the litigious plaintiff hypothesis case selection and resolution the process through which cases are selected for litigation cannot be ignored because it yields a set of lawsuits and plaintiffs that is far from a random selection either of potential claims or of potential claimants we present a theoretical framework for understanding the operation of this suit selection process and its relationship to the underlying distribution of potential claims and claimants the model has implications for the trial rate and the plaintiff win rate at trial our empirical analysis using data on over 200 000 federal civil litigations yields results that are strongly consistent with the theory

risk aversion in contests in a contest participants spend money or effort to increase their chances of winning a prize the authors examine primarily the following question could the timid the more risk averse have a better chance of winning in contests under limited liability the answer is always positive in the absence of limited liability there is no single answer whereas when the prize is shared as a function of effort the outcome is independent of the contestants risk aversion the authors also relate their results to self protection and examine some other implications of risk aversion copyright 1995 by royal economic society

transmission network cost allocation based on circuit theory and the aumann shapley method this paper presents a new method to allocate the costs of the transmission system among generators and loads the allocation is calculated for each branch of the transmission system to identify and quantify the individual responsibility of generators and loads a two step method based on the perfect coupling of the circuit theory with the aumann shapley method is proposed here first to determine the participation of the generators in the costs of the transmission network the generators are modeled as current injections and the loads as impedances second to determine the participation of the loads in the cost of the transmission network the loads are modeled as current sources and the generators as impedances the aumann shapley method and the circuit theory are used to calculate the participation of each real and imaginary current component in the allocation of the costs of the transmission system game by considering them as independent agents the properties of the aumann shapley method ensure equitable allocation and recovery of the total costs numerical results are presented and discussed to demonstrate the applicability of the proposed method

cooperative and noncooperative r d in duopoly with spillovers contrary to the usual assumption made in most oligopoly models relations among firms are seldom of a wholly cooperative or noncooperative type in many situations they compete in some fields while they cooperate in others an important example is the case of cooperative research efforts bringing fierce competitors together two types of agreement are observed first r d cooperation can take place at the so called precompetitive stage companies share basic information and efforts in the r d stage but remain rivals in the market place 1 a second type of agreement involves an extended collusion between partners creating common policies at the product level the usual justifications of this extension are the difficulties of protecting intellectual property the idea is then to allow partners who have achieved inventions together to also control together the processes and products which embody the results of their collaboration in order to recuperate jointly their r d investments 2 what could be expected from these types of agreement is a reduction in r d expenditures because of less wasteful duplication and a reduction of total production because of more reprinted from the american economic review 78 5 1133 1137 1988 center for operations research econometrics 1348 louvain la neuve belgium we are grateful to jean

analysis of policies to reduce oil consumption and greenhouse gas emissions from the us transportation sector abstract even as the us debates an economy wide co 2 cap and trade policy the transportation sector remains a significant oil security and climate change concern transportation alone consumes the majority of the us s imported oil and produces a third of total us greenhouse gas ghg emissions this study examines different sector specific policy scenarios for reducing ghg emissions and oil consumption in the us transportation sector under economy wide co 2 prices the 2009 version of the energy information administration s eia national energy modeling system nems a general equilibrium model of us energy markets enables quantitative estimates of the impact of economy wide co 2 prices and various transportation specific policy options we analyze fuel taxes continued increases in fuel economy standards and purchase tax credits for new vehicle purchases as well as the impacts of combining these policies all policy scenarios modeled fail to meet the obama administration s goal of reducing ghg emissions 14 below 2005 levels by 2020 purchase tax credits are expensive and ineffective at reducing emissions while the largest reductions in ghg emissions result from increasing the cost of driving thereby damping growth in vehicle miles traveled

a new transmission tariff allocation model based on bilevel programming this paper proposes a flow based approach for the transmission tariff allocation problem based on the notions of long run marginal cost lrmc and nodal exchange factors nefs a worst case power flow expressed in terms of nefs is formulated to characterize the system state additionally the nefs optimal values are determined considering a specific criterion to compute tariffs the resulting problem is formulated as a bilevel program the upper level is a worst case power flow that maximizes line flows taking into account the transmission tariffs computed in the lower level the criterion considered in the lower level aims to minimize the variation range of transmission tariffs which is particularly desirable to provide incentives for renewable sources installed far away from load centers the resulting bilevel problem may have multiple solutions here the uniqueness in tariffs is preserved by solving an alternative problem once both the generation dispatch and the variation range of transmission tariffs are known numerical results are provided for a 6 bus system and the ieee 118 bus system

transmission cost allocation by cooperative games and coalition formation the allocation of costs of a transmission system to its users is still a pending problem in many electric sector market regulations this paper contributes with a new allocation method among the electric market participants both cooperation and competition are defined as the leading principles to fair solutions and efficient cost allocation the method is based mainly on the responsibility of the agents in the physical and economic use of the network their rational behavior the formation of coalitions and cooperative game theory resolution mechanisms the designed method is applicable to existing networks or to their expansion simulations are made with sample networks results conclude that adequate solutions are possible in a decentralized environment with open access to networks comparisons with traditional allocation systems are shown and cooperative game solutions compare better in economic and physical terms

truth effort and the legal battle in lawsuits relative success depends upon two main factors the true degree of fault and the efforts invested on eachside a proposed litigation success function displays thisdependence while satisfying other essential properties undertwo different protocols nash cournot and stackelberg solutions are obtained for the litigation efforts proportionate success and values of the lawsuit on each side outcomes are evaluated in terms of two normative criteria i achieving justice interpreted as equality between defendantfault and relative plaintiff success and ii minimizingaggregate litigation cost achievement of these aims isdetermined by the decisiveness of litigation effort relativeto true fault

