price functions fortunately the correction for the specification error also provides a test for the market effects of zoning a bid price interpretation of hedonic price functions for land is presented in section ii the sample selection bias issues are also discussed in that section and a formal test for the market effects of zoning is introduced

taxation and the tiebout model the differential effects of head taxes taxes on land rents and property taxes on the theory of state and local public finance is the seminal paper by charles tiebout 1956 tiebout constructed a multijurisdictional model in which independent local governments offer a wide variety of expenditure and tax policies and perfectly mobile consumers reveal their preferences for local public goods through their choice of residential community he argued that under such circumstances local public service provision would be efficient the tiebout model has formed the basis of a vast number of subsequent articles in the state and local public finance literature and has also been very influential in urban and regional economics the efficiency properties of various tiebout type models of local public good provision have been examined and the role of politics in these models has been debated at length in this literature of more direct relevance to this paper however is the fact that although tiebout had little to say directly about taxation simply assuming the existence of head taxes subsequent analyses have used adaptations of this model to examine the effects of local head taxes land taxes and property taxes it is the literature on the efficiency and distributional effects of alternative local taxes that is the subject of this survey 1

monopoly regulation under asymmetric information prices versus quantities we compare two instruments to regulate a monopoly that has private information about its demand or costs fixing either the price or quantity for each instrument we consider sophisticated screening and simple bunching mechanisms we characterize the optimal mechanisms and compare their welfare performance with unknown demand and increasing marginal costs the sophisticated price mechanism dominates that of quantity whereas the sophisticated quantity mechanism may prevail when marginal costs decrease the simple price mechanism dominates that of quantity when marginal costs decrease but the opposite may arise if marginal costs increase with unknown costs both instruments are equivalent

a study of the impacts of zoning on housing values over time abstract using a virtually unique data base for vancouver canada this study examines the ways in which various zoning classifications and land uses affect the sale prices of single family residences over a 24 year period the overwhelming conclusion is that while there are impacts they are consistent in neither direction nor magnitude the results suggest that the negative externalities that are generally assumed to exist may in fact not exist as a result the use of zoning to control the effects of such presumed externalities may not be justified

optimal pricing of flights and passengers at congested airports and the efficiency of atomistic charges abstract this paper investigates and compares airport pricing policies under various types of competition considering both per passenger and per flight charges at congested airports we show that an airport requires both pricing instruments to achieve the first best outcome and we distinguish their role by showing that congestion externalities need to be addressed through per flight tolls whereas the inefficiency caused by airlines market power exertion must be corrected with per passenger subsidies we also show that bertrand competition with differentiated products a type of behavior recently pointed out by the empirical literature as pertinent has policy implications that diverge from analyses that assume cournot competition the welfare gains and congestion reductions of congestion pricing would be higher than what has been advanced before the degree of self financing of airport infrastructure under optimal pricing would be increased and may approach exact self financing and the implied differentiation of charges between asymmetric airlines would be significantly smaller presumably enhancing the political feasibility of welfare maximizing congestion pricing as the potential distributional concerns would be decreased finally we numerically analyze second best policies and find that atomistic pricing may offer a relatively attractive alternative to first best congestion pricing

congestion agglomeration and the structure of cities abstract congestion costs in urban areas are significant and clearly represent a negative externality nonetheless economists also recognize the production advantages of urban density in the form of positive agglomeration externalities the long run equilibrium outcomes in economies with multiple correlated but offsetting externalities have yet to be fully explored in the literature therefore i develop a spatial equilibrium model of urban structure that includes both congestion costs and agglomeration externalities i then estimate the structural parameters of the model using a computational algorithm to match the spatial distribution of employment population land use land rents and commute times in the data policy simulations based on the estimates suggest that congestion pricing may have ambiguous consequences for economic welfare

