the public choice of superior sanctions this paper analyzes the public choice of specific forms of sanctions current sanctions are essentially quantity constraints q sanctions which are like quotas in that they might bestow benefits on certain special interest groups in the target country revenue sanctions r sanctions may be able to recapture such benefits in the form of sender government revenue which could either compensate for the costs of sanctions to the sending country or finance other sanction enhancing activities aimed at the target country hence r sanctions may be superior to q sanctions in general or on the basis of target efficiency however public choice analysis suggests that q sanctions will generally be chosen over r sanctions by democratic countries

political influence motives and the choice between tariffs and quotas abstract tariffs and quotas are not symmetric under a variety of circumstances this paper pursues the implications of one such circumstance domestic market power for the political choice of protectionist instrument in the context of a political support maximization model tariffs dominate quotas in the political model in the absence of revenue seeking motives in the presence of revenue seeking ambiguity arises but limits can be placed on the range of tariff or quota levels also some welfare implications emerge

political economy and contingent protection the growing interest in the political economy of protection and the extensive literature which has already developed around the theme are mainly due to the wide gap between what policy makers practice and what economists preach notwithstanding the interesting nuances brought forth by the new trade theory most economists do not seriously contest the superiority of free trade over protection but policy makers in almost all countries practice some form of trade protection further the context within which such practices occur the extent to which they are resorted or the industries that benefit from them do not often seem to conform to the traditional explanations of protection such as optimal tariffs infant industry protection or the new arguments in favour of international rent shifting in specific strategic sectors this being the case the study of the positive theory of trade policy determination has continued to gain ground with economists borrowing concepts from political science most but not all such analyses have attempted to explain tariff protection particularly inter industry differences in nominal or effective tariff rates but successive multilateral trade negotiations have brought down average tariffs to single digit figures also agreement has been reached through the uruguay round negotiations to reduce the levels of some important types of non tariff barriers such as agricultural subsidies and export restraints although the trend has thus been clearly towards a reduction of the levels of protection the use of certain selective unilateral protectionist measures such as anti dumping and countervailing duty ad cvd measures are very much on the increase this has raised genuine fears that the codes and regulations which were meant for a corrective purpose are now being increasingly used for legitimising selective unilateral protection although the political economy analysis of this type of contingent protection is still in its infancy from the trade policy point of view this is an area of considerable importance

why voluntary export restraints are voluntary the paper presents an analysis of the effect upon an oligopolistic equilibrium of introducing a voluntary export restraint ver upon an importing firm a ver set at the free trade level of imports is shown to raise the profits of all firms within the industry the result follows as the imposition of a ver upon a free trade nash price competition forces the domestic firm to become an industry price leader the ver raises industry prices by facilitating collusion and lowers consumer welfare pourquoi les restrictions volontaires d 1 exportation sont volontaires ce memoire presente une analyse des effets de l introduction de restrictions volontaires a l exportation rve sur une entreprise qui importe dans un monde en equilibre oligopolistique on montre que l introduction de rve approximant le niveau des importations en regime de libre echange devrait augmenter les profits de toutes les entreprises dans l industrie cela decoule du fait que l imposition de rve sur un univers de concurrence par les prix a la nash en regime de libre echange force l entreprise domestique a devenir le leader en prix l introduction de rve augmente le niveau des prix de l industrie en facilitant la collusion et de ce fait reduit le niveau de bien etre des consomrnateurs

import penetration and the politics of trade protection abstract in this paper we reconsider a key empirical prediction generated by an important class of political economy models of trade policy namely that trade protection should be higher in sectors characterized by lower import penetration we call this the standard prediction the existing empirical evidence offers little support for this prediction in this paper we argue that the standard prediction depends critically on the assumptions that trade taxes are the only policy instruments and that the government has access to non distortionary taxation we analyze a model in which the government can use quotas and vers in addition to trade taxes and raising public funds may be costly under a simple sufficient condition our model predicts that the protection level increases with import penetration both in sectors that are protected with tariffs and in sectors that are protected with quantitative restrictions

free to trade democracies autocracies and international trade trade relations we address this issue by analyzing the relationship between regime type and trade policy in a formal model of commercial policy we establish that the ratification responsibility of the legislature in democratic states leads pairs of democracies to set trade barriers at a lower level than mixed country pairs composed of an autocracy and a democracy we test this hypothesis by analyzing the effects of regime type on trade during the period from 1960 to 1990 the results of this analysis accord with our argument democratic pairs have had much more open trade relations than mixed pairs t he effects of domestic political institutions on trade policy have long been a source of controversy among social scientists despite the widespread interest that this debate has prompted however remarkably few studies have addressed the links between political regime type and commercial policy 1 most work on the political economy of trade policy that examines institutional factors focuses only on variations in policy among democracies and avoids comparing democracies with other types of regimes moreover many analyses of trade barriers especially those by economists ignore the effects of domestic political

protection lobbying and market structure abstract we look at a model of lobbying by oligopolistic industry where firms allocate resources between lobbying and internal cost reducing activities we ask the following questions i if firms differ with respect to comparative advantage in lobbying what is the equilibrium allocation of resources between lobbying and cost reducing activities ii can lobbying opportunities reverse the profitability ranking among firms iii under what condition is the conventional wisdom that highly concentrated industries tend to obtain more protection valid the answers depend on various measures of comparative advantage in lobbying and on the demand curve

