a globally flexible almost ideal demand system the almost ideal demand system is combined with the fourier expenditure system subject to the assumption that preferences are of the price independent generalized logarithmic class the resulting demand system has the desirable features of each of its components aggregate demand equations are consistent with preferences of a representative consumer and consistent estimates of elasticities are obtained for all observed prices application of the new demand system to u s consumption of meats and fish reveals that it fits the data well and that the restriction to the usual specification is rejected

the power of parties evidence from close municipal elections in norway we show that small shifts in representation can affect policy in proportional election systems using data from norway we find that a larger left wing party leads to more property taxation higher child care spending and less elderly care spending while local public goods appear to be a non partisan issue these effects are partly due to shifts in bloc majorities and partly due to changes in the left right position of the council keeping the majority constant the estimates on spending allocations are rather imprecise but they are consistent with evidence on politicians fiscal preferences and patterns in media attention this article is protected by copyright all rights reserved

financing and funding health care optimal policy and political implementability health care financing and funding are usually analyzed in isolation this paper combines the corresponding strands of the literature and thereby advances our understanding of the important interaction between them we investigate the impact of three modes of health care financing namely optimal income taxation proportional income taxation and insurance premiums on optimal provider payment and on the political implementability of optimal policies under majority voting considering a standard multi task agency framework we show that optimal health care policies will generally differ across financing regimes when the health authority has redistributive concerns we show that health care financing also has a bearing on the political implementability of optimal health care policies our results demonstrate that an isolated analysis of optimal provider payment rests on very strong assumptions regarding both the financing of health care and the redistributive preferences of the health authority

quality competition with motivated providers and sluggish demand we study incentives for quality provision in markets where providers are motivated semi altruistic prices are regulated and firms are funded by a combination of block grants and unit prices competition is based on quality and demand adjusts sluggishly health or education are sectors in which the mentioned features are the rule we show that the presence of motivated providers makes dynamic competition tougher resulting in higher steady state levels of quality in the closed loop solution than in the benchmark open loop solution if the price is sufficiently high however this result is reversed if the price is sufficiently low and below unit costs sufficiently low prices also imply that a reduction in demand sluggishness will lead to lower steady state quality prices below unit costs will nevertheless be welfare optimal if the providers are sufficiently motivated

political donations and the allocation of public procurement contracts abstract we study whether and when firms donations to political parties induce favouritism in public procurement allocations our analysis builds on a unique comprehensive dataset covering all public procurement contracts and all corporate donations to major political parties in the czech republic over the period from 2007 to 2014 and exploits changes in political control over regional governments within this period for identification purposes we find that firms donating 10 more to a political party gaining losing power witness an increase decrease in the value of their public procurement contracts by 0 5 0 6 importantly and in line with theoretical expectations these effects only arise for contracts allocated under less restrictive procurement allocation processes assessing the underlying mechanisms we show that donating firms receive more small contracts allocated under less regulated procurement procedures face less competition in more regulated and open procurement procedures and tend to win with bids further above the estimated cost of the procurement contract

do parties matter estimating the effect of political power in multi party systems abstract when there are more than two parties policy outcomes are typically the result of a bargaining process we investigate whether changes in political power for various parties have an effect on tax policies we use an instrumental variable approach where close elections provide the exogenous variation in our variable of interest voting power in order to isolate close elections in a proportional election system we develop a new simulation algorithm using data from german municipalities in the state of bavaria our estimation results suggest that political power does matter for policies somewhat surprisingly the center left party spd is found to lower all three locally controlled taxes whereas the greens increase both property taxes considerably these results remain robust across a range of specifications our partisan effect for the spd is also confirmed by a simple regression discontinuity estimation using mayoral elections

reputational concerns with altruistic providers we study a model of reputational concerns when doctors differ in their degree of altruism and they can signal their altruism by their observable quality when reputational concerns are high following the introduction or enhancement of public reporting the less altruistic bad doctor mimics the more altruistic good doctor otherwise either a separating or a semi separating equilibrium arises the bad doctor mimics the good doctor with probability less than one pay for performance incentive schemes are unlikely to induce crowding out unless some dimensions of quality are unobservable under the pooling equilibrium a purchaser can implement the first best quality by appropriately choosing a simple payment scheme with a fixed price per unit of quality provided this is not the case under the separating equilibrium therefore policies that enhance public reporting complement pay for performance schemes

new parties and policy outcomes evidence from colombian local governments abstract in many democracies increasing political competition has changed the traditional party system and brought new parties into the political arena this study examines whether the presence of politicians from new parties affects the size of government measured by public spending and tax revenue the study focuses on colombian municipalities where new parties have been numerous and successful in recent years regression discontinuity estimates show that public spending and tax revenues are significantly higher in municipalities governed by a mayor from a new party using information about local politics and the features of the new parties i argue that this result is not associated with new party ideology but instead relates to new parties having lower probability of reelection which raises the incentives to increase short term rent seeking