atomistic congestion tolls at concentrated airports seeking a unified view in the internalization debate abstract the goal of this paper is to bring some unity to the theoretical side of the debate on internalization of airport congestion by showing that all the literature s theoretical results can be derived within one simple and unified framework the analysis starts by replicating the results of brueckner brueckner j k 2002 airport congestion when carriers have market power american economic review 92 1357 1375 who showed that because airlines behaving in cournot fashion internalize congestion they should be charged low congestion tolls the analysis then validates the findings of daniel daniel j i 1995 congestion pricing and capacity of large hub airports a bottleneck model with stochastic queues econometrica 63 327 370 who argued that larger atomistic tolls are required in a model where a stackelberg leader interacts with competitive fringe airlines however it is shown that this result only holds approximately when the carriers outputs are imperfect substitutes

mobility and redistribution the ability of individuals to move freely from one jurisdiction to another is generally seen as a constraint on the amount of redistribution that each jurisdiction within a system of governments can undertake in this paper we look at this proposition by developing a positive analysis of income redistribution by local governments in a federal system we ask how much redistribution occurs when only local governments can have tax transfer instruments individuals can move freely among jurisdictions and voters in each jurisdiction are fully aware of the migration effects of redistributive policies local redistribution is shown to induce sorting of the population with the poorest households located in the communities that provide the most redistribution while the threat of out migration affects the potential for redistribution our results suggest that significant local redistribution is nonetheless feasible numerical computations indicate that the proportion of residents who are renters is a major factor affecting the local choice of level of redistribution

comparison of three empirical models of airport congestion pricing abstract we compare three empirical models of airport congestion pricing a standard peak load pricing model with econometrically estimated demand and delay functions morrison 7 morrison and winston 8 a deterministic bottleneck model with traffic adjusting intertemporally to congestion prices vickrey 9 arnott et al 2 and a bottleneck model with time dependent stochastic queuing daniel 4 when implemented using daniel s airport traffic data the models produce similar traffic patterns under weight based pricing but differ significantly under congestion pricing we conclude that structural modeling of stochastic traffic queues and intertemporal substitution is necessary to produce realistic responses of traffic patterns to congestion pricing

large lot zoning and subdivision costs a test abstract this paper tests two hypotheses 1 that large lot zoning is a binding constraint on the residential land market and 2 that subdivision costs are inversely related to lot size the paper shows that in general the two hypotheses are not mutually exclusive but that they can be distinguished in the case of a test conducted across tracts of unsubdivided vacant land a hedonic price model for vacant land is developed and then estimated using disaggregate data from a new york city suburb

perceived inflation under loss aversion building on prospect theory we apply the concept of loss aversion to the formation of inflation perceptions and test empirically for nonlinearities in the inflation perceptions relation for a panel of 10 euro area countries specifically under the assumption of loss aversion inflation changes above a certain reference rate will be perceived more strongly rejecting rationality of inflation perceptions in general under symmetric loss and in a majority of cases under flexible loss functions panel smooth transition models give evidence of nonlinearities in the inflation perceptions relation regarding both actual inflation and time this result is confirmed by dynamic fixed effects estimates where the slope of the estimated value function is significantly steeper in the loss region and the implied average reference inflation rate is found close to 2

congestion pricing of canadian airports abstract under congestion pricing canadian airports would annually save between 72 and 105 million social costs per landing and takeoff decrease about 300 at toronto and vancouver and 50 at calgary and montreal slot constraints fail to eliminate this airport congestion congestion prices are lower on average than existing weight based prices current airport capacity accommodates at least five more years of traffic growth before congestion reaches current levels substantial welfare gains occur even if dominant airlines already internalize their self imposed delays this article calculates equilibrium congestion pricing schedules traffic rates queuing delays layover times and connection times by time of day

a comparative study of alternative methods of quantifying qualitative survey responses using napm data this article examines the effectiveness of a subjective probability approach to quantify three category qualitative responses from expectations surveys since one cannot make a judgment on the validity of estimated expectations by comparing them with ex post outcomes we use the national association of purchasing managers survey data on materials buying prices and compare them with the producer price index for intermediate materials and components for manufacturing we experimented with normal logistic and scaled f distributions and found that the approach could explain approximately 60 of the variation in the monthly series marginal improvement in the explanatory power of the procedure was noted when the imperceptible parameter was allowed to be asymmetric and variable over time

