public sector pay and corruption measuring bribery from micro data abstract this study provides the first systematic measure of bribery using micro level data on reported earnings household spending and asset holdings we use the compensating differential framework and the estimated sectoral gap in reported earnings and expenditures to identify the size of unobserved unofficial compensation i e bribes of public sector employees in the case of ukraine we find that public sector employees receive 24 32 less wages than their private sector counterparts the gap is particularly large at the top of the wage distribution at the same time workers in both sectors have essentially identical level of consumer expenditures and asset holdings that unambiguously indicate the presence of non reported compensation in the public sector using the conditions of labor market equilibrium we develop an aggregate measure of bribery and find that the lower bound estimate of the extent of bribery in ukraine is between 460 million and 580 million u s dollars 0 9 1 2 of ukraine s gdp in 2003

the price of pollution a dual approach to valuing so2 allowances under the 1990 clean air act amendments a market based scheme to reduce u s sulfur dioxide emissions takes effect in 1995 indications are that participation in the market will be light and allowance prices will be lower than was once expected using an output distance function approach for wisconsin coal burning utility plants we estimate the shadow price of so2abatement which should approximate the allowance price the estimated average shadow price is above the prices at which the few observed allowance trades have occurred wisconsin s stringent state so2legislation may explain a portion of this divergence

reducing bureaucratic corruption interdisciplinary perspectives on what works abstract this article offers the first comprehensive review of the interdisciplinary state of knowledge regarding anti corruption policies with a particular focus on reducing corruption among civil servants drawing on the work of economists political scientists sociologists and anthropologists we examine seven policy categories 1 rewards and penalties 2 monitoring 3 restructuring bureaucracies 4 screening and recruiting 5 anti corruption agencies 6 educational campaigns and 7 international agreements notably rigorous empirical evaluation is lacking for the majority of commonly prescribed anti corruption policies nevertheless we find growing evidence of the effectiveness of policies based on monitoring including anti corruption audits and e governance in addition adequate civil service wages seem to be a necessary but insufficient condition for control of corruption an emerging skepticism regarding the effectiveness of anti corruption agencies also is apparent in the literature we conclude with broader lessons drawn from our review such as the recognition that when corruption is a systemic problem it cannot be treated in the long term with individual level solutions

party system institutionalization and government formation in new democracies party systems provide the essential structure of the coalition bargaining environment stability in party systems ensures the presence of regularities that can be observed in government formation but most empirical research focuses on established democracies in new democracies party systems are less institutionalized which means that interactions between parties can be unpredictable and has significant implications for coalition formation this article presents the first study of coalition formation in new democracies that employs an empirical design comparable to that of the leading research on western europe the author uses a new data set of potential coalitions in central and eastern europe to examine three explanations for government formation that arise when party systems are weakly institutionalized the results show first that incumbency is a disadvantage for governments in new democracies when formation occurs postelection this disadvantage is due to high levels of electoral volatility caused by policy failure and clientelistic practices incumbents are advantaged when formation takes place midterm as weak party system institutionalization leads to an inchoate pattern of interaction between opposition parties which therefore fail to provide a viable alternative second the presence of former dominant parties influences government formation by stifling the development of programmatic competition instead programmatic competition is subjugated to contestation based on historical enmities and third established parties collude to exclude new parties from coalition formation a possible indicator that a party system is becoming more institutionalized the article provides new insights into the importance of routinized and stable political practices and institutions

tradeable permits missing markets and technology this paper examines the effects of missing markets heterogeneous pollutants and the pollution technology of firms on the efficacy of transferable pollution permits under the assumption of perfect competition in all markets we show that if firms can substitute among pollutants then setting the optimal number of permits for only one pollutant will not in general lead to an efficient outcome the degree of the inefficiency will depend on the information set available to the regulator and the substitutability among pollutants by firms when establishing transferable pollution rights regulators should therefore consider the technology of firms if firms discharge pollutants in the same fixed proportions then the regulator need only set a market for one of the pollutants to ensure an efficient outcome where firms can substitute among pollutants however establishing a market for only one pollutant provides an incentive for firms to substitute to unregulated ones this is an important policy issue as substitutability among pollutants within and across production processes may dampen the dynamic advantages of a tradeable permit policy