risk adjustment and prevention widespread integration of market based incentives into healthcare systems calls for and has elicited increasing adoption of risk adjustment by deterring selection risk adjustment helps to assure fair and efficient payments among health insurers or capitated provider groups however since conventional risk adjustment allocates funds among regions or insurers according to current population health status it does not reward indeed it penalizes preventive efforts that improve population health this prevention penalty of risk adjustment represents a hidden cost of unclear magnitude undermining provider incentives for health promotion we develop a theoretical model of selection and prevention demonstrating this problem with conventional risk adjustment and suggesting a simple alternative risk adjustment should be linked to pay for performance for prevention l integration generalisee d incitatifs mercantiles dans les systemes de soins de sante appelle et a engendre l adoption croissante d ajustements au risque en decourageant la selection l ajustement au risque aide a assurer des paiements justes et equitables entre les assureurs ou les groupes de fournisseurs finances par capitation cependant comme les ajustements conventionnels au risque allouent des fonds entre les regions ou les assureurs selon le statut sanitaire present de la population ils ne recompensent pas et meme penalisent les efforts de prevention qui ameliorent la sante des populations cette penalisation de la prevention dans les ajustements au risque represente un cout cache d une magnitude mal etablie qui mine l incitation des fournisseurs a s occuper de promotion de la sante on developpe un modele theorique de selection et de prevention mettant en lumiere ce probleme dans l utilisation de l ajustement au risque conventionnel et on suggere une solution de rechange ou l ajustement au risque est reliea une remuneration a la performance pour la prevention

how do budget deficits and economic growth affect reelection prospects evidence from a large panel of countries conventional wisdom is that good economic conditions and expansionary fiscal policy help incumbents get reelected but this has not been tested in a large cross section of countries we test these arguments in a sample of 74 countries over the period 1960 2003 we find no evidence that deficits help reelection in any group of countries developed and less developed new and old democracies countries with different government or electoral systems and countries with different levels of democracy in developed countries and in old democracies election year deficits actually reduce the probability that a leader is reelected with similar although smaller negative electoral effects of deficits in the earlier years of an incumbent s term in office higher growth rates of real gdp per capita raise the probability of reelection only in the less developed countries and in new democracies but voters are affected by growth over the leader s term in office rather than in the election year itself and apparently only by growth not attributed to global growth low inflation is rewarded by voters only in the developed countries the effects we find are not only statistically significant but also quite substantial quantitatively we also suggest how the absence of a positive electoral effect of deficits can be consistent with the political deficit cycle found in new democracies

quality and quantity in primary care mixed payment models evidence from family health organizations in ontario abstract we study the impact of a mixed capitation model the family health organization fho on quality and quantity outcomes among primary care physicians in ontario using a panel of administrative data covering one year before and two years after the fho model was introduced we find that physicians in the fho model provide about 6 to 7 fewer services and visits per day but are between 7 and 11 more likely to achieve preventive care quality targets these results suggest that the mixed capitation model with contractible quality indicators may be welfare improving relative to the ffs model

the effects of hospitals governance on optimal contracts bargaining vs contracting we propose a two stage model to study the impact of different hospitals governance frameworks on the optimal contracts designed by third party payers when patients disease severity is the private information of the hospital in the second stage doctors and managers interact within either a bargaining or a contracting scenario in the contracting scenario managers offer a contract that determines the payment to doctors and doctors decide how many patients to treat in the bargaining scenario doctors and managers strategically negotiate on both the payment to doctors and the number of patients to treat we derive the equilibrium doctors payments and number of treated patients under both scenarios we then derive the optimal contract offered by the government to the hospital in the first stage results show that when the cost of capital is sufficiently low the informational rent is lower and the social welfare is higher in the contracting scenario

price adjustment in the hospital sector we analyse the properties of optimal price adjustment to hospitals when no lump sum transfers are allowed and when prices differ to reflect observable exogenous differences in costs we find that a when the marginal benefit from treatment is decreasing and the cost function is the power function price adjustment for hospitals with higher costs is positive but partial if the marginal benefit is constant the price is identical across providers b if the cost function is exponential or it is separable in monetary and non monetary costs and linear in monetary costs price adjustment is positive even when the marginal benefit is constant c higher inequality aversion of the purchaser increases concentration in prices and lowers concentration in quantities d if some dimensions of costs are private information a higher correlation between the observable and unobservable cost component increases the optimal price for providers whose observable costs are above the average