effects of asymmetric information on airport congestion management mechanisms abstract we study and compare three different mechanisms for capacity slot allocation in a congested airport when airlines have one dimensional private information direct allocation of slots differentiated tolls and slot auctions with perfect information direct allocation is a first best policy which can be implemented through pigouvian taxes or slot auctions the mechanisms are equivalent in terms of social welfare with the introduction of asymmetric information this equivalence is lost direct allocation is always ex post inefficient and in some cases tolls and subsequent quantity delegation is a better alternative social welfare wise auctions may be superior or inferior to tolls we further show that naive application of pigouvian tolls is sub optimal when imperfect information exists

pricing the major us hub airports abstract implementing congestion pricing at 27 major us airports would reduce delays by 13 passenger years and 1000 aircraft hours every day saving 3 5 million dollars daily chicago and atlanta would save about 1000 dollars per aircraft airport revenues would increase about 11 million dollars daily a bottleneck model with stochastic queues estimates substantial welfare gains whether or not airlines internalize self imposed delays erroneously imposing fees from the non internalizing specification on internalizing airlines however would be a costly mistake the model calculates equilibrium traffic rates queuing delays layover times connection times and congestion fee schedules by minute of the day

the economics of airport congestion pricing abstract conventional economic wisdom suggests that congestion pricing would be an appropriate response to cope with the growing congestion levels currently experienced at many airports several characteristics of aviation markets however may make naive congestion prices equal to the value of marginal travel delays a non optimal response this paper develops a model of airport pricing that captures a number of these features the model in particular reflects that 1 airlines typically have market power and are engaged in oligopolistic competition at different sub markets 2 part of external travel delays that aircraft impose are internal to an operator and hence should not be accounted for in congestion tolls and 3 different airports in an international network will typically not be regulated by the same authority we present an analytical treatment for a simple two node network and some numerical results to illustrate our findings some main conclusions are that second best optimal tolls are typically lower than what would be suggested by congestion costs alone and may even be negative and that cooperation between regulators need not be stable but that non cooperation may lead to welfare losses also when compared to a no tolling situation

are the representative agent s beliefs based on efficient econometric models abstract no they are not at least not in the uk by examining gdp dynamics we find that over a time span of two decades an easy to perform adaptive expectations model systematically outperforms other standard predictors in terms of squared forecasting errors this should reduce model uncertainty and thereby lead to increased homogeneity in expectations however data collected in surveys show that great variety in expectations persists even in this situation moreover granger tests indicate that the forecasting fitness of the best predictor can be further enhanced by the use of information provided by survey expectations these results based on real time data and robust to both several predictors and nonlinearities weaken the general validity of approaches assuming predictions based on efficient econometric models

inflation expectations revisited this paper describes the construction and main features of a new monthly time series for the mean and standard deviation of consumer inflation expectations in the united kingdom in the years 1961 85 based on a number of consumer surveys this involves generalizing to four and five category tendency survey data the method used by j a carlson and m parkin 1975 to quantify the results of a three category tendency survey of inflation expectations the new series exhibit very different time series properties from the original carlson parkin data copyright 1988 by the london school of economics and political science

airlines strategic interactions and airport pricing in a dynamic bottleneck model of congestion abstract this paper analyzes efficient pricing at a congested airport dominated by a single firm unlike much of the previous literature we combine a dynamic bottleneck model of congestion and a vertical structure model that explicitly considers the role of airlines and passengers we show that a stackelberg leader interacting with a competitive fringe partially internalizes congestion and that there are various toll regimes that induce the welfare maximizing outcome widening the set of choices for regulators in particular charging the congestion toll that would apply for fully competitive carriers and that ignores any internalization to both the leader and the fringe yields the first best outcome

weitzman revisited emission standards versus taxes with uncertain abatement costs and market power of polluting firms studies dealing with the optimal choice of pollution control instruments under uncertainty have invariably taken it for granted that regulated firms face perfectly competitive markets by introducing the product market into the stochastic framework of weitzman rev econ stud 41 477 491 1974 this paper shows for the case of a polluting symmetric cournot oligopoly that weitzman s policy rule for choosing emission standards versus taxes with uncertain abatement costs is biased in the presence of market power since the oligopolists take into account their influence on the market price their total abatement effort including the restriction of output is less vulnerable to miscalculations of the tax rate compared to price taking firms consequently the comparative advantage of instruments is shifted in favour of taxes in a further step the provided policy recommendations are generalised by abolishing the assumption that firms are symmetric

