dynamic processes for public goods an institution oriented survey a nontechnical but nevertheless not informal account is given of dynamic models recently developed in the theory of public goods after a purely descriptive presentation of three basic models section 2 and their many subsequent extensions section 3 various reflections are made in section 4 on issues raised by an institutional perspective first the usual planning interpretation of such processes is presented and commented upon next contrasting normative and positive approaches to public goods it is argued that one category of processes can be given an interpretation much in line with the literature on positive public economics third the planning vs voluntary exchange institutions are contrasted from the point of view of cooperation among the agents in an economy with public goods

the employment effects of shorter working hours an application to japanese data this paper applies a simple model of hours employment and earnings to japanese manufacturing data and shows that a reduction in the number of standard hours is likely to increase overtime and reduce employment these findings are in line with recent theoretical developments and in contrast to the predictions of traditional analysis of hours and employment adjustment this difference is shown to be due to the treatment of the wage rate copyright 1989 by the london school of economics and political science

sectoral implications of farm program modifications the overall and distributional effects of farm programs and selected revisions are examined using a mathematical programming sector model the model incorporates market distortions caused by price supports target prices program participation deficiency payments and marketing loans current farm programs are found to increase producer prices depress consumer prices and in turn result in excess production and higher consumption and exports domestic and foreign consumers as well as domestic producers are subsidized by farm programs social deadweight loss occurs as government payments exceed welfare benefits received by consumers and producers society as a whole benefits from reductions in program provisions

retrospectives friedrich hayek and the market algorithm friedrich a hayek 1899 1992 is known for his vision of the market economy as an information processing system characterized by spontaneous order the emergence of coherence through the independent actions of large numbers of individuals each with limited and local knowledge coordinated by prices that arise from decentralized processes of competition hayek is also known for his advocacy of a broad range of free market policies and indeed considered the substantially unregulated market system to be superior to competing alternatives precisely because it made the best use of dispersed knowledge our purpose in writing this paper is twofold first we believe that hayek s economic vision and critique of equilibrium theory not only remain relevant but apply with greater force as information has become ever more central to economic activity and the complexity of the information aggregation process has become increasingly apparent second we wish to call into question hayek s belief that his advocacy of free market policies follows as a matter of logic from his economic vision the very usefulness of prices and other economic variables as informative messages which is the centerpiece of hayek s economics creates incentives to extract information from signals in ways that can be destabilizing markets can promote prosperity but can also generate crises we will argue accordingly that a hayekian understanding of the economy as an information processing system does not support the type of policy positions that he favored thus we find considerable lasting value in hayek s economic analysis while nonetheless questioning the connection of this analysis to his political philosophy

optimal production with learning by doing abstract this paper characterizes optimal production over time when production cost is a decreasing function of past accumulated output when production exhibits learning by doing monopolistic competitive and socially optimal solutions are considered

a simple stochastic adjustment process in this note we present a stochastic adjustment process which has nice optimality and probablistic dynamic stability properties for a large class of economic environments in addition the process relies on a strikingly simple information exchange procedure at each iteration it can also be termed as strongly locally individually incentive compatible 2 in that each consumer agent has no incentive to lie about his preferences provided he is concerned only with maximization of one step expected utility gain at each iteration the obvious source of inspiration for this process is the stochastic decentralized resource allocation mechanism the b process by hurwicz radner and reiter 2 indeed it should be regarded as the latter s informationally simplified descendent for general background information on resource allocation mechanisms and motivations for designing such mechanisms see hurwicz radner and reiter 2 and hahn 1 in order to simplify the exposition we present the process only for the case of pure exchange economies with possible consumption externalities for more general cases see mitsui 4 mitsui 4 also constructs a core convergent version of the process

the competitive allocation process is informationally efficient uniquely abstract this paper establishes that the competitive allocation process is the only informationally decentralized mechanism for exchange environments which i achieves pareto optimal allocations ii gives each consumer an allocation which is according to his preferences at least as good as his endowment iii satisfies certain regularity conditions and iv has a message space of the smallest dimension necessary to satisfy i iii

the effects of work sharing on employment and overtime in finnish manufacturing 1960 87 comparison of three alternative models the purpose of this paper is to develop a model of the determination of hours and employment is developed and compared with the models of brunello 1989 and hart and wilson 1988 the models are estimated by using annual and quarterly data from the finnish manufacturing sector according to the results the actual hours closely follow the standard hours this implies that the interior solutions in hours determination suggested by compared models are not relevant instead firms try to avoid overtime as a consequence work sharing through shorter hours will be effective

