uniqueness of stationary equilibrium payoffs in the baron ferejohn model abstract we consider a multilateral sequential bargaining model in which the players may differ in their probability of being selected as the proposer and the rate at which they discount future payoffs for games in which agreement requires less than unanimous consent we characterize the set of stationary subgame perfect equilibrium payoffs with this characterization we establish the uniqueness of the equilibrium payoffs for the case where the players have the same discount factor we show that the payoff to a player is nondecreasing in his probability of being selected as the proposer for the case where the players have the same probability of being selected as the proposer we show that the payoff to a player is nondecreasing in his discount factor journal of economic literature classification numbers c72 c78 d70

rules communication and collusion narrative evidence from the sugar institute case detailed notes on weekly meetings of the sugar refining cartel show how communication helps firms collude and so highlight the deficiencies in the current formal theory of collusion the sugar institute did not fix prices or output prices were increased by homogenizing business practices to make price cutting more transparent meetings were used to interpret and adapt the agreement coordinate on jointly profitable actions ensure unilateral actions were not misconstrued as cheating and determine whether cheating had occurred in contrast to established theories cheating did occur but sparked only limited retaliation partly due to the contractual relations with selling agents jel l13 l41 this paper reexamines the cartel problem by studying the private discussions within one cartel while we find much that is in accord with george j stigler s 1964 basic insight that firms would structure an agreement conscious of their later incentive to cheat on it we also uncover puzzles for established theory and identify elements that a richer theory should encompass especially regarding the role of communication in collusion our window into the inner workings of a cartel is a remarkable series of notes on the weekly meetings of the sugar institute this trade association was formed in december 1927 in the wake of several years of falling margins and excess capacity by 14 firms comprising nearly all the cane sugar refining capacity in the united states it operated until 1936 when the supreme court ruled its practices illegal among the top executives in regular attendance at the meetings was louis v place vice president of mccahan a midsize refinery in philadelphia place who was in charge of all activities of the company except production and raw sugar purchases wrote over 500 pages of single spaced detailed

bicameralism and its consequences for the internal organization of legislatures theories of organization of legislatures have mainly focused on the u s congress explaining why committee systems emerge there but not explaining variance in organization across legislatures of different countries to analyze the effects of different constitutional features on the internal organization of legislatures we adopt a vote buying model and consider the incentives to delegate decision rights in a game among legislative chambers we show how presidential veto power and bicameral separation can encourage a legislative chamber to create internal veto players or supermajority rules while a unicameral structure can encourage legislators to delegate power to a leader

bargaining in bicameral legislatures when and why does malapportionment matter malapportionment of seats in bicameral legislatures it is widely argued confers disproportionate benefits to overrepresented jurisdictions ample empirical research has documented that unequal representation produces unequal distribution of government expenditures in bicameral legislatures the theoretical foundations for this empirical pattern are weak it is commonly asserted that this stems from unequal voting power per se using a noncooperative bargaining game based on the closed rule infinite horizon model of baron and ferejohn 1989 we assess the conditions under which unequal representation in a bicameral legislature may lead to unequal division of public expenditures two sets of results are derived first when bills originate in the house and the senate considers the bill under a closed rule the equilibrium expected payoffs of all house members are surprisingly equal second we show that small state biases can emerge when 1 there are supermajority rules in the malapportioned chamber 2 the senate initiates bills which produces maldistributed proposal probabilities and 3 the distributive goods are lumpy we thank seminar participants at new york university the university of pennsylvania and the 2002 annual meeting of the american political science association for helpful comments james snyder and michael ting gratefully acknowledge the financial support of national science foundation grant ses 0079035 stephen ansolabehere gratefully acknowledges the support of the carnegie corporation under the carnegie scholars program this paper was written while michael ting was at the university of north carolina at chapel hill and he thanks the department of political science there for their support

impacts of capital inflows on aggregate spending categories the case of turkey this paper discusses the impact of foreign savings on aggregate spending categories in turkey using the vector autoregressive var models the major finding is that foreign savings has an increasing effect on consumption the increase of investment arises from the accelerator effect of consumption which results in an upward trend in investment in non tradable sectors concluding that the policy of relying on foreign savings to obtain long term increases in tradable sector investment and competitiveness is ill judged