political economy of public policies insights from distortions to agricultural and food markets the agricultural and food sector is an ideal case for investigating the political economy of public policies many of the policy developments in this sector since the 1950s have been sudden and transformational while others have been gradual but persistent this paper reviews and synthesizes the literature on trends and fluctuations in market distortions and the political economy explanations that have been advanced based on a rich global data set covering a half century of evidence on commodities countries and policy instruments the paper identifies hypotheses that have been explored in the literature on the extent of market distortions and the conditions under which reform may be feasible

black hole tariffs and endogenous policy theory political economy in general equilibrium preface acknowledgments list of results 1 a preview of the results 2 endogenous policy theory a diagrammatic approach part i endogenous policy theory with specific factors the theory of industry tariffs in partial equilibrium 3 the probabilistic voting model of political efficiency and powerless politicians 4 endogenous lobbying theory and the contribution specialization theorem 5 endogenous tariff theory 6 the power function model of endogenous industry lobbying 7 three simple tests of the stolper samuelson theorem 8 the invisible foot and the waste of nations lawyers as negative externalities part ii endogenous policy theory in general equilibrium a long run theory of national tariff levels 9 the 2 x 2 x 2 x 2 model of endogenous redistribution theory 10 a prisoner s dilemma theory of endogenous protection the leontief model 11 the compensation effect and the multiple equilibrium trap 12 increasing returns to politics and factor endowments economic development and brazilian vitality versus the indian disease 13 endogenous protection in the united states 1900 88 14 a cobb douglas model 15 black hole tariffs 16 the endowment effect cross national evidence on endogenous tariffs part ii postscript 17 the senile industry argument for protection 18 optimal obfuscation and the theory of the second worst the politically efficient policy mathematical appendices references author index subject index

testing for common features in north american energy markets abstract using recent advances in the field of applied econometrics we explore the strength of shared trends and shared cycles between north american natural gas and crude oil markets in doing so we use daily data from january 1991 to april 2001 on spot u s henry hub natural gas and wti crude oil prices the results show that there has been decoupling of the prices of these two sources of energy as a result of oil and gas deregulation in the united states we also investigate the interconnectedness of north american natural gas markets and find that north american natural gas prices are largely defined by the u s henry hub price trends

voluntary export restraints antidumping procedure and domestic politics a voluntary export restraint ver is preferred to a tariff by a government concerned about electoral returns when the influence of industry profits is large relative to the losses to consumers from higher prices if the foreign firm is uncertain of these pressures the antidumping code facilitates the complete transfer of the relevant information and generates a ver rather than a tariff in equilibrium the choice across instruments is determined by the political attributes domestic and foreign profits rise with the antidumping generated ver and the ver lowers the volume of trade by more than the expected duty copyright 1996 by american economic association

the political economy of israeli protectionism an empirical analysis the aim of this study was to examine the tariff structure in israel in terms of the four main theoretical models of endogenous commercial policy the empirical results for levels of protection in israel support several of the models in particular the pressure group model performs well and especially the variable that represents the lobbying power of the histadrut public sector in israel this is consistent with the longstanding political power of the histadrut in israel the histadrut s role in the israeli economy rises above the western concept of a labor union and takes on a quasi governmental function the clearest example of this elevated status is seen when the government included the histadrut as part of the commission charged with the responsibility of carrying out the nominal liberalization process of the 1960s evidently it is this kind of political economic power that allowed the histadrut to affect the level of protection histadrut dominated industries received

endogenous trade policy under foreign direct investment abstract using bernheim and whinston 1986 common agency game we endogenize trade policy in a duopoly composed of a domestic firm and a foreign firm where both firms influence the domestic government s trade policy via their contributions the foreign firm can jump over trade restrictions by undertaking foreign direct investment fdi in the domestic market the government prefers a voluntary export restraint ver to a tariff for two reasons first a ver leads to higher contributions from the foreign firm than a tariff second a ver provides a higher level of protection to the domestic firm without generating fdi by the foreign firm

price and quantity controls as facilitating devices abstract this letter examines three cases in which a regulation imposed on one of two duopolists can increase the profit levels of both firms the regulations examined include a price floor an output quota and a sales tax

government spending and budget deficits in the industrial economies fiscal policy nouriel roubini and jeffrey sachs this paper examines the evolution of the size of government and of budget deficits in oecd economies we highlight the rapid increase in government spending in the 1970s the sharp rise in budget deficits and public debt after 1973 and the reversal in these trends in the 1980s the increase in the size of government was associated in part with the slowdown in growth after 1973 but also reflected gradual adjustment of the ratio of spending to output towards a long run target which depends on political and institutional characteristics of the economy the political orientation of the government the degree of wage indexation and the degree of stability of the political system such factors also explain the size of budget deficits when faced with an adverse shock subsequent deficit reduction requires a measure of political consensus we note that such consensus is hard to achieve in multi party coalitions in consequence countries with such a political structure tended in consequence countries with such a political structure tended toin consequence countries with such a political structure tended to experience much more rapid increases in their debt gnp ratios

resistance to reform status quo bias in the presence of individual specific uncertainty comment why do governments so often fail to adopt policies which economists consider to be efficiency enhancing our answer to this question relies on uncertainty regarding the distribution of gains and losses from reform we show that there is a bias towards the status quo and hence against efficiency enhancing reforms whenever some of the individual gainers and losers from reform cannot be identified beforehand there are reforms which once adopted will receive adequate political support but would have failed to carry the day ex ante the argument does not rely on risk aversion irrationality or hysteresis due to sunk costs jel d72 f13 why do governments so often fail to adopt policies that economists consider to be efficiency enhancing this is one of the fundamental questions of political economy the answer usually relies on what may be