privately informed seekers of an uncertain rent two departures from antecedent rent seeking models are invoked a rent of unknown size is sought and rent seekers obtain private imperfect estimates of this size a symmetric equilibrium for a fixed number of rent seekers is characterized and shown to underdissipate the rent then a model of the decision to obtain private information and participate in the rent seeking contest is built the symmetric equilibrium participation probability equates expected profit to participation costs a simple formula for underdissipation results dissipation is incomplete pre cisely by the expected aggregate participation costs if an award mechanism can attain a lower level of dissipation for a fixed number of seekers then it will raise the endogenous probability of partici pation and as a result will dissipate less rent in the equilibrium with an endogenous number of seekers

imperfect patent protection and innovation the paper studies the effect of strengthening protection on r d incentives in the context of process innovation it shows that for non drastic innovations that do not render the pre existing technology obsolete the innovator might favor imitation if the expected royalty rate determined by the court is sufficiently high since imitation is discouraged for very high levels of patent protection r d investment is maximized for an intermediate level of patent strength this finding provides a theoretical explanation for emerging empirical evidence questioning the effectiveness of strengthening protection on innovation incentives it also serves as a justification for the imperfections of the existing patent system that allows for some infringement

the strategic equivalence of rent seeking innovation and patent race games abstract we establish the strategic equivalence of a variety of rent seeking contests innovation tournaments and patent race games the results allow us to disentangle negative and positive externalities and to apply theorems and results intended for rent seeking games to other games and vice versa we conclude with several examples that highlight the practical utility of our results

clearing the air the costs and consequences of higher cafe standards and increased gasoline taxes abstract concerns about energy security and climate change have sparked legislators interest in reducing gasoline consumption by increasing corporate average fuel economy cafe standards using an empirically rich simulation model and cost estimates for anticipated fuel economy technologies we estimate annual costs of reducing long run gasoline consumption by 10 via a 3 8 miles per gallon increase in the standards and the potential cost savings from allowing manufacturers to buy and sell fuel economy credits maximum gasoline savings would be realized only after all existing vehicles were replaced or 14 years in our model a gasoline tax would produce greater immediate savings by encouraging people to drive less and eventually to choose more fuel efficient vehicles we demonstrate the advantage of a tax by comparing the cost of the higher cafe standards over the first 14 years against the cost of a gasoline tax that would save the same amount of gasoline over that time

marginal lobbying cost and the optimal amount of rent seeking in some ideal world in which information was free and the desire to promote the public interest prevailed the results developed in this paper would have no relevance the efficient amount of publicly provided goods and services would be known costlessly and the public interest motivation would assure that these quantities were provided in our less than ideal world however things are far different costly lobbying activities provide useful though incomplete information on the relative value of different public outlays but with private interest rather than public interest dominant this lobbying will also be used by special interests as a means of acquiring socially excessive quantities of government services

allocation of firm energy rights among hydro plants an aumann shapley approach the firm energy of generation plants is a critical component in some electricity markets it is usually calculated by the regulator and sets a cap to the amount a plant can trade in capacity markets or auctions in order to avoid free riding behaviors firm energy is a systemic property and in case of hydro plants a synergy is observed whenever a cooperative operation occurs i e the firm energy of a system is greater than the sum of the individual plants this immediately raises the question of how to divide the system s firm energy among the individual hydro plants the objective of this work is to investigate the application of different allocation methods of firm energy rights among hydro plants using a game theoretic framework it is shown that there is not an optimal and unique approach to make this allocation the paper investigates the advantages and disadvantages of different methods such as marginal allocation average production during the critical period incremental allocation finally recommending the aumann shapley as the allocation method this method is tested for the brazilian power system which has around 100 hydro plants the results obtained are compared with the current allocation adopted by the electricity regulatory agency of brazil

blending under uncertainty real options analysis of ethanol plants and biofuels mandates abstract the value of a representative ethanol producer that benefits from both low and high gasoline prices in the short run is modeled ethanol producers make a modest competitive profit in the mandate induced region of production a low price of gasoline increases the demand for blend ethanol and consequently increases the profit of ethanol producers on the other hand when gasoline becomes costlier than ethanol the capacity constraints of the biofuels sector bind and ethanol producers gain large quasi monopoly margins this is an interesting example of a market where two commodities are complement up to a point and then substitute after that we postulate the value of an ethanol producer as a strangle option consisting of two real options the option to substitute gasoline at times of expensive crude oil and the option to expand supply of blend at times of cheap gasoline using a dynamic model we show that the higher volatilities of crude oil and ethanol costs increase biofuels firms value we also find non monotonic relationships between the value of an ethanol plant and several underlying variables including gasoline price level we estimate the value provided by a 10 blend mandate to be around 150 000 000 for a representative ethanol unit our results offer a novel view of oil and feedstock price risks in contrast to the common belief that considers those risks as a negative factor for the biofuels sector

estimating the supply and demand of gasoline using tax data abstract we estimate supply and demand functions for the u s gasoline market using information from excise tax returns provided by the irs for the period 1990 2009 we find price and income elasticities of demand similar to those found using eia data we find a price elasticity of supply of 0 29 which differs from the common assumption of a perfectly inelastic short run supply curve by using a novel data source the analysis provides a robustness check of aggregate studies of gasoline demand and a consistent econometric estimate of the price elasticity of gasoline supply the results are useful in guiding tax and regulatory policies regarding gasoline consumption