fines leniency and rewards in antitrust this article reports results from an experiment studying how fines leniency and rewards for whistleblowers affect cartel formation and prices antitrust without leniency reduces cartel formation but increases cartel prices subjects use costly fines as punishments leniency improves antitrust by strengthening deterrence but stabilizes surviving cartels subjects appear to anticipate the lower postconviction prices after reports leniency with rewards prices fall at the competitive level overall our results suggest a strong cartel deterrence potential for well run leniency and reward schemes these findings may also be relevant for similar white collar organized crimes such as corruption and fraud

the effect of group size on public good provision in a repeated game setting abstract the ability to cooperate in the provision of a pubic good is analyzed in a repeated game holding the level of provision fixed with quasi linear utility we find that the critical value of the discount parameter converges to 0 in the limit thus cooperation is feasible in a large market next we allow the level cooperation to be adjusted optimally as the group size increases both for a specific form of quasi linear utility and for cobb douglas utility in each case we find that there are admissible values of the discount parameter such that cooperation may be maintained in the limit

the acid rain differential game this paper considers an acid rain differential game countries emit sulphur which is partly transferred to other countries depositions above critical loads ultimately destroy the soil countries face a trade off between the costs of emission reductions and the damage to the soil due to the depletion of the acid buffers because of the transboundary externalities the outcome will depend on whether the countries cooperate or not this paper presents the cooperative outcome and the open loop and markov perfect nash equilibria of the acid rain differential game it will be shown that the depositions always converge to the critical loads but the steady state levels of the buffer stocks differ the theory is used to analyse the acid rain differential game for sulphur between great britain and ireland finally some results are given for the whole of europe

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

intraplay communication in repeated games the paper examines repeated games where players have the possibly costly option of initiating bargaining over continuation payoffs between plays of the stage game a solution concept for these augmented games renegotiation perfectness is used to characterize concepts like subgame perfectness and pareto perfectness in the underlying repeated game and to extend pareto perfectness to infinite horizon games when bargaining is costly renegotiation may be indispensable off the equilibrium path for supporting renegotiation perfect outcomes sufficient conditions for a renegotiation perfect profile to support payoffs which are not supported by and not dominated by some subgame perfect profile are developed in the infinite horizon case journal of economic literature classification number c70

a note on renegotiation in repeated bertrand duopolies weak renegotiation proofness ww singles out marginal cost pricing as a unique pure strategy equilibrium of the infinitely repeated bertrand duopoly we show that with a discrete strategy space wrp does not eliminate any relevant subgame perfect equilibrium outcome c 2006 elsevier b v all rights reserved

do meetings in smoke filled rooms facilitate collusion the sherman act prohibits firms from discussing prices in meetings traditional thought suggests that this prohibition makes it harder for firms to collude and economists have concluded that the sherman act operates in the public interest i provide an alternative explanation for the act that also accounts for the small sanctions chosen by the legislature when firms interact in a dynamic environment in which the law helps them to prevent renegotiation the firms may benefit from the law that makes it costly but not very costly to meet to discuss prices the sherman act may help firms to collude

collusion with almost no information we analyze noncooperative collusion in an infinitely repeated bertrand game where each of the n firms receives a privately observed i i d cost shock in each period and firms only and privately observe whether they have won the unit mass of consumers no other information is available and no communication is allowed we prove that there exist equilibria in private strategies approximating first best profits when firms are sufficiently patient in particular productive efficiency obtains in the limit

