scale diversity and determinants of labour migration in europe while global migration is increasing internal eu migration flows have only increased slowly this paper contributes to a better understanding of the determinants and scale of european migration it surveys previous historical experiences and empirical findings including the recent eastern enlargements the determinants of migration before and after the 2004 enlargement and in the eu15 and eu10 countries are analysed using individual data on migration intentions in addition perceptions about the size of migration after the enlargement are studied the potential emigrant from both old and new eu member states tends to be young better educated and to live in larger cities people from the eu10 with children are less likely to move after enlargement in comparison to those without family there exists a correlation between individual perceptions about the scale of migration and actual flows better educated and left oriented individuals in the eu15 are less likely to perceive these flows as important

when is external debt sustainable the article empirically examines the determinants of debt distress defined as periods in which countries resort to any of three forms of exceptional finance significant arrears on external debt paris club rescheduling and non concessional international monetary fund lending probit regressions show that three factors explain a substantial fraction of the cross country and time series variation in the incidence of debt distress the debt burden the quality of policies and institutions and shocks the relative importance of these factors varies with the level of development these results are robust to a variety of alternative specifications and the core specifications have substantial out of sample predictive power the quantitative implications of these results are examined for the lending strategies of official creditors

spatial competition and vertical integration cement and concrete revisited reply in this review 1983 mark mcbride reconsiders the federal trade commission s ftc enforcement policy toward vertical mergers between cement and ready mix concrete firms in response to a significant increase in acquisitions of ready mix concrete firms by cement manufacturers during the 1960 s the ftc undertook a series of legal actions to block or dissolve the mergers the actions of the ftc constituted one of the most intensive efforts undertaken to date to challenge vertical mergers in a single industry mcbride p 1012 notes that the actions of the ftc provoked considerable debate concerning the motivation for the mergers both in the industry and in academe a significant number of articles were published advancing various reasons for the mergers in addition to the ftc s main contention that the mergers were motivated by a desire for captive markets it has been suggested that there were economies of integration or that the mergers were the outcome of an erroneous view of the potential benefits to foreclosure held by executives in the beleaguered cement industry 2 mcbride s 1983 paper offers another explanation for the mergers his argument is that vertical integration was undertaken to avoid rigid oligopolistic pricing in the cement industry 3 the empirical results presented by mcbride suggest that vertical integration was a significant factor in the decline of cement prices in the 1960 s the purpose of this comment is to point out some of the problems with mcbride s analysis in particular we show that the experimental design of his testing equation is faulty and does not offer a test of his hypothesis as a result mcbride s analysis does not provide convincing evidence on whether cement firms vertically integrated to avoid rigid oligopolistic pricing or if cement firms were merely reacting to prices that had already begun to decline our intent however is not to challenge mcbride s contention that vertical integration can provide lower prices to consumers rather we would argue that the evidence presented at the ftc hearings involving cement and ready mix concrete firms as well as mcbride s and others analyses illustrate the problems in discerning the motives for mergers 4

evidence on changes in aid allocation criteria have donors changed their aid allocation criteria over the past three decades toward greater selectivity a frequently stated goal of the international development community using data on how 22 donors allocated their bilateral aid among 147 countries over 1970 2004 the article finds that after the fall of the berlin wall in 1989 and especially in the late 1990s bilateral aid responded more to poverty and the quality of the policy and institutional environment in the recipient countries furthermore the sensitivity of aid allocation to the country s size and its debt burden has declined over time these results are robust to different samples and model specifications various econometric techniques and alternative measures of institutional quality while the specific factors causing these changes cannot be identified these presumably include geopolitical and economic concerns and the many changes in the international aid architecture donors still differ greatly in their selectivity this suggests that further multifaceted reforms are needed to ensure even greater selectivity of aid

catalyzing aid the imf and donor behavior in aid allocation the international monetary fund imf has often asserted that its programs encourage aid by signaling policy credibility commonly referred to as aid catalysis our study investigates this claim for sector specific aid and for bilateral and multilateral donors using data on 136 recipient countries for the 1986 2009 period we employ a two part quantitative model to match the donor decision making process consisting of a first stage recipient selection equation and a second stage allocation equation on selected recipients we find strong support that imf programs catalyze aid on aggregate but the evidence varies across different types of aid aid catalysis is stronger and more robust in sectors linked to the imf s core competency areas namely debt related relief and general budget support but weaker and less robust for infrastructure production multisector and humanitarian aid and non existent for health and education across donors imf programs are associated with increases in aid by countries with larger voting shares in the imf such as the united states and japan but less so by countries with few votes or for multilateral agencies this finding is consistent with research in international political economy arguing that the imf s powerful stakeholders drive the organization s decisions and policies taken together our findings emphasize the imf s multi dimensional impact on the global development agenda an erstwhile overlooked factor in studies of aid allocation while refuting the purported positive effects of imf programs on aid for social policy

do potential migrants internalize migrant rights in oecd host societies this paper analyzes how countries provision of migrant rights affects potential migrants destination choice combining data on bilateral migration desires from over 140 origin countries and data on migrant rights in 38 mainly oecd destination countries over the period 2007 2014 we find that potential migrants tend to favour destinations that are more open to the inclusion of immigrants into their society in particular better access to and conditions on the labour market as well as access to nationality and to permanent residency significantly increase the perceived attractiveness of a destination country these results are robust across different specifications and hold for subsamples of origin countries as well as of destinations moreover some results vary across types of respondents educational opportunities for migrants for instance affect the migration desires of individuals aged 15 to 24 years but less so of individuals in other age groups

cournot oligopoly reconsidering cournot the cournot equilibrium is consistent this article uses an infinite regress model of firm level decisions to find a rational expectations equilibrium for a duopoly and to relate concepts of conjectural variations and consistency to the cournot equilibrium the model derives a conjectural variation instead of assuming it in particular the cournot equilibrium is shown to be consistent in the usual sense of the literature the conflict between notions of consistent conjectures and the cournot equilibrium results from a compounding problem inherent in the earlier models we extend these results to the n firm problem alternatively the article can be viewed as providing a purely static model that generates the cournot equilibrium without reference to conjectures or quasi dynamics