ec trade protection law produmping or antidumping this paper argues that the anticipation of protection can have astimulating effect on exports instead of the commonly claimed effect of harassment if protection serves market cartelization by fixing export quantities or prices exporters may have an incentive to increase their sales abroad in order to secure a large share of the expected rent which is brought about by the anticipated import restriction this may even result in sales below marginal costs or dumping the effect of the protectionist threat may then be the reverse of what is intended it can raise the speed of import penetration and it can provoke dumping a formal model and a supportive institutional analysis of ec trade protection is supplemented by preliminary empirical evidence

lobbying and cournot nash competition abstract arguments for strategic trade intervention with cournot duopolists are reconsidered in a model where domestic firms can lobby for increased subsidies an export subsidy may not improve national welfare if lobbying costs are included even if an optimal positive subsidy exists the government needs information about lobbying effectiveness in order to correctly implement the program

ontology and the study of social reality emergence organisation community power social relations corporations artefacts and money the conception of social reality i have previously defended and here extend positing features such as social relations positions and powers is thoroughly naturalistic and even consistent with modern interpretations of quantum field theory it also serves to ground a social science that can be scientific in the sense of natural science this is the thesis defended here central to the argument is an emphasis on a strong form of emergence and the category of organisation in process to bring out various salient features of the position defended i take the opportunity to compare aspects of it with relevant components of the contribution of john searle whose ontological conception appears at once to be both very similar yet also very different copyright the author 2012 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

trade barriers as bargaining outcomes whether bilateral trade barrier data conform with the grossman helpman 1995 model s predictions about trade talks is examined in this article a simple form of the prediction from the model is tested bilateral us japan and us eu data from the 1990s are employed the results are the first in the literature

protectionist policies as the regulation of international industry the political feasibility of protectionist policies that regulate international industry derives from the absence of overt collusion among domestic import competing producers the regulation of international industry cannot be explicit since governments would thereby be perceived to be approving or instigating international collusion hence voluntary export restraints have been popularly presented with a focus on the difficulties confronted by domestic import competing producers and a de emphasis on the mutual gains to domestic and foreign producers from monitoring by a foreign government of a restrictive export cartel arrangement similarly trigger price mechanisms have popularly been explained in terms of the need for anti dumping measures to preserve fair competition likewise the involuntary export tax derived in the first instance from an administratively validated but as demonstrated by kalt s econometric analysis contentious complaint of unfair foreign competition voluntary export restraints trigger price mechanisms and involuntary export taxes are however protectionist devices the beneficiaries of which can transcend national jurisdictions and which have in common the characteristic that the gains to domestic industry interests derive from the regulation of foreign competitors

the process of socialist economic transformation in this paper we consider the reform process in those central and east european countries that have made the decision to move from a more or a less planned socialist system to a private market economy one in which private ownership predominates and most resources are allocated through markets because the reform process is both complex and intertwined with political factors especially the shift towards representative democracy and because there are substantial differences among the reforming countries no single detailed road map can guide the way to the new systems rather the paper sets out general considerations that provide a framework for reform and relates the choices to some initial conditions of the various reforming countries the framework applies also to the soviet union or in the event of its disintegration to its successor states as they move to market systems

foreign influence and welfare how do foreign interests inuence the policy determination process what are the welfare implications of such foreign inuence in this paper we develop a model of foreign inuence and apply it to the study of optimal taris we develop a two country voting model of electoral competition where we allow the incumbent party in each country to take costly actions that probabilistically aect the electoral outcome in the other country we show that policies end up maximizing a weighted sum of domestic and foreign welfare and we study the determinants of this weight we show that although foreign inuence is zero in equilibrium its threat may be welfare enhancing from the point of view of aggregate world welfare this is because foreign inuence helps alleviate externalities arising from cross border eects of policies the threat of foreign inuence can however prove harmful in the presence of large imbalances in inuence power across countries we apply our model of foreign inuence to the study of optimal trade policy we derive a modied formula for the optimal import tariand show that a country s import tariis more distorted whenever the inuenced country is small relative to the inuencing country and whenever natural trade barriers between the two countries are small

domestic politics foreign interests and international trade policy reply this paper incorporates the foreign interest in the determination of a country s international trade policy into a model of political competition between candidates contesting elective office we envisage foreign and domestic producer interests as expressing political support for a candidate via campaign contributions and candidates as making trade policy pronouncements to maximize political support from producer interests tariffs are divisive but vers are consistent with conciliatory policy positions yielding mutual gain to foreign and domestic interests no candidate has an interest in formulating a trade policy position using a tariff if a ver is a policy option protection in the developed countries has in recent years often taken the form of bilaterally negotiated voluntary export restraints vers rather than the more traditional unilaterally imposed import restrictions the use of voluntary export restraints has been paralleled by interest in the theoretical literature the effects of vers have been compared with tariffs and quotas and vers have been examined in a political economy framework with a view to identifying the gainers and losers from this form of restric

stabilization and growth in transition economies the early experience this paper analyzes the growth and stabilization experience in 26 transition economies in eastern europe the former soviet union and mongolia for the period 1989 1994 inflation rates have declined significantly in most countries following an inflation stabilization program growth resumes after stabilization occurs typically with a lag of about two years reducing inflation thus appears to be a precondition for growth an econometric analysis of the short run determinants of inflation and growth illustrates the key roles of fixed exchange rates improved fiscal balances and structural reforms in spurring growth and lowering inflation and confirms that inflation stabilization programs have been beneficial for growth even after controlling for structural reforms