a bargaining model of collective choice we present a general model of legislative bargaining in which the status quo is an arbitrary point in a multidimensional policy space in contrast to other bargaining models the status quo is not assumed to be bad and delay may be pareto efficient we prove existence of stationary equilibria the possibility of equilibrium delay depends on four factors risk aversion of the legislators the dimensionality of the policy space the voting rule and the possibility of transfers across districts if legislators are risk averse if there is more than one policy dimension and if voting is by majority rule for example then delay will almost never occur in one dimension delay is possible if and only if the status quo lies in the core of the voting rule and then it is the only possible outcome this core selection result yields a game theoretic foundation for the well known median voter theorem our comparative statics analysis yield two noteworthy insights i if the status quo is close to the core t hen equilibrium policy outcomes will also be close to the core a moderate status quo produces moderate policy outcomes and ii if legislators are patient then equilibrium proposals will be close to the core legislative patience leads to policy moderation

optimal cartel pricing in the presence of an antitrust authority the dynamic behavior of a price fixing cartel is explored when it is concerned about creating suspicions that a cartel has formed consistent with preceding static theories the cartel s steady state price is decreasing in the damage multiple and the probability of detection however contrary to those theories it is independent of the level of fixed fines it is also shown that the cartel prices higher when a more competitive benchmark price is used in calculating damages

savings and investment some international perspectives consistent with neoclassical growth models recent estimates of the close association between domestic saving and investment rates may allow policy makers the opportunity to alter investment through the introduction of polices that alter domestic savings however such an interpretation presumes an endogenous investment response equally likely at least theoretically is that the close association is maintained by movements in domestic savings the present paper explicitly examines the endogeneity of domestic saving and investment rates for a subset of countries including the united states the results suggest that saving adjustments make up only a small portion of investment behavior

optimal cartel trigger price strategies abstract a dynamical model of industry equilibrium is described in which a cartel deters deviations from collusive output levels by threatening to produce at cournot quantities for a period of fixed duration whenever the market price falls below some trigger price in this model firms can observe only their own production level and a common market price the market demand curve is assumed to have a stochastic component so that an unexpectedly low price may signal either deviations from collusive output levels or a downward demand shock

saving growth and investment a macroeconomic analysis using a panel of countries this paper provides a descriptive analysis of the long and short run correlations among saving investment and growth rates for 123 countries over the period 1961 94 three results are robust across data sets and estimation methods i lagges saving rates are positively related to investment rates ii investment rates granger cause growth rates with a negative sign iii growth rates granger cause investment with a positive sign

saving investment and international capital mobility in ec countries abstract drawing on different assumptions on the behaviour of the private and public sectors and on alternative scenarios of international capital mobility causality relationships are derived between saving and investment and between the private sector and public sector saving investment gaps cointegration is used to measure the resulting relationships between these sets of variables in ec countries over the 1960 1988 period the paper shows that there has been a lack of any reaction by budgetary policy to the current account balance in all the countries under study furthermore the empirical results suggest that capital controls have been the main instrument used to target the external balance

uniqueness of stationary equilibria in bargaining one dimensional policies under super majority rules article history we consider negotiations selecting one dimensional policies individuals have instanta neous preferences represented by continuous concave and single peaked utility functions and they are impatient decisions arise from a bargaining game with random proposers and super majority approval ranging from the simple majority up to unanimity we provide sufficient conditions that guarantee the existence of a unique stationary subgame perfect equilibrium and we provide its explicit characterization the uniqueness of the equilibrium permits an analysis of the set of pareto optimal voting rules for symmetric distributions of peaks and uniform recognition probabilities unanimity is the unanimously preferred ma jority rule

an analysis of the interaction among savings investments and growth in turkey turkey has been implementing tight fiscal and monetary policies for years these policies rely on the basic understanding that savings trigger growth and investments however there are alternative theoretical discussions and empirical findings related to the interaction among these variables in this study while one of the purposes is to analyse the interaction among these variables for the turkish case the other is to try to bring an insight for other developing countries for the issues such as data production econometric analysis and as well as making policy suggestions in line with the evidence from the turkish case the findings of this study show that it is the growth that induces both savings and investments hence it is necessary to question policies that assume it is the savings triggering growth and investments

