multiple object auctions with budget constrained bidders in the last few years governments in many parts of the world have aggressively sought to privatize socially held assets this wave of privatization has included the sale of industrial enterprises in the former soviet union and eastern europe the sale of public transportation systems in britain and scandinavia and the sale of radio spectra in the u s both the enormity and the importance of these sales have naturally led to an examination of how best to accomplish this task auctions have been proposed and have frequently been used as time honoured convenient and attractive mechanisms for such sales this in turn has led to a revival of interest in the theory of auctions particularly those involving multiple objects the magnitude of these privatization sales has meant that in many instances it is realistic to consider that buyers may run up against liquidity or borrowing constraints the presence of these financial constraints introduces important differences into traditional auction theory for instance pitchik and schotter 1986 and che and gale 1996 1998 have shown that when bidders are subject to such constraints the conclusion of the celebrated revenue equivalence theorem no longer holds when multiple objects are auctioned in the presence of budget constraints it may be advantageous for a bidder to bid aggressively on one object with a view to raising the price paid by his rival and depleting his budget so that the second object may then be obtained at a lower price in effect a bidder may wish to raise a rival s costs in one market in order to gain advantage in another thus unlike in traditional auction theory a particular bidder s payoff is affected by the price paid by a rival bidder it is important to note that this effect comes into play only when several objects are sold

specific experience household structure and intergenerational transfers farm family land and labor arrangements in developing countries data from indian rural household survey was used to test th hypothesis that the coexistence in traditional rural societies of extended intergenerational families infrequent land sales and high reliance on family members as farm laborers is the result of the economic advantages which accrue from the knowledge gained by farming a particular ploy of land over a long period of time the land specific experience of elderly members of a intergenerational household who farmed the land as a child and then as an adult are expecially critical in adverse weather years most previous investigators attributed the existence of multigenerational households the use of family members rather than hired laboreds and the infrequency of land sales to deficiencies in the market i e labor market imperfections and an absence of capital insurance and asset markets in the present investigations these same characteristics are viewed as having an economic advantages a model for estimating the contribution of the experience of the elderly household members to agricultural profits was developed and applied to data from a 3 year panel study of 2900 indian rural farm households the data was collected between 1968 71 by the national council of applied economic research the survey collected information on farm profits farm inputs demographic characteristics and the effects of weather conditions on profits a major limitation of the study was a lack of information on the duration of land ownership age of household members was substituted as a proxy for duration of ownership findings were consistent withe the hypothesis in poor agricultural years gross returns for households which contained an elderly household member were greater than the gross returns for comparable households which did not contain an elderly member the economic advantages of specific knowledge embodied in the experienced elderly farmer were comparable to the economic advantages which accrued to households whose members were more educated the hypothesis cannot fully explain the existence of intergenerational families since there is a relatively large proportion of such families among nonfarm families in many countries including india findings suggest that intergenerational families may provide for more occupational diversity and thereby reduce income risks the specific experience hypothesis has policy implications if technological changes are introduced the value of specific experience may be lost and the frequency of intergenerational households may decline the hypothesis may also explain why farmers are reluctant to agree to land redistribution and consolidation schemes this reluctance may disappear after sufficient technological change has occurred

switching regression models with imperfect sample separation information with an application on cartel stability an exogenous switching regression model with imperfect reginme classificationi information is specified and applied to a study of cartel stability an efficient estimation method is proposed which takes this imperfect information into account the consequences of misclassification are analyzed the direction of the least squares bias is derived an optimal regime classification rule is obtained and compared theoretically and empirically with other classification rules we then examine the joint executive committee a railroad cartel in the 1880 s the econometric evidence indicates that reversions to noncooperative behavior did occur for the firms in our sample and these reversions involve a significant decrease in market price this article is concerned with the possibility of estimating a switching regression model and its application to a study on cartel stability the switching regression model is the exogenous switching model proposed by quandt 24 which generalized a problem of mixture distributions day 4 the sample in this model is generated from distinct regression equations or regimes for each time period if the investigator has a priori information on how the sample is partitioned into the underlying regimes it is a switching regression model with known sample separation otherwise it is a model with unknown sample separation estimation of these latter models has been considered by quandt 24 goldfeld and quandt 8 and kiefer 14 16 among others a switching regression model is appropriate for the study of cartel behavior when there are price wars as firms will revert from cooperative to noncooperative behavior and so the industry supply function shifts occasionally this model will allow us to exploit the fact that there will be periodic stochastic switches or reversions between cooperative and noncooperative conduct in order to identify collusive episodes

second sourcing and the experience curve price competition in defense procurement we examine a dynamic model ofprice competition in defense procurement that incorporates the experience curve asymmetric cost information and the availability of a higher cost alternative system we model acquisition as a two stage process in which initial production is governed by a contract between the government and the developer competition is then introduced by an auction in which a second source bids against the developer for remaining production we characterize the class of production contracts that are cost minimizing for the government and that induce the developer to reveal private cost information when high costs are revealed these contracts result in a credible cutoff of new system production in favor of the still higher cost alternative system

asymmetric private values auctions with application to joint bidding and mergers abstract much of the theoretical auction literature assumes that there are no observable differences between the bidders of an auction in this paper i present an asymmetric auction model where the distribution of a bidder s value depends on some commonly observed characteristics the model is applied to joint bidding and mergers in auction markets the results provide additional evidence that first price auctions are less susceptible to the acquisition and exercise of market power than open auctions