evaluation of three methods proposed for the computation of inter tso payments in the internal electricity market of the european union parties to the internal electricity market of the european union iem decided in 2001 to abolish the method of pancaking of transmission tariffs for cross border transactions that was originally in place instead they have agreed to implement a system whereby national transmission tariffs provide access to the entire iem this system is supplemented by a scheme of inter tso payments however conflict may arise if the compensation that a country must pay another one is not in accordance with the electrical usage that the former is making of the grid of the latter for instance inter tso compensation methods itc methods implicitly allocate the cost of any existing or new transmission line therefore the adoption of an inefficient method may be an obstacle for building some needed regional grid investments consequently one should give careful consideration to the selection of the itc method this paper analyzes both qualitatively and quantitatively the implementation of the most relevant itc methods that have been considered so far in the european debate when assessing each method from a conceptual point of view considerable attention is devoted to the critical examination of its main underlying assumptions

free entry and efficient rent seeking this paper concerns rent seeking and the extent to which rents are dissipated under various circumstances gordon tullock s 1967 insight that expenditures made to capture an artificially created transfer represent a social waste suggested that the cost to the economy of monopoly and regulation is greater than the simple harberger 1954 deadweight loss indeed under tullock s original formulation and in the extensions of his work by krueger 1974 and posner 1975 rents are exactly dissipated at the social level 1 is spent to capture 1 so that the total welfare loss from such activities is equal to the harberger triangle plus the rectangle of monopoly profits

transmission network cost allocation based on equivalent bilateral exchanges this paper presents a novel methodology for allocating the cost of a transmission network to its users based on the principle of equivalent bilateral exchanges which states that after all physical laws governing the flow of power have been met each demand is assigned a fraction of each generation and each generator is assigned a fraction of each demand in a uniform manner transmission cost allocation based on this principle presents several advantages namely independence from the choice of the slack bus recognition of counter flows and transmission use charges that are stable and always positive

allocation of transmission fixed charges an overview the application of marginal cost in pricing the transmission services has shown not effective mainly due to revenue reconciliation problems to overcome this a set of other methods derived from the mw mile rule has been suggested to allocate transmission fixed costs this paper compares such methods known as embedded cost methods in a centralized transmission network environment although these methods actually share the total cost and are very simple they are usually rejected due to the lack of a good economic reasoning the economic issue and the impact on the system expansion planning of such allocation are addressed in this paper some examples with the brazilian transmission system illustrate the results derived from this analysis

taxation of rent seeking activities we consider taxes on firms which engage in rent seeking contests the taxes can be on realized profits or on rent seeking expenditures the prize can be awarded to either the highest bidder or to a firm with probability proportional to its share of total spending on lobbying we find the conditions under which taxes do not reduce rent seeking effort generate tax revenue with no tax burden and cause no reduction in the profits of firms

gasoline demand revisited an international meta analysis of elasticities meta analysis is used to determine if there are factors that systematically affect price and income elasticity estimates in studies of gasoline demand four econometric models are estimated using long run and short run price and income elasticity estimates from previous studies as the dependent variables explanatory variables include functional form lag structure time span national setting estimation technique and other features of the model structure elasticity estimates are found to be sensitive to the inclusion or exclusion of some measure of vehicle ownership static models appear to overestimate short run elasticities underestimate long run price elasticities but pick up the full long run income responsiveness there is variation in the elasticity of demand across countries especially in the short run and gasoline demand appears to be getting more price elastic and less income elastic over time

deterrence in contests this paper explores the role of deterrence in contests as a general rule we show that for a deterrence strategy to be played by rational agents it is necessary that the contest be destructive we show for a very general class of functions that pure strategy deterrence equilibria where contestants deter one another do not exist a corollary of this finding is that under fairly general conditions agents should always be expected to engage in contests applied to international relations our results imply that war is always a potential outcome despite deterrence attempts

can cross border transmission expansion lead to fair and stable cooperation northeast asia case analysis abstract in this paper we present a framework for analyzing cross border power interconnection projects based on cooperative game theory compared to existing studies we not only quantify the benefits of interconnections and suggest cost benefit allocation techniques but also analyze the stability of the allocations which is a crucial aspect in regions where coordination and mutual trust between countries have not been built yet we apply our framework to the northeast asia where six countries china russia mongolia south korea north korea and japan are suggested for cross border transmission expansion planning cooperation cost benefits allocation of the interconnections is analyzed according to the marginal contribution of each country to the grand coalition and the minimal dissatisfaction of each coalition that ensures the stability of the solution accordingly game theory concepts the shapley value and the nucleolus are used in our analysis moreover we employ the core concept to further analyze the stability of the allocation solution and present a visualization of the feasible space formed by all stable allocations we found out that the grand coalition i e the scenario where all countries agree on the cooperation is the optimal and stable coalition with 7 1 billion total savings per year we also suggested a scheme of investment allocation and payments between the northeast asian countries in order to ensure that the proposed interconnections are plausible in practice

transfer seeking and avoidance on the full social costs of rent seeking we would like to thank gordon tullock and an anonymous referee of this journal for their helpful comments and suggestions this abstract was borrowed from another version of this item