uniqueness of stationary equilibrium payoffs in coalitional bargaining we study a model of sequential bargaining in which in each period before an agreement is reached the proposer s identity is randomly determined the proposer suggests a division of a pie of size one each other agent either approves or rejects the proposal and the proposal is implemented if the set of approving agents is a winning coalition for the proposer the theory of the fixed point index is used to show that stationary equilibrium expected payoffs of this coalitional bargaining game are unique this generalizes eraslan 34 insofar as a there are no restrictions on the structure of sets of winning coalitions b different proposers may have different sets of winning coalitions c there may be a positive probability that no proposer is selected

on the workings of a cartel evidence from the norwegian cement industry using the institutional set up of the norwegian cement industry in particular its sharing rule we are able to identify the workings of a cartel in some detail given data on prices production and exports we are able to identify marginal costs as well as the effectiveness of the cartel we compare our marginal cost estimates which are derived from an equilibrium condition to detailed cost accounting data and find that our estimate of marginal cost is very much in line with the data we then show that the cement cartel has been ineffective in the sense that the sharing rule induces overproduction and exporting below marginal costs in this sense it is consumers not firms that benefi tf rom the sharing rule we find that the ineffectiveness of the cartel is becoming so large that domestic welfare of a merger to monopoly would in fact be positive at around 1968 which is exactly when the merger actually took place however we also show that competition would have resulted in even higher welfare gains over the entire sample

explaining saving investment correlations national saving and investment rates are highly positively correlated in virtually all countries this is puzzling as it apparently implies a low degree of international capital mobility this paper shows that the observed positive correlation between national saving and investment rates arises naturally within a quantitatively restricted equilibrium model with perfect mobility of financial and physical capital the model is consistent with the fact that saving investment correlations are larger for larger countries but are still substantial for small countries further the model is consistent with the finding that current account deficits tend to be associated with investment booms copyright 1993 by american economic association

proposal rights and political power in a canonical model of sequential collective bargaining over a divisible good we show that equilibrium expected payoffs are not restricted by players voting rights or their impatience for all monotonic voting rules and discount factors and for all divisions of the good among players there exists a stationary proposal making rule such that this division represents players expected payoffs in a stationary subgame perfect nash equilibrium in pure strategies the result highlights the significance of proposal rights in determining political power in collective deliberations t he purpose of this article is to further our understanding of political power in a committee environment we consider the problem of a group of two or more agents who must split a fixed divisible good agents cannot use physical force to divide this good our goal is to clarify the role and relative significance of other features of the political environment such as voting rights proposal rights agents patience etc in determining political power following shapley and shubik 1954 we gauge political power in terms of expected outcomes rather than a priori equate it with individual prerogatives 1 in that spirit political power is the share of the divisible good that agents can expect to obtain when their behavior conforms to an appropriately defined equilibrium notion 2 we model committee interaction using a canonical sequential bargaining game in each period a member of the committee is recognized with some probability that is fixed across periods and proposes a division of the good committee members then vote on the proposal if the proposal is approved in accordance with the underlying voting rule the proposed division is implemented and the

do antitrust laws facilitate collusion experimental evidence on costly communication in duopolies bertrand supergames with non binding communication are used to study price formation and stability of collusive agreements on experimental duopoly markets the experimental design consists of three treatments with different costs of communication zero cost low cost and high cost prices are found to be significantly higher when communication is costly moreover costly communication decreases the number of messages but more importantly it enhances the stability of collusive agreements mccutcheon 1997 presents an interesting application to antitrust policy by letting the cost of communication symbolize the presence of an antitrust law that prohibits firms from discussing prices although our experimental results do not support the mechanism of mccutcheon s 1997 argument the findings point in the direction of her prediction that antitrust laws might work in the interest of firms

renegotiation proof equilibria in repeated prisoners dilemma abstract in this note it is shown that the requirement of weak renegatiation proofness does not eliminate any subgame perfect equilibrium outcome of the repeated prisoner s dilemma specifically it is demonstrated that when players are sufficiently patient any feasible and individually rational outcome can be sustained by means of an equilibrium in which the punishing player always profits by carrying out the punishment