application of sample selection model to double bounded dichotomous choice contingent valuation studies modeling households behavior with the data from a contingentvaluation cv survey is often complicated by samplenon response which can cause non response bias and sampleselection bias leading to inconsistent parameter estimates and adistorted mean willingness to pay estimate this paper reportsthe results of empirical tests for both biases using householdsurvey data in which the double bounded dichotomous choice cvquestion involved the benefit of a tap water quality improvementpolicy in korea no non response bias but sample selection bias is detected in the sample to correct for sample selection bias a sample selection model is employed the authors also discusshow failure to correct for bias may distort aggregate benefitestimates

incentive compatibility and individual rationality in public good economies abstract hurwicz s theorem states that pareto optimality individual rationality and incentive compatibility are inconsistent in a class of private goods economies a similar result is obtained by ledyard and roberts in a class of public good economies hurwicz and walker show that generically there are no incentive compatible and pareto optimal mechanisms in a class of both private and public goods economies without imposing pareto optimality this paper explores the possiblity of the existence of incentive compatible and autarkically individually rational mechanisms in a class of public good economies autarkic individual rationality which strengthens individual rationality in a natural way and incentive compatibility are shown to be inconsistent

incentives in the generalized mdp procedure for the provision of public goods malinvaud 1970 1971 and dreze and de la vallee poussin 1971 have independently proposed a well defined planning procedure for an economy with public goods this procedure which has come to be called the mdp procedure has several desirable properties given correct revelation of each participant s preference if each individual truthfully announces his marginal rates of substitution between public goods and a private good every trajectory of the process lies entirely in the space of feasible allocations and monotonically converges to an individually rational pareto optimum moreover as is shown in champsaur 1976 given correct revelation this procedure is neutral to any kind of distributional value judgements in the sense that every individually rational pareto optimum can be attained as a limit of some trajectory defined by the process in connection with the problem of whether the participants in the mdp procedure reveal their correct preferences little literature has so far been written there are now results available which have been derived by dreze and de la vallee poussin 1971 and roberts 1979 that i at every iterative stage telling the truth is a maximin strategy for each individual and at an equilibrium of the process is a nash equilibrium strategy and that ii correct revelation produces a dominant strategy equilibrium at every instant if a society consists of just two individuals nevertheless maximin strategies are played only because of the rather restricted assumption on each participant s behaviour while confinement to the case of a two person society is too severe to give meaningful implications for reality in either case one might be fully justified in believing that truthful revelation will hardly appear in the mdp procedure fortunately almost all the properties of the mdp procedure can be preserved under circumstances where the agents misrepresent their marginal rates of substitution henry 1979 and roberts 1979 have shown that as long as each individual chooses a nash type strategy at each instant the process maintains the same properties as in the case of correct revelation except that the adjustment speeds of public goods are significantly reduced this result implies the mdp procedure is implementable under game theoretic circumstances but at the same time it exposes serious problems in several respects in the first place since the nash equilibrium strategy of each agent is not necessarily the truthful announcement the virtue of honesty is no longer of positive significance in the mdp procedure secondly for the validity of its solution concept if each agent plays a nash equilibrium strategy at all he must have complete knowledge relating to the possible strategies chosen by all the other agents clearly this supposition

a study of the impact of direct trade on taiwan s fishery sector with special reference to the effect of china s wto accession after taiwan became a member of the wto in 2002 its tariff rates for fishery products decreased by an average of 35 5 from the level in 2001 direct imports of fishery products from china would be allowed in 2004 these tariff reductions and the relaxation of import restrictions will have a strong effect on taiwan s fishery sector in this paper we present an analysis of how fishery production prices input usage and welfare distribution might react to trade liberalization in addition to evaluating the overall impact of tariff reduction on taiwan s fishery sector we assess the effects of china s wto accession on the taiwanese market we use a fishery sector equilibrium model in which 40 products and 68 fishing activities are identified the model also includes an import export subsector a factor input subsector and a supply demand equilibrium condition to analyze the distributions of social welfare due to trade liberalization three simulations are conducted to investigate the impact of tariff reductions in 2004 2 years after taiwan has jointed the wto the results indicate that taiwan s fishery sector will be adversely affected when it encounters the extremely low import prices of certain fishery products from china the total production of the fishery sector and its value are predicted to decrease by 4 03 and 9 96 respectively in 2004 aquaculture would suffer the heaviest loss with a 7 48 reduction in the production and a 19 23 reduction in its value the demand for labor will decrease by 8 71 the effect is most pronounced in aquaculture in which the demand for labor will go down by 11 40 and the wage rate will decline by 14 28 to meet the challenge of globalization the taiwanese fishery industry will have to diversify and improve its operational efficiency as well as production and distribution structures for a sustainable development