cost allocation and net load variability a basic principle of electricity market design is that cost allocation should follow cost causation as closely as possible as renewable resources play a larger role in electricity generation system operators have become increasingly concerned about costs related to variability in net load while variable generation resources have attracted a great deal of attention along these lines load is a larger source of variability in most systems this paper introduces a shapley value framework to assess the total system cost attributable to electricity market participants that either exacerbate or alleviate net load variability furthermore this paper investigates the extent to which these costs are adequately reflected in wholesale market prices numerical tests indicate that the cost of variability on the hourly time scale is in most cases internalized by market integrated generators and buyers mitigating concerns that variability imposes a socialized cost from ramping or cycling of thermal generators

rent seeking contest when the prize increases with aggregate efforts the objective of this article is to investigate contests in which efforts are productive tullock s standard rent seeking model is extended by making the rent itself increase with the aggregate efforts a positive externality is thereby introduced into the contest because a contender s private effort in quest of the rent generates a benefit for other contenders coupled with a negative externality presented in the standard rent seeking model the net effect on the social efficiency of the contest is a priori ambiguous it is shown that the extended contest generates socially wasteful excessive aggregate efforts

estimates from a consumer demand system implications for the incidence of environmental taxes abstract most studies suggest that environmental taxes are regressive making them less attractive policy options we consider the distributional effects of a gasoline tax increase using four incidence measures and under three scenarios for gas tax revenue use to incorporate behavioral responses we use consumer expenditure survey data to estimate a consumer demand system that includes gasoline other goods and leisure our estimates confirm that when revenues are not recycled a gasoline tax is regressive use of incidence measures that ignore demand responses however will substantially overstate this regressivity in contrast the differences between the equivalent variation and easier to implement consumer surplus measures are relatively small in addition our results suggest that using the additional gas tax revenue to fund labor tax cuts makes the policy substantially less regressive while using the revenue to fund lump sum transfers actually makes it progressive

contests with multi tasking the standard contest model in which participants compete in a single dimension is well understood and documented multi dimension extensions are possible but are liable to increase the complexity of the contest structure mitigating one of its main advantages simplicity in this paper we propose an extension in which competition ensues in several dimensions and a competitor that wins a certain number of these is awarded a prize the amount of information needed to run the contest is hence limited to the number of dimensions won by each player we look at the design of this contest from the point of view of maximising effort in the contest per dimension and totally and show that there will be a tendency to run small contests with few dimensions the standard tullock model and its results are encompassed by our framework

improving inter transmission compensation in eu abstract this article is intended as a roadmap to the correction of the existing shortcomings in the eu power transmission tariff system especially in the existing mechanism of inter transmission system operator tso compensation itc the relevant literature is surveyed and the essence of the issue is formulated definitions preconditions assumptions and constraints for the problem are explained the paper outlines the most simple and straightforward approach for the improvement of inter transmission compensation in the continental european synchronous area the proposals are based on the old practice of socialization of the network costs retained in almost all european countries i e the principle of charging the customers at the exit equal treatment is given to internal users and cross border users a tso is reimbursed for both internal and cross border flows from the users conjoined to its network on an equal footing with the users extracting power from the peripheral nodes the existing inequity in individual payments for power transmission is overcome and the cross border subsidy element is avoided this approach should be tested modeled and evaluated with real data for the european union of networks some key parts of the article are written in a more popular style in order to be accessible to inexpert readers as well

legal expenditure as a rent seeking game legal expenditures at a civil trial constitute an interesting type of rent seeking contest in civil litigation there is a natural interaction between the objective merits of the case and the outcome of the contest institutions such as fee shifting do not generally have a counterpart in other rent seeking contests the endogenous decision to participate in the rent seeking contest corresponds to the decision by the plaintiff to bring a case and the decision by the defendant to defend it the desirability of fee shifting is very sensitive to the value of the parameter which describes the legal technology

gasoline prices gasoline consumption and new vehicle fuel economy evidence for a large sample of countries abstract countries differ considerably in terms of the price drivers pay for gasoline this paper uses data for 132 countries for the period 1995 2008 to investigate the implications of these differences for the consumption of gasoline for road transport to address the potential for simultaneity bias we use both a country s oil reserves and the international crude oil price as instruments for a country s average gasoline pump price we obtain estimates of the long run price elasticity of gasoline demand of between 0 2 and 0 5 using newly available data for a sub sample of 43 countries we also find that higher gasoline prices induce consumers to substitute to vehicles that are more fuel efficient with an estimated elasticity of 0 2 despite the small size of our elasticity estimates there is considerable scope for low price countries to achieve gasoline savings and vehicle fuel economy improvements via reducing gasoline subsidies and or increasing gasoline taxes

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

seeking rents by setting rents the political economy of rent seeking in recent years there has been a large number of papers on the subject of rent seeking most such works on rent seeking have taken the rent as exogenously determined by regulators regulators howeve r may also be expected and indeed have been shown to be rent seeke rs and hence the determination of the rent itself should be endogeniz ed to reflect the fact that the rent setters are themselves rent se ekers in this paper the authors do this by presenting an analysis o f the interaction of regulators firms and consumers within a rent s eeking framework where all three groups are assumed to be self motiva ted the analysis is carried out under alternative assumptions regard ing the nature of the market and the reaction functions of the partic ipants policy implications are drawn where appropriate copyright 1987 by royal economic society