price vs quantity based approaches to airport congestion management abstract this paper analyzes price and quantity based approaches to management of airport congestion using a model where airlines are asymmetric and internalize congestion under these circumstances optimal congestion tolls are differentiated across carriers and a uniformity requirement on airport charges as occurs when slots are sold or tolls are uniform distorts carrier flight choices flight volumes tend to be too low for large carriers and too high for small carriers but quantity based regimes where the airport authority allocates a fixed number of slots via free distribution or an auction lead carriers to treat total flight volume and thus congestion as fixed and this difference generates an efficient outcome as long as the number of slots is optimally chosen

unintended consequence of centralized public school funding in michigan education 1 introductionin an effort to create greater equity among school districts a number of states have shifted the responsibility for school funding from local school districts to the state although many researchers have found that centralizing funding for public schools has been successful in creating greater equity murray evans and schwab 1998 moser and rubenstein 2002 other researchers have pointed out that centralizing funding can lead to unintended consequences for example fischel 1989 1992 suggests that families in wealthier districts which have a stronger demand for education are no longer able to match their preference for education under a system of equalized funding in some cases this may drive parents to seek private school alternatives downes and schoeman 1998 1 in other cases families meet their preferences by making private contributions to public schools sonstelie and brunner 1997 furthermore theobald and picus 1991 argue that centralizing funding forces education as a state service to compete with other state services for funds and as a result the growth rate of spending per pupil decreases over time 2 these articles illustrate that policies designed to centralize control of public school funding can produce unintended consequences in this article we introduce into the literature an additional consequence caused by centralizing control of school funding we argue that centralized control of public school funding with the objective to equalize operating expenditures i e salaries supplies and other ongoing expenses across school districts while leaving capital acquisitions i e purchases of school buildings and other facilities under local control results in resource rich school districts becoming more reliant on debt financing 3 we find empirical support for this theory using data in the state of michigan during its transition to a centralized school financing system in 1994 in the next section we present an overview of michigan s move to a centralized funding policy in the third section we present the regression model used to test the theory followed by the description of the data and the estimated results the final section of the study summarizes our findings 2 overview of michigan s educational systemin 1993 a legislative anomaly lead to an abrupt change in the method of financing public education in michigan prior to 1993 michigan had one of the most locally controlled school systems in the united states over 65 of school operating expenditures came from local revenues whereas the remaining 35 were derived from state and federal sources courant gramlich and loeb 1995 property owners argued that local reliance on property taxes created an excessive burden and voiced their complaints to state representatives attempts to lower these taxes were defeated annually until debbie stabenow a democrat senator and candidate for governor frustrated with the tax debate proposed an absurdity to eliminate all property taxes without suggesting an alternative funding mechanism courant and loeb 1997 astonishingly the legislature passed her bill leaving the public school system with no means of funding seizing an opportunity to create greater equity among school districts michigan officials quickly devised a centralized system of financing public school operations known as proposal a that reduces districts reliance on local property taxes by increasing the state s sales tax integrated into proposal a is a distribution formula that reduces the disparity in operating expenditures across high and low spending school districts in part by constraining the allocation of operating funds for high spending districts however proposal a does not affect local control of funding for capital projects watkins 2002 michigan s state operating budget typically provides less than 5 of the total revenue needed to service school debt and no revenue for capital expenditures

internal or external devaluation what does the ec consumer survey tell us about macroeconomic adjustment in the euro area this paper explores the dynamics of national inflation expectations within the euro area during the recent crisis using the european commission s consumer survey we find that the strong anchoring of area wide inflation expectations which is typically found in the literature does not extend to individual member states we also measure the effect of the crisis on national inflation expectations using sovereign bond spreads and find that increases in sovereign risk have a significant negative effect on inflation expectations this suggests that consumers expect their country to adjust through a process of internal devaluation in contrast we find no evidence that tensions in the sovereign bond markets increase national inflation expectations as one would be expect under an exit or breakup scenario