selfish bakers caring nurses a model of work motivation abstract work contributes to people s self image in important ways we propose a model in which effort is unobservable and where individuals have a preference for being important to others this gives the following predictions 1 if a worker s effort is paid by his marginal productivity bakers effort is just like in the standard model 2 if a worker s wage is unaffected by his effort nurses more effort is provided than in the standard model 3 to prevent that shirkers become nurses nurses wages must be kept strictly lower than bakers income at this wage level there will be too few nurses 4 overinvestment in nursing equipment can be justified as a means to attract motivated nurses 5 even with full income compensation both nurses and bakers may experience a net utility loss when losing their job 6 similarly both nurses and bakers may prefer work to welfare even with full income compensation

international trade in a differentiated good trade elasticities in the world rice market in many previous rice trade models the commodity has been regarded as a homogeneous product however homogeneity is not an appropriate assumption given the various types of rice that are traded and consumed parameters estimated from these models therefore do not reflect the real world market for rice and hence may mislead decision makers who use the results for policy evaluation purposes this study uses an armington approach to model the world rice trade as a differential good market and to derive trade elasticity parameters

political representation and public contracting evidence from municipal legislatures abstract this study examines how partisan representation in multiparty legislatures affects direct expenditures contract allocation design and selection of politically connected firms as suppliers in public procurement for identification i exploit quasi random variation in partisan electoral outcomes near the effective representation thresholds in czech proportional municipal elections my regression discontinuity estimates suggest that partisan representation matters for public procurement for instance if local level political parties barely enter legislatures at the expense of the national parties municipalities decrease their direct procurement spending and allocate fewer contracts to the corporate donors of the national parties fewer contracts are awarded especially in pre election years and in auctions restricting competition among procurement suppliers the results are not associated with higher government fragmentation or selection of more competent candidates but rather with reduced political power of the national parties

representative evidence on lying costs abstract a central assumption in economics is that people misreport their private information if this is to their material benefit several recent models depart from this assumption and posit that some people do not lie or at least do not lie maximally these models invoke many different underlying motives including intrinsic lying costs altruism efficiency concerns or conditional cooperation to provide an empirically validated microfoundation for these models it is crucial to understand the relevance of the different potential motives we measure the extent of lying costs among a representative sample of the german population by calling them at home in our setup participants have a clear monetary incentive to misreport misreporting cannot be detected reputational concerns are negligible and altruism efficiency concerns or conditional cooperation cannot play a role yet we find that aggregate reporting behavior is close to the expected truthful distribution suggesting that lying costs are large and widespread further lab experiments show that this result is not driven by the mode of communication

price adjustment in the hospital sector how should the nhs discriminate between providers a comment on miraldo siciliani and street miraldo et al 2011 have analyzed the price adjustment policy of a payer implementing a prospective payment system in the hospital sector in the presence of exogenous cost differences when no lump sum transfers are allowed they focus on deriving conditions for the price adjustment being positive in this paper using a result of miraldo et al we emphasize whether the price adjustment is larger or smaller than the marginal cost we show how the discrimination operates against either the low cost or the high cost hospitals according to the value of the elasticity of the additional marginal cost with respect to the quantity of services

the effect of fiscal performance on local government election results in israel 1989 1998 abstract we discuss the circumstances under which voters in local elections will reward fiscal responsibility and suggest that such circumstances evolved in israel in the mid 1990s we present empirical evidence that indeed fiscal performance of mayors substantially affected their reelection probability in the 1998 campaign but not in the 1989 and 1993 campaigns changes in the political environment enforcement of audit and financial reporting requirements tougher imposition of hard budget constraints and the development of local media are proposed as explanations the hypotheses that the fiscal variables reflect the income level at the locality or the mayor s success in extracting resources from the central government are tested and rejected

quality competition with profit constraints abstract firms in markets such as health care and education are often profit constrained due to regulation or their non profit status and they are often viewed as being altruistic towards consumers we use a spatial competition framework to study incentives for cost containment and quality provision by altruistic firms facing profit constraints if prices are regulated profit constraints lead to lower cost containment efforts but higher quality if and only if firms are sufficiently altruistic under price competition profit constraints reduce quality and cost containment efforts but lead to lower prices if and only if firms are sufficiently altruistic profit constrained firms cost containment efforts are below the first best while their quality might be too high or too low if prices are regulated profit constraints can improve welfare and be a complement or substitute to a higher regulated price depending on the degree of altruism

elections coalitions and legislative outcomes predictions of electoral behavior in a multiparty setting should be a function of the voters beliefs about how parties will perform following an election similarly party behavior in a legislature should be a function of electoral promises and rewards we develop a multistage game theoretic model of three party competition under proportional representation the final policy outcome of the game is generated by a noncooperative bargaining game between the parties in the elected legislature this game is essentially defined by the vote shares each party receives in the general election and the parties electoral policy positions at the electoral stage parties and voters are strategic in that they take account of the legislative implications of any electoral outcome we solve for equilibrium electoral positions by the parties and final policy outcomes

