the demand for housing in sweden equilibrium choice of tenure and type of dwelling abstract most studies of housing demand and tenure choice only identify two modes of tenure owner occupied one family houses and rental apartments furthermore they are typically based on a cross section across all households in this study we use recent swedish data to overcome these weaknesses we identify owner occupied apartments coop shares as a third mode of tenure and show that this should be treated separately we also use information about the household s own assessment of its probability of moving during the next year we demonstrate that it makes a large difference if likely movers are eliminated from the sample

efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

a microsimulation model of swedish housing demand abstract this paper presents a microsimulation model of housing demand aimed at analyzing effects of changes in tax schedules like many other countries sweden s income tax laws treat homeowners and renters asymmetrically therefore most changes in tax laws will affect housing demand and tenure choice we develop a microsimulation model which generates consistent estimates of the mean and variance of total housing demand and show that commonly used measures like analytic elasticities evaluated at mean values of the exogenous variables can yield very misleading predictions our model can be used to simulate almost any change in the tax system here we report results of three simple experiments one of which is a change in the rate at which imputed income from owner occupied housing is taxed

pricing the strategic value of putable securities in liquidity crises putable security holders have a de facto rst claim on the rm s liquid assets and can threaten to force solvent issuers to bear nancial distress costs their threatening power implies that the puts have a strategic value larger than their intrinsic value strategic value depends on the issuer s size potential distress costs and the distribution of put ownership relative to the rm s liquidity position the analysis of kmart s put induced crisis in 1995 and a calibration to observed secondary market yield reductions on poison put bonds shows that strategic value is an important determinant of payouts received by bondholders 2001 elsevier science s a all rights reserved

monopolistic competition in the spirit of chamberlin a general model this paper develops a model of large group chamberlinian monopolistic competition in which 1 there are many firms producing differentiated commodities 2 each firm is negligible in that it can ignore its impact on and hence reactions from other firms 3 free entry leads to zero profit of operating firms but 4 each firm faces a downward sloping demand curve the existence of a monopolistically competitive equilibrium is established in a companion paper more particular questions such as whether the market provides too many or too few products are addressed for a special case of the model

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

taxation of capital gains on owner occupied homes the paper compares taxation on realization with taxation on accrual in the context of owner occupied housing it considers a model where the utility a household derives from housing relative to other consumption varies over the life cycle as there are sizeable transaction costs housing consumption will not even in the absence of taxes be adjusted continuously but at discrete intervals the focus of the paper is on tax effects on the length of these intervals the following results are shown u taxing true economic appreciation at the same rate as imputed rental income and other capital income will lead to a shortening of the intervals if the capital gains are taxed on accrual an increase in this tax rate holding other rates constant will lead to a shortening of the intervals if the capital gains are taxed only as they are realized an increase in this tax rate holding other rates constant may either lead to a lengthening or a shortening of the holding period shortening is more likely if transaction costs are large whereas lengthening will occur if the rate of price increase is high

low carbon and clean energy scenarios for india analysis of targets approach abstract low carbon energy technologies are of increasing importance to india for reducing emissions and diversifying its energy supply mix using gcam an integrated assessment model this paper analyzes a targets approach for pushing solar wind and nuclear technologies in the indian electricity generation sector from 2005 to 2095 targets for these technologies have been constructed on the basis of indian government documents policy announcements and expert opinions different targets have been set for the reference scenario and the carbon price scenario in the reference scenario wind and nuclear technologies exceed respective targets in the long run without any subsidy push while solar energy requires subsidy push throughout the century in order to meet its high targets in the short run nuclear energy also requires significant subsidy including a much higher initial subsidy relative to solar power which is a result of its higher targets under a carbon price scenario the carbon price drives the penetration of these technologies still subsidy is required especially in the short run when the carbon price is low we also found that pushing solar wind and nuclear technologies leads to a decrease in share of ccs under the carbon price scenario and biomass under both the reference and carbon price scenarios this is because low carbon technologies compete among themselves and substitute each other thereby enhancing the need for subsidy or carbon price highlighting that proposed targets are not set at efficient levels in light of contemporary debate on external costs of nuclear energy we also assess the sensitivity of the results to nuclear technology cost we find that higher cost significantly decreases the share of nuclear power under both the reference and carbon price scenarios

arbitrage and the flattening effect of large numbers abstract in a model of an exchange economy with a continuum of individuals we show that competitive equilibrium can be regarded as resulting from the elimination of arbitrage opportunities generically the elimination of such opportunities results in a phenomenon we call the flattening effect of large numbers the flattening effect provides a precise meaning to the statement that under perfect competition individuals cannot influence prices they face perfectly elastic demands and supplies the attractive geometry associated with arbitrage and the flattening effect is highlighted in several figures we also link the demonstration of equilibrium through arbitrage with the logic of marginalism journal of economic literature classification number d51