eu anti dumping and tariff cuts trade policy substitution the world trading system in its current form aims at reducing multilateral trade barriers across the board indeed the last successfully concluded multilateral trade negotiations led to substantial tariff concessions on the part of most developed economies what however happened to other forms of import protection have substantial tariff concessions subsequently been replaced by the use of alternative forms of import protection in this paper we empirically investigate the relationship between negotiated external tariff cuts and the subsequent use of anti dumping actions by the eu evidence is found for larger uruguay round tariff cuts increasing the probability of subsequent anti dumping investigations

trade restrictions as facilitating practices abstract the effect of quantitative restrictions in oligopolistic markets is shown to depend on whether imports are substitutes or complements for domestic products in the former case they have profound effects even when set at free trade levels because they impede the ability of the foreign firm to compete in the domestic market thereby acting to facilitate collusion and raise prices and profits for this reason tariffs and quotas are fundamentally non equivalent with substitute goods when goods are complements a voluntary export restriction ver at the free trade level has no effect and tariffs and quotas are equivalent

microeconomic issues in the transition to a market economy evidence from developing countries suggests that a one sided preoccupation with macroeconomic issues may be unfortunate as macro stabilization programs tend to unravel in the presence of an inadequate micro adjustment for example kiguel and liviatan 1990 this finding is important because the socialist system introduced microeconomic distortions that probably transcend those observed in the third world the recent developments in poland yugoslavia and the soviet union also support the hypothesis that macro stabilization will be difficult to achieve in the transforming socialist economies in the absence of adequate micro adjustments in this paper i address what i consider to be the most important micro issues related to the transition from socialist to market economies i first summarize the initial microeconomic conditions and then describe the main changes that have taken place in the early stages of the transition finally i discuss the micro policy agenda that needs to be addressed if the transition is to be successful

ec members fighting about surplus vers fdi and japanese cars the distribution of consumer and producer surplus among ec members of three different trade regimes free trade a voluntary export restraint ver and a ver in conjunction with foreign direct inv

endogeneous protection factor returns and resource allocation we consider a heckscher ohlin samuelson trade model with two lobbies representing the interests of factor owners and two political parties the lobbies contribute resources to politics equating their returns to political and economic activity at the margin while the parties maximize their probability of election trading off general voter dissatisfaction with protection against the electioneering resources that favorable policies attract from the lobbies the equilibrium level of protection of a factor and its expected rate of return increase with its relative endowment if this relative endowment is high low then the factor will be better worse off than under free trade but at intermediate factor endowment ratios both factors will be worse off under parameter changes making lobbies more sensitive to the commodity price the lobbies contribute more resources to politics and can both be worse off even though the parties are proposing lower trade distortions

political reform and trade policy abstract the welfare effects of partial restrictions on political competition are investigated in a model in which two candidates receive campaign contributions from import competing industries in return for tariff protection ceilings on allowable contributions per industry may be welfare worsening particularly if the contributor elasticity is high because they induce candidates to seek additional contributors restrictions that reduce the number of industries allowed to contribute may also worsen welfare because candidates respond by increasing contributions and tariff protection for each active contributor the results suggest that the ability of candidates to circumvent partial restrictions may eliminate any potential benefits

political competition rent seeking and the choice of environmental policy instruments comment in this comment i analyze damania s political economy model environmental and resource economics 13 415 433 1999 correcting some flaws and clarifying some ambiguities i arguethat the political parties are identical at the outset of the game onlyafter the parties have chosen the instrument standards or taxation and thestrictness of environmental policy do the environmentalists and thepolluting firms know which party to support in the election campaign inequilibrium both parties choose the same platform so that both have anequal probability of winning the election

veblen on the machine process and technological change this paper explores veblen s analysis of technological change i claim that rather than succumbing to the traditional criticisms his approach founders due to his failure to fully articulate a social ontology whilst veblen s analysis of his own time remains in many ways compelling this failure creates a gap between meta theoretical promise and current theoretical results i show how work in the social studies of technology has successfully avoided the ontological problems associated with veblenian economics this success is tempered by the fact that the field has not yet provided an appropriate framework to systematise the ways in which technical innovations transform social relations in ways that are beyond conscious control and manipulation copyright the author 2009 published by oxford university press on behalf of the cambridge political economy society all rights reserved oxford university press

the political economy of transition the overriding importance of political constraints in the transition process has led to developments of the theory of the political economy of reform what are the main insights from that theory how does it reflect the transition reality what have we learned and what do we still need to learn the present article will attempt to answer those questions

europe 1992 and the western pacific economies the main stimulus to completing the integration of the economies of the european community under the i992 programme has been the ec s relatively slow economic growth during the past two or three decades while japan s share of world gdp has trebled since the early i96os to about one sixth the eci 2 s share has fallen slightly to around one quarter many expect or at least hope that the removal of remaining barriers to movements of goods services people and capital within the ec not only will provide a one off boost to ec output cecchini et al i988 but will set ec incomes on a permanently higher growth path baldwin i989 numerous non europeans worry however that the trade diverting consequences of the ec reforms together with possible enlargements of ec membership and changes in ec preferential trading arrangements will be much more significant than any external trade creation and may make some excluded economies worse off this paper seeks to assess the effects of the ec92 programme and related changes currently underway in europe on the trade and growth prospects of a particularly vulnerable group namely the western pacific economies the next section of the paper explains why the western pacific region defined to include northeast and southeast asia plus australia and new zealand is a natural grouping of economies for considering external effects of european policy changes 2 the subsequent section summarizes the likely effects of those changes on the volume and commodity composition of europe s external trade and hence on the trade and welfare of different western pacific economies the fourth section examines possible responses by that region to these developments and their likely repercussions for europe the paper concludes that while the western pacific economies are likely to respond positively to whatever changes take place in europe welfare there in europe