purchasing health care services from providers with unknown altruism cost sharing rules for paying physicians have been advanced as a way of generating incentives for the provision of quality care while recognizing their potential negative effects on production efficiency however the optimal sharing rate typically depends on the degree to which the physician acts in the interest of the patient what we identify as the physician s altruism since the degree of altruism is likely to vary across physicians and to be private information the standard rules for setting the cost sharing rate are unlikely to be optimal this paper derives conditions for the optimal non linear cost sharing mechanism in the presence of asymmetric information about altruism and shows how it can sometimes be implemented through a menu of linear cost sharing schemes the model can be used to rationalize the design of the fund holder system for general practictioners that operated in the 1990s in the united kingdom

do political parties matter evidence from u s cities are cities as politically polarized as states and countries no is the answer from our regression discontinuity design analysis which shows that whether the mayor is a democrat or a republican does not affect the size of city government the allocation of local public spending or crime rates however there is a substantial incumbent effect for mayors we investigate three mechanisms that could account for the striking lack of partisan impact at the local level and find the most support for tiebout competition among localities within metropolitan areas

accountability and incentives of appointed and elected public officials political agency models suggest that elected public officials choose different policies than appointed officials do this paper is the first a to apply a clean empirical design to study whether t

do parties matter for economic outcomes a regression discontinuity approach a long standing issue in political economics is to what extent party control makes a difference in determining fiscal and economics policies this question is very difficult to answer empirically because parties are not randomly selected to govern political entities this article uses a regression discontinuity design namely party control changes discontinuously at 50 of the vote share which can produce near experimental causal estimates of the effect of party control on economic outcomes the method is applied to a large panel data set from swedish local governments with a number of attractive features the results show that there is an economically significant party effect left wing governments spend and tax 2 3 more than right wing governments left wing governments also have 7 lower unemployment rates which is partly due to that left wing governments employ 4 more workers than right wing governments jel c21 d72 d78 h71 h72

price dynamics in the bangladesh rice market implications for public intervention in this paper the price dynamics of a rice market are examined using dynamic programming techniques the model is parameterised to the case of bangladesh and thus represents the situation of a very poor country which has characteristically high price elasticity due to income effects and high storage and interest costs the incentives for private sector storage and its impact on price stability are examined various options for public intervention in the storage sector are also explored including price ceiling schemes and subsidisation of storage costs results show that interventions that remove private disincentives such as storage subsidies are much cheaper than direct intervention by government but the impact on the probability distribution of prices is quite different the effect of trade on the probability distribution of prices is also examined

contracting for health services when patient demand does not reflect quality this paper analyses contracts to keep down costs while maintaining quality of health services when patient demand does not reflect quality there is then a natural role for forms of contract that have emerged during the reforms of the nhs in britain that differ from pure fixed price or cost reimbursement contracts the optimal form depends on whether the provider is entirely self interested or benevolent in having genuine concern for patient welfare with fully benevolent providers there are roles for block and cost and volume contracts with partially benevolent providers some degree of cost sharing is typically optimal

demand for beef and chicken products separability and structural change several studies have indicated that the recent shift from beef to poultry in consumption is not entirely caused by changes in rela tive prices or income braschler chavas dahlgran hudson and vertin moschini and meilke frank thurman most studies of structural change have focused on red meat consumption only thurman has looked closely at the poultry market and no one has considered poultry products yet the mix of chicken products marketed changed dramat ically during the last twenty years and should have influenced aggregate meat demand the share of broiler slaughter marketed as whole birds declined from 74 in 1965 to 28 in 1985 while cut up parts and processed chick en products increased from 26 to 72 whole birds are inferior goods and cut up parts and processed chicken are normal goods haidacher et al the shift in chicken prod uct mix away from whole birds should have increased the preference for total chicken in this article two related questions are ad dressed first do consumers allocate expendi tures among meats by animal origin or by product type second does disaggregation of meat into products in a meat demand model give insight into the causes of structural

professional norms and physician behavior homo oeconomicus or homo hippocraticus abstract physicians treatment decisions determine the level of health care spending to a large extent the analysis of physician agency describes how doctors trade off their own and their patients benefits with a third party such as the collective of insured individuals or the taxpayers bearing the costs professional norms are viewed as restraining physicians self interest and as introducing altruism towards the patient we present a controlled experiment that analyzes the impact of professional norms on prospective physicians trade offs between their own profits the patients benefits and the payers expenses for medical care our data support the notion that professional norms derived from the hippocratic tradition shift weight to the patient in physicians decisions while decreasing their self interest and efficiency concerns

