the economics of a blend mandate for biofuels a biofuel blend mandate may increase or decrease consumer fuel prices with endogenous oil prices depending on relative supply elasticities biofuel tax credits always reduce fuel prices tax credits result in lower fuel prices than under a mandate for the same level of biofuel production if tax credits are implemented alongside mandates then tax credits subsidize fuel consumption instead of biofuels this contradicts energy policy goals by increasing oil dependency co 2 emissions and traffic congestion while providing little benefit to either corn or ethanol producers these social costs will be substantial with tax credits costing taxpayers 28 7 billion annually by 2022 copyright 2008 oxford university press

the expansion of modern agriculture and global biodiversity decline an integrated assessment the world is banking on a major increase in food production if the dietary needs and food preferences of an increasing and increasingly rich population are to be met this requires the further expansion of modern agriculture but modern agriculture rests on a small number of highly productive crops and its expansion has led to a significant loss of global biodiversity ecologists have shown that biodiversity loss results in lower plant productivity while agricultural economists have linked biodiversity loss on farms with increasing variability of crop yields and sometimes lower mean yields in this paper we consider the macro economic consequences of the continued expansion of particular forms of intensive modern agriculture with a focus on how the loss of biodiversity affects food production we employ a quantitative structurally estimated model of the global economy which jointly determines economic growth population and food demand agricultural innovations and land conversion we show that even small effects of agricultural expansion on productivity via biodiversity loss might be sufficient to warrant a moratorium on further land conversion

getting ahead of the joneses when equality increases conspicuous consumption among bottom tier consumers it is widely believed that increasing the equality of material possessions or income in a social group should lead people at the bottom of the distribution to consume less and save more however this prediction and its causal mechanism have never been studied experimentally five studies show that greater equality increases the satisfaction of those in the lowest tier of the distribution because it reduces the possession gap between what they have and what others have however greater equality also increases the position gains derived from status enhancing consumption since it allows low tier consumers to get ahead of the higher proportion of consumers clustered in the middle tiers as a result greater equality reduces consumption when consumers focus on the narrower possession gap but it increases consumption when they focus on the greater position gains i e when consumption is conspicuous social competition goals are primed and the environment is competitive

taking account of governance implications for land use dynamics food prices and trade patterns deforestation mainly caused by unsustainable agricultural expansion results in a loss of biodiversity and an increase in greenhouse gas emissions as well as impinges on local livelihoods countries governance performance particularly with respect to property rights security exerts significant impacts on land use patterns by affecting agricultural yield related technological investment and cropland expansion this study aims to incorporate governance factors into a recursive agro economic dynamic model to simulate governance impacts on land use patterns at the global scale due to the difficulties of including governance indicators directly into numerical models we use lending interest rates as discount rates to reflect risk accounting factors associated with different governance scenarios in addition to a reference scenario three scenarios with high low and mixed divergent discount rates are formed to represent weak strong and fragmented governance we find that weak governance leads to slower yield growth increased cropland expansion and associated deforestation mainly in latin america sub saharan africa south asia and southeast asia this is associated with increasing food prices particularly in sub saharan africa and southeast asia by contrast strong governance performance provides a stable political and economic situation which may bring down deforestation rates stimulate investment in agricultural technologies and induce fairly strong decreases in food prices

a model of the it products in fashion one of the characteristics of the fashion marketplace is the unpredictability and apparent randomness of fashion hits another one is the information asymmetry among consumers in this paper we consider fashion as a means consumers use to signal belonging to a higher social rank and propose an analytical model of fashion hits in the presence of competition and consumers who can coordinate on which product to use we show that consistent with the observed market phenomenon in equilibrium consumer coordination involves randomization between products chosen i e in randomness of fashion hits analyzing optimal consumer choice we find that whenever low type consumer demand for a product is positive a price increase results in a higher probability of high type consumers choosing this product but lower low type consumer demand we also show that although high type consumers may prefer higher prices that would lead to complete separation of the high and the low type consumers through product use in equilibrium firms always price as to attract positive demand from low type consumers the equilibrium price and profits turn out to be nonmonotonic in the low type consumer valuation of being recognized as belonging to a higher social rank equilibrium profits first increase and then decrease in this valuation

status seeking income taxation and efficiency abstract it is well known that status seeking produces distortions in consumption competition to achieve status leads to over consumption of those goods which confer status it has been found that taxing such goods may even lead to pareto improvements in this paper we extend a model of status which relies on a signalling equilibrium approach to include the individual labour supply decision and an income tax we show that a pareto improving income tax can exist even with the simplest tax benefit scheme a number of results follow the model is extended to a two period analysis to accommodate the reputation building element of status achievement without altering the conclusions

conspicuous consumption and sophisticated thinking consumers purchase conspicuous goods to satisfy not only material needs but also social needs such as prestige in an attempt to meet these social needs producers of conspicuous goods like cars perfumes and watches highlight the exclusivity of their products in this paper we propose a monopoly model of conspicuous consumption using the rational expectations framework and then examine how purchase decisions are affected by the desire for exclusivity and conformity we show that snobs can have an upward sloping demand curve but only in the presence of consumers who are weakly followers laboratory tests lend support for this model prediction and for the rational expectations framework the experimental results suggest that subjects used some degree of sophisticated thinking to arrive at their first period decisions their behavior in the subsequent trials however can be adequately captured by a purely adaptive learning mechanism we discuss the implications of consumer learning for optimal dynamic pricing policy by a monopolist