is workfare cost effective against poverty in a poor labor surplus economy workfare schemes impose work requirements on beneficiaries this has seemed an attractive idea for self targeting transfers to poor people this incentive argument does not imply however that workfare is more cost effective against poverty than even poorly targeted options given hidden costs of participation in particular even poor workfare participants in a labor surplus economy can be expected to have some forgone income when they take up such a scheme a survey based method is used to assess the cost effectiveness of india s employment guarantee scheme in bihar participants are found to have forgone earnings although these fall well short of market wages on average factoring in these hidden costs the paper finds that for the same budget workfare has less impact on poverty than either a basic income scheme providing the same transfer to all or uniform transfers based on the government s below poverty line ration cards for workfare to dominate other options it would have to work better in practice reforms would need to reduce the substantial unmet demand for work close the gap between stipulated wages and wages received and ensure that workfare is productive that the assets created are of value to poor people cost effectiveness would need to be reassessed at the implied higher levels of funding

a study of collusion in first price auctions this paper examines the bidding for school milk contracts in florida and texas during the 1980s in both states firms were convicted of bid rigging the data and legal evidence suggest that the cartels in the two states allocate contracts in different ways one cartel divides the market among members while the other cartel also uses side payments to compensate members for refraining from bidding we show that both forms of cartel agreements are almost optimal provided the number of contracts is sufficiently large in the auction the cartel bidder may face competition from non cartel bidders the presence of an optimal cartel induces an asymmetry in the auction the selected cartel bidder is bidding as a representative of a group and has on average a lower cost than a non cartel bidder the data support the predicted equilibrium bidding behaviour in asymmetric auctions in accordance with optimal cartels

does industrialization build or destroy social networks abstract this article estimates the relationship between changes in industrialization and changes in social networks measures in indonesia during 1985 97 using repeated cross sections of nationally representative surveys we analyze a rich set of social interaction measures including various measures of voluntary associational activity levels of trust and informal cooperation districts that experienced rapid industrialization showed significant increases in most measures of social interaction however districts that neighbor rapidly industrializing areas exhibited high rates of out migration significantly fewer community credit cooperatives and a reduction in mutual cooperation as assessed by village elders manufacturing growth can be thought of as a proxy for income growth here the findings are contrary to several recent claims regarding the role of social capital in economic development

programme evaluation with multiple treatments this paper reviews the main identification and estimation strategies for microeconometric policy evaluation particular emphasis is laid on evaluating policies consisting of multiple programmes which is of high relevance in practice for example active labour market policies may consist of different training programmes employment programmes and wage subsidies similarly sickness rehabilitation policies often offer different vocational as well as non vocational rehabilitation measures first the main identification strategies control for confounding variables difference in difference instrumental variable and regression discontinuity identification are discussed in the multiple programme setting thereafter the different nonparametric matching and weighting estimators of the average treatment effects and their properties are examined download discussion paper pdf 484 kb

risk pooling between households and risk coping measures in developing countries evidence from rural bangladesh abstract using data from rural bangladesh i test whether income risks are pooled among villagers between neighboring households and between related households living in different villages i find evidence that risks to food consumption are pooled between neighboring households and between related households but not among villagers as for nonfood consumption i find little evidence of risk pooling except between unrelated neighboring households i also find that while households belonging to a neighborhood network do not take any special measures during an economic hardship those not belonging to any such network try to smooth consumption by selling off livestock and other assets and by getting interest free loans negative income shocks are found to have little effect on labor supply or private transfers

is there persistence in the impact of emergency food aid evidence on consumption food security and assets in rural ethiopia we identify the impact of emergency food aid programs after the 2002 drought in rural ethiopia on future welfare based on a difference in differences matching estimator participation in food for work increases growth in total consumption and food consumption eighteen months after the drought separately receiving free food raises growth in food consumption but surprisingly negatively impacts food security food for work benefited households in the middle and upper tail of the consumption distribution while the better targeted free food program benefited the poorest evidence suggests these impacts demonstrate accumulated and persistent effects of food aid received in the first twelve months after the drought

do social protection transfers reduce poverty and vulnerability to poverty in pakistan household level evidence from punjab empirical studies in different developing countries have investigated the impact of social protection sp on ex post poverty however few studies analysed the impact of sp on ex ante vulnerability to poverty vtp this paper contributes to the literature by evaluating the impact of sp on vulnerability to poverty vtp and poverty rates among households in the punjab province of pakistan a hierarchical modelling approach is used to analyse the multiple indicator cluster survey mics 2011 data of about 90 000 households matching methods and simultaneous endogenous switching regression are used to control for potential selection bias and estimate average treatment effects our results show that sp has a positive impact in reducing household poverty and vtp but this impact is mainly driven by a short term flood relief cash transfer programme pension of government employees and households regular purchase from utility store network

informal insurance arrangements with limited commitment theory and evidence from village economies recent work on consumption allocations in village economies finds that idiosyncratic variation in consumption is systematically related to idiosyncratic variation in income thus rejecting the hypothesis of full risk pooling we attempt to explain these observations by adding limited commitment as an impediment to risk pooling we provide a general dynamic model and completely characterise efficient informal insurance arrangements constrained by limited commitment and test the model using data from three indian villages we find that the model can fully explain the dynamic response of consumption to income but that it fails to explain the distribution of consumption across households