the effect of democracy and press freedom on corruption an empirical test this paper tests the effect of democracy and press freedom on corruption the empirical investigation carried out in this paper suggests that democracy and press freedom can have significant impact on corruption

transaction costs of tradable white certificate schemes the energy efficiency commitment as case study this paper analyses the nature and scale of transaction costs tcs borne by obliged parties under a tradable white certificate twc scheme taking the first phase of the energy efficiency commitment eecl in great britain as a case study several sources of tcs were considered such as search for information persuasion of customers negotiation with business partners and measurement and verification activities information was obtained through interviews and a questionnaire distributed to obliged parties results show that the most significant sources of tcs were related to search for information persuading customers and negotiating with managing agents contractors to implement energy efficiency measures perceived high tcs related to contract negotiation and liability risks slightly reduced the low trading level the scale of tcs was estimated to be around 10 and 30 of total investments costs for the lighting and insulation segments respectively the results indicate that despite the presence and scale of tcs the eecl scheme generated energy savings that yielded net societal benefits estimated financial benefits range from 0 6 to 6 p kwh for insulation and lighting savings respectively when avoided external costs due to electricity savings are included estimated economic benefits range from 3 to 8 p kwh several lessons from the eecl can be drawn for twc schemes among others it is found that informative policy instruments to raise awareness among end users are critical if a twc scheme is to deliver cost effective energy savings in all the nature and scale of tcs under twc schemes will differ because of a number of endogenous and exogenous determinants c 2007 elsevier ltd all rights reserved less

market failure in incentive based regulation the case of emissions trading abstract among the existing evaluations of the us epa s emissions trading program a consensus has emerged while the program has resulted in significant cost savings it has not even approximately achieved a cost effective allocation of the control responsibility the cost savings have been smaller and the trades fewer than might have been expected at the outset of the program in this article we explore one hypothesis which purports to explain the divergence between the cost minimizing and the observed pattern of trades for nonuniformly mixed pollutants the trading process hypothesis attributes some significant proportion of this divergence to the nature of the process by which emission reduction credits are traded under the bubble policy an examination of actual bubble trades reveals that the actual trading process is sequential and bilateral and hence differs considerably from the implicit process modeled in the existing empirical studies simulations of this more realistic trading process suggest that the resulting equilibria deviate considerably from cost effective allocations of the control responsibility

democracy political risks and stock market performance this study examines the impacts of democracy and political risk on stock market using annualized panel data for 49 emerging markets for 2000 2012 we find evidence that democracy and political risk do have impact on stock market returns and the relationship between democracy and political risk is parabolic i e there is a threshold level of democracy after which political risk begins to decline also our results suggest that decreases in political risk lead to higher returns

trading sulphur emissions in europe guided bilateral trade in this paper a system of guided permit trading is developed for so2emissions reduction which considers permit trading as a bilateral andsequential process this implies that in order to meet the deposition targetsat the end of the trading process not every single trade transaction hasto meet the deposition targets to ensure that the target is ultimately met the number of permits traded should be controlled by a trade coordinatinginstitution a simulation of the system of guided bilateral trading ofso2 permits among european countries on the basis of the secondso2 protocol indicates that some non profitable trade transactionstake place this prevents the cost effective emission allocation from beingfully achieved however the calculations show that guided bilateral permittrading may generate substantial cost savings while contributing toenvironmental protection

the comparative politics of corruption accounting for the east asian paradox in empirical studies of corruption growth and investment abstract numerous empirical studies demonstrate that corruption reduces investment and or slows growth but how robust are these relationships this question is answered by conducting a series of crosscountry regression tests using four different corruption datasets we find that corruption slows growth and or reduces investment in most developing countries particularly small developing countries but increases growth in the large east asian newly industrializing economies the latter finding provides solid empirical support to a country case literature that explains the east asian paradox the combination of high corruption and high growth in terms of stable and mutually beneficial exchanges of government promotional privileges for bribes and kickbacks

price effects inefficient environmental policy and windfall profits we examine conditions under which a new or tighter restriction on emissions from a competitive polluting industry creates price effects in adjacent markets price effects may arise when a quantity restriction on emissions causes output to fall and therefore output price to rise they may also arise when the required reduction in output causes the price of a polluting input to fall we model emissions as a fixed proportion of output limiting the possibilities for input substitutions the possibility of price effects exists whenever the set of regulated firms is large relative to its input or output markets a possibility that is expressly ruled out in montgomery s j econ theory 5 395 418 1972 paper two potential implications of price effects are explored one is an efficiency concern a welfare maximizing regulator who neglects price effects will require more than the optimal level of abatement the other is a distributional concern an emissions restriction might create windfall profits for the polluting industry