explaining fashion cycles imitators chasing innovators in product space abstract this paper considers the problem of a fashion trend setter confronting an imitator who can produce the same product at lower cost a one dimensional product space is considered which is an abstraction of the key attribute of some consumer good three broad strategies can be optimal for the fashion leader 1 never innovate which milk profits from the initially advantageous position but ultimately concede the market without a fight 2 innovate once but only once which just temporarily defers conceding the market 3 cycle infinitely around product space never letting the imitator catch up and capture the market sometimes the cycles start immediately sometimes the innovator should wait for a time before beginning the cycles the optimal solution exhibits strong state dependency with so called skiba curves separating regions in state space where various of these strategies are optimal there are even instances of intersecting skiba curves in most cases analytical expressions can be stated that characterize these skiba curves

commonality in product design cost saving valuation change and cannibalization abstract offering a variety of products is important for a firm to attract different consumer segments however high product variety increases production and distribution costs modular product design and parts commonality are approaches used to counter this trend in cost and still offer a variety of products this paper develops a model to examine when modular products should be introduced and how much modularity to offer the model looks at a market consisting of a high segment and a low segment customers choose the product that maximizes their surplus which is defined as the product s utility minus its price presence of commonality affects the utility of a product greater commonality decreases production cost but makes the products more indistinguishable from one another this makes the product more desirable for the low segment but less desirable for the high segment the firm s objective is to design the products and set the prices so as to maximize its profit

street crime and street culture a model shows how reputation concerns can support widespread street crime a street culture where the direct incentives for such behavior are weak there are social benefits to street reputations but those benefits are dominated when reputation concerns draw into crime those who obtain no direct gain from it the model matches facts about violent crime that a standard model cannot easily explain including low monetary returns disproportionate victimization of the young and poor and high variance in rates across small distances the model generates novel implications for policy and social science including a negative effect of social capital

induced innovations and farm mechanization cal change in agriculture then they come mainly from the public agent of farm technology the agricultural research system the research system should be held responsible for the social consequences of farm mechanization and it should be budgeted and directed accordingly on the other hand if mechanization and exit from farming are caused mostly by external price and wage changes the responsibility of the research system is limited principally to technology improvement in this note we discuss the newly emerging tradition of induced innovation and its relation to the alternative explanations of machine labor substitution in agriculture we first clarify the conceptual basis of the induced innovation hypothesis and the related innovation possibility function second we call into question the validity of some of the empirical applications we argue that an incomplete conceptualization of the induced innovation idea has led to invalid empirical tests and to inappropriate implications on the causes of american farm mechanization

agriculture in the global economy agriculture is diverse and full of contradictions the sector accounts for a griculture is diverse and full of contradictions the sector accounts for a comparatively small share of the global economy but remains central comparatively small share of the global economy but remains central to the lives of a great many people in 2012 of the world s 7 1 billion to the lives of a great many people in 2012 of the world s 7 1 billion people an estimated 1 3 billion 19 percent were directly engaged in farming people an estimated 1 3 billion 19 percent were directly engaged in farming but agriculture including the relatively small hunting fi shing and forestry sectors but agriculture including the relatively small hunting fi shing and forestry sectors represented just 2 8 percent of overall income world bank 2012 however in represented just 2 8 percent of overall income world bank 2012 however in today s middle and low income countries where most of the world s farmers are today s middle and low income countries where most of the world s farmers are to be found agriculture accounts for a much greater share of national income and to be found agriculture accounts for a much greater share of national income and employment for instance in india agriculture represents 18 percent of national employment for instance in india agriculture represents 18 percent of national income and 54 percent of employment income and 54 percent of employment 1

adverse selection without single crossing monotone solutions abstract the single crossing assumption simplifies the analysis of screening models as local incentive compatibility becomes sufficient for global incentive compatibility if single crossing is violated global incentive compatibility constraints have to be taken into account this paper studies monotone solutions in a screening model that allows a one time violation of single crossing the results show that local and non local incentive constraints distort the solution in opposite directions therefore the optimal decision might involve distortions above as well as below the first best decision furthermore the well known no distortion at the top property does not necessarily hold the results show that the decision can even be distorted above first best for all types sufficient conditions for existence strict monotonicity and continuity of the solution are presented a new necessary condition satisfied by such solutions is found an algorithm based on this condition can calculate continuous and strictly monotone solutions

macroeconomic implications of conspicuous consumption a sombartian dynamic model this chapter presents a dynamic general equilibrium model in which consumers have status preference i investigate the manner in which capital accumulation is impeded by conspicuous consumption a la corneo and jeanne j public econ 66 55 71 1997a following the literature social norms are given as either bandwagon type or snob type i then show that when the economy is characterized by a bandwagon type social norm capital accumulation exhibits interesting patterns those patterns include for example an oscillating convergence path the rise of the economy feeds its decay through conspicuous consumption and that decay suppresses conspicuous consumption and engenders prosperity as predicted by sombart liebe luxus und kapitalismus reprinted 1967 deutscher taschenbuch verlag munchen 1912