welfare effects of expansions in equilibrium models of an electricity market with fuel network the welfare of electricity producers and consumers depends on congestion in the transmission grid generation costs that consist mainly of fuel costs and strategic behavior we formulate a game theoretic model of an oligopolistic electricity market where generation costs are derived from a fuel supply network the game consists of a fuel dispatcher that transports fuels at minimum cost to meet generator demands generators that maximize profit in cournot competition and an independent system operator iso that sets nodal prices to balance electricity supply with linear demand functions we prove the existence of an equilibrium if fuel supplies are unlimited the same equilibria hold in a simplified version of the game in which each generator optimizes its fuel acquisition from the network in some very simple examples under different assumptions about the rationality of generators with respect to iso decisions paradoxical effects on total welfare can occur from expanding either electricity transmission capacity or the transportation capacity of low cost fuel we find some instances in which the paradox occurs only under bounded rationality of the generators others where it occurs only if the generators are fully rational and still others where it occurs to different degrees under the two rationality assumptions

does aid availability affect effectiveness in reducing poverty a review article this paper addresses the impact of aid supply on aid effectiveness first we review theoretical literature that deals with the problem of governance in donor recipient relationships and are susceptible of highlighting effects of aggregate aid availability second we provide a conceptual framework that explicitly incorporates a trade off between considerations of needs and governance we examine the impact of aid supply on the manner in which a donor agency allocates the available money between countries differing in terms of both needs and domestic governance the central conclusion is that a donor s utility function that embodies the need governance trade off and the associated optimization mechanism yield a meaningful rule to guide inter country allocation of aid resources

external debt in post conflict countries summary in the development literature there exists no systematic study of external borrowing in post conflict countries we address this gap by analyzing statistical and case study evidence from three african countries we find that many war affected countries face rising debt arrears and deteriorating relations with creditors rebuilding trust between lenders and borrowers is hence a crucial but often slow process furthermore donors to war affected african countries have been slow to grant exceptional debt relief based on odious debt or on financial requirements debt relief for post conflict reconstruction should embrace a more forward looking and more generous conditionality

did high debts distort loan and grant allocation to ida countries summary we examine the allocation of net loans net transfers and grants to ida countries over the period 1982 2008 focusing on the role of debt and debt sustainability in the decisions of multilateral and bilateral donors we find no evidence of defensive lending but strong evidence of defensive granting a significant negative reaction of net loans to the debt ratio indeed characterizes the decisions of both multilateral and bilateral creditors the impact of lower loans on the budget of debtor countries is however accommodated through higher grants in addition to debt relief these findings are consistent with a substitution of grants for loans and with the new approach to debt sustainability but question the efficiency and selectivity of foreign aid

alternative models of spatial competition the concept of a spatial price equilibrium underlies most studies of spatial movement and competition however this concept is based upon a notion of perfectly competitive markets that is often unrealistic for many markets such as the markets for oil and coal and ignores the existence of local spatial monopolies this paper presents alternative economic models of spatial competition and shows how all of these models can be solved with essentially the same solution algorithm specifically after reformulating the classical spatial price equilibrium model and two extensions of takayama and judge s monopoly model we state and analyze a cournot nash model and discuss solution algorithms we then generalize these models and algorithms to multiple commodities and networks with transshipment nodes we conclude with a brief discussion of possible extensions of this class of models and associated algorithms

policy selectivity forgone debt and donor behavior in africa authors assess the dynamics behind the high net resource transfers by donors and creditors to sub saharan african countries analyzing the determinants of overall net transfers for a panel of 37 recipient countries in 1978 98 authors find that country policies mattered little donors especially bilateral donors actually made greater transfers to countries with high debt largely owed to multilateral creditors when policies were bad authors conclude that comprehensive debt relief has the potential though not the certainty to restore selectivity in support of good policies that would make development assistance more effective going forward and increase public support in donor countries

imperfect competition in the international energy market a computerized nash cournot model this paper describes the conceptual structure properties and solution approach of a computerized model of the international energy market the model treats energy producers as players in a multistage noncooperative game the goal of each player or cartel of players is assumed to be maximization of discounted profit subject to technical political and resource constraints the model calculates that collection of intertemporal extraction and price paths from which a player can unilaterally deviate only at a loss the open loop nash equilibrium the model integrates the theory of exhaustible resources due to hotelling and the theory of oligopoly due to nash and cournot although useful as a teaching device to illustrate theoretical results its main function is to facilitate analysis of real world resource problems the model is flexible allowing the user to specify not only cost demand and reserve information but also assumptions about who belongs to what coalition two shortcomings deserve note t

computing cournot nash equilibria this paper examines convergence criteria of an algorithm for the computation of cournot nash economic equilibria the method is based on formulating the equilibrium problem as that of finding a solution to a nonlinear complementarity problem solved by sequential linearization and lemke s algorithm conditions for local and global convergence are developed and the technique is applied to homogeneous segmented and differentiated product markets

grants versus loans for development banks in recent years economists have increasingly debated whether multilateral development banks such as the world bank should switch from making subsidized loans to giving outright grants it is no small question the combined loans of the world bank group and brethren regional entities such as the asian and inter american development banks approach 300 billion their funds constitute a main channel through which rich country governments provide assistance to developing country governments in bulow and rogoff 1990 we first developed the case for a shift to outright grants we argued that under the status quo a vastly disproportionate share of aid goes to middle income countries via disguised interest subsidies rather than to the poorest countries we also argued that a shift to grants would protect donor banks from sometimes having to play a bad cop role when trying to collect net repayments rather than fully rolling over loans the meltzer commission international financial institution advisory commission 2000 report on government sponsored international lending institutions famously took a similar view supporters of the status quo often argue that development bank loans to middle income countries are in fact highly profitable and are essential for allowing institutions like the world bank to subsidize aid to poor countries we shall argue that the bank s profitability is an accounting artifice that greatly underestimates the risks of the bank s portfolio another argument for loans is that multilateral development banks have a superior enforcement technology that helps international debt markets to function more efficiently thus loans allow financially strapped governments including in middle income countries to borrow more than they could otherwise we will argue that this benefit too is an illusion in those cases when official lending does expand a developing country government s borrowing capacity it effectively enables the government to commit the country to repayment levels beyond that supported by domestic political consensus creating moral hazard for shortsighted rulers in theory better credit access to finance say public infrastructure projects can be highly beneficial in practice however the increased risk of debt crisis all too often outweighs any gain ordinary citizens might enjoy from the loans furthermore moral hazard on the part of lenders who may be able to induce rich countries into subsidizing the bailout of troubled middle income borrowers may mean that aggregate lending is excessive even if multilaterals merely displace equivalent private debt we do not argue for eliminating assistance to middle income countries on the contrary we would favor expanding aid in general albeit in far greater proportion to the world s poorest countries note that in principle any country with market access could use grant flows to help defray interest rate costs on loans if it so chose but development banks would never need to assume a bad cop role in enforcing debt