presidential pork executive veto power and distributive politics mitigated to the extent that the president prefers spending in some districts over others the model also generates new insights and predictions about fiscal policy under the separation of powers including the effects of divided government electoral rules and term limitations for the executive

renegotiation proof relational contracts abstract we study infinitely repeated two player games with perfect monitoring and assume that each period consists of two stages one in which the players simultaneously choose an action and one in which they can transfer money to each other in the first part of the paper we derive simple conditions that allow a constructive characterization of all pareto optimal subgame perfect payoffs for all discount factors in the second part we examine different concepts of renegotiation proofness and extend the characterization to renegotiation proof payoffs

legislative bargaining with heterogeneous disagreement values theory and experiments we study a legislative bargaining game in which failure to agree in a given round may result in a breakdown of negotiations in that case each player receives an exogenous disagreement value we characterize the set of stationary subgame perfect equilibria under all q majority rules under unanimity rule equilibrium payoffs are strictly increasing in disagreement values under all less than unanimity rules expected payoffs are either decreasing or first increasing and then decreasing in disagreement values we conduct experiments involving three players using majority and unanimity rule finding qualitative support for several but not all of our main predictions having a high disagreement value is indeed an advantage under unanimity under majority the player with the highest disagreement value is more likely to be excluded but this does not consistently result in a lower average payoff

legislative bargaining under weighted voting organizations often distribute resources through weighted voting we analyze this setting using a non cooperative bargaining game based on the baron ferejohn 1989 model unlike analyses derived from cooperative game theory we find that each voter s expected payoff is proportional to her voting weight an exception occurs when many high weight voters exist as low weight voters may expect disproportionately high payoffs due to proposal power the model also predicts that ex post the coalition formateur the party chosen to form a coalition will receive a disproportionately high payoff using data from coalition governments from 1946 to 2001 we find strong evidence ofsuch formateur effects

antitrust and prices this study examines the effects of antitrust prosecution on prices charged by firms indicted for price fixing in a survey of 25 cases filed between 1973 and 1984 prices are found to gradually rise by about 7 percent over the 4 years following an indictment however the severity of penalties is negatively correlated with prices these two findings suggest either that penalties are too lenient or that prosecution is too broad penalizing economically efficient conspiracies along with those that are inefficient

social capital and growth we define and characterize social capital in a simple growth model we capture social capital in a model where individuals in a community maximize their lifetime gains to trade each trade between two members of a community has the structure of the prisoners dilemma trades are repeated indefinitely but not necessarily each period social capital is defined as the social structure which facilitates cooperative trade as an equilibrium the trading model is incorporated into a growth model to explore the connections between growth labor mobility and social capital the key assumption is that technological innovation which drives growth involves a reallocation of labor that affects social capital modifying the responsiveness of labor to a technological shock has implications for both labor efficiency and social capital

voting and vetoing the consequences of veto power in committees is analyzed using the appro ach of noncooperative bargaining theory it is first shown that in equilibrium nonveto players do not share in the benefits gained by the decision making of the committee that is in every equilibrium outcome of the bargaining game nonveto players earn zero some measures for reducing the excessive power of veto members in committees are analyzed specifically i study the effects of imposing a deadline on negotiations and of expanding the committee by increasing the number of nonveto players quantitative results are given for the case of the un security council

leniency programs for multimarket firms the effect of amnesty plus on cartel formation we examine the effect of amnesty plus on dynamic cartel formation in a multimarket setting the amnesty plus program has been adopted as part of the us corporate leniency policy in 1999 and is now vigorously advertised as one of the most compelling tools in generating successful cartel investigations amnesty plus is aimed at attracting amnesty applications by encouraging firms convicted in one market to report their collusive agreements in other markets we show that amnesty plus has two opposite effects on firms ability and incentives to collude which are both increasing in the fine reduction granted first amnesty plus can reduce the deterrence of cartel activities by making it easier for firms to sustain multimarket collusion through strategies involving self reporting after a first cartel detection second it can reduce the expected duration of cartels or delay their formation by increasing firms incentives to self report after a first cartel detection