property taxation and local public spending the renter effect the point of departure for this study is the pervasive finding that other things equal local jurisdictions tend to spend more on local services the larger the fraction of renters among their residents this paper seeks to determine the approximate magnitude of this renter effect by posing the question how much smaller would local public budgets be if all residents were home owners making use of two quite different approaches the paper finds a typical renter effect on local public expenditure on the order of ten percent this finding suggests that we might do well to reform the administration of the property tax so that changes in property tax liabilities on rental dwellings are directly and visibly transformed into changes of monthly rental payments

sequential peak load pricing the case of airports and airlines we investigate airport peak load pricing using a vertical structure of airport and airlines we find that a profit maximizing airport would charge higher peak and off peak runway prices and a higher peak off peak price differential than a public airport consequently airport privatization would lead to both fewer total passengers and fewer passengers in the peak period although peak travelling passengers benefit from fewer delays this low level of peak congestion is not efficient suggesting that airport privatization cannot be judged based on its effect on congestion alone we also examine pricing behaviour of a public airport constrained to charge a time independent price on etudie la tarification de pointe dans une structure verticale d aeroports et de compagnies d aviation on decouvre qu un aeroport qui maximise ses profits chargerait des prix plus eleves pour l usage des pistes tant aux heures de pointe qu en autre temps qu un aeroport public ainsi qu un differentiel plus grand entre ces differents moments en consequence la privatisation des aeroports va entrainer a la fois moins de passagers et moins de passagers aux heures de pointe meme si ceux qui voyagent aux heures de pointe vont devoir subir moins de delais cette moindre congestion n est pas efficace voila qui suggere qu on ne doit pas evaluer la privatisation des aeroports seulement a l aune de l impact sur la congestion les auteurs examinent aussi les strategies de tarification d un aeroport public contraint a imposer une tarification qui ne peut varier selon le moment d usage dans le temps

manipulable congestion tolls the recent literature on congestion pricing with large agents contains a remarkable inconsistency though agents are large enough to recognize self imposed congestion and exert market power over prices they do not take into account the impact of their own actions on the magnitude of congestion tolls when large agents are confronted with tolls derived under this parametric assumption but understand the rule used to generate them the toll system will no longer guide the market to the social optimum to address this problem the present paper derives alternate manipulable toll rules which are designed to achieve the social optimum when agents anticipate the full impact of their actions on toll liabilities

planes ships and taxes charging for international aviation and maritime emissions international aviation and maritime transport account for a significant and growing share of global carbon emissions yet they are not only excluded from the kyoto agreement and all current carbon pricing schemes but do not even pay fuel excises of the type standard for other transport activities moreover each sector benefits from preferential tax treatment failure to charge vat on international aviation and the application of tonnage tax regimes rather than the normal corporate tax in maritime this paper considers the design of fuel charges in these sectors to address these distortions and quantifies their impact on emissions revenue and welfare showing amongst other things that the gain from offsetting the pre existing tax distortions may be as significant as those from reducing emissions it shows too how compensation schemes can be designed to protect the poorest countries a key ingredient in the politics of the issue given the practical need for wide applicability of such charges the real challenge is to amass the degree of international cooperation required especially strong for maritime failure of which to some degree explains their current under taxation and unsurprisingly to decide who gets the money technically these charges should if anything be rather easy to implement michael keen ian parry and jon strand

evidence on the specification of price in the study of domestic water demand the development of lakefront property in northern wisconsin has prompted in several towns minimum frontage zoning stricter than the state standard such zoning generates an economic loss by constraining development development effect and an economic

network effects congestion externalities and air traffic delays or why not all delays are evil we examine two factors that explain air traffic congestion network benefits due to hubbing and congestion externalities while both factors impact congestion we find that the hubbing effect dominates empirically hub carriers incur most of the additional travel time from hubbing primarily because they cluster their flights in short time spans to provide passengers as many potential connections as possible with a minimum of waiting time non hub flights at the same hub airports operate with minimal additional travel time these results suggest that an optimal congestion tax might have a relatively small impact on flight patterns at hub airports jel l2 l5 l9 d6