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

climbing the ranks incumbency effects in party list systems abstract incumbents tend to have a solid electoral advantage in candidate centered electoral settings do similar incumbency effects exist in more party centered environments we estimate incumbency effects in an open list proportional representation system exploiting that seats are first allocated across parties and then to candidates within party lists using data from norwegian local elections 2003 2015 we document that a candidate that barely wins a seat in the local council has about a 9 percentage points 43 higher probability of being elected in the next election compared to a candidate that just misses out on a seat on the same party list we find no evidence that voters contribute to this personal incumbency advantage rather it seems as if party elites are instrumental in securing the electoral success of their party affiliates we show that incumbents and non incumbents run again in the subsequent election at about equal rates but that incumbents tend to advance in the party hierarchy and obtain safer ballot positions in future elections which is what ultimately leads to electoral success

wto negotiations on agriculture and the distributional impacts for us rice farm households abstract the policies of wealthy countries have proven the most difficult to reform in the wto doha round negotiations considerable emphasis has been placed on developing country impacts but a gap in the literature remains on the stakes for rich country farmers despite the large role these countries play in global agricultural protection the research here considers the particular case of us rice households and their sensitivity to japanese market access reform using an applied general equilibrium model with multiple farm households we highlight the distributional impacts among these producers we argue that concessions to japan on market access make domestic reforms in rice a difficult political sale in the us since the wealthiest producers bear the largest losses improving our understanding of the distributional impacts and political realities of the richest countries is critical to informing the negotiating process because the gains to the world s poor can only be realized with creative policy redress in these rich nations

hospital competition and quality with regulated prices we analyse the effect of competition on quality in hospital markets with regulated prices considering the effect of both introducing competition monopoly versus competition and increasing competition through either lower transportation costs increased substitutability or a higher number of hospitals with semi altruistic providers and a fairly general cost structure we show that the relationship between competition and quality is generally ambiguous in contrast to the received body of theoretical literature this is consistent with and potentially explains the mixed empirical evidence

profit or patients health benefit exploring the heterogeneity in physician altruism abstract this paper investigates physician altruism toward patients health benefit using behavioral data from hennig schmidt et al s 2011 laboratory experiment in the experiment medical students in the role of physicians decide on the provision of medical services the experimental setup allows us to identify the influence of profits and patients health benefit on the choice of medical treatment we estimate physician altruism the weight individuals attach to patients health benefit by fitting mixed logit and multinomial logit regression models to the experimental data estimation results provide evidence for physician altruism we find however substantial variation in the degree of physician altruism we also discuss some implications of our results for the design of physician payment schemes in the light of the theoretical literature

optimal price setting in pay for performance schemes in health care abstract the increased availability of process measures implies that the quality of health care is in some areas de facto verifiable optimal price setting for verifiable dimensions of quality is well described in the theoretical literature on incentive design we seek to narrow the large gap that remains between actual price setting behaviour in pay for performance schemes and the incentive design literature we present a stylised model for hospital price setting for process measures of quality and show that optimal hospital prices should reflect the marginal benefit of the expected health gains the weight given to patients benefit relative to profits and the opportunity cost of public funds based on published estimates we derive the optimal prices for three measures of quality that have been incentivised in the english national health service since april 2010 treatment in an acute stroke unit rapid brain imaging and thrombolysis with alteplase we then compare the optimal prices with the actual prices offered to hospitals in england under the best practice tariffs scheme for emergency stroke care

management practices relational contracts and the decline of general motors abstract general motors was once regarded as the best managed and most successful firm in the world however between 1980 and 2009 gm s us market share fell from 46 to 20 percent and in 2009 the firm went bankrupt we argue that the conventional explanation for this decline namely high legacy labor and healthcare costs is seriously incomplete and that gm s share collapsed for many of the same reasons that many highly successful american firms of the 1960s were forced from the market including a failure to understand the nature of the competition they faced and an inability to respond effectively once they did we focus particularly on the problems gm encountered in developing the relational contracts essential to modern design and manufacturing and we discuss a number of possible causes for these difficulties we suggest that gm s experience may have important implications for our understanding of the role of management in the modern knowledge based firm and for the potential revival of manufacturi

public rationing and private cost incentives this paper considers a public provider s strategic use of rationing in a market served by both public and private providers such a mixed market structure is common in many industries such as health care telecommunication postal service and public utilities the technology in the private sector exhibits increasing returns each firm can expend effort in the form of fixed cost to reduce the marginal cost firms in the contestable private sector compete and the market equilibrium is characterized by average cost pricing the equilibrium private sector market size is too low resulting in deficient cost effort efficient rationing forces more consumers to use the private sector restoring cost incentives and implementing the first best random rationing may reduce cost inefficiency but does not implement the first best

hospital quality choice and market structure in a regulated duopoly this paper analyzes the optimal structure of a regulated health care industry in a model in which the regulator cannot enforce what hospitals do unverifiable quality of health or does not know what hospitals know incomplete information about production costs or both we show that if quality is unverifiable the choice between monopoly and duopoly does not change with respect to the verifiable case but if there are fixed costs assumed to be quality dependent and the monopoly is the optimal market structure the quality level of the operative hospital decreases asymmetry of information introduces informational rents that can be reduced by increasing the most efficient hospital s market share a monopoly is chosen more often