computation of equilibrium values in the baron and ferejohn bargaining model abstract computation of exact equilibrium values for n player divide the dollar legislative bargaining games as in baron and ferejohn 1989 with general quota voting rules recognition probabilities and discount factors can be achieved by solving at most n bivariate square linear systems of equations the approach recovers eraslan s 2002 uniqueness result and relies on a characterization of equilibria in terms of two variables that satisfy a pair of piecewise linear equations

why isn t the whole world experimenting with the east asian model to develop review of the east asian miracle abstract like narcissus the world bank sees its own reflection in east asia s success it attributes the east asian miracle to macroeconomic basics high saving and investment rates expenditures on education and exports but in reality these are anchored in micro institutions that exhibit pervasive state intervention east asia created competitiveness by subsidizing learning whereas bank policy emphasizes methods that effectively cut real wages the report is rich in empirical data but they do not support the bank s dismissal of industrial policy as ineffective and they are presented in a way that makes it difficult for students to corroborate bank findings the greatest disappointment of the report s market fundamentalism is a failure to study seriously how elements of the east asian model can be adapted to suit conditions in other countries

trade negotiations domestic policies and the most favored nation clause this paper illustrates how restricting trade instruments to non discrimination links trade agreements to non trade agreements and under certain conditions helps governments further lower tariffs and or domestic standards policies these conditions are i governments objective functions are sufficiently concave with respect to domestic standards policies ii domestic standards are sufficiently valued and iii policies are strategic complements these can then be used as a rationale for restricting safeguard measures to non discrimination ce texte montre comment le fait de restreindre les instruments de politique commerciale a la seule poursuite de liens commerciaux libres de discrimination relie accords commerciaux et non commerciaux et a certaines conditions aide les gouvernements a reduire encore davantage les tarifs douaniers et ou les normes politiques nationales ces conditions sont que i les fonctions objectives soient suffisamment concaves par rapport aux normes politiques nationales ii les normes nationales soient suffisamment valorisees et iii les politiques soient des complements strategiques ces arguments fournissent le rationale pour limiter les mesures de protection a la seule non discrimination

cooperation on climate change mitigation abstract we analyze conditions under which it is possible to achieve efficient mitigation of greenhouse gas emissions with a self enforcing international agreement in which all countries find it in their self interest to abide by the agreement we model the choice of emissions by countries as a dynamic game we use a two part punishment scheme for deviations from an agreement that is renegotiation proof and show when this scheme supports the efficient outcome as a subgame perfect equilibrium using numerical examples we show that an efficient subgame perfect equilibrium exists for a range of reasonable parameter values the existence of such equilibrium may be non monotonic in the discount rate and the ratio of slope of marginal abatement cost and marginal damages

noncooperative foundations of the nucleolus in majority games abstract this paper studies coalition formation payoff division and expected payoffs in a divide the dollar by majority rule game with random proposers a power index is called self confirming if it can be obtained as an equilibrium of the game using the index itself as probability vector unlike the shapley value and other commonly used power indices the nucleolus has this property the proof uses a weak version of kohlberg s siam j appl math 20 1971 62 balancedness result reinterpreting the balancing weights as probabilities in a mixed strategy equilibrium

the gatt and gradualism abstract this paper shows how the institutional rules imposed on its signatories by the gatt created a strategic incentive for countries to liberalize gradually trade liberalization must be gradual and free trade can never be achieved if punishment for deviation from an agreement is limited to a withdrawal of equivalent concessions and if initial deviation from an agreement is also limited the paper shows how sufficiently patient countries have an incentive to deviate in a limited way when operating under gatt dispute settlement procedures

justifiable punishments in repeated games abstract in repeated games subgame perfection requires all continuation strategy profiles must be effective to enforce the equilibrium they serve as punishments should deviations occur it does not require whether a punishment can be justified for the deviation which creates a great deal of freedom in constructing equilibrium strategies resulting the well known folk theorem we introduce justifiable punishments in repeated games after one player deviates the corresponding continuation or punishment is justifiable if either the deviation is bad to the other player or the continuation itself is good to the other player we characterize the set of payoff vectors that can be supported by subgame perfect equilibria with justifiable punishments as the discount factor goes to one this limiting set of equilibrium payoffs can be quite different from the set of subgame perfect equilibrium payoffs any efficient feasible and strictly individually rational payoff can be supported by equilibrium with justifiable punishments