the lens of contract private ordering james buchanan 2001 p 29 avers that mutuality of advantage from voluntary exchange is the most fundamental of all understandings in economics he further contends that this fundamental understanding is better realized by examining economics through the lens of contract rather than the lens of choice buchanan 1975 because the latter has been the reigning paradigm in economics during the 20th century lionel robbins 1932 melvin w reder 1999 the lens of contract is understandably less fully developed interest in contractual approaches has nevertheless been building up whence the gap between these two has been closing this paper sketches some of these developments with emphasis on private ordering

tenure choice and the demand for housing this paper deals with the estimation by means of nonlinear methods of preference parameters from observation of behaviour in housing markets it differs from previous work on housing market behaviour in several important aspects first it treats the choice of tenure mode that is whether to rent or own and the housing consumption decision as a joint decision second it explicitly uses the same behavioural model in analysing these discrete and continuous elements of housing market behaviour third it allows for an analysis of the role of capital market imperfections and discriminatory practices in constraining housing market decisions

nonatomic economies and the boundaries of perfect competition this paper explores the distinction between nonatomicity and thick markets as the source of perfect competition the focus of the paper is the construction of a model of an imperfectly competitive economy with a nonatomic continuum of traders and a continuum of differentiated commodities for which walrasian equilibria exist the failure of perfect competition in this instance can be identified in two ways individuals can affect prices and the core is strictly larger than the set of walrasian allocations by contrast it is shown that when markets are physically or economically thick or both then individuals cannot typically affect prices and the core always coincides with the set of walrasian allocations

housing prices and tenure choice with asymmetric taxes and progressivity abstract this paper studies the effects of tax schedule changes on prices and tenure choice in the housing market it is shown that given the present asymmetric treatment of owner occupants vs renters an increase in the degree of progressivity is likely to lead to an increasein the prices of both owner occupied and rental housing a numerical example indicates that the effects may be quite large equilibrium prices are calculated based on the actual swedish income tax schedules for 1971 and 1979 according to these simulations the tax changes that took place between these years caused the price of owner occupied houses to increase by around 30 percent and the rent level to increase by 2 or 3 percent

a reformulation of the marginal productivity theory of distribution reformulating marginal productivity theory by replacing productivity with respect to commodities with productivity with respect to persons and then defining perfectly competitive equilibrium as an allocation at which each person receives the marginal product of his her contribution called a no surplus allocation there emerges a competitive theory of price determination characterizations of no surplus allocations are given in models with a nonatomic continuum of agents and an infinite dimensional commodity space comparisons between the no surplus and walrasian equilibrium definitions of competitive equilibrium are made and some sufficient conditions are obtained for the existence of a no surplus allocation

property rights and the efficiency of bargaining we show that efficient bargaining is impossible for a wide class of economic settings and property rights these settings are characterized by i the existence of adverse efficient opt out types whose participation does not change the efficient allocation and who when they opt out are the worst type other agents can face and ii non existence of the marginal core and its multivaluedness with a positive probability we also examine the optimal allocation of property rights within a given class that satisfies i such as simple property rights liability rules and dual chooser rules we characterize property rights that minimize the expected subsidy required to implement efficiency with two agents simple property rights that are optimal in this way maximize the expected surplus at the status quo allocation but this no longer holds with more agents we also study second best budget balanced bargaining under a liability rule the optimal second best liability rule may differ from but is often close to the expectation of the victim s harm which would be optimal if there were no bargaining however liability rules that are close to a simple property right result in a lower expected surplus than the simple property right they are near

the loser s curse and information aggregation in common value auctions we consider an auction in which k identical objects of unknown value are auctioned off to n bidders the k highest bidders get an object and pay the k 1st bid bidders receive a signal that provides information about the value of the object we characterize the unique symmetric equilibrium of this auction we then consider a sequence of auctions a r with n r bidders and k r objects we show that price converges in probability to the true value of the object if and only if both k r and n r k r i e both the number of objects and the number of bidders who do not receive an object go to infinity

walrasian allocations without price taking behavior abstract consider an exchange economy where agents are arbitragers in that they try to upset allocations imagining plausible beneficial trades with an introspective algorithm each agent constructs an interactive choice set ics i e a set of bundles that he considers achievable through a sequence of plausible trades with other agents we show that walrasian allocations can be characterized as those where each agent chooses optimally from his ics which is always contained in a budget set with differentiability both sets coincide our analysis provides a different behavioral assumption underlying walrasian allocations offers an explanation for the source of competitive prices and connects with the core convergence theorem journal of economic literature classification numbers d00 d51