a variable threshold band approach to measuring market linkages uncertain and changing economic conditions can have substantial effects on price relationships in spatially separated linked markets although numerous studies have analysed price relationships to characterize market linkage structures most assume that the relationships and associated linkages are time invariant this study extends the literature by modelling and estimating time dependent market linkages that are conditional on changes in exogenous factors the methodology is used to investigate price relationships in north carolina nc corn and soya bean markets empirical results indicate that generalized market linkage models provide a better representation of price relationships over time improving the understanding of price discovery dynamics and marketing strategies

understanding economic policy reform one of the eventual consequences of the global debt crisis was a wave of market oriented economic reforms this paper discusses the state of our knowledge on the political economy of this process why were inefficient and often unsustainable policies maintained for so long why are so many governments reforming now after decades of adherence to policies of an opposite kind have the reformers internalized the correct lessons from the east asian experience finally are there any helpful rules for reformers to follow in guiding their policies through complicated political terrain

timing is everything elections and trade liberalization in the postcommunist world in the wake of the soviet bloc s collapse various postcommunist countries rushed to gain greater access to foreign markets many of them have made substantial progress in liberalizing commerce but the movement toward free trade has been by no means universal one prominent view is that the establishment of democratic institutions has stimulated economic reform in thepostcommunist world the authors conduct one of the first studies on this topic and find that democracies are indeed more likely to liberalize trade than nondemocracies they also find that the electoral calendar has a potent influence on the timing of commercial reform in postcommunist democracies controlling for a range of factors politicians are most likely to reduce trade barriers immediately after voters go to the polls trade liberalization is much less likely to occur at other points in a democracy s electoral calendar and elections have no effect on commercial reform in nondemocracies

cooperative lobbying and endogenous trade policy this paper considers trade policies in a small open economy in which two influential interest groups lobby the government since competitive lobbying leads to excessive rent seeking expenditures the lobbies have an incentive to cooperate the outcome of cooperative lobbying is characterized in terms of lobbying and bargaining power of the two groups two important results are derived first if the power of competing interest groups is balanced then cooperation leads to free trade second if it is unbalanced cooperation may on the contrary increase protection

the use and effect of political propaganda in democracies this paper examines the influence of political propaganda on voters and analyses the behavior of the interest groups in the face of the influence being exercised by propaganda semi truths are distributed among the electorate the decision taken by a voter results from his basic opinion and from the parts of information he receives the analysis shows that the greater the likelihood of a certain decision being reached by a fully informed electorate the more probable it is that the same decision will be reached by a rationally uninformed electorate the pecuniary interest of an interest group is however also positively correlated with the probability that the electorate reaches a decision which is agreeable to that interest group it has finally become appar ent that the results of the approach concur well with empirical studies

political competition rent seeking and the choice of environmental policy instruments this paper investigates the impact of political lobbying on the choice of environmental policy instruments it is argued that the prevalence of pollution emission standards over more efficient policy instruments may result from rent seeking behaviour the model further predicts that when an emission standard is used to control pollution rival political parties have an incentive to set the same standard there is therefore a convergence of policies moreover it is shown that emission taxes are more likely to be supported and proposed by political parties which represent environmental interest groups this feature appears to accord with the observed support for environmental taxes by green parties in europe australia new zealand and elsewhere

time varying threshold cointegration and the law of one price a theoretical model of the law of one price which allows for seasonality in transaction costs and supply and demand conditions between markets is developed bivariate three regime threshold vector error correction models are applied to natural gas markets to examine seasonality in threshold levels results indicate that there are nonlinear adjustments to the law of one price in seven pair wise markets chicago is used as the base market in the natural gas sector dynamic threshold effects relative to the chicago market vary depending on season geographical location and whether the market is an excess producing or consuming market

price interactions and discovery among natural gas spot markets in north america recent advances in modeling causal flows with time series analysis are used to study relationships among eight north american natural gas spot market prices results indicate that the canadian and us natural gas market is a single highly integrated market further results indicate that price discovery tends to reflect both regions of excess demand and supply across north america malin hub in oregon chicago hub illinois waha texas and henry hub louisiana region are the most important markets for price discovery opal hub in wyoming is an information sink in contemporaneous time receiving price information but passing on no price information aeco hub in alberta canada receives price signals from several markets and passes on information to opal and the oklahoma region

orchestrating rent seeking contests contests have different sometimes quite complex organisational structures in particular while most of the existing literature focusses on simultaneous contests multistage contests are also quite frequently encountered this paper seeks to provide a rationale for the latter by endogenising the choice of a contest structure which is made by an organiser of a contest interested in maximising the efforts expended by the contenders

risk averse rent seekers and the social cost of monopoly power there is now quite general recognition that the social cost of monopoly power encompasses the resources expended by individuals seeking to become the beneficiaries of monopoly rents however since the activity of rent seeking is generally not observable direct estimates of resources expended in quests to acquire monopoly power are usually impossible to come by 1 as a consequence the indirect approach of taking the observed value of monopoly rents as indicative of the unobserved value of the resources expended in rent seeking is quite generally adopted in approaches to evaluation of the social cost of such activity