public and private returns from joint venture research an example from agriculture public research institutions are turning increasingly to the private sector for additional financial support such a trend in the short run lessens the need for public research expenditures but may in the long run prove to be very costly to the economy as a whole this is because private funding increases the chance that the direction of research will shift so that private benefits are enhanced such a shift is especially costly if public research funds are then not forthcoming that would have the potential of producing the maximum level of benefits to the economy as a whole a case study of canadian barley research is used to illustrate this problem

ratio lindahl equilibria and an informationally efficient and implementable mixed ownership system abstract in this paper we formalize an informationally efficient and implementable mixed ownership economic institutional framework by using the ratio lindahl equilibrium that yields pareto efficient and individually rational allocations for public goods economies with general variable returns we consider the incentive aspects of the system by giving an incentive compatible informationally efficient and privacy preserving mechanism whose nash allocations coincide with ratio lindahl allocations moreover the mechanism is well behaved in the sense that it uses an individually feasible balanced and continuous outcome function and further has a message space of minimal dimension

the economic benefits of surface water quality improvements in developing countries a case study of davao philippines two nonmarket valuation techniques the contingent valuation method and travel cost model are used to estimate the economic value that people in davao philippines place on improving the water quality of the rivers and sea near their community the contingent valuation and travel cost estimates are very close to each other and are quite low both in absolute terms and as a percentage of household income these findings suggest that water pollution control is simply not a high priority for davao s residents and support the argument that households willingness to pay for environmental amenities such as improved water quality is low

the discrete heal algorithm with intermediate goods good i by quantity a it is easy to modify this procedure for the case where final products are not homegeneous but the presence of intermediate production raises considerable difficulties they stem from the requirement that firms be asked about the effect of specific reallocations of inputs because heal type processes require that the aggregate production plan be feasible at each step of the procedure these reallocations must be consistent with each other in the presence of intermediate goods this consistency is difficult to maintain as the answer of one firm will dictate the feasible changes in inputs for other firms it should be possible to solve this problem for some special cases i have not been able to do so in other cases without changing the procedure fundamentally in our version of heal s procedure the planning board asks each firm to provide a local description of its production possibility set and does not commit itself to transfers of certain size the important difference here is between the examination of certain specific reallocations and the study of local approximations to the economy the questions that the centre asks of firms are composed of two parts a prospective production plan and a real number which indicates the maximal size of the reallocation which the planning board has in mind the answers of the firms are also composed of two parts the first corresponds to the vector of marginal rates of transformation in the continuous version of the procedure the second a real number is a measure of the distance between the proposal of the centre and the boundary of the production possibility set hence the sizes of the messages which are transmitted are minimally larger than in the continuous version of the procedure even in the framework where both are applicable the procedure of this paper has two advantages over that of henry and zylberberg first the message space is smaller

a multicommodity analysis of trade policy effects the case of nicaraguan agriculture agricultural trade policies for a small country are analyzed using a simple multicommodity quadratic programming agricultural sector model the policy conditions simulated include a quantitative trade restrictions given an uncertain world market b export taxation and c import subsidies the multicommodity sectoral wide coverage permits analysis of the factor product market linkages and enables identification of the distributional consequences