an exact solution method for binary equilibrium problems with compensation and the power market uplift problem abstract we propose a novel method to find nash equilibria in games with binary decision variables by including compensation payments and incentive compatibility constraints from non cooperative game theory directly into an optimization framework in lieu of using first order conditions of a linearization or relaxation of integrality conditions the reformulation offers a new approach to obtain and interpret dual variables to binary constraints using the benefit or loss from deviation rather than marginal relaxations the method endogenizes the trade off between overall societal efficiency and compensation payments necessary to align incentives of individual players we provide existence results and conditions under which this problem can be solved as a mixed binary linear program we apply the solution approach to a stylized nodal power market equilibrium problem with binary on off decisions this illustrative example shows that our approach yields an exact solution to the binary nash game with compensation we compare different implementations of actual market rules within our model in particular constraints ensuring non negative profits no loss rule and restrictions on the compensation payments to non dispatched generators we discuss the resulting equilibria in terms of overall welfare efficiency and allocational equity

multilateral resistance to migration the rate of migration observed between two countries does not depend solely on their relative attractiveness but also on the one of alternative destinations following the trade literature we term the influence exerted by other destinations on bilateral flows as multilateral resistance to migration and we show how it can be accounted for when estimating the determinants of migration rates in the context of a general individual random utility maximization model we propose the use of the common correlated effects estimator pesaran 2006 and apply it to high frequency data on the spanish immigration boom between 1997 and 2009 compared to more restrictive estimation strategies developed in the literature the bias goes in the expected direction we find a smaller effect of gdp per capita and a larger effect of migration policies on bilateral rates

recent experience with commercial bank debt reduction has the menu outdone the market abstract debt reduction at market terms has been criticized as too expensive from the point of view of the debtor the recent reduction agreements following the menu approach are partially concerted but they also possess some elements of voluntariness this raises two issues a what is the conceptual justification for such financial arrangements and b based on recent evidence to what extent have these arrangements reduced the cost of debt reduction in a review of six recent menu driven debt reduction agreements we find that the debtors achieved a far better financial result than would have been feasible with simple market buybacks

debt relief investment and growth from 1989 to 2004 the donor community provided approximately 400 billion in debt relief to developing countries in an attempt to promote growth and reduce poverty using a sample of 118 developing countries this paper empirically assesses the impact of debt relief on growth via 1 resources made available for investment from reduced debt service payments and 2 improved incentives to invest from a reduced debt stock although the results show no general evidence of a growth effect from debt relief the study provides certain evidence that it promotes investment and thereby growth in countries not classified as hipcs

the determinants of international migration unbundling the role of economic political and social institutions international migrants may relocate because of economic political and social factors in their origin or destination countries using global bilateral migration flows from 103 countries over the period 1990 2000 we explore whether emigrants self select based on economic political and social institutions our study adds social dimension as a potential determinant of migration and separates the pull and push effects of political economic and social institutions our results indicate that economic political and social institutions are significant pull factors of migration economic freedom has the most substantial pull effect followed by the political institutions social institutions have the weakest pull effect on migration moreover economic and social institutions are significant push factors of migration while political institutions do not show any push effect furthermore educated migrants are more sensitive to the destination economic political and social institutions than less educated migrants and less educated migrants are more sensitive to the social institutions at the origin

border flow rights and contracts for differences of differences models for electric transmission property rights in this paper a property rights model for electric transmission is proposed and its properties analyzed the proposed rights called border flow rights support financial hedging of transmission risk and merchant transmission expansion through associated financial rights called contracts for differences of differences these financial rights allow for forward trading of both energy and transmission by a unified exchange avoiding the bifurcation in current markets between decentralized long term energy trading and centralized long term transmission trading such long term trading can help to support the financing of both generation and transmission assets we consider incentive properties of such a right in the absence of lumpiness economies of scale and market power

spatial pricing in the united states west germany and japan this paper investigates the spatial pricing policies of a sample of firms in the united states west germany and japan we begin in section i by providing general results for the three countries these suggest that f o b pricing is the exception rather than the rule furthermore there appear to be significant differences between the countries in the degree of spatial price discrimination the remainder of the paper examines whether the inter country differences in spatial discrimination can be explained by a theory of spatial pricing section ii uses the theory of spatial pricing proposed in greenhut and greenhut 1975 to derive an operational model in section iii the parameters of this model are estimated from the individual country data and the results are discussed section iv presents the conclusions the data used in this study were obtained from a survey of firms in the three countries in each country target regions were selected with a similar urban rural proportions as restricted by b existing acquaintanceships with professors in or near these urban rural centres survey constraint b was imposed after a mailed questionnaire pilot study in the united states had indicated a likely need for follow up mailings phone calls and even interviews before a sufficient number of responses from a particular place e g a particular state in the united states could be expected after selecting our comparable survey areas firms were picked at random from industrial lists of business establishments in each country and questionnaires were mailed to them the questionnaire is reproduced in the appendix the firms that returned questionnaires were compared to non responding firms no distinction in size of firm industry type or location was apparent for any country or sub region studied among the respondents we dropped from the sample all firms that were not subject to a significant freight cost defined to be a 5 per cent minimum freight cost to delivered cost ratio on sales to at least one distant market point our findings on pricing strategies are summarized in table 1 firms in the united states tend to price discriminatorily of 174 sampled firms less than one third priced non discriminatorily f o b the spokesmen for the remaining firms 67 per cent admitted that they did not add full freight cost to their mill price on all of their distant sales these firms therefore priced discriminatorily the tendency to price discriminatorily is even greater in west germany and japan with the percentage of discriminating firms approximately