globalisation and corruption revisited this paper presents new empirical evidence on the determinants of corruption focussing on the role of globalization and inequality the estimates for a panel of 102 countries over the period 1995 2005 point to three main results i detection technologies reflected in a high level of development human capital and political rights reduce corruption whereas natural resource rents increase corruption ii globalization in terms of both trade and financial openness has a negative eect on corruption which is more pronounced in developing countries iii inequality increases corruption and once the role of inequality is accounted for the impact of globalization on corruption is halved in line with recent theory this suggests that globalization besides reducing corruption through enhanced competition aects corruption also by reducing inequality

new directions in emissions trading the potential contribution of new institutional economics abstract once an arcane topic even among environmental economists emissions trading systems have substantially increased during this past decade in the usa moreover the implementation of these systems has necessitated increased involvement of professionals in many fields besides economics this paper reviews the practical experience of the six major types of emissions trading systems focusing on credit market development participation and results including transaction costs five more recent applications of emissions trading also are considered as well as the possibility of inter pollutant trading while inter pollutant trading has been successfully used for chlorofluorocarbons cfcs the applicability of this experience is probably very limited additionally it would be highly premature to attempt an evaluation of these newer emissions trading systems some of which have yet to be even partially implemented in order to improve these latter and future programs the paper considers the potential contribution of the new institutional economics nie to emissions trading the nie is used to develop theoretical insights and a series of predictions about the performance of a range of emissions trading systems

economic assessment of the regional clean air incentives market a new emissions trading program for los angeles this article documents the methodology used to compare policy alternatives considered for reclaim an emissions trading program for los angeles which commenced january 1994 reclaim reduces no x and so x emissions from stationary sources with declining emissions credit allocations the emissions trading model etm includes credit supply and demand spatial restrictions and opportunity costs of owning credits the etm solves interactively with a regional model that estimates economic impacts predicted emissions distributions are input into airshed and exposure models the models predict similar improvements in air quality and public health as command and control regulations but with lower costs and employment impacts

prices vs quantities the irrelevance of irreversibility we explore the efficacy of price and quantity controls in a dynamic setup in which the decisions of some agents are irreversible the assumption of irreversibility is shown to improve the performance of a tax relative to that of a system of tradable quotas and significantly alter the equilibrium behavior of agents we nevertheless conclude that taking into account the fact that agents decisions may be irreversible does not lead to policy implications significantly different from those reached in a simpler model in which irreversibility is ignored

environmental benefits from marketable discharge permits or an ecological vs economical perspective on marketable permits abstract economists typically extol the virtues of marketable discharge permits based on their ability to obtain a given environmental standard at least cost previous empirical studies of marketable permits have quantified the benefits from the use of permits relative to a command and control system in terms of cost savings occasionally the benefits of a permit system are described by noting that the efficiency of such systems would allow improved environmental quality relative to a command and control system for the same cost that is the increased efficiency resulting from a permit system would allow environmental regulators to tighten emission standards resulting in less pollution while still holding costs at their initial level this paper presents a simple conceptual model that examines the potential emission savings from a marketable permit system the conceptual model is empirically implemented with data on abatement costs for light duty vehicles in california the emission saving potential is directly compared with the cost saving potential although cost savings from a marketable permit system in this context are found to be relatively modest on the order of 1 to 10 the emission savings potential is found to be much larger estimates of the emission savings possibilities range from about 7 to 65

double dipping in environmental markets abstract there is an increasing tendency to use markets to induce the provision of environmental services as such markets increase in scope potential market participants might sell multiple environmental services the question we consider here is whether participants in such markets should be allowed to sell credits in more than one market simultaneously some have argued in favor of such double dipping because it would make the provision of environmental services more profitable in practice however most programs do not allow double dipping we show that if the optimal level of pollution abatement is sought then double dipping maximizes societal net benefits however if pollution policies are set in a piecemeal fashion then the caps for each market are unlikely to be optimal and in this second best setting a policy prohibiting double dipping can lead to greater social net benefits we explore conditions under which a single market policy is preferred or equivalently where piecemeal policies are likely to yield particularly inefficient outcomes