estimated payroll tax incidence and aggregate demand for labour in the united kingdom the payroll tax should be of interest to empirical researchers for a number of reasons it is a large and growing source of government revenues in many countries such as united states canada and the united kingdom it is also a major source of funds out of which important social security benefits such as unemployment insurance and public pensions are paid however while relatively easy to collect and administer the payroll tax may be distributionally regressive and contradict the equal sacrifice principle based on ability to pay it is thus of some concern for reasons of equity and public policy to be able to evaluate the actual magnitude of these distributional effects in addition there is considerable current interest in alternative social security schemes see for example okner 1975 and munnell 1977 arising from the present demographic trends which with present financial arrangements are likely to result in future funding deficits so that revisions will have to be undertaken in particular a number of studies have examined the liability structure and distributional incidence of the payroll tax peckman and okner 1974 peckman 1977 and johnston and wixon 1978 in order to evaluate the distributional implications of the various options available there should be a better understanding particularly of the distributional characteristics of the payroll tax the specific problem this paper addresses is the distributional incidence of the payroll tax and whether the employer portion of the tax is entirely shifted backwards on to labour that is do employees bear the full burden of the employer portion of the payroll tax in the form of wage cuts or forgone earnings the empirical literature in the area of payroll tax shifting is so far fairly limited and is characterized by markedly differing estimates of the incidence works by deran 1966 1967 weitenburg 1969 brittain 1972 vroman 1974a leuthold 1975 and hamermesh 1979 1980 employed different data bases and empirical procedures and obtained widely differing results in particular the work of brittain 1972 has become the standard reference and the basis for a good deal of empirical analysis the present paper puts forward an alternative approach to estimating payroll tax incidence on employees that substantially improves upon the approach of brittain specifically it involves estimating an aggregate demand curve for labour in the united kingdom and analysing how the curve shifts in response to changes in the payroll tax the result that in a world of competitive markets the full incidence of a universal payroll tax is shifted on to an inelastic supply of labour is a standard result ifl microeconomics musgrave and musgrave 1976 pp 404 406 the

mechanism design how to implement social goals existing economic institutions the theorist wants to explain or forecast the economic or social outcomes that these institutions generate but in mechanism design theory the direction of inquiry is reversed we begin by identifying our desired outcome or social goal we then ask whether or not an appropriate institution mecha nism could be designed to attain that goal if the answer is yes then we want to know what form that mechanism might take in this paper i offer a brief introduction to the part of mechanism design called implementation theory which given a social goal characterizes when we can design a mechanism whose predicted

a characterization of strongly locally incentive compatible planning procedures with public goods this paper provides a systematic study of planning procedures with public goods in which local truthful revelation of preferences is a dominant strategy these procedures are said to be strongly locally individually incentive compatible sliic we first characterize the time invariant continuously differentiable planning procedures that are sliic then we study properties such as balancedness cheatproofness with respect to coalitions neutrality individual rationality and we point out the connection with the mdp procedures

hourly wages and working time in the dutch market sector 1962 1995 this article analyses the joint behaviour of hourly wages and standard hours in the netherlands with respect to the development of full time hours to different hypotheses are suggested work sharing or productivity sharing under the work sharing hypothesis high unemployment would lead to reduced hours whereas under productivity sharing increased productivity leads to higher wages or reduced hours the evidence is in favour of the productivity hypothesis there is no direct impact of unemployment on the evolution of hours moreover although reduced hours tend to increase hourly wages in the short run this is not the case in the long run

complexity and economic policy a paradigm shift or a change in perspective a review essay on david colander and roland kupers s complexity and the art of public policy in their recent book colander and kupers 2014 argue that viewing the economy as a complex adaptive system should change the way in which we make economic policy this would necessitate a paradigm shift economics has over time tried to produce a coherent model to underpin the dominant laissez faire liberal approach but we have never proved in that model that left to their own devices the participants in an economy will self organize into a satisfactory state this is an assumption complex interactive systems with direct interaction between heterogeneous agents may show no tendency to self equilibrate and will undergo endogenous crises economists should concentrate on the emergence of certain patterns colander and kupers suggest that we may be able to nudge the system into good basins of attraction a more radical view is that there are no fixed basins of attraction these change with the evolution of the system and it is illusory to believe that we can choose good basins we may be able to recognize and influence the emergence of certain states of the economy but we are far from leon walras s dream of economics as a science like astrophysics

a unique informationally efficient allocation mechanism in economies with consumption externalities this article investigates the informational requirements of resource allocation processes in pure exchange economies with consumption externalities it is shown that the distributive lindahl mechanism has a minimal informational size of the message space and thus it is informationally the most efficient allocation process that is informationally decentralized and realizes pareto efficient allocations over the class of economies that include nonmalevolent economies furthermore it is shown that the distributive lindahl mechanism is the unique informationally efficient decentralized mechanism that realizes pareto efficient and individually rational allocations over a certain class of nonmalevolent economies