risk and insurance in a rural credit market an empirical investigation in northern nigeria credit contracts play a direct role in pooling risk between households in northern nigeria repayments owed by borrowers depend on realizations of random shocks by both borrowers and lenders the paper develops two models of state contingent loans the first is a competitive equilibrium in perfectly enforceable contracts the second permits imperfect information and equilibrium default estimates of both models indicate that quantitatively important state contingent payments are embedded in these loan transactions but that a fully efficient risk pooling equilibrium is not achieved the research is based on a year long survey in zaria nigeria conducted by the author

transfer benefits from public works employment evidence for rural india current knowledge provides little guidance on one of the key questions in evaluating public employment schemes aimed at directly reducing poverty what are the net income gains to participating workers this paper offers an answer for rural public employment in two villages in the state of maharashtra in india a model of intrahousehold time allocation is proposed and estimates are made using household data over six years the empirical implementation indicates that the projects induce significant behavioral responses transfer benefits are large and are greatly underestimated using prevailing market wage rates for similar work to estimate forgone incomes copyright 1994 by royal economic society

the declining price anomaly abstract data from wine auctions indicate that identical products sold sequentially typically follow a decreasing pattern of prices known as the declining price anomaly this is explained for both first and second price auctions by appealing to risk averse bidders earlier bids are then equal to expected later prices plus a risk premium associated with the risky future price we show that this logic rests on the assumption of nondecreasing absolute risk aversion which is necessary for pure strategy equilibrium bidding functions to exist thus decreasing absolute risk aversion implies ex post inefficiency with positive probability data from wine auctions are used to confirm the existence of the declining price anomaly journal of economic literature classification numbers d43 d44 d81 d82 l81

standard auctions with financially constrained bidders we develop a methodology for analyzing the revenue and efficiency performance of auctions when buyers have private information about their willingness to pay and ability to pay we then apply the framework to scenarios involving standard auction mechanisms in the simplest case where bidders face absolute spending limits first price auctions yield higher expected revenue and social surplus than second price auctions the revenue dominance of first price auctions over secondprice auctions carries over to the case where bidders have access to credit these rankings are explained by differences in the extent to which financial constraints bind in different auction formats

matching the gold standard comparing experimental and nonexperimental evaluation techniques for a geographically targeted program abstract we compare nonexperimental impact estimates based on matching methods with those from a randomized evaluation to determine whether the nonexperimental approach can match the so called gold standard the social experiment we use was carried out to evaluate a geographically targeted conditional cash transfer antipoverty program in nicaragua the outcomes we assess include several components of household expenditure and a variety of children s health outcomes including breast feeding vaccinations and morbidity we find that using each of the following improves performance of matching for these outcomes 1 geographically proximate comparison samples 2 stringent common support requirements and 3 both geographic and household level matching variables even for a geographically targeted program in which the selection is at the geographic rather than at the individual or household level and in which it is not possible to find comparison individuals or households in the program locales m

optimal sequential auctions sequential sealed first price and open descending price procurement auctions are studied we examine which procurement auction rule achieves the low procurement cost we show that the answer to this policy question depends on whether the items are complements or substitutes with substitutes the first price procurement auction is preferred while with complements the open descending price procurement auction is preferred we also illustrate the procurement cost minimizing auction and the auction rule preferred by the bidders with substitutes bidders prefer the open descending price procurement auction while with complements bidders prefer the first price procurement auction

risk sharing and public transfers we use public transfers in the form of food aid to test for the presence of risk sharing arrangements at the village level in rural ethiopia we reject perfect risk sharing but find evidence of partial risk sharing via transfers there is also evidence consistent with crowding out of informal insurance linked to food aid programmes

does welfare enable family expenditures on human capital evidence from china summary using the national china household income project 2007 urban survey data and a propensity score matching method this article investigates whether welfare receipt helped enable low income families to spend more on human capital we find that welfare recipient families prioritized spending in health and education relative to their non recipient peers welfare particularly helped poor families afford medical care medicine tuition and fees for noncompulsory education private tutoring for children and purchasing of textbooks we find some evidence that welfare helped recipient families pay for maintenance fees for their residence but receiving welfare also deterred families from having leisure activities

how auctions work for wine and art interview auctioneers and even to buy a little wine in the meantime i have also had the opportunity with john abowd 1988 to observe and collect data on the auction sale of impressionist and contemporary paintings this paper reports on some of the empirical regularities that i and others have observed in the actual operation of the auction markets for these items in view of the rich and diverse array of theoretical literature on auctions it seems high time economists began to spell out precisely what facts it is meant to explain 2

sugarcane outgrowers in ethiopia forced to remain poor contract farming is often seen as a panacea to many of the challenges faced by agricultural production in developing countries given the large heterogeneity of contract farming arrangements it is debatable whether all kinds of contract farming arrangements offer benefits to participating smallholders we apply matching methods to analyze the effects of a public sugarcane outgrower scheme in ethiopia participation in the outgrower scheme significantly reduces the income and asset stocks of outgrowers who contributed irrigated land to the outgrower scheme while the effect was insignificant for outgrowers who contributed rain fed land we provide several explanations and discuss policy implications

perfect equilibria in budget constrained sequential auctions an experimental study this article presents an experimental study of bidding behavior in sequential auctions in which there are budget constraints and perfect information our experiments test both the properties of such auctions and the predictive power of a refinement of the nash equilibrium concept we find that budget constraints affect the behavior of bidders and that the trembling hand perfect equilibrium is generally a good predictor of prices