optimal income tax in the presence of status effects abstract the existence of distortions from individuals competing to attain social status by using consumption signals justifies some measure of income tax as a counter acting distortion the question posed here is whether it also constitutes a reason for a more progressive income tax schedule the answer is found to be broadly negative if progressiveness is interpreted as a more convex tax schedule unless the rich are more concerned with status seeking than the poor on the other hand status seeking makes the optimal tax schedule steeper so that redistribution is increased essentially the analysis of status seeking based on a signaling approach confirms and strengthens the existing view of an optimal tax schedule and can be incorporated into the diamond american economic review 88 1998 83 95 approach

waves in consumption with interdependence among consumers this paper presents a model to analyze the development of consumption patterns when there are social interactions among consumers in particular a consumer in this model recognizes three reference groups a peer group of similar consumers with whom the consumer wishes to share consumption activities a distinction group from which the consumer wishes to distinguish him or herself and an aspiration group to which the consumer does not belong but wishes that he she did and with whom the consumer would like to share consumption activities the interplay of aspiration and distinction can lead to waves in consumption these can happen when for example the avant garde consumption of up market pioneers is copied by other types of consumer as the latter aspire to emulate the former the former in turn seek to distinguish themselves from these unwelcome companions by varying their consumption in consequence a particular consumption activity may start up market an then gradually proceed down the social spectrum more complex patterns with continuing cycles in consumption can also be found the paper argues that this model is not only applicable to the consumption behaviour of an elite or would be elite but is relevant in a wide range of consumption settings

pecuniary emulation inequality and growth abstract we study a two class growth model in which agents care about both consumption and the social perception of their wealth rank the latter determines the social status enjoyed by agents social perceptions are based upon noisy signals of wealth and in equilibrium there is incomplete separation of classes the steady growth rate of the economy increases with the full information status differential between classes and contrary to the growth model without status it is affected by the initial level of wealth inequality both too much equality and too much inequality are detrimental to economic growth

global population growth technology and malthusian constraints a quantitative growth theoretic perspective we structurally estimate a two sector schumpeterian growth model with endogenous population and finite land reserves to study the long run evolution of global population technological progress and the demand for food the estimated model closely replicates trajectories for world population gdp sectoral productivity growth and crop land area from 1960 to 2010 projections from 2010 onwards show a slowdown of technological progress and because it is a key determinant of fertility costs significant population growth by 2100 global population reaches 12 4 billion and agricultural production doubles but the land constraint does not bind because of capital investment and technological progress

what s in a sign trademark law and economic theory the aim of this paper is to summarize the extant theory as it relates to the economics of trademark and to give some suggestions for further research with reference to distinct streams of literature the proposed line of study inevitably looks at the complex relationship between signs and economics copyright 2006 the authors journal compilation 2006 blackwell publishing ltd

reflections on agricultural r d productivity and the data constraint unfinished business unsettled issues sixty years ago t w schultz introduced the idea of the productivity residual to agricultural economics 1956 schultz s main message was that growth in conventional inputs accounted for little of the observed growth in agricultural output and that there was work to be done by agricultural economists to understand and ultimately eliminate this unexplained residual called productivity thus was launched the economics of agricultural productivity as a sub field within agricultural economics along with the economics of agricultural r d and innovation and related government policy much progress has been made in the decades since still critical issues remain unresolved this matters because agricultural innovation and productivity matter and so do the related policies that rest to some extent on our established understanding of the economic relationships in this paper i review some unsettled issues related to economic models and measures applied to agricultural r d and productivity and some unfinished business in terms of economic and policy questions that are not yet well answered before doing that i present some evidence on agricultural productivity and why it matters next with a nod to factology i present available productivity measures from the u s department of agriculture usda and international science and technology practice and policy instepp center and compare them in the context of translog cost function models in subsequent sections i use these and other data to develop new evidence related to two contentious questions a do farmers benefit from public agricultural r d b has u s agricultural productivity growth slowed in recent decades the answers are revealed within

conspicuous consumption and race evidence from south africa abstract a century ago thorstein veblen introduced socially contingent consumption into the economic literature this paper complements the scarce empirical literature by testing his conjecture on south african household data and finds that black and coloured households spend relatively more on visible consumption than comparable white households following the approach of charles et al 2009 this paper explores whether the differences in visible expenditures can be explained with a signaling model of status seeking moreover it is assessed to which extent positional concerns motivate conspicuous consumption although the socially contingent share in visible consumption increases with income different incentives to consume conspicuously seem to explain that at every level of income black households spend relatively more on visible consumption than comparable white households in contrast to the findings of charles et al 2009 where differential spending on conspicuous consumption can be found also within each group separately the model s core hypothesis fails to hold within the group of white south africans

identification of job lock and inefficient labor market mobility the common practice of linking employment with certain fringe benefits notably health insurance has long been thought to impede labor market mobility thereby producing a phenomenon called job lock a sizable literature has developed theoretical frameworks for how job lock impacts the labor market and empirically estimated the magnitudes of these effects however most empirical studies rely on identification strategies that do not separately identify productivity enhancing from productivity reducing labor market mobility this article develops a simple theoretical framework showing how prior identification strategies confound both types of mobility and outlines conditions where productivity reducing mobility is of greatest concern