optimal cartel equilibria with imperfect monitoring abstract there exist optimal symmetric equilibria in the green porter model 4 8 having an elementary intertemporal structure such an equilibrium is described entirely by two subsets of price space and two quantities the only production levels used by firms in any contingency the central technique employed in the analysis is the reduction of the repeated game to a family of static games

cartel pricing dynamics in the presence of an antitrust authority cartel pricing is characterized when firms are concerned about creating suspicions that a cartel has formed balancing concerns about maintaining the stability of the cartel with those of avoiding detection the cartel may either i gradually raise price to its steady state level or ii gradually raise price and then have it decline to its steady state level antitrust laws may have a perverse effect as they make cartel stability easier and thus allow for higher cartel prices

financial and legislative aspects of drug development of orphan diseases on the european market a systematic review abstractaccording to the european commission medical products for orphan diseases are those which affect fewer than five persons out of every 10 000 producers are reluctant to develop these drugs under the common market conditions because the demand for these drugs does not guarantee return on investments into research and development of such products patients with orphan diseases however have the same rights for treatment as any other patient to stimulate the research and development of drugs for orphan diseases the governmental offices introduce various incentives for health and biotechnological industry this started in the usa already in 1983 by passing a special law japan introduced this law in 1993 and australia in 1997 europe followed in 1999 by introducing common policy for all member states the aim of this article is to specify current economic and legislative conditions in european countries and compare them with the legislation and approaches of the countries which started this initiat

the impact of leniency and whistle blowing programs on cartels antitrust authorities have set up leniency programs for cartel members that denounce their collusive agreements these programs help prosecute participants and can thereby deter collusion we compare the impact of reduced fines and positive rewards and argue that rewarding individuals including firm employees can deter collusion in a more effective way we discuss possible adverse effects of whistle blowing programs on firms behavior and particularly on turnover incentives to innovate and cooperation we also explore explanations for the puzzling fact that managers keep incriminating evidence and argue reward programs actually provide additional incentives for keeping such evidence

the savings growth nexus for the malaysian economy a view through rolling sub samples the purpose of this study is to re investigate the savings growth nexus for the malaysian economy using bounds testing approach to cointegration and toda and yamamoto 1995 and dolado and lutkepohl 1996 tydl granger causality test this study covered the sample period from 1971 q1 to 2008 q4 the cointegration results suggest that the variables are moving together in the long run and the tydl granger causality results indicate that the relationship between savings and economic growth is bilateral in addition the rolling sub samples tydl granger causality test exhibited a relatively stable causal relationship running from savings to economic growth in malaysia particularly before the onset of asian financial crisis in 1997 1998

on interdependent supergames multimarket contact concavity and collusion abstract following bernheim and whinston 1990 this paper addresses the effects of multimarket contact on firms ability to collude real world imperfections tend to make firms objective function strictly concave and market supergames interdependent firms payoffs in each market depend on how they are doing in others then multimarket contact always facilitates collusion it may even make collusion sustainable in all markets when otherwise it would not be sustainable in any the effects of conglomeration are discussed multigame contact is shown to facilitate cooperation in supergames other than oligopolies as long as agents objective function is submodular in material payoffs journal of economic literature classification numbers c72 d43 l13 l21

managerial incentives and collusive behavior abstract i characterize the effects of empirically observed managerial incentives on long run oligopolistic competition when managers have a preference for smooth time paths of profits as revealed by the empirical literature on income smoothing manager led firms can sustain collusive agreements at lower discount factors capped bonus plans and incumbency rents with termination threats make collusion supportable at any discount factor independent of contracts duration when managers have these preferences incentives and demand fluctuates price wars during booms need not occur the most collusive price may then be pro cyclical