neo liberal reforms and illiberal consolidations the indonesian paradox market oriented policy agendas have enjoyed a remarkable influence in indonesia for almost four decades yet attempts to impose these agendas in any systematic fashion have proven uncertain and inconclusive this is not simply a case of successful resistance to reform by entrenched interests rather the deepening of market capitalism and global integration has in many instances appeared to consolidate authoritarian politics and predatory economic relationships even in the wake of economic crisis and dramatic political change these basic frameworks of power remain largely intact such paradoxes raise important questions about the relationships between markets institutions and political and social power we examine how market reforms have been resisted and even hijacked to consolidate predatory state and private oligarchies we look at the way such entrenched interests have been reorganised in the face of fundamental institutional changes including the collapse of authoritarian rule and the decentra

regulation and corruption higher levels of government expenditures and more regulation naturally invite corruption because they provide the opportunity for government officials to be paid off for regulatory favors subsidies and government contracts some countries have relatively large governments but lower levels of corruption scandinavian countries offer examples while institutional differences may explain some of the cross country differences in corruption the most consistent relationship is that high levels of regulation are associated with more corruption when looking at the effect of the size of government it is the regulatory state rather than the productive or redistributive state that is associated with corruption

potential cost savings from internal external co2 emissions trading in the korean electric power industry abstract korea plans to introduce an emissions trading scheme for the controlling greenhouse gas emissions in 2015 using shephard s 1970 output distance function we first estimate the shadow price of co 2 for power generators in the korean fossil fueled electric generation industry then by assuming that each power generator is required to reduce co 2 emissions by one ton we compute the potential cost savings from internal trading among generators within the same plant and from external trading across plants at prevailing market prices the results indicate that on average the generators paid 14 63 to abate one ton of co 2 emissions in 2007 plants realized additional gains through external trading in particular cost savings from trades between different fuel fired plants were substantial

economic implications of emissions trading rules for local and regional pollutants in 1975 the united states environmental protection agency initiated an historic process of regulatory reform now known as the emissions trading program for nonuniformly mixed pollutants such as sulfur dioxides air quality is a function not only of the level of emissions but their location and stack heights as well the focus of this paper is how to protect local air quality and limit long range pollutant deposition caused by emission trades while allowing as much cost reducing trading activity as possible the authors examine the implications of two trading rules in two different airsheds using programming simulation models they find that the use of either trading rule represents a substantial improvement over relying exclusively on the current allocation of control responsibility

the net benefits of incentive based regulation a case study of environmental standard setting economists interested in environmental safety and health regulation have long argued that decentralized incentive based or ib policies are more efficient than centralized command and control or cac approaches see charles schultze 1977 for instance these arguments generally have been based on the assumption that ib policies will accomplish the same goals as their cac counterparts but at less cost to society however some of those touting ib policies have overlooked an important point environmental workplace or even productsafety standards typically take the form of maximum permissible concentrations of harmful substances so that compliance only requires that all monitoring points or samples register readings below these critical levels for this reason ib policies typically assign a shadow price of zero to improvements that exceed the standard s while more crude cac policies generally result in overcontrol beyond the standards if there is no value to this overcontrol cac policies will not improve at all on ib approaches and will indeed be more expensive if however reduced concentrations below the level of the standards bring with them further improvements in health or the environment cac approaches will produce greater benefits than ib approaches thus a fair comparison between the two necessitates that any additional benefits associated with cac policies be offset against the cost advantages enjoyed by their ib counterparts although this possibility has been recognized by others scott atkinson and t h tietenberg 1982 for instance it is little appreciated and its empirical significance has never been ascertained that is our purpose here we do so by developing data on the costs and benefits of controlling a common air pollutant total suspended particulates or tsp in baltimore by comparing the tsp levels likely under both ib and cac approaches we are able to estimate the marginal costs and benefits associated with a variety of alternative air quality standards which take the form of maximum permissible concentrations this in turn allows us to determine the net benefits arising from the two kinds of regimes in the next section we present a simple conceptual framework for our analysis section ii describes the estimation of the costs and benefits of our hypothesized air pollution controls in baltimore section iii presents our somewhat surprising findings and section iv discusses those findings and their potential significance for regulation in the real world