dynamic aspects of consumer decisions in housing markets abstract in this study we estimate a model of the joint tenure length of stay and consumption level choices of families in the housing market this is the first attempt we know of to do this type of estimation the data pertain to a single residence spell per household from the panel study of income dynamics wealthier and better educated families were found to be more mobile in terms of housing consumption after accounting for tenure choice and controlling for planned length of stay renters and owners were found to have similar demand function relationships in terms of the impacts of socioeconomic variables this confirms the notion that renters and owners are not differentiated by housing choice but simply in life cycle circumstances as to when it is optimal to own or rent

appropriation and efficiency a revision of the first theorem of welfare economics the first theorem of welfare economics rests on the assumption that individuals have neither price making nor market making capacities we offer a revision in which individuals have such capacities the revision emphasizes two keys for market efficiency i the need to align private rewards with social contributions called full appropriation and ii the need for an assumption to counter the possibility of coordination failures in the choice of produced commodities called noncomplementarity we also emphasize that information about prices of unmarketed commodities involves decentralized knowledge available only to product innovators and that pecuniary extemalities are important potential sources of market failure jel d51 d60 d62

long term building energy demand for india disaggregating end use energy services in an integrated assessment modeling framework with increasing population income and urbanization meeting the energy service demands for the building sector will be a huge challenge for indian energy policy although there is broad consensus that the indian building sector will grow and evolve over the coming century there is little understanding of the potential nature of this evolution over the longer term the present study uses a technologically detailed service based building energy model nested in the long term global integrated assessment framework gcam to produce scenarios of the evolution of the indian buildings sector up through the end of the century the results support the idea that as india evolves toward developed country per capita income levels its building sector will largely evolve to resemble those of the currently developed countries heavy reliance on electricity both for increasing cooling loads and a range of emerging appliance and other plug loads albeit with unique characteristics based on its climate conditions cooling dominating heating and even more so with climate change on fuel preferences that may linger from the present for example a preference for gas for cooking and vestiges of its development path including remnants of rural poor that use substantial quantities of traditional biomass

competitive stock markets suppose that a perfectly competitive firm wishes to determine its intertemporal production and investment plan in accordance with its shareholders interests will it be able to satisfy this desideratum and if so what course should it pursue in a general equilibrium model with many periods uncertainty incomplete markets and trading through time we show that

bargaining under incomplete information this paper presents and analyzes a bargaining model of bilateral monopoly under uncertainty under the bargaining rule proposed the buyer and the seller each submit sealed offers that determine whether the good in question is sold and the transfer price the nash equilibrium solution of this bargaining game implies an offer strategy of each party that is monotonic in its own reservation price and depends on its assessment of the opponent s reservation price issues of relative bargaining advantage and efficiency are examined for a number of special cases finally we discuss the appropriateness of the nash solution concept

urbanization energy consumption and emissions in the indian context a review abstract as the world s fastest growing major economy and home to nearly one fifth of the worlds population india a vibrant democracy is in the midst of a profound transformation and rapid urbanization urbanization improves the quality of life of people while promoting economic growth however it also increases energy consumption and is capable of generating an energy crisis urbanization has a significant impact on carbon dioxide co2 emissions as well this paper empirically investigates the temporal dynamic and causal relationships between urbanization energy consumption and emissions the study also aims to understand the urbanization process in india in terms of the level and tempo of urbanization and the urban growth morphology by utilizing the census data of 1901 2011 the rise in energy consumption and resulting emissions in the context of rapid urbanization is also reviewed to address these problems the study recommends a series of measures and a set of strategies that include energy intensity and emission intensity reduction measures through continuous monitoring information feedback systems introduction of industrial energy quota management incentives for energy efficient facilities shutting down of inefficient facilities and setting up of smart residential buildings reduction of distribution and transmission losses by investing in smart grids is also highly recommended

post walrasian and post marxian economics it is widely believed that the failure of the socialist experiment should have had a devastating effect on radical economics yet radical economics is not only alive and well but flourishing years before the official demise of marxist socialism they had broadened their critique of standard economics well beyond the received marxist literature indeed their arguments offered striking parallels with the mainstream critiques of walrasian economics provided by the newly developing strand of thought i shall refer to as information economics in walrasian economics information is free moreover there are no costs associated either with making or enforcing contracts but with imperfect and costly information and incomplete risk markets the field of information economics has established that 1 in general markets are not constrained pareto efficient 2 markets may not clear 3 markets may not exist or when they exist may be thin 4 rents are pervasive and indeed reputation rents are necessary to ensure that high quality products get produced that workers do not shirk and so on 5 even when there are many participants in a market competition may be highly imperfect and 6 the distribution of income matters for economic efficiency