numerical analysis of asymmetric first price auctions abstract we propose numerical algorithms for solving first price auction problems where bidders draw independent valuations from heterogeneous distributions the heterogeneity analyzed in this work is what might naturally emerge when subsets of distributionally homogeneous bidders collude bid functions and expected revenues are calculated for two special cases extensions to more general asymmetric first price auctions are discussed journal of economic literature classification numbers d44 c63 c72 d82

local governance and the quality of local infrastructure evidence from village road projects in rural china abstract research has shown that allowing local communities to elect their own leaders increases local infrastructure investment however much less is known about the effects of local governance reform on the quality of local infrastructure this paper examines the effects of governance reform implemented in rural chinese villages on the quality of village road projects we conduct surveys in 101 rural villages and collect data related to the implementation of the reform over the last two decades we also measure the quality of over 550 village road projects completed in these villages using fixed effects and instrumental variable estimation methods we find that the implementation of village governance reform increases the quality of village road projects we also find evidence supporting the following effect mechanisms 1 village leaders become younger and more educated 2 high quality road projects increase incumbent leaders re election chances and 3 village residents participate more actively in the management and monitoring of village road projects

the effects of migration on collective action in the commons evidence from rural china summary over the past three decades scholars have studied the effects of more than three dozen factors on collective action in the commons but little is known about the effects of rural to urban migration we examine this question with the case of china which has the world s most extensive levels of rural to urban migration using ols logit and probit models and data from a survey of 1 780 households from 18 provinces we find that migration has a statistically significant adverse effect on collective irrigation controlling for a large number of theoretically relevant variables the effects of migration on collective action in the commons are possibly mediated by a number of factors frequently identified in the literature including leadership social capital sense of community economic heterogeneity and dependence on resources we speculate that massive out migration partly explains the significant drop in the use of collective canal irrigation and exacerbated the significant increase in groundwater irrigation since the start of reforms in 1980s these findings have important policy implications for commons governance in china given that massive rural to urban migration will continue in the next decade because of the increasing rural to urban migration worldwide especially in developing countries the findings could also partly explain the deteriorating state of rural village infrastructure natural common pool resources and ecological systems in many developing countries

how does public assistance affect family expenditures the case of urban china summary using recent national household survey data and a propensity score matching method this study examines the effects of urban china s primary public assistance program minimum living standard assistance mlsa on family expenditures an important yet understudied indicator of family material well being we find that families receiving mlsa prioritized human capital investment i e paying for education and health rather than making the ends meet e g paying for food clothing rent and utilities the policy implications of these findings are discussed

jump starting self employment evidence among welfare participants in argentina one important concern of governments in developing countries is how to phase out large safety net programs the authors evaluate the short run effects of one possible exit strategy programs that promote self employment in argentina they provide evidence that a small fraction of beneficiaries were attracted by this program overall potential participants to self employment are more likely to be female household heads and more educated beneficiaries relative to the average jefes beneficiaries using nonexperimental methods the authors show that participation in the program does affect the labor supply of participants by reducing the probability of having an outside job especially for males and increasing the total number of hours worked but the intervention fails to produce on average income gains to participating individuals and households in the short run the fact that a small subset of former welfare beneficiaries are attracted to the program coupled with the fact that only a subset of participants younger and more educated beneficiaries and with previous self employment experience benefited from participation has important implications for this intervention to represent a viable exit strategy from welfare

non farm work and food security among farm households in northern ghana this paper examines the impact of non farm work on household income and food security among farm households in the northern region of ghana we analyze the impact by employing propensity score matching method that accounts for self selection bias the matching results show that participation in non farm work exerts a positive and statistically significant effect on household income and food security status supporting the widely held view that income from non farm work is crucial to food security and poverty alleviation in rural areas of developing countries

effectiveness of active labor market tools in conditional cash transfers programs evidence for argentina summary this paper examines the impact of the program seguro de capacitacion y empleo sce implemented to provide support in skills upgrading job seeking and job placement to eligible beneficiaries of the argentinian conditional cash transfer program plan jefes the sce is an example of a growing trend observed in latin america where labor activation components have been increasingly included into cash transfers programs to support beneficiaries in finding more stable income opportunities despite this growing trend not enough is known regarding the effectiveness of these components especially on job quality in this context this paper sheds light on whether the provision of a comprehensive package of active labor market measures contributes to a successful labor market integration of cash transfers beneficiaries taking advantage of the panel structure of the permanent household survey and exploiting the time variation in the assignment of the program as identification strategy we apply difference in difference estimators to measure the impact on a number of labor market indicators we find that the program affects positively the job quality of participants by increasing the probability of having a formal job and raising hourly wages moreover the intervention is associated with a lower probability of having a low paid job and working an excessive number of hours these effects are however not homogeneous across all groups of participants while the program is more successful among the younger beneficiaries it does not contribute to an improvement in the labor market conditions of female beneficiaries who in fact are the majority of sce participants our results suggest that reducing dependency on monetary transfers through programs such as the sce that are rich in activation components is beneficial for participants labor market trajectories and therefore it constitutes a satisfactory exit strategy to more universal cash transfer programs

wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

scale economies and the dynamics of recurring auctions we analyze the dynamics of a game of sequential bidding in the presence of stochastic scale effects either economies or diseconomies of scale we show that economies of scale give rise to declining expected equilibrium prices whereas the converse is not generally true moreover first and second price auctions are not always revenue equivalent economies of scale make second price auctions more profitable for the seller whereas revenue equivalence may be preserved in the case of diseconomies