an oligopolistic model of an integrated market for energy and spinning reserve in this paper a model for oligopolistic competition in electricity markets is presented most previous proposed models have been static and focused only on the energy market incentives for strategic behavior in contrast in this paper a multiperiod market for energy and spinning reserve sr is considered by including such factors the competition among participants is modeled with more realism competition in the energy market is modeled by means of conjectured supply functions while conjectured reserve price response functions are used to consider the generators ability to alter the sr prices the resulting equilibrium problem is modeled in terms of complementarity conditions based upon a complementarity model the opportunity cost between the energy and sr markets is derived for oligopolistic markets the proposed model is illustrated by a six node network using a dc approximation

aid and debt relief in africa have they been substitutes or complements summary much attention has been paid to helping economies in sub saharan africa ssa to achieve the millennium development goals mdgs the conventional instruments for providing assistance have been foreign aid disbursements and debt relief but have debt relief initiatives complemented or substituted for other aid has debt relief been additional this paper examines the evolving relationship between debt relief and other foreign aid in ssa using recently constructed and improved data estimating a model of aid allocation for 42 ssa countries using panel data for 1988 2006 it finds that the relationships between debt debt relief aid and resource transfers have changed over time this paper interprets how policy changes may have modified the underlying relationship between aid and debt relief

optimal fuel power and load based emissions trades for electric power supply chain equilibrium this paper proposes a model to determine equilibrium fuel power and emissions trades in an electric power supply chain fuel generation transmission distribution consumption framework with a load based lb emissions trading program the model represents the oligopolistic gaming behavior of generation companies gencos and load serving entities lses and equilibrium conditions for fuel power and emissions allowance markets which are integrated through endogenous prices the model is solved by using a practical heuristic method based on the fisher burmeister nonlinear complementarity function ncp and smoothing technique an application to a four node system with three gencos and lses is also presented to illustrate the effects of emission allowances trading renewable energy generation and network congestion on equilibrium solutions

large scale market power modeling analysis of the u s eastern interconnection and regulatory applications this paper presents results from a large scale cournot model of the u s eastern interconnection using a dc load flow network there are 100 network locations at the level of control areas along with 2725 generators owned by 99 cournot firms and 200 competitive fringe suppliers these results demonstrate that this modeling approach can analyze potential generation market power with a reasonable approximation of the actual transmission network over a large integrated region while such models have been used to analyze market design alternatives their application to regulatory decision making concerning generation market power mitigation has been more controversial we suggest that such large scale market price simulations could improve upon aspects of the existing generation market power screening methods used in the united states for mergers and market based rates illustrating such applications using this model

time of use pricing in electricity markets under different market structures in this paper we propose variational inequality models for electricity markets with time of use tou pricing demand response is dynamic in the model through a dependence on the lagged demand different market structures are examined within this context with an illustrative example the welfare gains losses are analyzed after an implementation of tou pricing scheme over the single pricing scheme it is intended that the proposed models would be useful 1 for regulatory bodies in jurisdictions to assess market power 2 to forecast future tou prices and 3 to examine welfare changes in electricity markets that change to tou pricing from single pricing

bidding strategy of virtual power plant for participating in energy and spinning reserve markets part i problem formulation this paper addresses the bidding problem faced by a virtual power plant vpp in a joint market of energy and spinning reserve service the proposed bidding strategy is a non equilibrium model based on the deterministic price based unit commitment pbuc which takes the supply demand balancing constraint and security constraints of vpp itself into account the presented model creates a single operating profile from a composite of the parameters characterizing each distributed energy resources der which is a component of vpp and incorporates network constraints into its description of the capabilities of the portfolio the presented model is a nonlinear mixed integer programming with inter temporal constraints and solved by genetic algorithm ga

selection and network effects migration flows into oecd countries 1990 2000 abstract this paper presents empirical evidence on immigration flows into the oecd countries during the period 1990 2000 our results indicate that network effects are strong but vary between different groups of welfare states and between countries according to the type of immigration policy being applied network effects seem to be less important in the nordic countries which also seem to attract immigrants from the lowest income level source countries we do not find clear evidence that selection effects measured by migration flows being sensitive to differences in public social expenditures have had a major influence on the observed migration patterns until now this may partly be explained by restrictive migration policies which may have dampened the potential selection effects

stochastic programming based bounding of expected production costs for multiarea electric power system a bounding based method is developed for estimating the expected operation cost of a multiarea electric power system in which transmission capacity limits interarea flows costs include the expense of power generation and losses suffered by consumers because of supply shortfalls averaged over random generator outage states and varying demand levels the calculation of this expectation termed the distribution problem is a large scale stochastic programming problem rather than solving this problem directly lower and upper bounds to the expected cost are created using two more easily solved models the lower bound is from a deterministic model based on the expected value of the uncertain inputs the upper bound results from a linear program with recourse whose structure permits relatively quick solution by benders decomposition the benders subproblems use probabilistic production costing which can be viewed as a stochastic greedy algorithm to consider random outages and demands these bounds are iteratively tightened by partitioning realizations of the random variables into subsets based on the status of larger generators and a cluster analysis of demands computational examples are described and application issues addressed

imf concern for reputation and conditional lending failure theory and empirics one possible explanation for the unsatisfactory implementation of imf conditionality has been attributed to the lack of credibility of the imf threat of interrupting financial assistance in case of non compliance with the negotiated conditions in this paper we suggest that such lack of credibility might be due to the dual role played by the imf which acts at the same time as a creditor and a monitor of economic reforms we show that the imf incentive to hide its surveillance failures in order to preserve its reputation of being a good monitor may actually distort its lending decisions towards greater laxity relative to social optimum in punishing non compliance with economic reforms we have empirically tested such theoretical result by supposing that larger departures from efficiency of the imf lending rule are associated with a longer relationship between a country and the imf the longer this relationship the stronger the imf reputation will be affected in case it ultimately decides to stop lending specifically we have empirically investigated whether imf disbursements are affected by the imf own share of debt which is taken as a proxy for the duration of the relationship between the fund and a country our empirical results show that a higher imf debt share does increase imf disbursements