economic prescriptions for environmental problems how the patient followed the doctor s orders o ne of the dangers with ivory tower theorizing is that it is easy to lose sight of the actual set of problems which need to be solved and the range of potential solutions as one who frequently engages in this exercise i can attest to this fact in my view this loss of sight has become increasingly evident in the theoretical structure underlying environmental economics which often emphasizes elegance at the expense of realism in this paper i will argue that both normative and positive theorizing could greatly benefit from a careful examination of the results of recent innovative approaches to environmental management the particular set of policies examined here involves two tools which have received widespread support from the economics community marketable permits and emission charges pigou 1932 dales 1968 kneese and schultze 1975 both tools represent ways to induce businesses to search for lower cost methods of achieving environmental standards they stand in stark contrast to the predominant command and control approach in which a regulator specifies the technology a firm must use to comply with regulations under highly restrictive conditions it can be shown that both of the economic approaches share the desirable feature that any gains in environmental quality will be obtained at the lowest possible cost baumol and oates 1975 until the 1960s these tools only existed on blackboards and in academic journals as products of the fertile imaginations of academics however some countries have recently begun to explore using these tools as part of a broader strategy for managing environmental problems

tradable permits and unrealized gains from trade with the advent of tradable permit programs for bad outputs e g so2 emissions concerns arose over whether the theoretical gains from trade would be realized we will employ a methodology that calculates the potential gains accruing to coal fired electric power plants from implementing a tradable permit program the magnitude of the potential gains in a plant s kilowatt hour output from a tradable permit program relative to its observed production provides insights into the existence of intertemporal allocative inefficiencies and spatial allocative inefficiencies after the implementation of a tradable permit program

a trading ratio system for trading water pollution discharge permits abstract the fact that water flows to the lowest level uni directionally is a very specific and useful property of water by utilizing this property we design a trading ratio system trs of tradable discharge permits for water pollution control such a trading ratio system has three main characteristics 1 the zonal effluent cap is set by taking into account the water pollutant loads transferred from the upstream zones 2 the trading ratios are set equal to the exogenous transfer coefficients among zones and 3 permits are freely tradable among dischargers according to the trading ratios this paper shows that the trs can take care of the location effect of a discharge and can achieve the predetermined standards of environmental quality at minimum aggregate abatement costs problems with hot spots and free riding can be avoided and the burdens on both dischargers and the environmental authority should be relatively light

improving efficiency in bilateral emission trading when environmental damages from emissions are spatially nonuniform permit trading has been modeled most often as a pollution offset program in which emission permits are traded between agents subject to constraints on ambient air quality to date the institution envisioned to implement such a program involves trading on a bilateral and sequential basis however simulation studies indicate that the sequence of trades may alter the outcome and undermine the cost savings from a pollution offset program this paper identifies a design for the trading institution that tends to overcome this phenomenon and improve the efficiency of equilibria obtained in a simulation model we model a bilateral trading process for the reduction of sulfur dioxide emissions with a stochastic description of the sequence of trades within groups of nations in europe when trading takes place between disaggregated stylistic representations of economic enterprises rather than between national governments a significantly greater portion of potential savings is achieved in fact under most sets of assumptions approximate first order stochastic dominance is achieved wherein the more decentralized the trading agents the greater the expected savings from a trading program

phase i completed an empirical assessment of the 1990 caaa with the conclusion of phase i trading of so2 allowances the epa declared the allowance trading policy to be a success the time had come to include cap and trade programs in the arsenal of effective policy tools in terms of reducing atmospheric emissions of sulfur dioxide the program appears to be successful it is not clear however whether or not the program has minimized the cost of achieving the emission reductions the measure of the true success of a market based incentive program however has yetto be quantified has the program resulted in converging marginalabatement costs across participant plants in this study i report theshadow prices of phase i power plants from 1994 to 1998 anddetermine that there are more costs to be saved within theambitious public policy experiment

incremental and average control costs in a model of water quality trading with discrete abatement units this paper answers three questions related to the discrete nature of pollution abatement i does a source s incremental control cost as defined by the u s environmental protection agency necessarily exceed its average control cost ii is incremental control cost a better approximation of a source s willingness to pay for abatement credits than average control cost and iii exactly how does trading in discrete and continuous abatement markets differ we find that the answer to the first two questions are both no suggesting that the u s environmental protection agency needs to refine its reliance on incremental control cost as the sole measure upon which to assess the financial feasibility of water quality trading in answer to the third question we show that the outcome of bilateral trading in the presence of discrete abatement is determined by comparing the gains from trade associated with the full sequence of possible sunk cost trading scenarios for the most common case where trading partners average control cost curves cross the trading outcome with discrete abatement is inherently sensitive to the initial allocation of abatement responsibilities