construction corrupts empirical evidence from a panel of 42 countries the construction sector whether privately or publicly financed is characterized by potentially large rents and government intervention making it vulnerable to corruption consistent with this both case study and survey evidence has been provided highlighting the problem of malfeasance in this sector in this article we test the proposition that a bigger construction sector is likely to be inimical to clean government based on a panel of 42 countries over the period 1995 2011 we control for a range of potentially confounding variables and the expectation that corrupt public officials may favor the development of this sector because it increases the volume of rents available to them our empirical evidence shows that a larger construction sector will tend to increase perceptions of the extent to which public power is exercised for private gain

quality and outside capacity in the provision of health services abstract this paper studies the effects of non contractibility of investment on the choices made by a health authority and a hospital which supplies a specific service non contractibility determines inefficiencies compared with any pareto efficient outcome the quality of the service chosen by the hospital is too low and the health authority relies too much on outside providers

competition and waiting times in hospital markets this paper studies the impact of hospital competition on waiting times we use a salop type model with hospitals that differ in geographical locationand potentially waitingtime andtwotypesofpatients high benefitpatientswhochoosebetweenneighbouring hospitals competitive segment and low benefit patients who decide whether or not to demand treatment from the closest hospital monopoly segment compared with a benchmark case of monopoly we find that hospital competition leads to longer waiting times in equilibrium if the competitive segment is sufficiently large given a policy regime of hospital competition the effect of increased competition depends on the parameter of measurement lower travelling costs increase waiting times higher hospital density reduces waiting times while the effect of a larger competitive segment is ambiguous we also show that if the competitive segment is large hospital competition is socially preferable to monopoly only if the regulated treatment price is sufficiently high 2008 elsevier b v all rights reserved

do voters affect or elect policies evidence from the u s house there are two fundamentally different views of the role of elections in policy formation in one view voters can affect candidates policy choices competition for votes induces politicians to move toward the center in this view elections have the effect of bringing about some degree of policy compromise in the alternative view voters merely elect policies politicians cannot make credible promises to moderate their policies and elections are merely a means to decide which one of two opposing policy views will be implemented we assess which of these contrasting perspectives is more empirically relevant for the u s house focusing on elections decided by a narrow margin allows us to generate quasi experimental estimates of the impact of a randomized change in electoral strength on subsequent representatives roll call voting records we find that voters merely elect policies the degree of electoral strength has no effect on a legislator s voting behavior for example a large exogenous increase in electoral strength for the democratic party in a district does not result in shifting both parties nominees to the left politicians inability to credibly commit to a compromise appears to dominate any competition induced convergence in policy

local favoritism in at large proportional representation systems abstract pork barrel spending is typically attributed to the strategic behavior of political elites hoping to be electorally rewarded by voters residing in their districts such behavior is expected to depend on the incentives imposed by the electoral system we estimate the causal effect of local representation in a closed list proportional representation system where individual candidates have no clear electoral incentive to favor their hometown using data from norwegian regional governments we still find a hometown bias we document that municipalities with a representative on the regional council from the same party as the regional governor tend to obtain more funding for local investments citizens also tend to vote more often for parties whose gubernatorial candidate is from their own hometown consistent with expectations of particularistic benefits a possible explanation is that regional council members are often recruited from local politics and remain loyal to their roots we find no evidence that regional council experience affects politicians future career prospects at the local level

saving money vs investing money do energy ratings influence consumer demand for energy efficient goods abstract the article analyses economic barriers leading to the energy efficiency gap in the market for energy using products by observing several million transactions in the uk over two years the empirical exercise estimates aids models for refrigerators washing machines tvs and light bulbs results indicate that market barriers are crucial in the demand for energy efficient options and consumer response to changes in appliance prices total expenditures and energy prices depends on the possibility of behavioural adjustments in consumption in contrast with the induced innovation hypothesis current electricity prices can fail to induce innovation because of their short term impact on disposable income while consumers invest in energy efficiency when expecting electricity prices to rise in the future

choice of contracts in the british national health service an empirical study following major reforms of the british national health service nhs in 1990 the roles of purchasing and providing health services were separated with the relationship between purchasers and providers governed by contracts using a mixed multinomial logit analysis we show how this policy shift led to a selection of contracts that is consistent with the predictions of a simple model based on contract theory in which the characteristics of the health services being purchased and of the contracting parties influence the choice of contract form the paper thus provides evidence in support of the practical relevance of theory in understanding health care market reform

toward a consumer economy in china implications of changing wage policies for u s cotton exports the effect of a chinese minimum wage increase on china s textile market as well as on the world cotton market is evaluated based on a nonlinear quadratic almost ideal demand system nqaids model of china s textile demand the results suggest that the income elasticity for textiles is around 0 6 in china and that apparel is less price responsive than home textiles and other textile products simulation results suggest that a minimum wage increase would raise chinese domestic textile consumption and lower chinese textile exports most of the decline in textile exports by china is offset by expansion in other countries domestic textile production and results in a slight increase in world cotton mill utilization and higher clothing prices