an efficient ascending bid auction for multiple objects when bidders exhibit multi unit demands standard auction methods generally yield inefficient outcomes this article proposes a new ascending bid auction for homogeneous goods such as treasury bills or telecommunications spectrum the auctioneer announces a price and bidders respond with quantities items are awarded at the current price whenever they are clinched and the price is incremented until the market clears with private values this dynamic auction yields the same outcome as the sealed bid vickrey auction but has advantages of simplicity and privacy preservation with interdependent values this auction may retain efficiency whereas the vickrey auction suffers from a generalized winner s curse

risk sharing with limited commitment and preference heterogeneity structural estimation and testing in order to analyze the role of limited commitment and preference heterogeneity in explaining the consumption allocation i propose a theoretical and empirical framework to estimate and evaluate a risk sharing model where insurance transfers have to be self enforcing and the coefficient of relative risk aversion may depend on observable household characteristics i compare this model to benchmark models with full commitment and or without preference heterogeneity using data from three indian villages i find that the limited commitment model with heterogeneous preferences outperforms the benchmark models in a statistical sense and in terms of i explaining the dynamic response of consumption to idiosyncratic income shocks ii accounting for the variation of consumption unexplained by household and time effects and iii capturing the variation of inequality across time and villages and predicting changes in inequality i also use the estimated models to predict the effects of a counterfactual tax and transfer policy on the consumption allocation the limited commitment model with preference heterogeneity predicts larger benefits to the poor than its homogeneous counterpart

bidding behavior in sequential cattle auctions the objectives of this study are to investigate the institutional speciflcs of sequential cattle auctions and their role as determinants of prices institutional speciflcs are the order of sale according to quality a secret reserve price bidders multi unit demand and difierent types of bidders prices decline and bidders with a higher demand pay on average lower prices the estimation results show that declining prices are caused by the order of sale according to quality and the secret reserve price the results further show that bidders take the strategic efiect of sequential auctions and multi unit demand into account

equilibrium in sealed high bid auctions there is a voluminous theoretical literature on sealed high bid auctions auctions in which bids are sealed and the high bidder pays his bid see for example vickrey 1961 myerson 1981 riley and samuelson 1981 milgrom and weber 1982 matthews 1983 maskin and riley 1984 holt 1980 cox smith and walker 1988 a critical property on which this literature relies is the existence of equilibrium in which buyers bidding strategies are monotonic in their types this enables the analyst to perform comparative statics as the distribution of types changes and to compare the welfare properties of the high bid auction with those of other auction institutions one case in which the existence of monotonic equilibrium is readily established is that in which buyers types are distributed smoothly independently and symmetrically in this case there exists a symmetric equilibrium one in which all bidders share the same bidding behaviour as a function of their valuations and this bid function is the solution to a first order differential equation

assisting the transition from workfare to work a randomized experiment randomly sampled workfare participants in a welfare dependent region of argentina were given a voucher that entitled an employer to a sizable wage subsidy a second sample also received the option of skill training while a third sample formed the control group the authors analyze the effects of this scheme on participants employment and income using double difference and instrumental variables methods to deal with potential experimental biases including selective compliance with the randomized assignment the authors find that compared with the control group voucher recipients had a significantly higher probability of employment though their current incomes were no higher the impact was largely confined to women and younger workers labor supply effects appear to have been important however training had no significant impact the experiment was cost effective in reducing the government s welfare spending since take up of the subsidy by employers was low

an optimal auction for complements abstract this paper considers the optimal selling mechanism for complementary items when buyers are perfectly symmetric the optimal procedure is to bundle the items and run a standard auction in general however bundling the items is not necessarily desirable and the standard auctions do not maximize revenue moreover the optimal auction allocation may not be socially efficient since the auction must discriminate against bidders who have strong incentives to misrepresent their true preferences journal of economic literature classification number d44

regulating without cost information the incremental surplus subsidy scheme the authors propose a regulatory mechanism called the incremental surplus subsidy iss scheme that can be implemented even when the regulato r has no knowledge of the monopolist s cost structure the regulator need only share the firm s knowledge of demand which may be imperfec t and be able to observe with a lag the firm s expenditures the i ss scheme induces the firm to set marginal cost prices to minimize p roduction costs and to undertake efficient investment levels it als o severely limits the firm s rents and eliminates them altogether if the firm s discount rate is known copyright 1988 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

re evaluating microfinance evidence from propensity score matching this paper evaluates effectiveness of microfinance using propensity score matching psm method applied to data collected in a recent randomized control trial this method allows one to answer an additional set of questions not answered by the original study and provide more nuanced evidence by comparing microfinance institution mfi borrowers to those without any loans and those with prior loans from other sources it is argued that this unique setting with two comparison groups allows us to shed light on the unobservable entrepreneurial spirit bias and provides upper and lower bounds on the true microfinance impact the results suggest that microfinance can make a modest difference for some households in several expenditure categories

migration risk and liquidity constraints in el salvador abstract this article utilizes panel data from el salvador to investigate the use of transnational migration as an ex post risk management strategy i show that adverse agricultural conditions in el salvador increase both migration to the united states and remittances sent back to el salvador i show that in the absence of any agricultural shocks the probability that a household sent members to the united states would have decreased on average by 24 26 i also show that the 2001 earthquakes reduced net migration to the united states a one standard deviation increase in earthquake damage reduced the average probability of northward migration by 37 11 the evidence suggests that the effects of the earthquakes had more to do with households retaining labor at home to cope with the effects of the disaster than with the earthquakes disrupting migration financing