min max fair power flow tracing for transmission system usage cost allocation a large system perspective power flow tracing has been suggested as an approach for evaluating 1 transmission system usage tsu cost and 2 loss mw cost for generator and load entities in the system recently optimal power flow tracing methods have been proposed to explicitly model fairness constraints in the tracing framework this paper further strengthens the tracing compliant min max fair cost allocation approach the min max model proposed in this paper is robust it addresses concerns like scalability numerical stability and termination in a finite number of steps while searching the optimal solution we also propose a methodology to model discoms and gencos as coalition within min max framework case studies on an all india network of 1699 nodes and comparison with average participation and marginal participation methods bring out the better conflict resolution feature of the proposed approach a method to model hvdc lines within the marginal participation scheme is also proposed quantitative and qualitative comparison of various tsu cost allocation methods on such a large system is another noteworthy contribution of the paper

the number of rent seekers and aggregate rent seeking expenditures an unpleasant result i examine a rent seeking contest in which the winner gets a minimum rent but also gets an additional rent which is an increasing function of his lobbying expenditure i give real world examples of such rent seeking competitions contrary to the standard result in the rent seeking literature i obtain the perverse result that aggregate rent seeking expenditures may be inversely related to the number of rent seekers however i note that even if this result holds the cost of administering rent seeking competitions may imply that society is better off with fewer contenders than with an infinitely large number of contenders although the optimal number may not be the smallest number

an aumann shapley approach to allocate transmission service cost among network users in electricity markets this work presents a new methodology for the allocation of transmission service cost among network users in energy markets the proposed method is based on an optimization game theoretic framework aumann shapley that retains the desirable properties of other existing methodologies such as the average participations factors apf and long run marginal costs lrmc the approach is shown to be computationally feasible and presents desirable characteristics in terms of economic coherence and isonomy computational results are presented for the brazilian power system and compared with those obtained by three other methodologies lrmc apf and the current method adopted in brazil

what s yours is mine rent seeking and the common law the paper develops a rent seeking theory of the common law the general finding is that the law s form depends on thecomparative advantage each group has in production versusappropriation generally and appropriation via litigation inparticular the model generates new interpretations ofdevelopments in united states common law and is used both tosupplement and to criticize two dominant theories of such law the efficiency theory associated with the law and economicsmovement and that generated by critical legal studiesscholars

the dynamics of pretrial negotiation it is shown that many cases proceed to court despite ample opportunity for interaction and much of the settlement takes place on the courthouse steps the deadline effect when fixed costs of bargaining are introduced a u shaped pattern of settlement appears with a greater chance of settlement at the beginning and at the end of negotiations than in the middle these characteristics persist even as the time between offers approaches zero the theoretical predictions are consistent with the stylized facts a large proportion of the lawsuits that are settled out of court are settled very close to the trial date or in the first several days of the trial 3 although the deadline effect appears in many other settings as well it has little theoretical support 4

testing and estimating time varying elasticities of swiss gasoline demand this paper is intended to test and estimate time varying elasticities for gasoline demand in switzerland for this purpose a smooth time varying cointegrating parameters model is investigated in order to describe smooth mutations of the swiss gasoline demand the methodology based on chebyshev polynomials is rigorously outlined our empirical finding states that the time invariance assumption does not hold for long run price and income elasticities furthermore they highlight that gasoline demand passed through some periods of sensitivity and non sensitivity with respect to the price our empirical statements are of great importance to assess the performance of a gasoline tax as an instrument for co2 reduction policy indeed such an instrument can contribute to reduce emissions of greenhouse gases only if the demand is not fully inelastic with respect to the price our results suggest that such a carbon tax would not be always suitable since the price elasticity is found not stable over time and not always significant

nodal price control a mechanism for transmission network cost allocation this paper presents an approach for the allocation of transmission network costs by controlling the nodal electricity prices the proposed approach introduces generation and nodal injection penalties into the traditional economic dispatch so as to create nodal price differences that recover the required transmission revenue from the resulting congestion rent as a consequence the new electricity prices reflect not only the marginal costs of production subject to transmission constraints but also the capital costs of the network this is the approach commonly adopted with most commodities whose price includes the unit cost of the good itself as well as the transportation cost from the production centers to the final consumer

on the evolution of prize perceptions in contests abstract we apply an indirect evolutionary approach to players perceived prize valuations in contests evolution in finite populations leads to preferences that overstate the prize s material value and induce overexpenditure we establish an equivalence between evolutionarily stable strategies and the behavior induced by evolutionarily stable preferences

complex losses allocation to generators and loads based on circuit theory and aumann shapley method this paper presents a new method to allocate active and reactive losses simultaneously to generators and loads the allocation is calculated for each transmission branch identifying and quantifying the buses responsibilities in losses this is a two step process in the first step generators are modeled as current injections and loads as constant admittances in order to determine generator participations in losses in the second step loads are modeled as current sources and generators as constant admittances in order to determine load participations in losses the aumann shapley and circuit theories are used to calculate the participation of each real and imaginary current component considering them as independent players in the complex losses allocation game the properties of the aumann shapley method ensure equitable allocation and recovery of the total active and reactive losses counter flow cross subsidy and negative allocation issues are discussed numerical results are presented and discussed to demonstrate the applicability of the proposed method

experimental comparison of multi stage and one stage contests this article experimentally studies a two stage elimination contest and compares its performance with a one stage contest contrary to the theory the two stage contest generates higher revenue than the equivalent one stage contest there is significant over dissipation in both stages of the two stage contest and experience diminishes over dissipation in the first stage but not in the second stage our experiment provides evidence that winning is a component in a subject s utility a simple behavioral model that accounts for a non monetary utility of winning can explain significant over dissipation in both contests it can also explain why the two stage contest generates higher revenue than the equivalent one stage contest