globalization and household saving is there a link abstractthis article proposes that globalization can affect household saving in the long run in a number of ways social interactions between different cultures can induce value changes which can result in shifts in consumption and saving behaviour international trade allows consumers to have easier access to status goods stimulating consumption and dampening saving extending from veblen s conspicuous consumption theory saving may also decrease when globalization leads to greater population mobility and fosters urbanization thus enhancing the importance of consumption as a way to display wealth in addition financial globalization reduces credit constraints and allows households to save less using cross country data from the united nations un the oecd and other sources this article finds evidence that household saving declines as globalization deepens especially in the social and cultural dimensions

optimal pricing of a conspicuous product during a recession that freezes capital markets abstract this paper considers the problem of how to price a conspicuous product when the economy is in a recession that disrupts capital markets a conspicuous product in this context is a luxury good for which demand is increasing in brand image brand image here means the ability of a consumer to impress observers by conspicuously displaying consumption of the good brand image is built up when the good is priced high enough to make it exclusive and eroded if the good is discounted recession is modeled as having two effects it reduces demand and it freezes capital markets so borrowing is not possible in pricing the conspicuous product the firm faces the following trade off reducing price helps maintain sales volume and cash flow in the face of reduced demand but it also damages brand image and thus long term demand the paper analyzes the firm s pricing policy facing scenarios of mild intermediate and severe recessions while taking the threat of bankruptcy into account for an intermediate recession the optimal solution is history dependent the results have implications for policy interventions in capital markets and for timing of mergers and acquisitions

second best biofuel policies and the welfare effects of quantity mandates and subsidies abstract the quest for biorenewable energy sources is held to justify a number of government interventions including support policies for biofuels such as those responsible for the recent rapid growth of us ethanol production this article provides an analytical assessment of such policies we construct a general equilibrium open economy model that captures the rationale typically invoked to justify government intervention in this setting to alleviate the environmental impact of energy consumption and to decrease us energy dependence on foreign sources the model is used to study both the positive and normative implications of alternative policy instruments including the subsidies and mandates specified by the 2007 energy independence and security act from a positive perspective we find that biofuels mandates are equivalent to a combination of fuel taxes and biofuels subsidies that are revenue neutral from a welfare perspective we show that biofuels mandates dominate biofuels subsidies and that combining fuel taxes with mandates would be welfare enhancing

is there job lock evidence from the pre hipaa era we estimate discrete time hazard models of employment duration and standard logarithmic wage equations using the 1987 and 1990 panels of the survey of income and program participation sipp to examine the phenomenon of job lock we test for job lock using differences in differences approaches among those with and without employer provided health insurance and family members with and without health problems we find no statistically significant evidence of job lock on employment duration or wages using this approach we do find some evidence of shorter employment spells for those with employer provided health insurance and spouse provided health insurance and longer employment spells for those with employer provided health insurance and large families others have interpreted these findings as evidence of job lock however the wage equation results using these measures are not consistent with job lock although anecdotal evidence makes it clear that some workers have been locked into less than optimal jobs because of the combination of health problems and employer provided health insurance our results do not suggest that this phenomenon is pervasive in the u s economy

returns to food and agricultural r d investments in sub saharan africa 1975 2014 research enabled growth in agricultural productivity is pivotal to sub saharan africa s overall economic growth prospects yet investments in research and development rd median 38 0 py around 78 5 of the evaluations relate to the commodity specific consequences of agricultural research while 5 5 report on the returns to an all agriculture aggregate the weight of commodity specific evaluation evidence is not especially congruent with the composition of agricultural production throughout africa nor to the best that can be determined the commodity orientation of public african agricultural r d

on limiting the market for status signals abstract in many societies individuals care how others view them in their efforts to impress such individuals engage in consumption signals which attempt to establish higher levels of status than their true status type this leads to an inefficiency which offers the possibility of a pareto improving tax policy the impacts of tax policy and benefits on the signalling equilibrium are considered

pricing of conspicuous goods a competitive analysis of social effects abstract social needs play an important role in the purchase of conspicuous goods in this article the authors extend traditional economic models to accommodate social needs such as desire for uniqueness and conformism and examine their implications for pricing conspicuous goods first in the context of a duopoly the authors identify the conditions under which the desire for uniqueness can increase demand among some consumers as the price of a product increases second the authors show that though the desire for uniqueness leads to higher prices and firm profits a desire for conformity leads to lower prices and profits third the authors find that consumers purchase high quality products not because of their desire for uniqueness but despite it finally marketers of conspicuous goods may find it beneficial not to emphasize the functional differences among their products when the need for uniqueness is high in a laboratory test the authors find support for the claim that demand for a product amo