what do income tests tell us about the gap between wta and wtp for public goods abstract theory relates the gap between wta willingness to accept compensation and wtp willingness to pay to the income elasticity of wtp it has been suggested that empirical estimates of the income elasticity of wtp can therefore be used to test whether an observed gap between wta and wtp is consistent with rational behavior we examine this issue for the case of non market public goods we identify the theoretically appropriate tests of income sensitivity and examine conditions for valid income sensitivity tests we show that income tests may provide false signals in common settings indicating an inconsistency where none exists

myopic versus intertemporal manipulation in decentralized planning procedures manipulation is studied in abstract planning procedures in exchange economies with private goods and a generalization of the results of champsaur laroque 1980 is obtained when the nash equilibrium corresponding to myopic manipulation is unique the outcome of consistent intertemporal manipulation on a time interval 0 t is characterized it is shown that when t goes to infinity the exists a nash equilibrium only when the initial allocation is pareto optimal

hours layoffs and unemployment insurance funding theory and practice in an international perspective the strikingly different behaviour of important economic aggregates in the united states and other industrial countries has received surprisingly little attention from economists among recent exceptions however gordon i 982 has shown that wages and hours of work are much more flexible in the united kingdom and japan than in the united states such relative hours variability is confirmed in a macro analysis by capdevielle and alvarez i98i and at micro level by sengenberger and kohler i982 the latter authors are concerned with labour market adjustment within the u s and west german automobile industries between i 97 i and i 980 estimates of the german workeroutput elasticity are found to be less than half that of the united states while the german hours elasticity is twice the united states figure at the national aggregate level capdevielle and alvarez also reveal much greater employment variability in the united states than in most other oecd countries in the years following the i973 74 opec supply shock much in line with these employment hours observations moy and sorrentino i98i argue that after

auction protocols for decentralized scheduling decentralized scheduling is the problem of allocating resources to alternative possible uses over time where competing uses are represented by autonomous agents market mechanisms use prices derived through distributing bidding protocols to determine schedules we investigate the existence of equilibrium prices for some general classes of scheduling problems the quality of equilibrium solutions and the behavior of an ascending auction mechanism and bidding protocol to remedy the potential nonexistence of price equilibria due to complementarities in preference we introduce additional markets in combinations of basic goods finally we consider direct revelation mechanisms and compare to the market based approach journal of economic literature classification numbers c62 c70 d44

impacts of trade and the environment on clustered multilateral environmental agreements many countries align their environmental policy and environmental regulation by way of multilateral environmental agreements meas previous work in economics provided insights in the economic and political determinants of meas at large this paper distinguishes meas by the main issues covered and classifies them in five clusters biodiversity atmosphere land chemicals and hazardous wastes and seas then the role of environmental economic and political factors and of dynamic and cross cluster effects is studied at the level of mea clusters two findings stand out from this empirical analysis first economic size and multilateral trade liberalisation of countries are found to be the most important drivers of mea participation across all clusters second adjustment costs turn out to deter and in particular cross cluster spillovers turn out to stimulate mea participation across countries and clusters

constitutional political economy in the european union this article surveys recent research in constitutional political economy in europe although not all of theworks discussed necessarily focus only on european constitutional issues or are written by europeans european constitutional issues figure importantly in each area surveyed the article examines the literatures linking constitutional institutions to economic growth government size government deficits and corruption bicameralism direct democracy and federalism three exclusively european topics also are covered constitutional issues in the transition countries the structure of the european union and the draft constitution for the european union

leaving some stones unturned a reassessment of iterative planning theory abstract drawbacks of standard iterative planning algorithms include i planner actions are just on paper calculations without direct economic consequences and may converge very slowly ii planners cannot act systematically on hunches and intuitions and iii planners can observe unrealistically detailed information these problems are addressed through a bayesian learning model it is shown in sharp contrast to the standard literature that planners will not necessarily settle in the long run on even approximately optimal prices in an example the planner can end up setting prices in every period that guarantee chronic shortage this is an outcome of a fully optimizing model