prospective aid and indebtedness relief a proposal primary needs of human development are not met in poor development countries although ambitious goals have been set by the international community to meet specific human development targets by 2015 official development aid is lagging and excessive external debt continues to drain much needed resources from poor countries despite the recent hipc highly indebted poor countries initiative this paper outlines a 15 year program for implementing the 2015 human development targets while resolving fully the debt overhang problem for a set of 49 poor countries the proposal requires additional contributions from 23 rich countries amounting to 0 1 of 1 of their gdp over each of the 15y ears although only a small part of the effort would take the form of debt cancellation the outstanding debt of the 49 poor countries would be totally extinct by year 2015 the program to be implemented in a multilateral framework in which all interested parties have an effective voice relies on several basic premises a long term commitment by donors a fair burden sharing among creditors a fair distribution of newly available resources among poor countries heavily indebted or not a targeting of these resources to human development programs a conditionality guaranteeing reasonable aid effectiveness

debt relief and governance quality in developing countries summary in this paper we empirically discuss whether or not debt relief has been economically rational in the past 15 years from analyzing the determinants of debt relief our results suggest that governance quality did not play a role in the decision of creditor countries to forgive debt in the 1990s furthermore even the actual debt burden of highly indebted poor countries was not crucial in deciding whether or not debt forgiveness was granted rather debt relief followed a strong path dependence those countries whose debt had been forgiven in the first half of the 1990s were also granted debt forgiveness in the second half of the decade however this allocation pattern changed at the beginning of the 21st century when path dependence diminished and some dimensions of governance quality were taken into account by donor countries

migration and institutions evidence from internal eu mobility despite the formal achievement of the free movement of labour within the eu the institutional characteristics of the labour markets of the member states may influence european mobility the paper seeks empirical evidence of the relationship between labour market institutions and intra eu migrations estimating a gravity model for bilateral migration for the period 2001 11 the results indicate that trade union density negatively correlates with the size of bilateral migrations destinations with relatively high union density are associated with lower migration inflows since these countries tend to have a relatively flat earnings distribution it is also investigated whether their earnings structure reduces their attractiveness as destinations hindering the access to their labour market even if a dependence between the earnings dispersion and migrations is found trade union density remains the main driver of migration patterns clear effects of employment protection on eu mobility are not found

us politics and world bank ida lending this paper studies the role of us political factors in the allocation of world bank concessional lending where us political interests are proxied by voting similarity in the united nations general assembly on issues identified as important by the us department of state in contrast to previous studies we find that the us exerted a significant influence on ida lending during the period 1993 2000 we demonstrate that the influence was both statistically as well as economically significant finally we demonstrate that our result is robust with respect to the omission of the ida country performance rating index

a practitioners guide to gravity models of international migration the use of bilateral data for the analysis of international migration is at the same time a blessing and a curse it is a blessing because the dyadic dimension of the data allows researchers to address a number of previously unanswered questions but it is also a curse for the various analytical challenges it gives rise to this paper presents the theoretical foundations of the estimation of gravity models of international migration and the main difficulties that have to be tackled in the econometric analysis such as the nature of migration data how to account for multilateral resistance to migration or endogeneity we also review some empirical evidence that has considered these issues

aid policies and growth the authors of this paper use a new database on foreign aid to examine the relationships among foreign aid economic policies and growth of per capita gdp in panel growth regressions for 56 developing countries and 6 four year periods 1970 93 they find that the policies that have a great effect on growth are those related to fiscal surplus inflation and trade openness they construct an index for those three policies and have that index interact with foreign aid they have instruments for both aid and aid interacting with policies they find that aid has a positive impact on growth in developing countries with good fiscal monetary and trade policies in the presence of poor policies aid has no positive effect on growth this result is robust in a variety of specifications which include or exclude middle income countries include or exclude outliers and treat policies as exogenous or endogenous they examine the determinants of policy and find no evidence that aid has systematically affected policies either for good or for ill they estimate an aid allocation equation and show that any tendency for aid to reward good policies has been overwhelmed by donors pursuit of their own strategic interests in a counterfactual they reallocate aid reduce the role of donor interests and increasing the importance of policy such a reallocation would have a large positive effect on developing countries growth rates

the effect of market conduct on international steam coal trade abstract this paper is concerned with the determinants of international steam coal trade most quantitative work in explaining such trade has been stymied by the apparent failure of the competitive model to account for observed and anticipated trade flows in general authors have sought institutional explanations for this failure the hypothesis explored by this paper is that the exercising of market power by certain agents in the market can lead to trade patterns consistent with those observed and anticipated this hypothesis is explored through a simple model of imperfect market equilibrium in addition to perfect competition we examine cournot nash monopoly south africa duopoly south africa australia and duopoly monopsony south africa australia japan with a competitive fringe of producers us canada poland china colombia using the equilibrium model of coal trade we examine these market structures and evaluate the extent to which they can explain existing and anticipated trade patterns

immigrant selection in the oecd in this paper we examine the determinants of educational selectivity in immigration using immigrant stock data for 70 source countries and 21 oecd destination countries as observed in the year 2000 2001 we develop a variant of the roy model to estimate the determinants of educational selectivity two key findings emerge first the effect of the skill premium which is at the core of the roy model can be observed only after we take into account the poverty constraints operating in the source countries second cultural similarities colonial legacies and physical distance are often more important determinants of educational selectivity than wage incentives or selective immigration policy

permit banking in emission trading competition arbitrage and linkage abstract several existing or proposed climate policies have considered bankable permits in a cap and trade c t program that covers beyond a single sector e g electric power or allows the program to link to external c t programs in other regions this paper develops a model of permit banking under imperfect competition and imperfect inter temporal arbitrage in which the firms in one dominant sector can exert market power in both product and permit markets while those in other sectors or linked programs are perfectly competitive a simple analytical model is developed to generate contestable hypothesis we further extend the model to account for the physical power system institutional rules and market conditions and then apply it to the pennsylvania jersey maryland pjm market we show that if the dominant firm has market power then the permit price rises at a higher rate than the discount rate contrary to perfectly competitive permit market where the permit price rises at the discount rate following the classic hotelling s rule furthermore under a declining emissions cap system with the permits front loaded in early time periods the dominant firm has an incentive to suppress the permit prices monopsony when buying the permits in early periods and then inflate the permit prices monopoly when selling them in later periods numerical results of the pjm case are consistent with the analytical conclusion