selecting permit allocation rules for agricultural pollution control a bargaining solution abstract one of the primary justifications for using transferable permits for pollution control is that they achieve a given level of emission reduction at the lowest cost although the initial allocation of pollution permits may have no impact in terms of efficiency it does have a significant impact on equity in this paper we examine a variety of permit allocation rules for a small catchment in south west england an asymmetric nash bargaining framework is employed to characterise agents co operative behaviour and to explain their likely preferences over permit allocation rules the results indicate that the preferred allocation scheme depends upon the relative bargaining power of the agents furthermore some potential links between ex ante and ex post equity criteria were also discussed

costs of alternative policies for the control of nitrogen dioxide in baltimore abstract the costs of meeting alternative one hour nitrogen dioxide standards in baltimore are simulated for alternative pollution control policies applied to the 200 point sources with the largest emissions and compared to a similar study for the chicago area the least cost spatially differentiated policy is found to be quite closely approximated by an effluent fee varying only by source type and a policy that combines features of a regulatory and an economic incentive policy the uniform fee or its market permit analogue results in relatively high costs because of severe overcontrol

the empirical properties of two classes of designs for transferable discharge permit markets abstract previous work by atkinson and lewis j environ econ manag 1 237 250 1974 and anderson et al an analysis of alternative policies for attaining and maintaining a short term no2 standard mathtech inc princeton n j 1979 has indicated the tremendous cost advantages to be achieved by moving from a policy based on emission standards to one based on marketable emission permits as tietenberg land econ 56 391 416 1980 points out however neither of the major permit designs treated in the literature are optimal from all points of view this has triggered a search for alternative permit designs which while they may not minimize compliance costs have sufficient other virtues as to make them attractive on other grounds the purpose of this paper is to examine within the context of an empirical mathematical programming model the air quality emission and cost consequences of two classes of the permit designs which can be implemented in the absence of information on control costs this case study involves particulate control in st louis

the political economy of pollution markets historical lessons for modern energy and climate planners this article explores some of the central economic and political problems with the use of tradable permits to solve environmental problems drawing from transaction cost economics political economy and market theory it does so by looking at the history of three programs for curbing pollution in the united states the clean air act the leaded gasoline phase out and water permits in wisconsin the article begins by briefly summarizing the history of each of these programs before looking at a host of challenges related to political compromises in program design transaction costs spatial distortions such as geographic sensitivity and wrong way trading of credits temporal distortions such as the episodic nature of pollution and volatility of market prices and market abuses these concerns are raised with an eye for how historical experience may inform the current debate about how to design effective market mechanisms to respond to climate change and other forms of energy related environmental degradation

the regional implications of macroeconomic policy this article examines the relative impact of changes in uk fiscal and monetary policy on the economies of the uk regions this is done by first considering the relative importance of fiscal flows and balances to the uk regions and then assessing their sensitivity to fiscal policy changes second the impact of monetary policy on the regions is considered in four cases these are direct effects on spending exchange rate effects income effects and asset price effects the conclusions are that different policy levers have markedly different regional implications with southern regions being more sensitive to changes in income taxes and government consumption and investment while northern regions are more sensitive to changes in national insurance and transfer payments all regions have become more sensitive to interest rate changes over the past decade but regions in the south are considerably more vulnerable particularly to any knock on effect on house prices copyright 1995 by oxford university press

decentralization and corruption evidence across countries the relationship between decentralization of government activities and the extent of rent extraction by private parties is an important element in the recent debate on institutional design the theoretical literature makes ambiguous predictions about this relationship and it has remained virtually unexamined by empiricists the authors make a first attempt at examining the issue empirically by looking at the cross country relationship between fiscal decentralization and corruption as measured by a number of different indices their estimates suggest that fiscal decentralization in government spending is significantly associated with lower corruption moreover they find that the origin of a country s legal system for example civil versus common legal code performs extremely well as an instrument for decentralization the estimated relationship between decentralization when so instrumented and corruption is even stronger the evidence suggests a number of interesting areas for future work including investigating whether there are specific services for which decentralized provision has a particularly strong impact on political rent extraction and understanding the channels through which decentralization succeeds in keeping corruption in check