effects of shorter hours on employment in disequilibrium models abstract in this paper the employment effects of a wage compensated and non compensated reduction of standard working time are examined in the context of disequilibrium theory in disequilibrium models with exogenous working time noncompensated shorter standard hours increase employment in both regimes keynesian and classical unemployment wage compensation reduces the employment response at a regime dependent rate if working time is endogenized by taking into account overtime effects the employment response of shorter hours is positive in keynesian unemployment and negative in classical unemployment wage compensation increases the employment effect in the keynesian regime and decreases it in the classical regime a model is presented that allows for hours as well as capital stock adjustment and integrates non competitive price setting

strategic behavior in decentralized planning procedures noncooperative strategic behaviors are studied in the malinvaud dreze de la vallee poussin decentralized planning procedure we depart from the assumption of myopic behavior by assuming that every agent takes into account the effect over a given period of time 0 t of his answers to the center one shows that for t large every nash equilibrium of the ensuing game in intertemporal strategies approaches i a competitive equilibrium in an exchange economy and ii a lindahl equilibrium in an economy with public goods thus the center loses any significant influence on the income distribution

the median voter model in public choice theory the changing perception by public choice theorists about the relevance of the median voter model is a result of excessive extrapolation of the conclusions of theoretical models to the real world early in the 1970s the median voter model was often accepted as implying that the output produced in the public sector was what was most preferred by the median voter this claim is excessive because the median voter model is only a model of demand aggregation under majority rule and has little to say about the supply side of the public sector in the late 1970s many scholars identified several circumstances under which the model would not apply in theory but these critiques of the model were often viewed as reasons to abandon the median voter model altogether the model went from having excessive claims that made the model appear to be more powerful than it really is to excessive claims that made the model appear to be less powerful than it really is these latter claims were often in response to the earlier claims rather than to the model appropriately applied

worksharing and factor prices abstract the aspect of worksharing on which this paper concentrates concerns an increase in the firm s workforce offset by a reduction in average working hours emphasis is given to the effect of relative factor prices on worksharing within a model structure which includes the capital stock and worker productivity as endogenous inputs factor prices include all the main categories of wage and non wage labour payments as well as the user cost of capital special attention is given to the role of non wages both quasi fixed and variable an analysis of the effects of marginal employment subsidies on worksharing is also considered with reference to the french solidarity contracts

dynamic procedures and incentives in public good economies in this paper we consider economies involving one public good one private good and convex technology and propose an informationally decentralized dynamic nontatonnement procedure that converges in general from the initial endowments to an allocation in the core of the economy we then consider a general class of procedures and show that there exists none in the class that is locally incentive compatible and individually rational these results show that there exists a trade off between the requirements of local incentive compatibility and equitable cost sharing

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

theoretical foundations of negotiations and cost sharing in transfrontier pollution problems the negotiations model is described by a dynamic process bearing on a multilateral externality that converges to an individually rational pareto optimum the process embodies a cost sharing rule for pollutant abatement in the countries involved derived from a sharing rule of the surplus that is also shown to have strategic stability in the game theoretic sense of an imputation in the core of some cooperative game associated with the negotiation process the connections are explored between this cost sharing rule and the free rider problem in public goods theory

labour utilization and statutory non wage costs the purpose of this paper is to develop a theoretical framework in which to analyse the effects of statutory non wage costs on labour utilization the theoretical analysis of statutory non wage costs has been hampered by the complexity of the various schemes operated by different countries most countries have a social security contribution scheme that is partly fixed with respect to labour utilization and partly variable in this paper a contribution system that incorporates some typical elements of such schemes is analysed a framework is developed that seeks to determine how variations in statutory non wage costs might alter the employer s cost minimizing combination of utilization and employment if the statutory fixed component of labour costs could be reduced then the cost of an additional hour of overtime would increase relative to the cost of an hour s work from a new employee thus shifting the optimizing combination many types of statutory non wage payments are made in different countries but the majority of these can be fitted within a framework that has three main elements a a payment that is fixed irrespective of earnings or hours of work these may be payroll taxes or redundancy payments contributions or in some cases may be negative as for example regional employment premium in the united kingdom b an element that varies with total earnings for example rates of social insurance contribution c a payment that is fixed once earnings rise above a given ceiling most social insurance schemes take this regressive form payment of national insurance in the united kingdom for example for a period