social limits to redistribution in many countries equality of political rights including the right to vote over taxes and transfers goes along with substantial inequality of economic conditions this observation lies at the root of one fundamental issue in political economy one about the factors that limit the extent of redistribution in democracies the conventional economic wisdom on this issue can roughly be summarized by two arguments firstly redistributive taxation may be limited by various kinds of incentive costs of taxation as e g in james a mirrlees 1971 kevin w s roberts 1977 dennis n epple and thomas romer 1991 and thomas piketty 1995 secondly redistribution may be dampened by the lobbying activity of high income groups and by various imperfections inherent to the political process that determines the tax system as e g in gary s becker 1983 and john e roemer 1995 while both arguments offer illuminating insights into the phenomenon of redistribution they are also based on a very crude description of human behavior one which ignores social motivations of action both in the economic and the political sphere the present paper develops an explanation that takes such motivations into account specifically it shows that limits to redistribution may arise when economic inequality has an informational value for social decisions our approach is based upon the following observation many goods and decisions that heavily affect an individual s quality of life are not allocated or made through markets but through social interactions thomas scitovsky 1976 for instance although people have strong preferences over how they are treated by others and over whom they mate with these things are not the object of market transactions a number of sources of satisfaction like conversation dinners and parties playing with others and being observed and admired are nonmarket goods for which a keen social competition between individuals often develops as shown by harold cole et al 1992 the existence of social rather than market competition for some goods can endogenously generate a concern for relative position in the income distribution when information about relative income is private individuals become interested in the observable consumption differentials between them and their social competitors since consumption differentials are influenced by redistributive taxation the political attitudes of people toward redistribution will be shaped by its expected impact on social competition in some identifiable environments this concern for social success may be the crucial factor that limits the extent of redistribution desired by a majority of voters specifically while the middle class may obtain economic benefits from a large amount of redistributive taxation it may oppose an equalization of living standards since this would harm its social success the fear of losing social status in favor of the poor induces the middle class to enter a political alliance with the rich which supports conservative taxation programs in the sociological literature scholars of voting behavior have often suggested that the need for social recognition plays a crucial role in shaping political attitudes seymour m lipset 1967 pointed out that white collar workers tend to be socially valued similarly as those higher in the system and although their income may be only slightly larger than that of manual workers white collars are much more likely to corneo department of economics university of osnabruck rolandstrasse 8 d 49069 osnabruck germany cesifo munich and cepr london gruner department of economics university of mannheim d 68131 mannheim germany iza bonn and cepr london we would like to thank emmanuelle auriol dieter bos peter funk mike hout olivier jeanne peter jonas georg noldeke thomas piketty regis renault john roemer jens weidmann and three anonymous referees for insightful comments and suggestions we have also benefited from the comments of participants at workshops and conferences in barcelona bonn davis jena maastricht magdeburg mannheim montreal munich rotterdam silvaplana tel aviv tilburg toulouse and warwick at which we presented earlier versions of this work financial support from the deutsche forschungsgemeinschaft sfb 303 at the university of bonn is gratefully acknowledged

international productivity patterns accounting for input quality infrastructure and research in this paper we present measures of land and labor productivity for a group of ninety eight developed and developing countries using an entirely new data set with annual observations spanning the past three decades the substantial cross country and intertemporal variation in productivity in our sample is linked to both natural and economic factors we extend previous work by dealing with multiple sources of systematic measurement error in conventional agricultural inputs the mix of conventional inputs indicators of quality of agricultural inputs and the amount of publicly provided infrastructure are all significant in explaining observed cross sectional differences in productivity patterns

technology spillovers and land use change empirical evidence from global agriculture we estimate the effects of agricultural technological progress on cropland expansion at various geographical resolutions from the country level to the world as a whole while formally accounting for the international interdependence of national supply responses evidence for these effects has thus far been scant contributing to polarized perceptions about the potential for improving agricultural technologies as a means to slow down deforestation we find that in most countries of the world growth in total factor productivity tfp is either uncorrelated or is positively associated with cropland expansion yet worldwide tfp growth have been an important source of global land savings the divergence between the country level and the global results is explained by the changes in production patterns as countries interact in international markets our preferred point estimate of the elasticity of global cropland to global tfp growth is 0 34 moreover we estimate that satisfying food demand from 1991 to 2010 without observed tfp growth would have necessitated an additional 173 million hectares or close to 10 of the area covered by tropical rain forests

dynamic models of religious conformity and conversion theory and calibrations abstract this paper develops overlapping generations models to explain and simulate changes in the proportion of secular and religious people the church is modeled as generating an externality associated with conformity enhancing education observed changes in the number of nonbelievers are explained by different birth rates among secular and religious parents and the relative proportion of young nonconformists calibrations for the conformity rates among secular and religious people show that the observed long run increase in the difference between percentage of secular people in europe and the united states can be attributed to lower conformity rates prevailing in europe

the incidence of mandated maternity benefits i consider the labor market effects of mandates which raise the costs of employing a demographically identifiable group the efficiency of these policies will be largely dependent on the extent to which their costs are shifted to group specific wages i study several state and federal mandates which stipulated that childbirth be covered comprehensively in health insurance plans raising the relative cost of insuring women of childbearing age i find substantial shifting of the costs of these mandates to the wages of the targeted group correspondingly i find little effect on total labor input for that group jel 118 j32 h51 in an era of tight fiscal budget constraints mandating employer provision of workplace benefits to employees is an attractive means for a government to finance its policy agenda consequently in recent years there has been a growth of interest in mandated benefits as a tool of social policy for example the centerpiece of president bill clinton s health care proposal is mandated employer provision of health insurance and more than 20 states have man

productivity growth in world agriculture sources and constraints during the last half century advances in crop production came from expansion in areas irrigated from more intensive application of fertilizers and crop protection chemicals and from crop varieties that were more responsive to technical inputs and management advances in animal production came from genetic improvements and advances in animal nutrition differences among developed and developing countries in output per hectare and per worker have widened if these gaps are to be narrowed agricultural research capacity in developing countries will have to be substantially strengthened