corruption and democracy abstract most models and empirical tests of the relationship between corruption and democracy assume corruption falls as democracy matures yet recent theoretical developments and case evidence suggest an inverted u relationship between the two although so far no one has tested for this relationship by drawing on a panel data set covering a large number of countries between 1982 1997 substantial empirical support is found for an inverted u relationship between the durability age of democracy and corruption fortunately the turning point in corruption occurs rather early in the life of new democracies between 10 12 years

democracy rent seeking public spending and growth abstract does democratization imply faster growth less corruption and less inefficiency past studies yield ambiguous results on the effects of democracy on economic performance and growth we develop a simple two sector endogenous growth model that shows both very young and mature democracies grow faster than countries in mid stages of democratization producing a u effect this effect results from the pattern of rent seeking as it diverts from the provision of public goods rent seekers act as monopolistic competitors initially more democracy increases their number raising aggregate rents however rents per rent seeker fall with the number of rent seekers due to this crowding effect and the increased competition among rent seekers aggregate rents fall in mature democracies thus rents show an inverted u effect in relation to democracy we find fairly robust supportive evidence for the latter

enforcement and political power in anticorruption evidence from china summary few empirical studies focused on the role of officials in the anticorruption enforcement especially in the authoritarian regime this paper uses linear panel data models with various control variables to investigate how the power of the government official in an anticorruption agency may impact the effectiveness of anticorruption campaign in china two types of political power are considered formal power is obtained when the discipline inspection secretary is also named as a vice party secretary of the province whereas informal power arises when the secretary used to work with the party secretary of the province it is found that both the formal and informal power of the secretary of the chinese communist party s discipline inspection commission i e the head of the anticorruption agency help enhance the number of corruption cases under investigation this result offers evidence to further explore how and why the anticorruption enforcement officials play their roles in a developing transitional country

markets for tradeable emission and ambient permits a dynamic approach this paper discusses trade mechanisms in pollutionpermit markets proofs are given that sequential bilateral trade in tradeable emissions permitsconverges to a market equilibrium with minimal totalcosts of pollution control if ambient or depositionpermits are traded the convergence of bilateraltransactions occurs only in the case of a singlereceptor for multiple receptors the proof ofconvergence for tradeable emissions and ambientpermits is given for two trade mechanisms sequential multilateral trade and a walrasian auction

the potential for cost savings in the sulfur dioxide allowance market empirical evidence from florida since the passage of the 1990 clean air act amendments researchers have hastened to appraise the new market for sulfur dioxide so2 emission allowances as the epa s program moves into its second phase some analysts question whether large enough savings are available to induce widespread market participation this study calculates the shadow prices of emission reductions for power plants that serve florida and compares the actions of utility owners to the actions predicted by the shadow prices the evidence suggests that plant owners have not taken full advantage of the opportunities the allowance market has provided to date

economic instruments for environmental regulation our knowledge about economic incentive approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention not only have the theoretical models become more focused and the empirical work more detailed but we have now had over a decade of experience with emissions trading in the u s and emission charges in europe as the world community becomes increasingly conscious of both the need to tighten environmental controls and the local economic perils associated with tighter controls in a highly competitive global marketplace it seems a propitious time to stand back and to organize what we have learned about this practical and promising approach to pollution control that may be especially relevant to current circumstances this paper draws upon economic theory empirical studies and actual experience with implementation to provide a brief overview of some of the major lessons we have learned about two economic incentive approaches emissions tradi copyright 1990 by oxford university press

joint implementation under the second sulfur protocol analysis and simulation the purpose of the paper is to analyze the possibility of introducing a system of transferable discharge permits tdp to develop the joint implementation procedure conceived in the second sulfur protocol the analysis is performed considering not only the european countries that have agreed emission reductions in the protocol but also a group of non signing countries that could possibly abate their emissions and alleviate the reduction burden agreed by the former presumably receiving certain compensation from them in return the theoretic elements of the system are analyzed and then a simulation software the program atlas is developed and applied to study the effects of choosing among the possible implementation parameters in contrast to other simulation programs developed with a similar aim atlas can simulate multilateral permit trades which are closer than bilateral ones to the concept of joint implementation conceived in the protocol the use of this program anticipates that the amount of feasible and profitable transfers would be much higher if a set of european countries which are not parties to the protocol were allowed to take part in the system as permit sellers