the communication requirements of social choice rules and supporting budget sets the paper examines the communication requirements of social choice rules when the sincere agents privately know their preferences it shows that for a large class of choice rules any minimally informative way to verify that a given alternative is in the choice rule is by verifying a budget equilibrium i e that the alternative is optimal to each agent within a budget set given to him therefore any communication mechanism realizing the choice rule must find a supporting budget equilibrium we characterize the class of choice rules that have this property furthermore for any rule from the class we characterize the minimally informative messages budget equilibria verifying it this characterization is used to identify the amount of communication needed to realize a choice rule measured with the number of transmitted bits or real variables applications include efficiency in convex economies exact or approximate surplus maximization in combinatorial auctions the core in indivisible good economies and stable many to one matchings

the basic unit of economic analysis individuals or markets a comment on markets come to bits by phil mirowski abstract mirowski has put forward an argument for viewing the economy as a set of interlocking markets i argue that he is right to shift attention from the individual to a higher level he further holds that there has been a shift to considering the informational problem as central to economics and that this can provide the framework for a new vision of markets as automata i see the decline of homo economicus as rather due to a dissatisfaction with the intrinsic value of that concept with the development of cognitive economics and a realisation that this notion can give us no hold on analysing aggregate behaviour however markets are indeed important and they have been largely ignored as a result of our preoccupation with the individual different market forms co exist in reality and it is necessary to analyse the reasons for this however to reduce them to computable algorithms may miss many of the other features which make them fascinating but intractable

theory and practice of decentralized planning procedures the paper surveys the theory of decentralized planning procedures dealing with price guided quantity guided and mixed procedures informational and incentive properties of the various procedures are dealt with as is the problem of public goods the practice of planning in the u s s r hungary and india is also discussed copyright 1990 by blackwell publishers ltd

optimal administered pricing under capacity constraints abstract this paper addresses the question of how pricing policies can improve the utilization of existing production capacities an optimizing input output model for the indian economy is developed for this purpose where the government s objective is to maximize growth subject to capacity constraints it is found that the optimal prices are related to the keynesian income multipliers associated with increases in the consumption of goods

approximating compensated income from ordinary demand functions abstract this paper proposes a re versible s econd or der t aylor resort approximation to compensated income from ordinary demand functions resort yields the malmquist vartia m v algorithm as a first order case using the slutsky equation resort obtains the substitution matrix and checks it for symmetry and negative semi definiteness to validate compensated income this validation procedure is an improvement over m v

despairing over disparities explaining the difference between willingness to pay and willingness to accept this paper examines the three major explanations for the disparity between willingness to pay wtp and willingness to accept wta observed in contingent value surveys and laboratory experiments a belief that the results must be biased in some fashion hanemann s 1991 substitutes hypothesis and the loss aversion model proposed by tversky and kahneman 1991 starting from the assumption that individuals make utility maximizing choices we develop structural equations that yield parametric tests of the hypotheses within a single non experimental framework the approach is flexible enough to incorporate a variety of functional form and distributional assumptions and can be applied to either data from either open ended bids or dichotomous choice questions the usefulness of the approach is demonstrated using data from a survey that asked both wtp and wta questions the results provide weak support for loss aversion

analysing rationing policies drought and its effects on urban users welfare analysing rationing policies during drought the aim of this paper is to study the impact on consumers of rationing policies implemented during water shortages water scarcity gives rise to the need for rationing and various methods including supply cutoffs can be used a model is devised to quantify the welfare losses associated with qualitive and quantitive restrictions based on virtual prices and using the consumer surplus as a welfare measurement welfare variations for different users have been calculated to achieve the aim information relative to seville spain has been used analysing the drought period that took place in the first half of the 1990s it has been possible to observe the main source that led to welfare losses for each kind of user

input output prices with endogenous demand abstract this note presents a computable general equilibrium model which may be used for planning purposes in a mixed economy it consists of a sequence of short run equilibria linked by a capacity expansion process in which incomes and profitability are endogenously determined

incentive compatibility without compensation abstract standard public good mechanisms rely on a transferable medium of compensation to overcome incentive compatibility constraints groves laffont if no such medium exists and information is incomplete the available rules with satisfactory welfare and incentice compatibility properties require a unidimensional set of alternatives we define a dynamic procedure for two dimensional economies that is pareto optimal and individually rational with incentives as those of rules exploiting compensatory transfers