threshold cointegration and purchasing power parity in the pacific nations the paper uses a threshold cointegration methodology to explore the properties of long run purchasing power parity ppp in the pacific nations using japan and the usa as base countries it is shown that long run ppp holds for most asian countries but that the adjustment mechanism is asymmetric in contrast to symmetric error correction models it is found that asymmetric adjustments of nominal exchange rates play an important role in eliminating deviations from long run ppp

critical ethical naturalism and the transformation of economics in this article i shall argue that critical ethical naturalism an ethical position elaborated by tony lawson can help understand lawson s critique of modern mainstream economics according to critical ethical naturalism human action should be concerned with removing obstacles that lie in the way of human development and flourishing the attempt of transforming economics into a discipline that contributes to human development rather than being an obstacle to such a development can be seen as an exercise driven by critical ethical naturalism albeit in a more implicit way in lawson s earlier writings and in a more explicit way in more recent writings but the significance of critical ethical naturalism as elaborated by lawson goes well beyond the problem of transforming economics and so i shall also highlight some more general implications of this ethical position before addressing the specific problem of transforming economics to do so i will first present lawson s critical ethical naturalism while showing the relevance of his social ontology for the study of ethics at various levels of generality including meta ethics ethical theory and applied ethics

on the provision of official and private foreign aid abstract the provision of official relative to private foreign aid varies considerably between donor countries we explain the variations in terms of country size household composition income distribution and the government s ability to commit to aid and derive inter alia the results 1 official aid crowds out private aid 2 total aid and official aid collected from each household are lower in more populous countries 3 total aid is lower if i the distribution of income favors the more altruistic households and ii the government can credibly commit to a certain level of aid evidences suggest that the theoretical results can explain stylized facts

endogenous lobby formation and endogenous protection a long run model of trade policy determination this paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions under certain conditions free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare moreover greater inequality in asset distribution results in a greater number of lobbies and in most cases more protection for each of these lobbies furthermore industries with higher levels of capital stock fewer capitalists more inelastic demand and smaller geographical dispersion are the ones that get organized

to ban or not to ban foreign lobbying and cross national externalities this paper studies the costs and benefits of foreign lobbying we show how and when foreign lobbying can help internalize cross national externalities we argue that this is an often overlooked benefit of foreign lobbying we also study under what conditions a constitutional rule banning foreign lobbying is in the national interest of a country a key factor in this calculus is whether the interests of foreign lobby groups and domestic unorganized groups coincide or not we illustrate the logic with examples from trade policy and environmental regulation bannir ou ne pas bannir lobbying etranger et effets externes transnationaux ce texte etudie les couts et avantages du lobbying etranger on montre quand et comment que le lobbying etranger peut aider a internaliser des effets externes transnationaux on suggere que c est souvent un avantage qu on est porte a negliger du lobbying etranger on etudie sous quelles conditions une regle constitutionnelle bannissant le lobbying etranger peut etre dans l interet national d un pays un facteur cle dans ce calcul est le fait que les interets des groupes etrangers coincident ou non avec ceux des groupes nationaux non organises on illustre la logique sous jacente a l aide d exemples portant sur la politique commerciale et la reglementation environnementale

globalization domestic politics and social spending in latin america a time series cross section analysis 1973 97 this study examines the effects of globalization democratization and partisanship on social spending in fourteen latin american countries from 1973 to 1997 using a pooled time series error correction model the authors examine three sets of issues first following debates in the literature on oecd countries they want to know whether social spending has been encouraged or constrained by integration into global markets within this context they examine the extent to which such outcomes might be influenced by two additional sets of domestic political and institutional factors discussed in work on developed countries the electoral pressures of democratic institutions and whether or not popularly based governments are in power the authors show that trade integration has a consistently negative effect on aggregate social spending and that this is compounded by openness to capital markets this is the strongest and most robust finding in the study neither democratic nor popularly based governments consistently affect overall social spending the authors then disaggregate spending into social security transfers and expenditures on health and education they find that popularly based governments tend to protect social security transfers which tend to flow disproportionately to their unionized constituencies but they have a negative impact on health and education spending conversely a shift to democracy leads to increases in health and education spending which reaches a larger segment of the population the authors conclude by emphasizing the contrasting political logics of the different types of social spending

tariff protection in developed and developing countries a cross sectional and longitudinal analysis four political models the international system rational domestic economic policy intragovemmental politics and interest group influence may explain the cross national structure of average nominal levels of tariffs on manufactures using available data measuring or approximating the explanatory variables for the time periods 1902 and 1971 selected hypotheses were tested in regression equations the 1971 tariff levels are best predicted by rational economic policy variables while for 1902 international power variables provide the best predictions of the tariff in general the causal forces influencing the cross national pattern of tariff levels appear to have shifted in the 20th century from those indicating international power to those measuring domestic politico economic development these results provide evidence relevant to some of the general propositions about size and development suggested by the contemporary political economy literature they also lend support to those who argue that a rising level of international interdependence has resulted in long term changes in the pattern of influences on national public policies

a welfare comparison between vers and tariffs under the gatt economic theory suggests that tariffs are welfare superior to voluntary export re straints vers in the presence of perfect competition however with imperfectly competitive markets some authors have found that vers may be welfare superior to tariffs we reconsider the comparison between a ver and a tariff in the context of gatt based constraints using a model of perfect competition we show that a ver can welfare dominate a tariff increase that is accompanied by a compensatory reduction in the tariff on another good or if the tariff is matched with a retaliatory tariff on domestic exports une comparaison des effets de bien e tre des restrictions volontaires a 1 exportation et des tarifs douaniers dans le cadre du regime du gatt la theorie economique suggere que