electricity market near equilibrium under locational marginal pricing and minimum profit conditions this paper provides a tool to determine the near equilibrium of an electric energy market this market works under locational marginal pricing i e generating units and demand loads are paid and pay respectively the locational marginal prices corresponding to the nodes they are connected to the near equilibrium is defined as the energy transaction levels for which generating companies maximize their respective profits and consumption companies maximize their respective utilities an independent system operator clears the market maximizing the social welfare conditions that ensure minimum profit for generating units can be included however these conditions may render a generating unit uncompetitive and expel it from the market demands are taken to be non constant and values are determined as part of the solution the near equilibrium is obtained through the solution of a mixed integer quadratic problem equivalent to a mixed linear complementarity problem that includes the minimum profit conditions it is important to note that the near equilibrium concept presented in this paper does not solve a market equilibrium when indivisibilities such as start up costs or the like are present lastly we validate the proposed model on a case study using data from the ieee reliability test system

climatic factors as determinants of international migration we examine environmental change as a potential determinant of international migration we distinguish between unexpected short run factors captured by natural disasters as well as long run climate change and climate variability captured by deviations and volatilities of temperatures and rainfall from and around their long run averages starting from a simple neo classical model we use a panel dataset of bilateral migration flows for the period 1960 2000 that allows us to control for numerous time varying and time invariant factors we find no direct impact of climatic change on international migration across our entire sample these results are robust when conditioning on characteristics of origin countries as well as when further considering migrants returning home and the potential endogeneity of our network variable in contrast there is evidence of indirect effects of environmental factors going through wages we further find strong evidence that natural disasters beget greater flows of migrants to urban environs

income maximization and the selection and sorting of international migrants abstract two prominent features of international labor movements are that the more educated are more likely to emigrate positive selection and more educated migrants are more likely to settle in destination countries with high rewards to skill positive sorting using data on emigrant stocks by schooling level and source country in oecd destinations we find that a simple model of income maximization can account for both phenomena results on selection show that migrants for a source destination pair are more educated relative to non migrants the larger is the absolute skill related difference in earnings between the destination country and the source results on sorting indicate that the relative stock of more educated migrants in a destination is increasing in the absolute earnings difference between high and low skilled workers we use our framework to compare alternative specifications of international migration estimate the magnitude of migration costs by source destination pair and assess the contribution of wage differences to how migrants sort themselves across destination countries

oligopolistic competition of gencos in reactive power ancillary service provisions the need for a market based approach for reactive power procurement has been recognized by ferc due to the localized characteristic of reactive power regulatory mechanisms are necessary to mitigate the possibility of holding market power by generators the regulator is responsible for devising the regulatory mechanisms that provide incentives to generators to supply reactive power while preventing the abuse of market power this paper proposes a mathematical model to simulate the strategic behavior of generators supplying reactive power while considering the system operator s schedule the proposed method can be used by the regulator to simulate the market behavior in the reactive power supply we further study how regulatory policies affect the strategic behavior an alternative price cap method has been proposed and tested in the numerical example to mitigate the effect of strategic behavior of generators in reactive power procurement by the system operator the numerical examples are tested on the nordic 32 bus system

self selection and the earnings of immigrants this paper analyzes the way in which the earnings of the immigrant population may be expected to differ from the earnings of the native population because of the endogeneity of the decision to migrate the empirical study shows that differences in the u s earnings of immigrants with the same measured skills but from different home countries are attributable to variations in political and economic conditions in the countries of origin at the time of migration excerpt

the regulation of labor author s botero juan djankov simeon la porta rafael lopez de silanes florencio shleifer andrei abstract we investigate the regulation of labor markets through employment collective relations and social security laws in 85 countries we find that the political power of the left is associated with more stringent labor regulations and more generous social security systems and that socialist french and scandinavian legal origin countries have sharply higher levels of labor regulation than do common law countries however the effects of legal origins are larger and explain more of the variation in regulations than those of politics heavier regulation of labor is associated with lower labor force participation and higher unemployment especially of the young these results are most naturally consistent with legal theories according to which countries have pervasive regulaory styles inherited from the transplantation of legal systems

entry deterrence by non horizontal merger we study when and how pure non horizontal mergers whether cross product or vertical can deter new entry organizational mergers implicitly commit firms to more aggressive price competition because heightened competition deters entry mergers can occur in equilibrium even when absent entry considerations they do not we show that in order to prevent a flood of entrants mergers arise even when a marginal merger costs incumbent firms more than does a marginal entrant

optimal deficit and debt in the presence of foreign aid summary external revenue in the form of foreign aid constitutes an important component of the government s budget constraint in many developing countries we derive optimal public spending and the resulting optimal deficit and debt in an optimal control framework when the government seeks to maximize the utility of constituents in the presence of external revenue that cannot be influenced by the government directly but is contingent on public revenue and debt we find that in this context a policy of running budget deficits and accumulating debt becomes optimal in simulations we characterize the size and the path dependency of the optimal deficit and debt

migration and imperfect labor markets theory and cross country evidence from denmark germany and the uk we investigate the labor market effects of immigration in denmark germany and the uk three countries which are characterized by considerable differences in labor market institutions and welfare states institutions such as collective bargaining minimum wages employment protection and unemployment benefits affect the way in which wages respond to labor supply shocks and hence the labor market effects of immigration we employ a wage setting approach which assumes that wages decline with the unemployment rate albeit imperfectly we find that the wage and employment effects of immigration depend on wage flexibility and the composition of the labor supply shock in germany immigration involves only moderate wage but large unemployment effects since immigrants are concentrated in labor market segments with low wage flexibility the reverse is true for the uk and denmark

equilibrium pricing and lead time decisions in a competitive industry pricing and lead time are two crucial decisions to a success in today s competitive markets this paper examines the equilibrium pricing and lead time decisions in a duopoly industry consisting of two large and several smaller firms with competition we solve the sufficient karush kuhn tucker kkt optimality conditions for the nash equilibrium solution we characterize the existence and uniqueness of the nash equilibrium solution of pricing and lead time decisions for both homogenous and heterogeneous firms our case study provides important managerial insights about firms behavior under price and lead time competition in a semiconductor manufacturing industry