on auction protocols for decentralized scheduling abstract this note shows that for the combinatorial market goods defined by wellman et al 2001 there may not exist an optimal allocation that is in equilibrium moreover this result holds even if the value of each processed job is independent of its completion time the proposed algorithm for finding an equilibrium allocation using an assignment model fails due to complementarity even for instances that admit an optimal allocation which is in equilibrium

a note on allocations attainable through nash equilibria abstract this note reexamines the issue of attaining efficient resource allocations as noncooperative equilibria of a strategic game contrary to the spirit of earlier work on this subject it is shown that there is an entire class of choice rules aside from the walrasian one which are implementable in nash equilibrium stategies

international environmental problems a simple taxonomy of international environmental problems is developed based on economic considerations the unidirectional externalities are illustrated by the case of one upstream and one downstream country the main problem in this case is an informational one the analysis of regional reciprocal externalities is illustrated by the acid rains in europe it is shown that an efficient solution could be achieved by transferable export rights finally global external problems are discussed with reference to greenhouse effects and extinction of species copyright 1990 by oxford university press

pursuing economic growth in asia the environmental challenge this paper identifies and discusses the five main areas of environmental management public policy that pose serious challenges to asian governments the first is the emerging issue of siting environmentally unfriendly facilities that may be necessary for growth but with the social and environmental costs borne primarily by local host residents and neighbourhood municipalities more commonly known as the not in my backyard syndrome the second issue is the critical need for pricing of non market environmental goods third is the issue of waste generation the fourth challenge is that of transboundary pollution which has become increasingly important with regard to its effects on health and foreign relations lastly the paper discusses global warming and climate change discussions on cost benefit analysis and the more novel method of establishing damage schedules are also presented this is particularly relevant to fundamental differences between developed and less developed countries

international agreements economic sovereignty and exit abstract we develop a model in which realisations of an ex ante uncertain domestic policy environment can make it attractive to a sovereign nation to renege on an international agreement we show in a fairly general setting in which the likelihood of exit is affected by the degree of cooperation that the possibility of exit reduces the optimal degree of initial cooperation full cooperation will never be optimal and the optimal degree of cooperation will never be such as to squeeze out any possibility of exit however an increase in global uncertainty may imply an increase in cooperation when exit risks are already large to begin with

the role of economics in global management of whales re forming or re founding iwc abstract the global management of whale species identified as an economic mixed good is addressed by means of economic theory of bargaining and institution making i will analyse i why it is important to take into account explicitly both consumptive use and non use values within international conventions on global mixed goods ii the role and nature of institutions dealing with global issues iii the role of bargaining between conflicting interests as a focal feature of the institution making process and iv the role of economic thinking in international conventions co operative and non co operative solutions are discussed and instruments aimed at achieving co operative bargaining analysed the study has both positive and normative implications with insights on social welfare enhancing institutional reforms although the study is broad yet special focus is given to the international whaling commission iwc this paper concludes that we should make economic theory operational within the realm of global institutions on the basis of the bargaining model the conclusion is that iwc should necessarily be re founded or at least re formed changing the convention from whaling to a whale it is suggested that the possibility of introducing compensatory side payments into the bargaining arena in order to increase social welfare and enforceability with respect to a ban scenario be investigated ethical implications of monetary compensations are considered in parallel with economic efficiency the limits and potentialities of economics and economic instruments are also tested globally with respect to the whale and other environmental issues

the acid rain game as a resource allocation process with an application to the international cooperation among finland russia and estonia we consider optimal cooperation in transboundary air pollution abatement among several countries under incomplete information i e local information only on marginal emission abatement costs and damage costs directions of emission abatement in each country are determined that generate a succession of emissions programs shown to converge to an economic optimum a cost sharing scheme that results from appropriately designed international transfers guarantees that the individual costs of all parties are nonincreasing along the path towards the optimum a version of maler s 1989 acid rain game is used for a numerical application

a review article the case against the use of the sum of compensating variations in cost benefit analysis this paper presents a case against the use of the sum of compensating varia tions as a cost benefit test we argue that 1 the ethical judginents implied by the test are not defensible 2 positive sums of compensating variations occur without potential pareto improvements resulting in social preference reversals without simultaneous scitovsky re versals 3 when lump sum transfers are feasible a positive sum of compensating variations is necessary but not sufficient for a potential pareto improvement 4 in order to eliminate preference reversals and intransitivities all households must have almost identical quasi homothetic preferences a condition that is not satisfied in real economies