regulating a monopolist with unknown demand the authors analyze the optimal regulatory policy when the firm has better information about demand than the regulator from the outset of their relationship the firm s cost structure is common knowledge but monitoring of output is prohibitively costly the authors find that when marginal production costs increase with output the firm command s no rents from its private information and the efficient price is established for each realization of demand in contrast with declining marginal costs the same price is established by the regulator for all demand realizations and the firm s rents can be substantial overall major qualitative differences in the optimal regulatory policy arise when the firm s private information concerns demand rather than costs copyright 1988 by american economic association

inflation uncertainty inflationary shocks and the credibility of counterinflation policy abstract this paper assesses the contributions of price shocks general price variability and the credibility of counterinflation policy to changes in inflation uncertainty in the u k uncertainty is measured by the root mean square error of consumer inflation forecasts in contrast to the assumptions of much theory uncertainty is not significantly affected by noise in individual or aggregate inflation rates factors which determine policy credibility are more important the political party in government the proximity of elections and under fixed exchange rates the rate of inflation itself however government initiatives to increase credibility through incomes policies and monetary targets have failed to reduce uncertainty

another look at airport congestion pricing we study alternate approaches to implement congestion pricing at us airports conventional formulations toll all aircraft without determining whether a plane operated by a given airline delays other planes that it operates or planes operated by other airlines recent work points out optimal pricing calls for carriers to be charged only for the delay they impose on other airlines we find a small difference between the net benefits generated by the two congestion pricing policies because the bulk of airport delays are not internalized and because the efficiency loss from pricing internalized congestion is small jel l11 l93 r41

what do economists know an empirical study of experts expectations for more than three decades economic columnist joseph a livingston has canvassed a panel of economists twice a year eliciting their six month and twelve month forecasts for more than a dozen key variables this study analyzes whether the experts predictions are unbiased and whether complete use was made of all relevant known information unbiasedness and completeness being necessary conditions for fully rational expectations little bias was found in either the half year or full year predictions but extensive underutilization of information particularly data on monetary growth occurred to prophecy is extremely difficult especially with respect to the future chinese proverb do economists expectations regarding key price and nonprice variables utilize all known relevant information in an unbiased efficient manner this is a worthy subject for research for several reasons properties of experts predictions likely form an upper bound for those of laymen further as john muth 14 has noted the character of dynamic processes is typically very sensitive to the way expectations are influenced by the actual course of events p 316 hence we need to know precisely how events do affect expectations finally the common practice of replacing a variable s generally unobserved expectation with a proxy based on its past values will be unbiased and will not cause bias in other

do carriers internalize congestion costs empirical evidence on the internalization question abstract economists have long suggested overhauling the existing u s airport landing departure fees to reflect market valuations of scarce runway capacity economists however do not agree on the optimal congestion based pricing scheme while some researchers advocate for a uniform congestion fee regardless of a carrier s airport market share others suggest that airport tolls should only reflect the congestion costs imposed on other carriers this paper uses ten years of ontime performance data to empirically determine if carriers internalize congestion costs while previous researchers e g mayer christopher sinai todd 2003a network effects congestion externalities and air traffic delays or why all delays are not evil american economic review 93 4 1194 1215 use excess travel time to measure flight delays the contribution of this paper is the addition of on time arrival and delay measures based on actual versus scheduled arrival and departure times we find that estimates based on these new delay measures reverse earlier findings by mayer and sinai 2003a network effects congestion externalities and air traffic delays or why all delays are not evil american economic review 93 4 1194 1215 and hence imply that carriers are not internalizing flight congestion costs

the accuracy and rationality of uk inflation expectations some quantitative evidence 1987 the accuracy and rationality of uk inflation expectations some quantitative evidence applied economics vol 19 no 6 pp 819 828

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had

the interjurisdictional effects of growth controls on housing prices institute of university of i 39 business and california at i economic research berkeley fisher center for real estate and urban economics working paper series working paper no 84 83 the interjurisdictional effects of growth controls on housing prices l by these papers are preliminary in nature their purpose is to stimulate discussion and lawrence katz comment therefore they kenneth t rosen are not to be cited or quoted in any publication without the ex press permission of the author walter a haas school of business