uniqueness of stationary equilibria in a one dimensional model of bargaining abstract we prove uniqueness of stationary equilibria in a one dimensional model of bargaining with quadratic utilities for an arbitrary common discount factor for general concave utilities we prove existence and uniqueness of a minimal stationary equilibrium and of a maximal stationary equilibrium we provide an example of multiple stationary equilibria with concave nonquadratic utilities

do credible domestic institutions promote credible international agreements we examine the relationship between international policy coordination and domestic policy reputation when both are self sustaining we show that domestic policy commitment does not necessarily facilitate international cooperation rather efficient policies may be most easily sustained when governments are unable to pre commit to policy domestically moreover the lack of domestic commitment is more likely to facilitate international cooperation the larger the international spillovers of domestic policies are

nonresponse in panel data the impact on estimates of a life cycle consumption function if missing observations in a panel data set are not missing at random many widely applied estimators may be inconsistent in this paper we examine empirically several ways to reveal the nature and severity of the selectivity problem due to nonresponse as well as a number of methods to estimate the resulting models using a life cycle consumption function and data from the expenditure index panel from the netherlands we discuss simple procedures that can be used to assess whether observations are missing at random and we consider more complicated estimation procedures that can be used to obtain consistent or efficient estimates in case of selectivity of attrition bias finally some attention is paid to the differences in identification consistency and efficiency between inferences from a single wave of the panel a balanced sub panel and an unbalanced panel

a noncooperative coalitional bargaining game with random proposers abstract we extend the stahl rubinstein s alternating offer model ton person coalitional bargaining the key feature of the model is the random selection of proposers at every round no delay of agreement occurs in equilibrium for a super additive game in contrast to the fixed order model of chatterjeeet al rev econ stud 60 1993 463 477 when the discount factor of future payoffs is sufficiently high the agreement on the grand coalition is reached if and only if it has the largest value per capita among all coalitions moreover in the limit as the discount factor goes to one all players divide equally the value of the grand coalition regardless of who makes a proposal journal of economic literatureclassification numbers c72 c73 c78

collusion at the extensive margin abstract we augment the multi market collusion model of bernheim and whinston 1990 by allowing for firm entry into and exit from individual markets we show that this gives rise to a new mechanism by which a cartel can sustain a collusive agreement collusion at the extensive margin whereby firms collude by avoiding entry into each other s markets or territories we characterise parameter values that sustain this type of collusion and identify the assumptions where this collusion is more likely to hold than its intensive margin counterpart specifically it is demonstrated that where duopoly competition is fierce collusion at the extensive margin is always sustainable finally we provide a theoretic foundation for the use of a proportional response enforcement mechanism

communication in intergroup conflicts abstract numerous studies suggest that communication may be a universal means to mitigate collective action problems in this study we challenge this view and show that the communication structure crucially determines whether communication mitigates or intensifies rent seeking for pure public goods we observe the effect of different communication structures in the context of a finitely repeated intergroup contest and demonstrate that conflict expenditures are significantly higher if communication is restricted to one s own group as compared to a situation with no communication however expenditures are significantly lower if open communication within one s own group and between rivaling groups is allowed we show that under open communication intergroup conflicts are avoided by groups taking turns in winning the contest our results do not only qualify the role of communication for collective action but may also provide insights on how to mitigate the destructive nature of intergroup conflict and group rent seeking

the impact of federal spending on house election outcomes while it is widely believed by academics politicians and the popular press that incumbent members of congress are rewarded by the electorate for bringing federal dollars to their district the empirical evidence supporting that claim is extremely weak one explanation for the failure to uncover the expected relationship between federal spending and election outcomes is that incumbents who expect to have difficulty being reelected are likely to exert greater effort in obtaining federal outlays since it is generally impossible to adequately measure this effort the estimated impact of spending is biased downward because of an omitted variable bias we address this estimation problem using instrumental variables for each house district we use spending outside the district but inside the state containing the district as an instrument for spending in the district federal spending is affected by a large number of actors e g governors senators mayors and other house members in the state delegation