combining rent seeking and public choice theory in the analysis of tariffs versus quotas economists continuing criticisms of protectionism make a valuable contribution to the general interest element of the forces which operate to keep propensities to protect somewhat in check mckenzie rightly warns however that proposals by economists for giving protection in more efficient forms run the danger of increasing the total supply of protection thus we agree that serious consideration should be given to the political economy responses which may be induced before one advocates ways of doing more efficiently what one believes should not be done in the first place it does not follow however that all such policies will have net negative unanticipated consequences in the case of tariffs versus quotas we do not believe that we have yet sufficient knowledge of all of the relevant political economy considerations to predict about the full effects of legislation which allowed trade protection to only take the form of tariffs we are doubtful however that such a measure would increase the total quantity of protection through the channels outlined by mckenzie we believe that the same type of basic public choice analysis of the individual incentives to lobby which suggests that consumer taxpayers will not force the political process to operate so as to maximize aggregate economic efficiency with respect to the level of protection also suggests that the net lobbying for quotas is likely to be higher on average than the net lobbying for tariffs political effectiveness and ability to overcome free riding on the part of tariff revenue seekers is likely to be low at the margin furthermore issues of visibility and institutional structure are likely to lessen the ability of anti protection forces to lobby against quotas placed within a broader framework public choice and rent seeking theory is consistent with the empirical evidence that where quotas are used protection is high

the approach of institutional economics this paper assesses the old institutional economics it emphasizes the importance of key old institutionalist themes concerning the necessity of habits and rules and the role of institutions a problem in the alternative theoretical program of the new institutionalism is the untenability of its assumption of an original institution free market or state of nature even optimizing behavior requires the prior existence of habits and rules although it still lacks a complete and systematic theory the evolutionary approach of the old institutionalists tackles the problem of the interactive relationship of actor to structure without analytical reduction to one or the other

process order and stability in veblen this is the accepted manuscript version the final version is available from oup at http cje oxfordjournals org content early 2014 09 30 cje beu045 abstract

endogenous choice of trade policy instruments abstract recently developed theories of endogenous trade policy formation have attempted to explain tariffs as the result of economic interest seeking by individuals or groups this note demonstrates that tariffs will not emerge as a policy choice if income is redistributed solely through trade policy induced factor price changes a production tax cum subsidy will be adopted as both gainers and losers are better off than with a tariff

lobbying vs administered protection abstract import competing industries in many democracies can pursue import relief via administered protection ap procedures or can lobby politicians directly in this paper an industry chooses the option that maximizes expected profits both the ap and lobbying processes required a fixed resource cost and have an associated subjective probability of success we show that policy reforms that decrease the probability of success under administered protection or lobbying may reduce expected national welfare when both processes are potentially profitable

transitional politics emerging incentive based instruments in environmental regulation abstract this paper proposes a positive theory of environmental instrument choice we study a democratic society that seeks to lower the level of pollution from industrial sources to a pre specified target the target can be implemented by one of three instruments s uniform emission standards p tradeable permits and t emission taxes the conflict of interest between special interests representing polluters and the electorate is resolved by an elected politician we characterize when each of the three policy instruments is chosen in political equilibrium and show that the transition observed in many countries from s to either p or t can be understood as a natural consequence of increasingly ambitious environmental targets

regional free trade and social integration this paper analyzes recent free trade arrangements from a positive political economy perspective in contrast to most other literature which fails to take into account geographical factors it is argued here that proximity and transportation costs play an important role in trade arrangements another important also largely neglected factor is the degree of social cohesion in terms of labor standards among potential trading partners a political support maximizing government will consider these factors when balancing political support from free traders and protectionists

running out of steam a political incentive perspective of fdi inflows in china drawing on the sociological literature of state bureaucracy we develop a political incentive perspective on fdi inflows we argue that political term as a core feature of career advancement in state bureaucracy influences the incentives of newly appointed government officials and in turn their efforts toward achieving the state s goal of attracting fdi due to the mandatory retirement age which limits the career advancement officials in their first terms perceive that they have better chances of promotion and hence have stronger incentives to work toward advancement than those continuing to serve in the current position for the following term we test this argument by examining chinese city government leaders and fdi inflows in their cities from 2003 to 2010 using a difference in differences design the results show that first term leaders who are newly appointed after political turnover attract more fdi inflows than continuing leaders the difference is smaller when the new leaders are close to retirement but greater if they are appointed to cities with low prior gdp performance this study offers a new perspective on intra country fdi variations and extends the literature on the role of political institutions by investigating the political incentives of government officials

does the law of one price really hold for commodity prices in spite of the empirical failure of the law of one price it is usually assumed that commodity prices are perfectly arbitraged at least in the long run this paper argues that this assumption is counterfactual and that much of the empirical evidence provided to support it is flawed and affected by econometric shortcomings spurious regressions nonstationarity in the data inappropriate use of first differences an alternative methodology co integration by which a long run relationship between nonstationary series can be tested is proposed tests of nonstationarity and co integration for a group of commodities show quite uniformly that the law of one price as a long run relationship fails and that deviations from the pattern are permanent