contests for ranks experimental evidence we use experiments to analyze multiple dimensions of the relationship between rank incentives and individual performance in our experiment i rank is defined as subjects relative position in their group based on their performance in a real effort task and ii subjects earnings are independent of their performance we find that any rank incentive improves mean performance than no rank incentive and this result is independent of the group size in the large group the mean performance increases strictly in all except at the highest rank incentive but in the small group the mean performance increases weakly in rank incentives finally the mean performance is significantly higher in the large than in the small group because of a higher prestige effect in additional treatments in which we do not reveal the identity of the statusprize winners we find that average performance is identical to that in the baseline treatment without any status prizes the last result signifies the important role that public revelation plays to enhance the strength of status the results are important for managerial practices

if you tourist behave irrationally i ll find you abstract when departures from rational behavior can potentially be expected modeling should allow for their identification and their quantification in this regard prices in tourism might have effects that may not be as apparent as economic theory predicts this article incorporates the sticker shock formulation into the mixed logit model without imposing consistency with consumer theory to accommodate any possible positive or negative price effects by allowing the parameters of price and sticker shock term to take any value negative or positive we detect abnormal behaviors in the tourist demand not only is the negative relationship between price and demand inverted for some people but also some tourists might be willing to accept higher than expected prices the non well behaved groups shares are estimated

employment based health insurance and job mobility is there evidence of job lock the majority of privately insured americans obtain their health insurance through their own or a family member s employment the rationale for employers to provide health insurance is straightforward by pooling the risks of individuals employers can reduce adverse selection and lower administrative expenses in addition they benefit from tax laws allowing businesses to deduct their health insurance costs these advantages of employer provision however must be weighed against the distortions they may generate in individual labor market decisions in particular health insurance may distort job mobility if employees decide to keep jobs they would rather leave for fear of losing coverage for preexisting conditions a possibility that has been termed job lock this paper attempts to quantify the effect of employer provided health insurance on the labor market mobility of individuals the link between employer provided health insurance and

promotions and product pricing parsimony versus veblenesque demand the veracity of the parsimonious law of demand has long been challenged by analyses of the veblen effect and prestige pricing backward bending demand curves often attend discussions of conspicuous consumption probing the sociological and psychological intricacies of potential consumer interdependencies scholars in economics and marketing have overlooked mundane product promotions for a monopolistic firm we formalize the relationship between the optimal price quantity combination and the thoroughness of product promotions iterating toward the profit maximizing thoroughness of product promotion gives rise to a backward bending price quantity locus challenges to the law of demand that ignore product promotions are thereby undercut

signaling status the impact of relative income on household consumption and financial decisions this paper investigates the importance of status in household consumption and credit decisions using data from the survey of consumer finances linked to tract level data in the american community s

understanding the solar home price premium electricity generation and green social status this study uses a large sample of homes in the san diego area and sacramento california area to provide some of the first capitalization estimates of the sales value of homes with solar panels relative to comparable homes without solar panels although the residential solar home market continues to grow there is little direct evidence on the market capitalization effect using both hedonics and a repeat sales index approach we find that solar panels are capitalized at roughly a 3 5 premium this premium is larger in communities with a greater share of college graduates and of registered prius hybrid vehicles

multi period pricing in the presence of competition and social influence abstract this paper examines single and dynamic pricing policies of two competing firms over two periods in the presence of social influence assuming two firms adopt the same pricing policy we find that under either pricing policy firm profits always decrease with the degree of social influence firms prefer dynamic pricing policy when social influence is either relatively weak or sufficiently strong for firms under dynamic pricing policy to set zero prices in the first period otherwise single pricing policy is more preferable the conclusions are similar when the market size varies over periods except that dynamic pricing policy is always more profitable if the market size in period 2 is sufficiently large we have further compared the two pricing policies with posted pricing policy the results show that dynamic pricing policy dominates when social influence is relatively weak while posted pricing policy dominates when social influence is sufficiently strong because of the synergy between social influence and the reference price effect finally when each firm freely chooses either single or dynamic pricing policy we find that if the degree of social influence is relatively small two asymmetric equilibria exist where two firms adopt different pricing policies if the degree of social influence is very large however the unique equilibrium is both firms adopting dynamic pricing policy these findings provide important implications for firms to make more informed pricing decisions in an increasingly competitive environment with strong social influence

health insurance and job mobility theoryand evidence it is widely hypothesized that health insurance deters job mobility because of imperfections in the labor and health insurance markets this paper describes the nature of the welfare loss attributable to such job lock and reviews several studies that empirically test the job lock hypothesis the authors find that estimates of the magnitude and importance of job lock vary studies that support the job lock hypothesis typically report a 20 to 40 reduction in mobility rates depending on worker marital status and gender their own estimates suggest that although job lock is present in the labor market the proportion of workers affected and the magnitude of the welfare loss are less than generally supposed