on the merit of equal pay performance manipulation and incentive setting abstract work performance is often difficult to assess thus leaving room for manipulation of commonly used metrics we created a laboratory workplace in which we can precisely assess both work performance along with manipulation activities using two independent experiments we show that whenever pay for performance is used manipulation is pervasive leading to both a waste of organizational resources and a weakening of incentives by contrast paying organizational members equally effectively deters manipulation attempts leading to higher organizational production

marginal pricing of transmission services an analysis of cost recovery this paper presents an in depth analysis of network revenues computed with marginal pricing and in particular it investigates the reasons why marginal prices fail to recover the total incurred network costs in actual power systems the basic theoretical results are presented and the major causes of the mismatch between network costs and marginal revenues are identified and illustrated with numerical examples some tutorial and others of realistic size the regulatory implications of marginal network pricing in the context of competitive electricity markets are analyzed and suggestions are provided for the meaningful allocation of the costs of the network among its users

conflict and rent seeking success functions ratio vs difference models of relative success the rent seeking competitions studied by economists fall within a much broader category of conflict interactions that also includes military combats election campaigns industrial disputes lawsuits and sibling rivalries in the rent seeking literature each party s success pi which can be interpreted either as the probability of victory or as the proportion of the prize won has usually been taken to be a function of the ratio of the respective resource commitments alternatively however pi may instead be a function of the difference between the parties commitments to the contest the contest success function csf for the difference from is a logistic curve in which as is consistent with military experience increasing returns apply up to an inflection point at equal resource commitments a crucial flaw of the traditional ratio model is that neither onesided submission nor two sided peace between the parties can ever occur as a cournot equilibrium in contrast both of these outcomes are entirely consistent with a model in which success is a function of the difference between the parties resource commitments

efficient rent seeking under varying cost structures the rent seeking paradigm which was introduced by tullock 1967 has proven useful for exploring a variety of economic decisions that lie outside the traditional profit maximizing framework early applications of tullock s insight becker 1968 krueger 1974 posner 1975 demsetz 1976 foster 1981 and others usually assumed the entire value of the rent would be dissipated by competition following the fashion of economic profits in competitive markets in 1980 tullock structured a simple game reflecting the decisions made in rent seeking the results generated by his model suggest residual rents may accrue to rent seekers and under certain conditions resist dissipation a number of studies followed tullock s 1980 paper corcoran 1984 corcoran and karels 1985 higgins shugart and tollison 1985 tullock 1984 1985 and 1987 which explore the dissipation of excess rents under various assumptions

rational habits in gasoline demand abstract the dynamics of demand for energy goods such as gasoline are complicated by investment decisions and behavioral habits both types of complication can be captured by a habits model in which past consumption enters into an agent s current utility function if the agent is forward looking or rational then habits imply his consumption of the habit forming good will be sensitive to his expectation of future market conditions in particular future prices this sensitivity implies in turn that traditional measures of price elasticity will underproject consumers responsiveness to policy interventions this paper examines the implications of rational habits on gasoline demand using a simple model encompassing myopic and rational habits i demonstrate that an agent with rational habits will respond to anticipated future price changes and react more strongly to permanent than to temporary price changes with this distinction increasing in the strength of the habit i then estimate several habits models using panel data on u s states for the years 1989 through 2008 my preferred specification yields evidence of rational habits and moreover i find consumers to be twice as responsive to tax driven price changes as to market driven price changes taxes and other policies that operate through the gasoline price are a more powerful policy instrument than traditional price elasticity would lead us to believe

conflict settlement and the shadow of the future abstract we examine a conflictual setting in which adversaries cannot contract on an enforcement variable arms and where the future strategic positions of adversaries are very different when there is open conflict than when there is settlement we show that as the future becomes more important in this setting open conflict becomes more likely than settlement we demonstrate the theoretical robustness of this finding and test it in a laboratory experiment as predicted we find that subjects are more likely to engage in destructive conflict as the future becomes more important

long run equilibrium and total expenditures in rent seeking a comment although corcoran is mathematically correct i believe his comment is not very helpful in order to discuss the matter in some detail the reader should consult table 7 1 from my original efficient rent seeking reproduced on page 92 1 this shows the equilibrium investment of each individual different numbers of individuals playing the game n and differing values of r table 7 2 also reproduced on page 93 shows the total investment

marginal pricing of transmission services a comparative analysis of network cost allocation methods a strict marginal network pricing policy is not able to generate enough revenues to recover the cost of the primary transmission service other related network services are ignored here this cost recovery problem requires the stipulation of a complementary charge which completes the network marginal revenues this paper evaluates numerically and qualitatively three different allocation methods of the complementary charge marginal participation factors mean participation factors and benefit factors the evaluation has been applied to the spanish electrical system model

a general analysis of rent seeking games in this paper we reconsider the basic model of efficient rent seeking we stress the importance of the shape of the players reaction curve in order to understand the impact of the technology of rent seeking on the structure of the outcome of the game we give a complete characterization of the pure strategy equilibria moreover the possibility of preemption by a stakelberg leader is discussed according to the nature of the technology of rent seeking available to the agents

revealed and stated preferences for co2 emissions reduction the missing link abstract in this paper we combine data collected from two strands of literature dealing with revealed preferences expressed by conventional vehicle drivers for fuel price variation and stated preferences expressed by consumers for alternative fuel vehicles we employ a meta analysis approach drawing data on 30 primary studies reflecting two important policy interventions which are fuel price taxation and subsidies for alternative fuel vehicles this is a new contribution in environmental and energy economics in that we rescale all primary information into a unique index which captures consumers economic attitude towards carbon dioxide co2 emission reduction in monetary terms focusing on the transport sector we compute the implicit price for the avoidance of a kilogram of co2 emissions named pco2 explaining the existing heterogeneity from several points of view the results of the meta analysis show that contextual and individual characteristics influence the implicit price for co2 emissions avoidance this implicit price is on average positive in the case of revealed preferences studies whereas it is negative in the stated preferences studies although there are some important geographical differences our results show that fuel taxes could be an important additional instrument for environmental policy