competitive equilibria in production economies with an infinite dimensional commodity space the existence of competitive equilibrium is established for economies with a produc tion sector and an infinite dimensional space of commodities the cru cial assumptions which are required beyond those required in the fin ite dimensional setting are bounds on marginal rates of substitution and marginal rates of transformation copyright 1987 by the econometric society

hayek and socialism friedrich a hayek was a life long opponent of socialism three of his contributions are surveyed and placed within historical context his debates in the 1930s with the market socialists his political critique of socialism in the road to serfdom and his evolutionary arguments against rationalist constructivists recent discussions that use the economics of information to analyze the prospects for socialism are also reviewed it is argued that theorists working in the economics of information have not recognized just how far hayek s conceptualization of the appropriate theoretical constructs for economics deviates from those of mainstream economists as such they have misunderstood what may constitute an independent set of arguments against socialism

perfect competition and the creativity of the market from the perspective of the walrasian general equilibrium model entrepreneurial and opportunistic behavior seems foreign can the model be refashioned so that it can accommodate such behavior many would say no but we argue the contrary indeed we present a reformulation of the model that serves as a gateway to rather than a detour from such contemporary issues as innovation and incentives the trick is to reexamine what perfect competition means starting with an historical summary of general equilibrium we sketch an image of the perfect competitor as an active market opportunist seeking out profit potentials wherever he can

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

harsanyi values of large economies nonequivalence to competitive equilibria abstract we consider economies with many agents and compare the competitive equilibria and the value allocations of the resulting coalitional games in particular we provide a smooth and robust example where the value principle does not hold for the harsanyi ntu value there is a unique competitive equilibrium which however does not belong to the nonempty set of harsanyi value allocations journal of economic literature classification numbers c71 d51

taxing residential housing capital this paper discusses the main aspects of the taxation of housing drawing on general principles of optimal taxation it focuses on the role of the property tax in achieving neutrality between rental and owner occupied housing assuming that landlords are taxed according to a neutral profits tax it follows that the property tax should be based on the rate of interest the paper discusses how the tax rate could be adjusted to account for the lack of effective taxation of capital gains the double taxation of dividends and the differences in the cost of labour between rental and owner occupied housing in most oecd countries the combined effect of the different housing taxes amounts to a tax subsidy to owner occupied housing it is demonstrated how this subsidy has been reduced in sweden as in many other countries in the past decade as a result of tax reforms and a lower rate of inflation the subsidy has effects on consumption patterns saving capital accumulation the distribution of welfare across gener

perfect competition in the continuous assignment model abstract this paper provides a rigorous formalization in the context of the transferable utility assignment model of perfect competition as the inability of individuals to favorably influence prices the central tool for the analysis is the social gains function the central issue is differentiability of the gains function with respect to the population seven conditions are shown to be equivalent to perfect competition perfect competition and imperfect competition are possible for both finite and continuum assignment economies but most finite economies are imperfectly competitive while most continuum economies are perfectly competitive however most large finite assignment economies are approximately perfectly competitive journal of economic literature classification numbers c61 c62 c78

energy poverty an overview abstract in the coming decades the energy sector will have to face three major transformations concerned with climate change security of supply and energy poverty the first two have been extensively analysed but less attention has been paid to the third even though it has a great influence on the lives of millions of people this paper presents an overview on energy poverty different ways of measuring it and its implications according to the who indoor pollution causes an estimated 1 3 million deaths per annum in low income countries associated with the use of biomass in inadequate cookstoves although energy poverty cannot be delinked from the broader more complex problem of poverty in general access to energy infrastructures would avoid its most serious consequences and would help to encourage autonomous development according to the iea the cost of providing universal access to energy by 2030 would require annual investment of 35 billion i e much less than the amount provided annually in subsidies to fossil fuels finally the paper argues that energy and energy poverty need to be incorporated into the design of development strategies