the short run macroeconomic impact of foreign aid to small states an agnostic time series analysis abstract this paper investigates the short run macroeconomic impact of aid in small developing countries sdcs by using a vector auto regression var model to study the impact of aid on net import absorption and domestic demand spending we focus on average country effects within two country sub groups and find substantial differences between aid dependent sdcs and other sdcs that are more dependent on natural resources tourism or financial services in aid dependent sdcs aid absorption more or less equals spending although only half of the aid flow is absorbed and spent in the non aid dependent group aid does not seem to be absorbed or spent in any systematic fashion

oil nontax revenue and the redistributional foundations of regime stability nontax revenues make up a substantial amount of government revenue around the world though scholars usually focus on individual sources of such revenue for example foreign aid and state owned oil companies using a theory of regime change that builds on recent models of the redistributional foundations of dictatorships and democracies i generate hypotheses regarding all nontax revenue and regime stability i argue that an increase in nontax revenue should be associated with less taxation of elites in democracies more social spending in dictatorships and more stability for both regime types i find support for all three of these hypotheses in a cross sectional time series analysis covering all countries and years for which the necessary data are available significantly i show that the particular source of nontax revenue does not make a difference they all act similarly with regard to regime stability and the causal mechanisms

airline mergers airport dominance and market power effects of northwestrepublic and twaozark mergers on fares at minneapolisst paul and st louis

the price and profit effects of horizontal merger a case study the economic rationale behind antitrust concern for horizontal mergers rests primarily on the familiar structure performance paradigm that links market concentration with supra competitive profits and implicitly with higher prices a vast empirical literature has demonstrated a positive statistical relationship between measures of industry structure such as entry barriers and concentration and average industry profit using cross section data a small number of cross section studies most dealing with banking services have claimed to find a positive relationship between concentrated market structure and price measures aspinwall 1970 bell and murphy i969 heggestak and mingo 1976 hester i979 lamm i98i landon i97i marion et al 1979 and marvel 1978 but we are unaware of any study that traces the effect of an actual change in market structure on prices or profits in this paper we exploit an unusual opportunity to test for price effects and estimate profit consequences of two acquisitions that resulted in substantial increases in the market share of the acquiring firm the evidence we examine arises from a recent federal trade commission antitrust suit against xidex corporation the world s largest producer of duplicating microfilm the xidex case is unusual in three respects i although the size of the market is small sales under ioo million the acquisitions involved greater changes in market shares than are usual in antitrust actions 2 the suit was brought five years after the first acquisition and two years after the second so a post acquisition record of price behavior exists for this example furthermore the price data used in this study are actual transaction prices 3 special characteristics of the products allow a relatively straightforward test for price effects of the acquisitions the next section provides background information concerning the firms and products involved following that we describe the data and methodology used to estimate the price effects of the acquisitions and present results which indicate significant price increases traceable to the acquisitions we then offer estimates of the incremental profits attributable to those price increases a final section provides a summary the analysis and conclusions set forth in this study are those of the authors and do not necessarily reflect the views of federal trade commission staff or the commission itself all data and other information used in the study are in the public domain this includes information obtained by the commission which has become part of the public record for helpful comments we thank allan fisher ron lafferty paul pautler and rich sciacca of the bureau of economics federal trade commission

horizontal mergers comment joseph farrell and carl shapiro 1990a present an interesting and elegant analysis of horizontal mergers in the context of a cournot model under quite general demand and cost conditions one section of their paper deals with the effects of mergers on price or consumer welfare in it they show that in a cournot model mergers that do not lower costs always raise price and that mergers that lower costs still raise price unless they lower costs quite a lot these results are much more general than anything in the prior literature another section of the paper deals with the effects of mergers on nonmerging firms and consumers which farrell and shapiro term external with some minor additional assumptions they show that a merger is externally welfare enhancing if but not only if

dynamic market strategy under threat of competitive entry an analysis of the pricing and production policies open to the multinational company there is extensive evidence indicating that firms price discriminatorily over their market areas where price discrimination is defined to exist when the pattern of delivered prices departs from that which would be generated by f o b pricing see greenhut greenhut and li 8 hwang 10 phlips 16 underlying this evidence is an equally extensive body of theory which attempts to explain why such discriminatory pricing rules should be adopted both in competitive and monopolistic markets see capozza and van order 3 greenhut and greenhut 7 norman 15 one limitation of this theory is that it is essentially static even when competitive reactions and interdependencies are introduced there is no truly dynamic analysis rather the theory concentrates on comparing long run equilibria with perhaps some limited comment on how those equilibria might be achieved the analysis of price changes over time has received some attention notably by gaskins 6 jacquemin and thisse 11 and phlips 17 in these cases however analysis is spaceless while some analogies are drawn between intertemporal and spatial price discrimination these analogies are inevitably weak the major objective of this paper is to treat the spatial and temporal problems simultaneously we ask whether the pricing rules and market choice of a firm operating over a spatially extensive market area will vary when it is placed in a dynamic setting in particular we investigate the pricing behaviour of a firm to which we shall refer as the leading firm when it is subject to the threat of competitive entry in certain of its markets our model owes much to the analysis by gaskins 6 but we show that gaskins analysis applies to only part of the spatial market area once we allow for the costs of distance in particular we show that if the firm enjoys a substantial long run cost advantage in particular markets it will adopt a pricing rule identical to that derived in the static monopolistic case this can be expected to be a very

sustainable transmission planning in imperfectly competitive electricity industries balancing economic and environmental outcomes abstract we explore the role of a transmission system operator tso that builds a transmission line to accommodate renewable energy in order to lower emissions as required by government policy in contrast to central planning a tso in a deregulated electricity industry can only indirectly influence outcomes through its choice of the transmission line capacity via a bi level model we show that this results in less transmission capacity and with limited emissions control in a perfectly competitive industry vis a vis a benchmark centrally planned system a carbon charge on industry that fully accounts for the cost of pollution damage leads to a perfect alignment of incentives and maximised social welfare only under perfect competition by contrast a carbon charge may actually lower social welfare under a cournot oligopoly as the resulting reduction in consumption facilitates the further exercise of market power

network models of spatial oligopoly with an application to deregulation of electricity generation because of the existence of transmission costs and significant scale economies in power production deregulation of electricity generation would lead to spatial oligopolistic markets this paper uses linear programs to obtain short run spatial price equilibria for a deregulated bulk power market in upstate new york these models unlike most previous models of imperfect competition capture spatial variations in production costs and demand functions we present two models one calculates a nash bertrand equilibrium in which each firm believes that rivals will not react to price changes this equilibrium represents the most intense level of competition to be expected the other model yields limit prices that are designed to discourage new firms from entering the market