consistent conjecture and free entry oligopoly a general analysis abstract this paper shows that in an oligopoly model that allows free entry only competitive conjecture is consistent for any demand and cost functions and for any conjectural variation function that depends on the firm s own output and the outputs of the other firms

estimating the benefit incidence of an antipoverty program by propensity score matching this brief summarizes the results of a gender impact evaluation study entitled estimating the benefit incidence of an antipoverty program by propensity score matching conducted between 1997 and 1998 in argentina the study observed that the average direct gain to the participant is found to be about half the gross wage over half of the beneficiaries are in the poorest decile nationally and 80 percent are in the poorest quintile the propensity score matching psm estimator is reasonably robust to a number of changes in methodology participants are more likely to be poor than non participants participants are less well educated live in poorer neighborhoods and are more likely to be members of neighborhood associations and political parties average gains are similar between men and women but are higher for younger workers funding for the study derives from the world bank research committee

economic impact of direct marketing and contracts the case of safe vegetable chains in northern vietnam abstract the paper investigates the respective impacts on incomes of contractual arrangements direct sales and spot marketing for safe vegetable farmers in northern vietnam it is based on a survey of 137 peri urban vegetable farmers that was analyzed using different econometric methods to correct selection biases direct sales and contractual arrangements have a significant positive impact on income compared to spot marketing contracts have less impact on income compared to direct sales it is recommended that policies be formulated to stimulate direct dealings between farmers and consumers which enhance consumer confidence in terms of quality and translate into higher farmer income than anonymous exchanges or contracts

full insurance in the presence of aggregate uncertainty this paper tests implications of full consumption insurance the object is to determine how much mileage can be obtained from a model with complete markets with such features as private information or liquidity constraints omitted the implication exploited is that individual consumption responds to aggregate risk but not to idiosyncratic risk the test involves regressing the change in household consumption onto the change in aggregate consumption and other right hand side variables such as the change in household income and change in employment status all variables other than the change in aggregate consumption are predicted to be insignificant in explaining the change in household consumption with observations on consumption and income for 10 695 households from the consumer expenditure survey the results are mixed the results for one specification exponential utility are mostly consistent with full consumption insurance the results for the other specification power utility are not

sequential auctions of interdependent objects israeli cable television licenses in israel area cable television catv licenses were auctioned sequentially this paper provides evidence that i there were interdependencies among many of the franchises and that ii subscriber fees for the interdependent franchises decreased over time in this auction

active labour market programmes in latin america and the caribbean evidence from a meta analysis abstractwe present a systematic review and meta analysis of impact evaluations of active labour market programmes almps in latin america and the caribbean lac we extract 296 impact estimates f

indirect methods for regulating externalities under uncertainty it is sometimes necessary or appropriate to correct an externality by intervening in the market for a privately traded commodity with which the externality is linked in these situations ad valorem taxation is a viable policy option it is argued that some combination of specific and ad valorem taxes will always outperform regulations which fix price administratively but that quantity standards may outperform taxes the analysis is applied to a problem in international trade

a simple test of consumption insurance are consumers effectively insured against idiosyncratic shocks to income or wealth either by formal institutions such as charities private insurance and government programs or by informal mechanisms such as gifts and loans from relatives friends and neighbors under full insurance consumption growth should be cross sectionally independent of idiosyncratic variables that are exogenous to consumers this proposition is tested by cross sectional regressions of consumption growth on a variety of exogenous variables full insurance is rejected for long illness and involuntary job loss but not for spells of unemployment loss of work due to strike and an involuntary move

hidden impact household saving in response to a poor area development project abstract the possibility that poor households may prefer to save the income gains from a development project raises concerns about how well standard evaluation methods using data collected over relatively short periods can capture the true welfare impacts by the widely used difference in difference method the southwest china poverty reduction project had little current impact on the proportion of people in beneficiary villages consuming less than us 1 day despite a public outlay of us 400 million however the program had much larger impacts on incomes than consumptions uncertainty about the project s future impact probably made it hard for participants to infer the gain in permanent income so they saved a high proportion of the current income gains

should cities go for the gold the long term impacts of hosting the olympics the summer olympics bring hundreds of thousands of visitors and generate upward of 10 billion in spending for the host city this large influx of tourism dollars is only part of the overall impact of hosting the olympic games in order to host the visitors and sporting events cities must make sizable investments in infrastructure such as airports arenas and highways additionally the publicity and international exposure of a host city may benefit international trade and capital flows proponents argue that this investment will pay off through increased economic growth but research confirming these claims is lacking this paper examines whether hosting an olympiad improves a city s long term growth in order to control for the self selection of cities that host olympic games this paper matches olympic host cities with cities that were finalists for the olympic games but were not selected by the international olympic committee a difference in difference estimator examines post olympic impacts for host cities between 1950 and 2005 regression results provide no long term impacts of hosting an olympics on two measures of population real gross domestic product per capita and trade openness jel o18 r11

impact of cooperatives on smallholders commercialization behavior evidence from ethiopia this article examines the impact of marketing cooperatives on smallholder commercialization of cereals using detailed household data in rural ethiopia we use the strong government role in promoting the establishment of cooperatives to justify the use of propensity score matching to compare households that are cooperative members to similar households in comparable areas without cooperatives the analysis reveals that although cooperatives obtain higher prices for their members they are not associated with a significant increase in the overall share of cereal production sold commercially by their members however these average results hide considerable heterogeneity across households in particular we find that smaller farmers tend to reduce their marketed output as a result of higher prices whereas the opposite is true for larger farmers