general equilibrium effects of import constraints under variable labour supply public goods and income taxation we consider a general equilibrium trade model of a small open economy with a representative consumer where labour supply is variable where imports are restricted by a small tariff a quota or a voluntary export restraint ver and where alongside the production of two traded goods one imported and one exported a pure public good is produced and funded through an income tax within this framework we demonstrate among other things that under certain conditions while a small tariff or quota reduces employment and welfare a ver may increase them thus in the context of a small open economy contrary to standard results in certain cases vers may become the welfare and employment dominant instrument over the alternative import restrictions

opening the window for reform mandates crises and extraordinary policy making under what conditions are governments within established democratic political systems willing and able to launch ambitious reform programs in other words what conjunctural factors generally serve to open the window for reform the central argument of this article is that extraordinary policy making generally becomes possible only when a macro window is opened by a government s achievement of an impressive mandate and or by the onset of a severe socioeconomic crisis the mandate reform hypothesis is tested with data from britain france and the united states then the significance of both mandates and crises is demonstrated through an analysis of eight reform government case studies ranging from the new deal to thatcher s britain

effects of the structural change on transaction costs between north america natural gas spot markets abstractthreshold cointegration between market pairs before and after the potential structural break associated with the shale gas revolution is examined pairwise transaction costs differ between the pre and post break periods during the post break period five of seven pairwise transaction costs decrease while the remaining two pair wise transaction costs increase relative to the pre break period alterations in natural gas flows as the result of the shale gas revolution partially explain the changes in transaction costs

international trade and environmental policy in the postcommunist world this article examines whether commercial openness has affected environmental policy in the postcommunist countries of central and eastern europe and the commonwealth of independent states during the cold war these countries had closed trade regimes combined with little environmental regulation and poor environmental quality since the fall of the berlin wall and the breakup of the soviet union many postcommunist countries have engaged in extensive trade liberalization some countries however have been slower to open their markets and others have maintained highly protectionist trade policies have countries that opened up to global markets improved their environmental policies or has increasing exposure to the international trading system undermined efforts to improve environmental policy the results indicate that trade openness undermined a key element of environmental policy in the region by reducing governments ability to collect environmental taxes and support environmental investments

cleaning up while cleaning up pollution abatement interest groups and contingent trade policies this paper analyzes the political economy of environmental policy formation in a trading economy with established rules for administered protection we argue that the social costs associated with the adoption of an inefficient environmental regime are likely to be compounded by induced restrictions on trade when the effected industries are import competing the preferences of interest groups for alternative environmental regimes tend to be linked to the legal institutional setting in which trade policy is conducted under existing rules and practices in the area of administered protection there is reason to believe that interest group preferences for an inefficient approach to pollution control will be strengthened because the adoption of such a regime is more likely to lead to a concomitant increase in trade barriers

spatial market integration in the presence of threshold effects a large body of research has evaluated price linkages in spatially separate markets much recent research has applied models appropriate for nonstationary data such analyses have been criticized for their ignorance of transactions costs which may inhibit price adjustments and thus affect tests of integration this analysis utilizes threshold autoregression and cointegration models to account for a neutral band representing transactions costs we evaluate daily price linkages among four corn and four soybean markets in north carolina nonlinear impulse response functions are used to investigate dynamic patterns of adjustments to shocks our results confirm the presence of thresholds and indicate strong support for market integration though adjustments following shocks may take many days to be complete in every case the threshold models suggest much faster adjustments in response to deviations from equilibrium than is the case when threshold behavior is ignored a large amount of empirical research has evaluated the extent to which spatially separate markets are integrated though the term is used loosely in the literature tests of market integration usually consider the extent to which shocks are transmitted among spatially separate markets the integration of markets can have important implications for price discovery and the operation of the market since persistent deviations from integration may imply riskless profit opportunities for spatial traders

tariffs subsidies and welfare with endogenous policy abstract it is a well established proposition of trade theory that in the absence of directly trade related distortions or policy goals subsidies are superior to tariffs for achieving any economic or non economic objective this paper shows that once the endogeneity of the distortion or non economic objective is allowed for the welfare ranking of various policies can be reversed the particular model analyzed is one where the level of non economic objectives that have to be fulfilled itself depends on the policy tools considered to fulfill them with this arises from the public good nature of tariffs compared to subsidies

the role of investment in environmental lobbying contests this paper establishes that a lobbying stage following investment decisions regarding abatement technology may imply a positive strategic effect of investment pointing to relatively more investment in pollution abatement technologies than without lobbying the intuition is that polluting firms may choose to implement more advanced abatement technology as a credible commitment device in order to lower the investment of environmentalists in the lobbying contest that will ultimately determine whether or not an emissions tax is introduced

antidumping duties undertakings and foreign direct investment in the eu we study the effects of eu antidumping policy when foreign firms can jump antidumping duties through foreign direct investment fdi in the eu we show that duty jumping or duty pre empting fdi occurs if the eu administration has broader objectives than protecting eu industry s profitability and if cost advantages of foreign firms are transferable abroad the expectation of price undertakings reduces the incentives to engage in fdi and may even discourage fdi as long as products are not too differentiated the results are consistent with recent empirical findings on antidumping jumping fdi

service induced campaign contributions and the electoral equilibrium candidates for office are modeled as promising services such as support for legislation and intervention in the bureaucracy to interest groups in exchange for campaign contributions an electoral equilibrium is characterized in which candidates choose service contribution offers and interest groups choose whether to contribute the model provides several explanations of congressional incumbents success in over 90 percent of their reelection contests a recognition advantage a high personal valuation of the office a lower cost of providing services and policy alignment with high demand interest groups the model yields predictions that are consistent with empirical findings on the relation between campaign contributions and election outcomes