capital stock management during a recession that freezes credit markets abstract this paper considers the problem of how to price a conspicuous product while maintaining liquidity during a recession which both reduces demand and freezes credit markets reducing price would help maintain cash flow but low prices can erode brand image and hence long term sales the paper extends earlier work of the same authors by explicitly deriving a firm s optimal cash management behavior taking into account that a too low cash level results in bankruptcy there are different sets of initial conditions for which qualitatively different solution trajectories are optimal we distinguish mild and severe recessions with mild recessions bankruptcy can be avoided for sure when the brand image is large enough in case the recession is of intermediate strength it can be optimal to throttle forward then back how aggressively one spends down cash reserves with the associated state constraint alternately being non binding binding non binding then binding in such a way that the firm ceases operation

modelling inbound international tourism demand in small pacific island countries abstractin this study we estimate inbound international tourism demand models at the individual source market destination and overall destination levels for fiji cook islands tonga and vanuatu f

the effects of employer provided health insurance on worker mobility the authors use data from the 1984 survey of income and program participation sipp to investigate whether employer provided health insurance reduced worker mobility a phenomenon termed job lock the sipp provides information on variables particularly pension receipt job tenure and spouse job change that were omitted from previous studies and are the authors argue key to the estimation of welldefined mobility models for dual earner married men and women the authors estimate a model that accounts for the interaction between husbands and wives job change decisions for both married and single individuals the results provide fairly strong evidence ofjob lock among women but only weak indications of job lock among men the authors speculate that this finding reflects higher health care use by women than by men

global economic growth and agricultural land conversion under uncertain productivity improvements in agriculture we study how stochasticity in the evolution of agricultural productivity interacts with economic and population growth at the global level we use a two sector schumpeterian model of growth in which a manufacturing sector produces the traditional consumption good and an agricultural sector produces food to sustain contemporaneous population agriculture demands land as an input itself treated as a scarce form of capital in our model both population and sectoral technological progress are endogenously determined and key technological parameters of the model are structurally estimated using 1960 2010 data on world gdp population cropland and technological progress introducing random shocks to the evolution of total factor productivity in agriculture we show that uncertainty optimally requires more land to be converted into agricultural use as a hedge against production shortages and that it significantly affects both optimal consumption and population trajectories

social status entry and predation the case of british shipping cartels 1879 1929 the authors incorporate social status and regional affiliation two variables of central sociological interest into an economic analysis of entry and predation they build on scott morton s 1997 examination of entry and predation in the merchant shipping industry and examine whether the social status of an entrant owner impacts on the predation behavior of the incumbent cartels they find that high social status entrants are significantly less likely 40 to be preyed upon than the low social status entrants they discuss several interpretations of this result subsequent analysis supports the hypothesis that cartel members use social status as an indicator of an entrant s propensity to be a cooperative cartel participant

crime and conspicuous consumption we study how property crime distorts consumption decisions using an incomplete information model we argue that consuming conspicuous goods reveals information to criminals seeking bountiful victims and increases the likelihood of being victimized thus property crime reduces the consumption of visible goods even when these cannot be directly stolen but simply carry information about a potential victim s wealth we exploit the large decline in property crime in the u s during the 90s to test this mechanism using data from the u s consumer expenditure survey from 1986 to 2003 we find that households located in states experiencing sharper reductions in property crime increased significantly their consumption of visible goods even when these goods are not generally stolen both in absolute terms and relative to other consumption goods our findings hold when we instrument the decline in property crime during the 90s using a variety of strategies

signalling inequality and the social structure this paper proposes a theory of endogenous transmission of social status through signalling in the labour market a signalling game is analysed in which education acting as a signalling good determines one s position in society the economy s degree of inequality is shown to be a determinant of whether a society is aristocratic where high income is the source of social standing or meritocratic bestowing status on high ability each social structure shows a different balance between production efficiency and social factors such as equality or mobility

conspicuous consumption snobbism and conformism abstract we develop a model in which consumers purchase a conspicuous good in order to signal high income and thereby achieve greater social status in equilibrium the signalling value of conspicuous consumption depends in an identifiable way on the number of consumers and consumer behaviour is characterized by either snobbism or conformism the market demand curve for the conspicuous good may exhibit a positive slope if consumers are conformist we derive some unconventional policy implications concerning the taxation of luxuries and the voluntary provision of public goods

on employer specific information and internal labor markets the human capital literature of which becker s 2 paper is the seminal work stresses the productivity enhancing effects of schooling and on the job training later work by spence 21 and others emphasizes the fact that it is difficult for employers to ascertain the productivity of potential employees and suggests that activities such as schooling may provide employers with signals as to workers productivities in the signalling literature it is assumed that information generated concerning an individual s abilities is general in that it is known to all potential employers yet the information that an employer gathers concerning his workers abilities is not likely to be completely transferable to other employers as a consequence as rosen 18 249 points out there are limitations on the ability of the price system to achieve efficient assignments if the price system is incomplete there is a role for entrepreneurial activity of assembling an optimal work force this paper analyzes the employment relations that arise when employers information concerning new workers abilities is incomplete until after a period of employment the acquisition of such employer specific information is shown to lead to what has been referred to in the literature as internal labor markets internal labor markets as identified by dunlop 5 32 are the complex of rules which determine the movement of workers among job classifications within administrative units these movements may be transfers promotions demotions or layoffs to the exterior labor markets doeringer and piore 3 emphasize skill specificity and on the job training as the key factors in the emergence of the internal labor market along similar lines williamson wachter and harris 22 point out that job idiosyncracy can result in employment relations with attributes like those of internal labor markets by way of contrast this paper emphasizes the role of employer specific information in generating internal labor markets the theory provides an explanation as to why employers dismiss current employees at the same time that new employees are hired evidence that dismissal rates are not insignificant is presented in section iv the theory also provides a new rationale for long term em