longitudinal analyses of the effects of trade unions but union members are different from nonmembers in unobserved ways biasing your estimates y ou should make a selectivity bias correction simultaneously determine union status and economic outcomes develop an unobservables model use longitudinal data archetypical comment on virtually any study of the economic effects of umomsm or suitably modified on any other empirical subject

the effect of irrigation on poverty reduction asset accumulation and informal insurance evidence from northern mali summary the impact of small scale irrigation investments on household consumption assets and informal insurance is estimated from a panel of northern malian households 1998 2006 access to irrigation increases household consumption by 27 30 relative to water recession and rain fed cultivators the paper also investigates whether irrigation has secondary impacts on risk mitigating strategies by reducing covariate risk and reinforcing informal food sharing networks that allow households to insure against idiosyncratic risk we find that households with irrigation save between 4 5 and 6 4 more tropical livestock units and are 20 more likely to engage in informal food sharing with non irrigators this finding suggests that impact estimates that rely on consumption may underestimate welfare gains by ignoring the household s savings behavior and informal insurance network

optimal regulation of a consistent conjectures duopoly abstract previous regulatory incentive schemes have focused on monopoly or on competition with externalities this note examines a consistent conjectures duopoly deriving a specific tax function that induces optimal output even if the regulator is ignorant of demand and knows the cost function only up to an affine transformation the solution readily generalizes to symmetric oligopoly

bundling decisions by a multiproduct monopolist with incomplete information this paper analyzes bundling decisions of a rnultiproduct monopolist facing uncertain demand the monopolist sells his products using an auction mechanism and the market is analyzed as a game with incomplete information in which the buyers as well as the seller are strategic agents with a small number of buyers a profit maximizing seller will bundle all his output this makes buyers uniformly worse off compared to the case where the same monopolist does not bundle in the sense that any buyer is worse off regardless of his demand for the monopolist s outputs with a larger number of buyers the seller will have a tendency to unbundle his output and high demand buyers are worse off than they would be if the monopolist bundled his output low demand buyers on the other hand are always better off when the monopolist unbundles his output regardless of the number of competing buyers despite the fact that high demand buyers are the typical purchasers of the monopolist s output the net effect of increasing the number of buyers is greater market efficiency since bundling creates market inefficiencies both ex post and ex ante

first price auctions in the asymmetric n bidder case i consider the first price auction when the bidders valuations may be differently distributed i show that every bayesian equilibrium is an essentially pure equilibrium formed by bid functions whose inverses are solutions of a system of differential equations with boundary conditions i then prove the existence of an equilibrium i prove its uniqueness when the valuation distributions have a mass point at the lower extremity of the support i give sufficient conditions for uniqueness when every valuation distribution is one of two atomless distributions i establish inequalities between equilibrium strategies when relations of stochastic dominance exist between valuation distributions

household responses to economic and demographic shocks marginal logit analysis using indonesian data abstract we analyse the responses of indonesian households to demographic and economic shocks and examine how these responses vary in relation to the household s permanent income and the extent to which the shock is common across the community households respond in different ways to demographic and economic shocks economic shocks are more likely to result in a labour supply response from the household and this probability is further increased if the shock is common for rural households use of savings increases with permanent income the article also examines the role of the interviewer in influencing survey responses

capacity constraints and information revelation in procurement auctions i introduction procurement auctions are one of the most widely used mechanisms in modern economies to disburse funds for public works projects a substantial portion of these funds are spent on the construction and maintenance of roads and highways an activity on which the u s government for instance spends 160 billion annually in this article we examine the bidding behavior of experimental participants in order to shed light on the strategic incentives generated by these auctions our investigation is centered on two observations made in the existing literature in a typical state level procurement auction held in the united states firms submit sealed bids for a particular project that has been advertised in advance by the state s department of transportation subject to some qualifications the lowest bidder wins the project and is paid the amount of its bid empirical work analyzing these auctions has found that construction firms suffer from capacity constraints whereby a firm with a larger backlog of preexisting work commitments finds it more costly to add new work to its roster de silva dunne and kosmopoulou 2003 jofre bonet and pesendorfer 2003 1 bidders with larger backlogs therefore tend to submit higher bids and win fewer auctions because a typical department of transportation auctions off hundreds of such projects a year capacity constraints create an intertemporal linkage between adjacent auctions a bidder that wins a given auction incurs an opportunity cost in terms of forgoing expected profits in future auctions on account of its anticipated higher costs our first research question therefore is how does the presence of capacity constraints affect the bidding behavior of experiment participants our second research question is inspired by the fact that procurement markets have been found to be vulnerable to collusion by bidders bajari and ye 2003 porter and zona 1993 in most states contracts are typically won by a small set of firms that interact repeatedly in procurement auctions over the course of the year this can provide an ideal setting for a bid rigging scheme in procurement auctions where firms compete by setting prices observing the prices set by one s rivals can be crucial to the feasibility of any collusive scheme porter 2005 if bidders are not colluding and if past bids are not correlated with current costs then observing a rival s past bids will not lead to observable variation in a firm s bids if however firms are attempting to collude a change in the bid revelation policy of the procurer might lead to a measurable change in bids thus revealing the past bids of players can influence their strategic behavior as it alters the ways in which they can provide information to each other about their strategies even in the absence of explicit collusion when all bids are revealed a firm may be able to signal its desire to tacitly collude by submitting noncompetitive bids 2 this leads us to the question what is the effect of varying the amount of information revealed about past bids on the current bids of experimental participants competing in dynamic auctions the answer to this question may be useful for policy makers given that currently most state departments of transportation in the united states publicize all the bids from past auctions the central contribution of our article is to answer the two questions posed with evidence collected from laboratory economic experiments in the experimental sessions bidders play one shot two round and infinite horizon procurement auction games where winning an auction can increase a bidder s cost in the next auction in half of the experimental sessions only the winning bid is revealed after each auction this is done to restrict the amount of information that is shared between bidders explicit communication is not allowed in the other half of the sessions we reveal winning and losing bids at the conclusion of each auction