a generalized tullock contest we construct a generalized tullock contest under complete information where contingent upon winning or losing the payoff of a player is a linear function of prizes own effort and the effort of the rival this structure nests a number of existing contests in the literature and can be used to analyze new types of contests we characterize the unique symmetric equilibrium and show that small parameter modifications may lead to substantially different types of contests and hence different equilibrium effort levels

efficient rents 1 rent seeking behavior in the long run we have analyzed long run behavior in rent seeking under several conditions and behavioral hypotheses the question of interest is whether or not the long run expenditures will exactly equal the value of the rents our results depend on the type of competitive response which is assumed to exist in the long run and on the r value governing the probability of winning

three methods to share joint costs or surplus abstract we study cost sharing methods with variable demands of heterogeneous goods additive in the cost function and meeting the dummy axiom we consider four axioms scale invariance si demand monotonicity dm upper bound for homogeneous goods ubh placing a natural cap on cost shares when goods are homogeneous average cost pricing for homogeneous goods acph the random order values based on stand alone costs are characterized by si and dm serial costsharing by dm and ub the aumann shapley pricing method by si and acph no other combination of the four axioms is compatible with additivity and dummy journal of economic literature classification numbers c71 d62 d63

give peace a chance the effect of ownership and asymmetric information on peace abstract we study the possibility of peace when two countries fight a war over the ownership of a resource war is always the outcome of the game played by rational countries under complete or asymmetric information when there is no pre established distribution of the resource among countries when there is such a distribution of the resource under complete information peace is feasible for some initial distributions of the resource whereas under asymmetric information there are two classes of equilibria peaceful equilibria in which peace has a positive probability and aggressive equilibria which assign probability one to war surprisingly a little asymmetric information may yield war

strategic decisions on lawyers compensation in civil disputes i introduction a plaintiff and a defendant usually bargain to settle a civil dispute when they cannot reach a settlement the case goes to trial naturally through the settlement and trial stages the litigants behave strategically a few researchers study such a situation by developing contest models 1 examples include plott 1987 katz 1988 farmer and pecorino 1999 wfirneryd 2000 and hirshleifer and osborne 2001 there exists however some discrepancy between the contest models and the mainstream articles in the law and economics literature the contest models deal with the legal battle itself to use the words of hirshleifer and osborne 2001 by contrast the mainstream articles focus on one or some of the important aspects of the negotiation and litigation process such as the likelihood of settlement the reasons for lawsuits the efficient levels of precautions the burden of proof the comparison of alternative fee shifting systems and the compensation for lawyers in the presence of an agency problem 2 this article attempts to reconcile the two strands a bit further to do so we develop a contest model in which the negotiation and litigation stages are combined as in the previous contest models but unlike the previous ones two lawyers one for a plaintiff and the other for a defendant are introduced using this contest model with delegation we are able to analyze some of the important issues in legal disputes for instance a plaintiffs lawyer in the united states routinely charges one third of the award if his client wins and nothing if his client loses a natural question which we can address using our model is then why the lawyer s contingent fee is not one half of the award nor two thirds but one third using our model we can also address the following issues does the plaintiff have an incentive to choose an hourly fee arrangement if feasible does delegation to the lawyers increase the total legal expenditure of the plaintiff and defendant compared with the case of no delegation why do a plaintiff and a defendant hire lawyers in litigation a straightforward reason for such delegation is that a litigant can benefit by hiring a lawyer who has more capacity than herself throughout the article we use she to refer to a litigant and he to refer to a lawyer another explanation is that a litigant can benefit by achieving strategic commitments through delegation specifically the litigant can change her opponent s behavior in her favor by using a lawyer whose objective function differs from hers baik and kim 1997 consider a contest model that carries both aspects of delegation for the first time in the delegation literature but the idea that strategic delegation benefits a main player has long been emphasized in many contexts examples include schelling 1960 fershtman and judd 1987 katz 1991 and warneryd 2000 this article extends the delegation model of baik and kim 1997 to the case where a plaintiffs lawyer works on a contingent fee basis but a defendant s lawyer on an hourly fee basis 3 we assume that the litigants and lawyers are risk neutral to be more precise our two stage game runs as follows in the first stage knowing that the defendant adopts the hourly fee the plaintiff determines the contingent fee fraction for her lawyer and announces it publicly in the second stage the lawyers exert their effort simultaneously and independently to win the lawsuit the plaintiff s lawyer chooses the effort level on his own but the effort level of the defendant s lawyer is chosen by the defendant the defendant has to incur a monitoring cost because she hires her lawyer under the hourly fee we use logit form probability of winning functions after solving for the subgame perfect equilibrium of the game we first derive the condition on relevant parameters under which delegation to the lawyers brings both litigants more payoffs compared with the case of no delegation

long run equilibrium and total expenditures in rent seeking the lure of excess profits or rents associated with monopoly power gives rise to expenditures to obtain these rents competitive rent seeking behavior is recognized as a factor which must be included among the wastes associated with monopoly power tullock 1967 posner 1975 1 the expenditures are aimed at transferring wealth rather than its creation and the use of resources to obtain this transfer is a loss to society how important rent seeking is as a part of the total monopolistic waste hinges on the size of the total expenditures induced by a given level of excess profits