bringing institutions into performance persistence research exploring the impact of product financial and labor market institutions this study challenges the implicit assumption of homogeneity in national institutional environments made in past studies of firm performance persistence we propose that home country institutions matter we focus on the impact of formal institutions in the product financial and labor markets arguing that they affect the size of pools of exchange partners and the types of exchanges allowed and condoned ultimately these restrictions affect competitive intensity among firms and firm performance persistence using data for over 10 000 firms from 33 countries over a 10 year time frame we show that antitrust law strength a product market institution designed to prevent collusion among firms is associated with decreases in performance persistence unskilled labor market flexibility a labor market institution that reduces legal constraints imposed on residual claimants managers and owners to take necessary actions to maintain or enhance profitability is associated with increases in performance persistence product liability law effectiveness another product market institution and corporate control market development a financial market institution are positively associated with performance persistence only in the case of mnes the two remaining financial and labor market institutions public equity market development respectively skilled labor market availability have a positive respectively negative impact for domestic firms only

capital investment requirements for greenhouse gas emissions mitigation in power generation on near term to century time scales and global to regional spatial scales abstract our paper explores the implication of climate mitigation policy and electricity generation technology performance for capital investment demands by the electric power sector on near term to century time scales we find that stabilizing ghg emissions will require additional investment in the electricity generation sector over and above investments that would be needed in the absence of climate policy in the range of 15 to 29 trillion us 48 94 depending on the stringency of climate policy during the period 2015 to 2095 under default technology assumptions this increase reflects the higher capital intensity of power systems that control emissions as well as increased electrification of the global economy limits on the penetration of nuclear and carbon capture and storage technology could increase costs substantially energy efficiency improvements can reduce the investment requirement by 18 to 24 trillion us compared to default technology climate policy assumptions depending on climate policy scenario we also highlight the implications of different technology evolution scenarios for different regions under default technology set the heaviest investments across scenarios in power generation were observed in china india se asia and africa regions with the latter three regions dominating in the second half of the 21st century

efficient incentive compatible economies are perfectly competitive abstract efficient anonymous and continuous mechanisms for exchange environments with a finite number of individuals are dominant strategy incentive compatible if and only if they are perfectly competitive i e each individual is unable to influence prices or anyone s wealth equivalently in such a mechanism each individual creates no externalities for others by her announcement of a type the characterization applies whether preferences are ordinal or quasilinear and it also applies to continuum economies perfectly competitive mechanisms are non generic although non vacuous in finite economies and are generic but non universal in continuum economies we use these results to provide bridges to related work journal of economic literatureclassification numbers c72 d51 d62

tax reform and housing demand the distribution of welfare gains and losses abstract we study distributional effects of a recent reform of the swedish system of income taxation which affects the price of owner occupied housing in calculating the welfare effects we account both for the non linearities of the income tax schedule and the dichotomous choice aspect of housing demand to own or to rent small and rosen 1981 have shown how the standard harberger type approximation formulae can be adapted to handle discrete choices and we modify their analysis for a non linear budget constraint

urban and rural energy use and carbon dioxide emissions in asia the process of urbanization has been shown to be important for economic development environmental impacts and human wellbeing particularly in developing countries in this paper we compare structure data sources and scenario results of four integrated assessment models that are capable of analyzing different aspects of urbanization the comparison focuses on residential sector energy use and related co2 emissions based on a set of urbanization scenarios for china and india important insights from this model comparison include that i total fossil fuel and industrial co2 emissions at the regional level are not very sensitive to alternative rates of urbanization and are largely dependent on the linkage between urbanization and economic growth via differentiated labor productivity in urban and rural areas ii alternative urbanization pathways may yield different results for the share of solid fuels in residential energy use thereby affecting the number of people relying on these fuels and the associated adverse health impacts and iii alternative economic growth scenarios can only be assessed for their welfare implications if urban and rural household are distinguished even though that distinction does not always strongly affect aggregate outcomes which is often due to two effects that compensate each other in total it can be concluded that urbanization and heterogeneity of households and consumers are clearly relevant for distributional effects and associated health and social impacts

incentive efficient price systems in large insurance economies with adverse selection we decentralize incentive efficient allocations in large adverse selection economies by introducing a competitive market for mechanisms that is for menus of contracts facing a budget constraint informed individuals purchase lottery tickets to enter mechanisms whereas firms sell tickets and supply slots at mechanisms at given prices beyond optimization market clearing and rational expectations an equilibrium requires that firms cannot favorably change or cut prices an equilibrium exists and is incentive efficient an equilibrium can be computed as the solution to a programming problem that selects the incentive efficient outcome preferred by the highest type within an appropriately defined set for two types economies this is the only equilibrium outcome