prices poaching and protein alternatives an analysis of bushmeat consumption around serengeti national park tanzania abstract the consumption of meat from wild animals or bushmeat occurs throughout africa and highlights the conflict between two distinct development goals food security and biodiversity conservation growing human populations throughout the greater serengeti ecosystem rely heavily on bushmeat as a source of protein which places pressure on migratory wildlife populations this paper uses unique data from protein consumption surveys from 131 households over 34 months in a generalizable empirical framework to estimate price cross price and expenditure elasticities of protein sources and analyze the potential economic effects of policies to mitigate bushmeat hunting and consumption results suggest that 1 directly increasing the price of bushmeat through enforcement or other policies to reduce supply will have the most direct and largest effect of bushmeat consumption 2 increasing income increases bushmeat consumption as well as consumption of other meat sources 3 if surrounding fisheries experience a negative shock or collapse this will lead to a dramatic increase in bushmeat consumption overall these results strongly indicate that policies to reduce bushmeat hunting while maintaining food security must be considered in a broad and comprehensive framework

an almost ideal demand system for housing attributes in recent articles mendelsohn 16 and palmquist 20 use restricted versions of rosen s 22 model of household behavior to consistently estimate demand functions for attributes of a differentiated product rosen s 22 model is of a single market for such a product and he proposes a two step technique to estimate attribute demand functions first a single hedonic price function is estimated for the differentiated product attribute prices are the first derivatives of the fitted hedonic price function with respect to the relevant attributes second demand functions for attributes are estimated using the prices imputed in the first step if the hedonic price function estimated in the first step is linear then there is no price variation for attributes and demand functions cannot be estimated if the hedonic price function is nonlinear then there is price variation but it is endogenous to households since in a single market price and attribute quantity are chosen jointly 2 indeed within market price variation will always be endogenous in either case without sufficient restriction on the model the parameters of the demand functions for attributes cannot be consistently estimated using rosen s 22 method 3 mendelsohn 16 and palmquist 20 assume that there are many markets for the differentiated product and that households with like preferences may be observed in the different markets by this restriction households face price variation across markets that is exogenous whether hedonic price functions are linear or nonlinear if so demand functions can be consistently estimated 4

electoral thresholds and political representation we rely on a reform in the german federal state of hesse that abolished a 5 electoral threshold for local elections to study the effects of electoral thresholds on political representation the elimination of the threshold had on average a stronger effect on municipalities with larger councils since implicit also known as effective electoral thresholds are inversely correlated with council size using a dataset that includes all 426 hessian municipalities over the period 1989 2011 and exploiting discontinuities in a state law that maps populations exogenously to council size we implement a difference in discontinuities design our results show that the reform had large psychological effects that eventually improved the electoral prospects of relatively small local parties in the short run however the vote and seat shares of the large national parties increased we offer some explanations for this finding

voting weights and formateur advantages in the formation of coalition governments over the last two decades a large and important literature has emerged that uses game theoretic models of bargaining to study legislative coalitions to test key predictions of these models we examine the composition of coalition governments from 1946 and 2001 these predictions are almost always expressed in terms of parties minimal integer voting weights we calculate such weights for all parliamentary parties in addition we develop a statistical model that nests the predictions of many of these models of the distribution of posts we find that for parties that join but did not form the government there is a linear relationship between their share of the voting weight in parliament and their share of cabinet posts the party that forms the government the formateur receives a substantial bonus relative to its voting weight the latter finding is more consistent with proposal based bargaining models of coalition formation and suggests that parties gain disproportionate power not because of their size but because of their proposal power

testing restrictions in a flexible dynamic demand system an application to consumers expenditure in canada traditionally restrictions on systems of demand equations have been tested using static models whilst being estimated with time series data this paper develops a vector time series model of expenditure shares in the context of a singular dynamic demand system the model allows for non symmetric and non homogeneous short run behaviour the homogeneity and symmetry restrictions are only examined in the long run structure results based on canadian time series data are presented and reject the current practise of static modelling while restrictions suggested by economic theory are not rejected when imposed on the long run structure

elasticities in aids models in the literature a variety of approaches have been used to calculate demand elasticities in almost ideal demand system aids models of demand it is common to estimate the linear approximate almost ideal demand system la aids instead of the aids when the la aids is estimated all of the previously reported approaches to compute elasticities are theoretically incorrect this paper presents correct formulas for la aids elasticities and illustrates the potential errors from using incorrect computing the almost ideal demand system aids of deaton and muellbauer 1980a b has become popular in recent years anderson and blundell blanciforti and green 1983a b blanciforti green and king chalfant eales and unnevehr fujii khaled and mak fulponi heien and willett murray parsons ray a variety of approaches to computing elasticities has been used and some of the approaches may lead to significant errors this paper clarifies the differences between alternative approaches to estimating demand elasticities in aids models