distribution of surplus in sequential bargaining with endogenous recognition i examine a sequential bargaining situation in which agents contest the right to propose an allocation the contest can either take place at a pre bargaining stage yielding persistent recognition to propose or recur throughout the bargaining yielding transitory recognition equilibrium analysis reveals that surplus is distributed more unequally under persistent recognition social cost is higher under persistent recognition if and only if it attracts a sufficient number of active bargainers and individual s incentive to propose under transitory recognition may actually increase in the number of agents while this incentive always diminishes under persistent recognition

supply elasticity matters for the rebound effect and its impact on policy comparisons abstract we develop a model of the rebound effect which explicitly accounts for both the demand and supply sides of the energy sources we consider a transportation sector originally using a dirty fossil fuel and examine the relative effectiveness of alternative policies efficiency improvements in the dirty fuel technology sector e g cafe standards and technology shifts by partial adoption of a new clean technology e g low carbon fuel standards the model generates endogenous equilibrium quantities and prices for the dirty and clean fuels we characterize the magnitude of the rebound effect as a function of demand and supply elasticities and use the equilibrium values to compare policy options when the supply of the dirty fuel is inelastic we find that introducing a new technology with non zero emissions may actually increase the total level of emissions similar to the leakage effect a technology shift policy can perform better than an efficiency improvement policy in the dirty fuel sector only when the dirty fuel supply is sufficiently elastic the emission intensity of the new technology very low and the technology shift is greater than a threshold value using data for gasoline as a proxy for the dirty technology and several other cleaner technologies we show that these conditions are satisfied by a hypothetical zero emission technology but not by electric vehicles using the average us generation mix or the current us corn based e85 our results demonstrate the importance of accounting for the supply side in estimating the magnitude of the rebound effect and its impact on fuel consumption in a large scale policy implementation

a hybrid milp and benders decomposition approach to find the nucleolus quota allocation for a renewable energy portfolio portfolios of renewable electricity sources are interesting risk management mechanisms for trading in electricity contract markets when formed by players belonging to different companies their stability relies on the way the benefit generated by the optimal portfolio is allocated the challenge of finding a fair and efficient allocation can be mathematically formulated in terms of finding the core of a cooperative game which in turn is stated as an optimization problem with a set of constraints that exponentially grows with the number of participants quickly becoming computationally intractable moreover the right hand side of each constraint relies on a given coalition value which in our case is obtained by a two stage stochastic optimization model this paper presents an efficient methodology based on mixed linear programming and benders decomposition to find the nucleolus share of large scale renewable portfolios case studies are presented with data from the brazilian power system

on being asset constrained in litigation contests this paper establishes that being asset constrained may be advantageous for defendants in litigation contests an active asset constraint of defendants i may increase decrease defendant plaintiff contest effort ii may lower the sum of plaintiff and defendant contest effort iii lowers expected defendant payment and iv makes a symmetric contest asymmetric

on the partition of transmission losses among generators due to the introduction of competition in the electrical power industry determining the percentage of transmission grid losses that should be attributed to each generator has become important usually this is accomplished by determining the percentage of each transmission branch losses that should be attributed to each generator using the aumann shapley theory this letter identifies the fairest way to share the nonseparable portion of losses amongst the generators the obtained result validates some approximations assumed in recent papers and contributes to strengthening circuit theory based methods

comparative analysis of litigation systems an auction theoretic approach a simple auction theoretic framework is used to examine symmetric litigation environments where the legal ownership of a disputed asset is unknown to the court the court observes only the quality of the case presented by each party and awards the asset to the party presenting the best case rational litigants influence the quality of their cases by hiring skilful attorneys this framework permits us to compare the equilibrium legal expenditures that arise under a continuum of legal systems the british rule continental rule american rule and some recently proposed legal reforms are special cases of our model

contingent fees meet the british rule an exploratory study compensation schemes in which lawyer s fees are contingent on winning the suit are becoming increasingly popular throughout europe at the same time the british rule of legal cost allocation is applicable in many european countries as a result it is of policy relevance how their coexistence may be harmonized this paper uses the litigation contest framework to analyze the consequences of three different cost allocation regimes if a plaintiff s attorney is compensated on a contingent fee basis we compare the equilibrium contest effort justice and payoffs for affected parties in the different regimes and find arguments in favor of not reimbursing contingent fees

distributional effects of alternative vehicle pollution control policies abstract previous work shows that policies that subsidize new vehicles and tax size miles or gasoline efficiently reduce pollution less is known about their distributional effects this paper examines distributional effects by estimating the joint demand for vehicles and miles using the consumer expenditure survey greater price responsiveness among low income households enhances progressivity of gas or miles taxes across lower incomes and mitigates regressivity across upper incomes taxes on engine size or subsidies to new vehicles are significantly more regressive than gas or miles taxes

efficient rents 2 free entry and efficient rent seeking in the competition for a monopoly right in which the number of bidders is fixed tullock and others have found the value of the resources spent in the aggregate to capture the transfer to be sometimes less than and sometimes greater than the value of the monopoly we think this approach to be incomplete since it leaves unanswered the question of what determines the number of individuals who will vie for the right to be the monopolist it is unsatisfactory to imagine for example that the franchisor sets the number of contestants one could then foresee that rent seeking would arise to influence the permissible number of bidders and this merely moves the rent seeking dissipation question one step back