model projections for household energy use in india energy use in developing countries is heterogeneous across households present day global energy models are mostly too aggregate to account for this heterogeneity here a bottom up model for residential energy use that starts from key dynamic concepts on energy use in developing countries is presented and applied to india energy use and fuel choice is determined for five end use functions cooking water heating space heating lighting and appliances and for five different income quintiles in rural and urban areas the paper specifically explores the consequences of different assumptions for income distribution and rural electrification on residential sector energy use and co2 emissions finding that results are clearly sensitive to variations in these parameters as a result of population and economic growth total indian residential energy use is expected to increase by around 65 75 in 2050 compared to 2005 but residential carbon emissions may increase by up to 9 10 times the 2005 level while a more equal income distribution and rural electrification enhance the transition to commercial fuels and reduce poverty there is a trade off in terms of higher co2 emissions via increased electricity use

transaction costs capital gains taxes and housing demand abstract the paper considers the effect of transaction costs particularly in the form of capital gains taxes on the aggregate demand for owner occupied housing the framework is an overlapping generations model where consumers can avoid the transaction costs taxes by keeping the same house for both periods of life the first part of the paper analyzes the consumer s choice problem it distinguishes between costs that are fixed irrespective of the size of the house bought or sold and costs such as capital gains taxes that are related to the house value it is shown that higher transaction costs have lock in effects inducing consumers to keep the same house for both periods also it is found that under a wide variety of circumstances the amount of housing demanded will increase as the household is being locked in finally the paper looks at the effects on aggregate demand from an increase in capital gains taxes it is shown that an increased rate of taxation decreases demand for low tax rates but for high tax rates when lock in effects become important one generally gets the opposite effect high tax rates tend to increase housing demand

competitive intensity and its two sided effect on the boundaries of firm performance the new perspective emerging from strategy s value capture stream is that the effects of competition are twofold competition for an agent bounds its performance from below while that for its transaction partners bounds from above thus assessing the intensity of competition on either side is essential to understanding firm performance yet the literature provides no formal notion of competitive intensity with which to make such assessments rather some authors use added value as their central analytic concept others the core added value is simple but misses the crucial for an agent side of competition the core is theoretically complete but difficult to interpret and empirically intractable this paper formalizes three increasingly general notions of competitive intensity all of which improve on added value while avoiding the complexity of the core we analyze markets characterized by disjoint networks of agents e g supply chains providing several insights into competition and new tools f

effects of the swedish 1983 85 tax reform on the demand for owner occupied housing a microsimulation approach the effects of the swedish 1983 85 tax reform are analyzed with respect to the housing market a microsimulation model is used which takes into account the household s tenure choice owning vs renting as well as the quantity demanded conditional on the tenure choice the reform consists of a reduction in marginal tax rates and limitations on the deductibility of mortgage interest the simulations show that this will cause a general reduction in demand for owner occupied houses on a disaggregated level there will be an increase in the demand for small and medium sized houses while the demand for large units will fall sharply

preventives versus treatments preventives are sold ex ante before disease status is realized while treatments are sold ex post even if the mean of the ex ante distribution of consumer values is the same as that ex post the shape of the distributions may differ generating a difference between the surplus each product can extract if for example consumers differ only in ex ante disease risk then a monopolist would have more difficulty extracting surplus with a preventive than with a treatment because treatment consumers having contracted the disease no longer differ in disease risk we show that the ratio of preventive to treatment producer surplus can be arbitrarily small in particular when the distribution of consumer values has a zipf shape and the disease is rare the firm s bias toward treatments can be reversed for example if the source of private information is disease severity learned ex post the difference between the producer surplus earned from the products can result in distorted rd the deadweight loss from this distortion can be as large as the entire producer surplus difference calibrations for hiv and heart attacks based on risk factors in the u s population suggest that the distribution of disease risk is sufficiently zipf similar to generate substantial differences between producer surplus from preventives and treatments empirically we find that proxies for the zipf similarity of the disease risk distribution are associated a significantly lower likelihood of vaccine development but not drug development jel codes o31 l11 i18 d42

the theory of the firm as governance structure from choice to contract the propositions that organization matters and that it is susceptible to analysis were long greeted by skepticism by economists one reason why this message took a long time to register is that it is much easier to say that organization matters than it is to show how and why the prevalence of the science of choice approach to economics has also been an obstacle as developed herein the lessons of organization theory for economics are both different and more consequential when examined through the lens of contract this paper examines economic organization from a science of contract perspective with special emphasis on the theory of the firm

cross sectional estimation of a simultaneous model of tenure choice and housing services demand abstract in this paper we analyze the demand for housing services integrating into a single analysis a systematic treatment of several important conceptual and empirical issues our three major objectives are to 1 evaluate the empirical importance of the simultaneity between the tenure choice and consumption level decisions 2 analyze the relationship between household type and housing demand and 3 present new estimates of the parameters of housing demand which are based on detailed microdata in the process we derive and estimate overall income and price demand elasticities which incorporate the impacts of income and price on both the tenure choice and consumption level decisions