efficiency gains under exchange rate emission trading in the case of emission of non uniformly dispersed pollutants such as so2 the negative effects depend on the location of the sources a unit increase at one source must be compensated by either a larger or smaller reduction at another source to keep the negative effects at the same level emission trading between countries is possible under the second sulphur protocol exchange rate trading and third party problems are studied within a simultaneous model facilitating impositions of various environmental constraints simulations based on the negotiated emission quotas are offered results indicate potential cost savings of 19

emission trading in europe with an exchange rate this paper explores the analytical and empirical properties of a new method for emission trading according to a fixed exchange rate the exchange rate is based on the ratios of the marginal costs of abatement in the optimal solution in order to account for the impact of the location of emission sources on the deposition it is shown that generally this system will not achieve the optimal solution and does not guarantee that environmental deposition constraints are not violated although total abatement costs are always reduced a routine was developed to mimic trading as a bilateral sequential process subject to an exchange rate in the example used results for so2 emissions in europe show that starting from a uniform reduction exchange rate trading achieves higher cost savings than one to one trading without achieving the cost minimum sulfur deposition targets are not violated since the initial emission allocation overfulfilled targets at many places the results are sensitive to pre trade emission levels the transaction costs the availability of information on potential cost savings and assumptions made on the behavior of trading partners

tradeable permits for pollution control when emission location matters what have we learned our knowledge about tradeable permit approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention not only have the theoretical models become more focused and the empirical work more detailed but we have now had over a decade of experience with them in the u s this article draws upon economic theory empirical studies and actual experience with implementation to summarize what we have learned about applying tradeable permits to air pollution control in the special circumstance where the spatial aspects of the problem are a prime consideration

has democracy slowed growth in asia summary has democracy slowed growth in asia while there are a number of reasons to suggest that it has no one has tested this hypothesis hypotheses linking asia s democracies and autocracies to growth are tested in a within panel regression framework that controls for country fixed effects global time fixed effects the other major variables affecting growth and for endogeneity between the right hand side regressors the democracy slows growth hypothesis is tested against the toughest counterfactual the bureaucratically capable authoritarian regimes of east asia s developmentally minded governments findings reject the democracy slows growth hypothesis and show that democracy causes growth and investment to rise

reversing property rights practice based approaches for controlling agricultural nonpoint source water pollution when emissions aggregate nonlinearly nonpoint source water pollution remains a major issue despite decades of research and sizable conservation programs we suggest that by taking advantage of contemporary modeling and optimization approaches good approximations to physical relationships can be constructed so that even in the presence of unobservable field emissions and nonlinear fate and transport relationships standard economic tools of command and control requirements performance standards and trading can be implemented the boone river watershed in the u s state of iowa is used for empirical demonstration although the approach can be used to construct voluntary conservation policies the described policies involve imposing requirements on agricultural polluters rather than relying on voluntary actions alone

marketable pollution permits and acid rain externalities a comment and some further evidence in a recent paper scott atkinson 1983 has provided some important insights into the design of systems of marketable permits for the control of air pollution atkinson reaches two major conclusions 1 a system of marketable permits that minimizes the control costs for the attainment of local ambient air quality standards for so2 is likely to increase significantly the extent of long range sulfate depositions acid rain as compared to a traditional command and control cac strategy 2 solely from the perspective of local air quality the cost minimizing system of marketable permits must imply higher levels of local pollution relative to an alternative system of emissions permits or to a prototype cac system we have no quibbles with the first point moreover atkinson s simulation results suggest that the trade off between local air pollution and the long range transport of sulfur is a serious issue this is largely a matter of stack height higher chimneys allow sulfur emissions to escape the local environment only to result in increased sulfate pollution at more distant locations this suggests that stack height must be treated as a critical variable in the design of systems to control jointly local and global pollution our concern in this note is with atkinson s second point we shall show first that the atkinson theorem is formally incorrect the cost minimizing permit system need not result in increased local pollution however as a practical matter atkinson may well be right we shall supplement his simulation results with some findings from another set of simulations for a different air pollutant particulate matter in the baltimore air quality control