estimates of the benefit incidence of workfare workfare has become a central policy in argentina since mid 2002 when the government increased the number of beneficiaries from 100 000 to two million people in a country of thirty nine million in this paper i assess the focalization of the program and estimate its income effects using individual panel data for the period 2000 02 in addition to standard nearest neighbor matching estimators i compute difference in differences estimators and allow for nonpositive income effects i find that only 55 percent of the participants were in the poorest quintile of the income per capita distribution the estimated average income effect of the program during participation was about one third of the average benefit handed out by the program while there is some evidence that the program had a higher benefit for the poor for a large number of relatively wealthier individuals the program did not make a big difference these results appear to be driven at least partly by weak enforcement of work requirements and eligibility conditions these findings question the efficacy of this program as an effective tool for addressing poverty

on the measurement of poverty official statistics in the united states and the united kingdom show a rise in poverty between the 1970 s and the 1980 s but scepticism has been expressed with regard to these findings in particular the methods employed in the measurement of poverty have been the subject of criticism this paper re examines three basic issues in measuring poverty the choice of the poverty line the index of poverty and the relation between poverty and inequality one general theme running through the paper is that there is a diversity of judgments which enter the measurement of poverty and that it is necessary to recognize these explicitly in the procedures adopted there is likely to be disagreement about the choice of poverty line affecting both its level and its structure in this situation we may only be able to make comparisons and not to measure differences and the comparisons may lead only to a partial rather than a complete ordering the first section of the paper discusses the stochastic dominance conditions which allow such comparisons illustrating their application by reference to data for the united states the choice of poverty measure has been the subject of an extensive literature and a variety of measures have been proposed in the second section of the paper a different approach is suggested considering a class of measures satisfying certain general properties and seeking conditions under which all members of the class which includes many of those proposed give the same ranking those sceptical about measures of poverty often assert that poverty and inequality are being confounded the third section of the paper distinguishes four different viewpoints and relates them to theories of justice and views of social welfare

moving out of poverty in tanzania evidence from kagera abstract this paper uses linked qualitative and quantitative data to explore the growth trajectories of matched households in the kagera region of tanzania finding that agriculture and trade provided the two main routes out of poverty the interplay between initial conditions shocks networks and experiences of life beyond their village determine whether a person moves out of poverty in the following decade

optimal multi object auctions this paper analyses optimal auctions of several objects in the first model bidders have a binary distribution over their valuations for each object in which case the optimal auction is efficient the optimal auction takes one of two formats either objects are sold in independent auctions or a degree of bundling is introduced in the sense that the probability a bidder wins one object is increasing in her value for the other the format of the optimal auction may depend upon the number of bidders in the second model the restriction to binary distributions is relaxed and the optimal auction is then inefficient

the impact of a food security program on household food consumption in northwestern ethiopia a matching estimator approach abstract with the financial support from various development partners ethiopia has designed and implemented several programs to improve household food security yet food insecurity is still a major challenge to several millions of people in the country and it is questionable whether the different food security programs implemented over the past years have been successful using a propensity score matching method to control for pre intervention differences this study examined the impact on household food calorie intake of an integrated food security program ifsp which had been implemented in northwestern ethiopia by two non governmental organizations as a case study the estimated results provide evidence that ifsp has a positive and statistically significant effect on food calorie intake in particular ifsp has raised physical food calorie intake by 30 among the beneficiary households however we also found that ifsp has differential impact depending on family size landownership and gender of head of household overall the paper provides evidence that supporting integrated food security programs is important to improve food security in rural areas

evaluating irrigation investments in malawi economy wide impacts under uncertainty and labor constraints irrigation expansion is critical to increase crop yields and mitigate effects from climate change in sub saharan africa but the low profitability has led to little irrigation investments in the region so far using an integrated modeling framework we simultaneously evaluate the returns to irrigation arising from both economic and biophysical impact channels to understand what determines the profitability of irrigation in malawi our results confirm that the returns to irrigation cannot cover the costs in malawi while labor intensive irrigation expansion leads to unfavorable structural change in the short run the profitability hinges on low irrigated yields that fall far from expectations due to insufficient input use and crop management techniques on the other hand we find that the nonmonetary benefits of irrigation regarding higher food security lower poverty and reduced vulnerability to climate change make investments in irrigation worthwhile to improve the livelihoods of smallholders

sequential auctions with synergies an example abstract an equilibrium in an example of a two unit sequential ascending price auction where some bidders have superadditive values is presented the equilibrium is in pure strategies in equilibrium the expected price declines from the first to the second auction