theory and estimation in the economics of housing demand the main purpose of this paper is to review recent theoretical and empirical developments in the economics of housing demand in particular we ask what is known concerning the permanent income elasticity of housing demand vis a vis the current or measured income elasticity what is known concerning price elasticities what is the appropriate functional form for housing demand equations what is the role of demographic variables what is known concerning dynamic aspects of housing demand what appear to be the major sources of bias in existing estimates of demand equations

information strategies for energy conservation a field experiment in india abstract little is known about the effectiveness of information strategies on energy conservation in developing countries in this study we conduct a field experiment in an apartment complex in india to test how information about electricity usage impacts the electricity consumption of urban middle class households our results based on fifteen minute electricity readings over an academic year show that non monetary messages that framed electricity consumption in terms of environmental and health impacts were more effective than messages emphasizing the monetary savings of reducing electricity consumption households in the environmental health group accessed the online energy monitoring dashboard more frequently and reduced their electricity usage by 18 4 relative to the control group households in the monetary group did not significantly alter their usage these results about revealed preferences are contrasted with stated preferences disclosed in a survey of urban indians who describe money not health as the main motivation for energy conservation our findings have important implications for the development non monetary strategies for energy conservation in developing countries

does inflation affect real behavior the case of housing an important tradition in economics is to assume that demand depends upon relative prices and is homogenous of degree zero for the most part this has been interpreted as meaning inflation changes in the price level leaves demand unchanged recent work by a number of economists has challenged this position for the case of housing demand two arguments have been made that inflation acting in concert with existing institutions alters the quantity of housing demanded and the decision to rent or own a house the first argument states that inflation and the standard fixed payment mortgage combine to reduce the size of the mortgage loan a household can obtain for the purpose of buying a home this works to reduce the quantity of owner occupied housing demanded given the importance of mortgage finance to the demand for owner occupied housing the second argument focuses on the inflation adjusted after tax cost of owner occupied housing it simply states that an increase in the rate of anticipated inflation of the general price level reduces the after tax cost of housing thus increasing the demand for housing and the demand for homeownership there has been little empirical testing of these two arguments the purpose of this paper is to formulate and estimate a model which will give an indication of the quantitative significance of the two arguments a housing demand equation and a tenure choice equation own versus rent are estimated using a sample of about 6000 households from the 1975 annual housing survey 10 the estimates suggest that inflation dampens housing demand and homeownership opportunity for most households even though the inflation adjusted after tax cost of owner occupied housing declines as inflation heats up the paper consists of six sections including the introduction section two examines the ways inflation affects housing choices in more detail the third section contains the specification of the econometric model that forms the basis of the study section four is a discussion of econometric problems and the data used the results of the estimates are discussed in the fifth section the paper concludes with a presentation of the major conclusions and policy implications of the study

the theory of moral hazard and unobservable behaviour part i principal agent models are studied in which outcomes conditional on the agent s action are uncertain and the agent s behaviour therefore unobservable for a model with bounded agent s utility conditions are given under which the first best equilibrium can be approximated arbitrarily closely by contracts relating payment to observable outcomes for general models it is shown that the solution may not always be obtained by using the agent s first order conditions as constraint general conditions of lagrangean type are given for problems in which contracts are finite dimensional 1 the moral hazard situation

the revenge of homo economicus contested exchange and the revival of political economy recent developments in microeconomic theory have shown that the self interested behavior underlying neoclassical theory is artificially truncated it depicts a charmingly victorian but utopian world in which conflicts abound but a handshake is a handshake but a handshake is not always a handshake studies of principal agent analysis the economics of information radical political economy mechanism design and transactions cost economics have all focused on the difficulties involved in policing and enforcing the actual process of market exchange abandoning the victorian world of neoclassical theory will redirect economists to an older conception of their profession what once was called political economy by taking optimizing more seriously post walrasian economics has inspired a revolution in economic thought fostering both new theoretical departures and alternative conceptions of the capitalist economy we will offer our own interpretation of this literature focusing on the widely recognized fact that the terms arising from exchange are not generally enforceable at zero cost to the exchanging parties where some aspect of the good or service supplied is both valuable to the buyer and costly to provide the absence of third party enforcement of claims gives rise to endogenous enforcement strategies we refer to this relationship as a contested exchange because unlike the transactions of walrasian economics the benefit the parties derive from the transaction depends on their own capacities to enforce competing claims