selling to conspicuous consumers pricing production and sourcing decisions consumers often purchase goods that are hard to find to conspicuously display their exclusivity and social status firms that produce such conspicuously consumed goods such as designer apparel fashion goods jewelry etc often face challenges in making optimal pricing and production decisions such firms are confronted with precipitous trade off between high sales volume and high margins because of the highly uncertain market demand strategic consumer behavior and the display of conspicuous consumption in this paper we propose a model that addresses pricing and production decisions for a firm using the rational expectations framework we show that in equilibrium firms may offer high availability of goods despite the presence of conspicuous consumption we show that scarcity strategies are harder to adopt as demand variability increases and we provide conditions under which scarcity strategies could be successfully adopted to improve profits finally to credibly commit to scarcity strategy we show that firms can adopt sourcing strategies such as sourcing from an expensive production location supplier or using expensive raw materials this paper was accepted by preyas desai and pradeep chintagunta marketing

grand missions of agricultural innovation abstract this paper discusses three related examples of mission oriented agricultural institutional innovations associated with substantial crop yield increases in the 20th century it begins with the implementation of the united states land grant system and then discusses in turn the planning and implementation of the two grand missions that led successively to the yield increases in wheat and rice that heralded the onset of the green revolution it notes the remarkable role of the rockefeller foundation in identifying these two missions and selecting personnel developed within the land grant system to execute them with remarkable effectiveness

veblen effects in a theory of conspicuous consumption the authors examine conditions under which veblen effects arise from the desire to achieve social status by signaling wealth through conspicuous consumption while veblen effects cannot ordinarily arise when preferences satisfy a single crossing property they may emerge when this property fails in that case budget brands are priced at marginal cost while luxury brands though not intrinsically superior are sold at higher prices to consumers seeking to advertise wealth luxury brands earn strictly positive profits under conditions that would with standard formulations of preferences yield marginal cost pricing the authors explore factors that induce veblen effects and they investigate policy implications copyright 1996 by american economic association

exchange rate effects on agricultural exports transaction level evidence from pakistan this article examines the effects of domestic currency depreciation on agricultural exports from pakistan including the responses of price and quantity margins it uses highly disaggregated firm level data that contains the exchange rates of the actual currencies of invoicing at the transaction level the study finds that the currency depreciation positively affects both intensive and extensive margins the intensive margin increase in agricultural exports operates mainly through prices whereas the response of quantities is relatively smaller moreover depreciation improves the extensive margins of firms and products and expands the client base in existing markets these responses vary widely across firms exporting experience trade orientation sectoral and spatial distribution exchange rate regimes and invoicing currencies

employment separation and health insurance coverage abstract we study the interrelationship between employment separation and insurance coverage we first document that employment separation is associated with large reductions in insurance coverage even conditioning on underlying tastes for insurance we then show that reducing the cost of insurance through state laws mandating continued access to employer provided health insurance for the non employed increases the likelihood of having insurance after separating from a job by 6 7 these mandates also increase the number of individuals who separate and the total amount of time spent jobless finally at least some of this increased non employment appears to be spent in productive job search as the availability of continuation coverage is related to significant wage gains among those who separate from their jobs

status effects and negative utility growth this paper explains the observed stagnation of happiness measures through a growth model in which agents care about conspicuous consumption normal goods confer direct utility while status goods confer utility only at the expense of others firms can improve the quality of both goods through r d the nash equilibrium of the consumer game results in the share of expenditure on status goods increasing with the number of times the status good has been improved as the economy grows resources for innovation are transferred entirely to status good r d the resulting long run rate of utility growth is negative

why do people care about social status abstract this paper shows that complementary interaction can induce people to care about social status because it serves as a signal of non observable abilities there is a unique separating equilibrium in which everyone cares about social status in this equilibrium a person s social status perfectly reveals his abilities and everyone matches with a person of like ability the analysis shows that people s instrumental concern for social status has important welfare and policy implications indeed peoples efforts to keep up with the joneses may be welfare enhancing

exploring the widening food gap an international perspective using data for a long panel of 90 developed and developing countries this article explores the effects of research and development r d and fixed capital stock on agricultural land productivity over the period 1961 2012 instruments are used for r d to deal with feedback effects and measurement errors the results show very high social returns to investment in r d and to fixed capital stock suggesting that increasing investment in these factors are promising ways of arresting the increasing food prices due to increasing demand for animal protein population growth desertification salinization soil erosion climate change and decreasing growth in land productivity

do coffee roasters benefit from high prices of green coffee abstract the german coffee industry has repeatedly made the puzzling statement that it would prefer higher prices of green coffee its main input likewise it supported the maintenance of the coffee tax in this paper an oligopoly model with differentiated products is used to illustrate the possibility of profit raising cost increases the relationship between prices and costs of roasted coffee in germany is estimated and the hypothesis of overshifting is tested in addition the demand for coffee is studied however the empirical analysis does not confirm that increasing costs lead to higher profits alternative explanations for the coffee industry s statements based on long term considerations are also discussed