transmission congestion and competition on power generation expansion generation expansion planning involves decisions on location and capacity of new generation which may lead to adding or relieving congestion in transmission lines and to increasing or reducing competition in deregulated markets generation expansion may encounter congestion in the transmission network by constrained single line flows as well as flowgate transfer capabilities in this paper a model to study the interaction between competition and transmission congestion on power generation expansion is proposed the generation expansion problem is modeled as a cournot competition game network transmission constraints are included in the optimal generation expansion problem to comply with power flow limits results from a five bus power network and the ieee 24 bus system are presented and discussed

mill pricing versus spatial price discrimination under bertrand and cournot spatial competition this paper asks two questions about spatial competition first does spatial price discrimination lead to lower prices and higher welfare than mill pricing if firms hold the bertrand conjecture the answer is yes for most values of fixed cost but for the cournot conjecture the opposite is true second does the introduction of space into the oligopoly models of bertrand and cournot change their results the answer is generally no however spatial bertrand prices exceed marginal cost unlike their spaceless counterparts these answers are obtained using models of spatial competition of which the cournot mill pricing models are new in spatial competition significant transport costs and economies of scale bestow market power upon firms this paper addresses two questions about spatial competition first does spatial price discrimination yield lower prices and higher social welfare producer plus consumer surplus than fo b mill pricing under spatial price discrimination differences in the delivered prices charged by a firm bear no necessary relationship to differences in transport costs in contrast a mill pricing firm sets a single price at its plant and customers bear the cost of transport this paper answers this question for the cases in which firms adopt the bertrand or cournot conjectures concerning how rivals will react to price and output changes this question is important because of the superficial appeal of mill pricing which stems from its imitation of the spatial structure of marginal costs the presence of spatial price discrimination by contrast is often considered to be evidence of the presence of market power at least in part for these reasons the us robinson patman antitrust act and great britain s price commission favor mill pricing nevertheless spatial price discrimination remains ubiquitous in the us europe and japan greenhut 1981 the second question is how does the introduction of space into the original oligopoly models of cournot and bertrand change their results cournot

a robust linear approach for offering strategy of a hybrid electric energy company this paper presents a new approach for determining the day ahead bidding strategies of a large scale hybrid electric energy company the company has both energy generation and energy retailing businesses in a competitive electricity market demand response programs are also considered in the retail side of the company in order to hedge the risk of participation in wholesale market this paper introduces a max min bilevel mathematical programming with equilibrium constraint model for offering a strategy that manages the risk of uncertain forecasted rivals bids by robust optimization the max min bilevel model is converted to its equivalent single level optimization using karush kuhn tucker optimality conditions the duality theory is utilized to find the equivalent ordinary maximization model of the max min problem strong duality theory and big m method are also used to linearize the final model of offering strategy applicability of the proposed approach is shown by implementing it on the ieee 118 bus test system

linear complementarity models of nash cournot competition in bilateral and poolco power markets two cournot models of imperfect competition among electricity producers are formulated as mixed linear complementarity problems lcps and a simple example is presented to illustrate their application the two models simulate bilateral markets the models include a congestion pricing scheme for transmission but other transmission pricing approaches can also be represented in this framework the two models differ from each other in that one has no arbitrage between nodes of the network while in the other model arbitragers erase any noncost based differences in price the latter bilateral model turns out to be equivalent to a cournot model of a poolco the models differ from other cournot market models in that they include both of kirchhoff s laws via a dc approximation can include arbitragers possess unique solutions and are readily solved by efficient lcp algorithms the key assumption that permits their formulation as lcps is that each producer naively assumes that its output will not affect transmission prices

aid and growth regressions this paper examines the relationship between foreign aid and growth in real gdp per capita as it emerges from simple augmentations of popular cross country growth specifications it is shown that aid in all likelihood increases the growth rate and this result is not conditional on good policy there are however decreasing returns to aid and the estimated effectiveness of aid is highly sensitive to the choice of estimator and the set of control variables when investment and human capital are controlled for no positive effect of aid is found yet aid continues to impact on growth via investment we conclude by stressing the need for more theoretical work before this kind of cross country regressions are used for policy purposes

how did highly indebted poor countries become highly indebted reviewing two decades of debt relief how did highly indebted poor countries become highly indebted after two decades of debt relief efforts a set of theoretical models predict that countries with unchanged long run savings preferences will respond to debt relief with a mixture of asset decumulation and new borrowing a model also predicts that a high discount rate government will choose poor policies and impose its inter temporal preferences on the entire economy reviewing the experience of highly indebted poor countries compared with that of other developing countries the author finds direct and indirect evidence of asset decumulation and new borrowing associated with debt relief the ratio of the net present value of debt to exports rose strongly over 1979 97 despite the debt relief efforts average policies in highly indebted poor countries were generally worse than those in other developing countries nor were wars more likely in highly indebted poor countries over time there has been an important shift in financing for highly indebted poor countries away from private and bilateral nonconcessional sources to the international development association and other sources of multilateral concessional financing but this implicit form of debt relief also failed to reduce debt in net present value terms although debt relief is done in the name of the poor the poor are worse off if debt relief creates incentives to delay reforms needed for growth

short term market power assessment in a long term dynamic modeling of capacity investment this paper proposes a dynamic time simulation model for long term generation capacity investment decisions in the presence of either perfect or imperfect electricity market the model is based on system dynamics concept in which the dynamics of capacity construction is traced using the forecast of electricity price cleared in the short term electricity market both the perfect and oligopolistic competitions are considered and a market power index is defined to evaluate the competition level of the electricity market the short term and long term dynamic analysis are used to represent the generation firms behavior in bidding strategy and capacity investment respectively both possibilities of using forward bilateral contracts and application of wind power generation have been assessed individually in the proposed model in order to mitigate the market power the time simulation results derived from a case study demonstrate the effectiveness of the model in illustrating the oligopoly in electricity marketplace and also the alternative decisions to attenuate it such a decision tool enables both the generation firms and the regulators to gain perfect insight into the oligopoly and its consequences in the long term capacity investment in the electricity market