capabilities transaction costs and firm boundaries although the literature on firm boundaries has been greatly influenced by transaction cost economics strategy scholars often emphasize the importance of capabilities considerations in these decisions this has led to a debate that we suggest has generated more heat than light we argue that the two sets of considerations are in fact so intertwined dynamically that treating them as independent competitive explanations is fundamentally misleading we offer a theoretical synthesis of transaction cost and capabilities approaches to firm boundaries that seeks to overcome each approach s limitations and provides a unified and logically consistent understanding of boundary decisions

vickrey clarke groves mechanisms and perfect competition abstract we present a game theoretic mechanism characterization of perfect competition we prove the perfectly competitive mechanism is the only pareto optimal individually rational dominant strategy allocation mechanism thus perfect competition is uniquely capable of efficiently and non coercively solving the incentive bargaining problem when there is incomplete information i e when each individual knows his own tastes and production possibilities better than anyone else we also show one can interpret any dominant strategy demand revealing mechanism as working because it mimics the reward scheme that characterizes the perfectly competitive market namely the marginal product reward scheme

the economics of governance the economics of governance is an effort to implement the study of good order and workable arrangements where good order includes both spontaneous order in the market which is a venerated tradition in economics adam smith 1776 friedrich hayek 1945 kenneth a arrow and gerard debreu 1954 and intentional order of a conscious deliberate purposeful kind chester irving barnard 1938 p 9 also i interpret workable arrangements to mean feasible modes of organization all of which are flawed in comparison with a hypothetical ideal avinash dixit 1996 pp 4 9 the object is to work out the efficiency logic for managing transactions by alternative modes of governance principally spot markets various long term contracts hybrids and hierarchies interest among social scientists economists included in the study and practice of good order and workable arrangements has been steadily growing in contrast with the orthodox lens of choice prices and output supply and demand the economics of governance is a lens of contract construction broadly in the spirit of james buchanan s 2001 p 29 observation that mutuality of advantage from voluntary exchange is the most fundamental of all understandings in economics the economics of governance as herein described is principally an exercise in bilateral private ordering by which i mean that the immediate parties to an exchange are actively involved in the provision of good order and workable arrangements to be sure the need for private ordering varies with the rules of the game as provided by the state distinctions between lawlessness where the state provides limited or unreliable protection for property and contract dixit 2004 and lawfulness where the state undertakes to protect property and enforce contracts in a principled way are pertinent the first of these applies mainly to primitive and transition economies the second is commonly associated with western democracies recourse to private ordering under conditions of lawlessness is altogether understandable given the absence of state support the walter a haas school of business university of california berkeley ca 94720 1900 the paper has benefited from workshop presentations at the university of california berkeley the university of valencia insead fountainebleau and the 2004 annual conference of the international society for new institutional economics an abbreviated version was also given as the horst claus recktenwald lecture at nuremburg on 4 november 2004 comments and suggestions from fred balderston ernesto dalbo avinash dixit robert gibbons witold henisz ian larkin steven tadelis and dean williamson are especially acknowledged 1 lon fuller s 1954 p 477 definition of eunomics as the science theory or study of good order and workable arrangements is very much in the spirit of what i refer to as governance 2 one of the immediate ramifications of insistently comparing feasible alternatives all of which are flawed is that the purported inefficiencies that are ascribed to failures to achieve first best optimality are not dispositive but invite the query as compared with what i return to this issue in section iv 3 excluding corporate governance the numbers of articles that used the word governance during the period 1998 2000 as compared with the period 1977 1979 in selected economics business management sociology organization and political science journals were 60 vs 1 76 vs 4 79 vs 18 and 60 vs 25 where the journals surveyed were the american economic review journal of political economy quarterly journal of economics rand journal of economics and journal of economic perspectives in economics strategic management journal management science academy of management journal and academy of management review in business management administrative science quarterly organization science american journal of sociology american sociological review and annual review of sociology in sociology organization and american political science review political science quarterly journal of politics and political research quarterly in political science combining these four categories articles using the word governance increased from 48 to 275 over this 20 year interval dixit 2004 pp 149 50 reports that the number of web pages that turn up under the search for governance is huge

modelling energy technologies in a competitive market abstract energy economic models must predict the mix of energy technologies in competitive energy markets we examine a market composed of several competing technologies with geographically heterogeneous cost distributions an approach for determining both the market share and average market cost of energy produced by these technologies is derived the formalism developed which is based on a conditional least cost distribution function can be used to correct the convertional logit treatment of these quantities in several existing models and to better interpret empirical data in order to determine more realistic cost distribution functions for energy technologies