non stationarity and the import demand for virgin olive oil in the european union the aim of this study is to analyse the importation of virgin olive oil to european union countries paying special attention to the spanish export contribution the method used is based on the estimation of an imports demand system the novelty of the paper lies not in the modelling approach but in the explicit consideration of the univariate characteristics of series that is included in the analysis since prices are non stationary cointegration among them has been tested results indicate that they are cointegrated and that homogeneity holds as a result relative prices are included in the imports demand system structural change is also considered so as to account for the entrance of both spain and greece into the eu during the period studied results demonstrate the leadership of spain within the eu virgin olive oil market as well as the increasing competitiveness of greek oil

paying for performance and motivation crowding out abstract we investigate how prices affect output when publicly funded providers differ in altruism and enjoy being perceived as good and not as greedy a higher price increases output for low and high altruism providers intermediate altruism providers do not respond or reduce output

auctions versus negotiations which is the more profitable way to sell a company an auction with no reserve price or an optimally structured negotiation with one less bidder we show under reasonable assumptions that the auction is always preferable when bidders signals are independent for affiliated signals the result holds under certain restrictions on the seller s choice of negotiating mechanism the result suggests that the value of negotiating skill is small relative to the value of additional competition the paper also shows how the analogies between monopoly theory and auction theory can help derive new results in auction theory jel d44 g34 there are close analogies between standard price theory and the theory of auctions in an absolute english auction in which the price rises continuously until only one bidder remains and the seller is required to accept the final bid the sale price equals the lowest competitive price at which supply equals demand in the theory of optimal auctions the seller is treated as a monopolist who can choose any

reputation effects and the limits of contracting a study of the indian software industry this paper examines evidence of the role that reputation plays in determining contractual outcomes we conduct an empirical analysis of the indian customized software industry using a data set we collected containing detailed information on 230 projects carried out by 125 software firms we propose a model ofthe industry where reputation determines contractual outcomes the evidence supports the view that reputation matters ex ante contracts as well as the outcome after ex post renegotiation vary with firms characteristics plausibly associated with reputation this holds after controlling for project client and firm characteristics

opportunistic political cycles test in a young democracy setting this paper tests the theory of opportunistic cycles in a decade old democracy russia finds strong evidence of cycles and provides an explanation for why previous literature often found weaker evidence using regional monthly panel data we find that 1 the budget cycle is sizable and short lived public spending shifts toward direct monetary transfers to voters 2 the magnitude of the cycle decreases with democracy government transparency media freedom voter awareness and over time and 3 preelectoral manipulation increases incumbents chances for reelection the short length of the cycle explains underestimation of its size by previous literature because of low frequency data used in previous studies

shades of brown and green party effects in proportional election systems small parties play an important role in proportional election systems for exam ple the emergence and electoral success of environmental and anti immigration parties have constituted one of the central changes in the political landscape in europe over the last three decades but we do not know if this has actually had any implications for policy since no methods exist for credibly estimating the eect of legislative represen tation in proportional election systems because party representation is not randomly assigned both observable and unobservable factors in uence policy outcomes as well as party representation using a part of the legislative seat allocation that is as good as random i estimate the causal eect of party representation on immigration policy environmental policy and tax policy i use data swedish municipalities where key poli cies for each policy area are under direct jurisdiction of the municipal councils the results show that party representation has a large eect on the rst two policies but not on the tax policy

political alignment and intergovernmental transfers in parliamentary systems evidence from germany combining local council election data with fiscal data on grant allocations in a german state we study partisan favoritism in the allocation of intergovernmental transfers within a quasi experimental framework we hypothesize that state governments pursue two distinct goals when allocating grants to local governments 1 helping aligned local parties win the next election and 2 buying off unaligned municipalities that may obstruct the state government s policy agenda we argue furthermore that the relative importance of these two goals depends on local political conditions in line with this argument we show empirically that the effect of political alignment on grant receipts varies depending on the degree of local support for the state government while previous contributions find that aligned local governments always tend to receive larger transfers our results imply that the political economy of intergovernmental transfers is more intricate

competition and quality in health care markets a differential game approach we investigate the effect of competition on quality in health care markets with regulated prices taking a differential game approach in which quality is a stock variable using a hotelling framework we derive the open loop solution health care providers set the optimal investment plan at the initial period and the feedback closed loop solution providers move investments in response to the dynamics of the states under the closed loop solution competition is more intense in the sense that providers observe quality in each period and base their investment on this information if the marginal provision cost is constant the open loop and closed loop solutions coincide and the results are similar to the ones obtained by static models if the marginal provision cost is increasing investment and quality are lower in the closed loop solution when competition is more intense in this case static models tend to exaggerate the positive effect of competition on quality

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