bargaining rules of thumb abstract a steady state random matching game model is used to described bargaining in a large population where bargainers choose rules of thumb to apply across the board in a class of bargaining situations they face the unique population equilibrium rule distributions are computed for certain cases of the model these are then used in an exercise to analyze the relationship between a society s wealth and the relative frequency of haggled transactions in the society

the spread of municipal reform temporal spatial and social dynamics the adoption of commission and managerial administrative structures and their subsequent abandonment by the 267 largest american cities during the period 1900 1942 is studied using event history methods full period equations show no significant direct effect of percentage catholic culture clash or population size hierarchical diffussion and only a modest impact of city age modernization a strong effect from average annual manufacturing wages is found but in a direction contrary to that posited by the class conflict hypothesis the variable affecting transition rates most strongly appears to be regional adoption percentages an indicator of neighborhood diffusion these findings suggest revisions of the conventional image of the municipal reform experience

testing for asymmetric information in insurance markets the first goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context we also argue that insurance data are particularly well suited to such empirical investigations to illustrate this claim we use data on contracts and accidents to investigate the extent of asymmetric information in the french market for automobile insurance using various parametric and nonparametric methods we find no evidence for the presence of asymmetric information in this market

oligarchic family control social economic outcomes and the quality of government wealthy families as opposed to small public shareholders characterize ownership of the large corporate sectors of many countries around the world this paper shows that greater oligarchic family control over large corporations is associated with worse social economic outcomes it also correlates with more bureaucratic and more interventionist governments and less developed financial markets further tests show that red tape price controls and the lack of shareholder rights protection are the paramount factors relating to the extent of family control of large firms these results are broadly consistent with olson and others who argue that economically entrenched wealthy insiders pursue rent seeking activities to preserve the status quo and that this increases corruption and impedes growth

public capital and long run costs in u k manufacturing a model of u k manufacturing production that incorporates the inputs of public as well as private capital is specified and estimated the model is then used to measure the contribution of public capital to productivity growth over the period 1966 to 1990 it is found that before 1980 the public and private capital contributions were of comparable magnitude after 1980 the contribution of public capital declined significantly copyright 1993 by royal economic society

bureaucracy infrastructure and economic growth evidence from u s cities during the progressive era recent work in the sociology of economic development has emphasized the establishment of a professional bureaucracy in place of political appointees as an important component of the institutional environment in which private enterprise can flourish i hypothesize that establishment of such a bureaucracy will lengthen the period that public decision makers are willing to wait to realize the benefits of expenditures leading to allocation of a greater proportion of government resources to long gestation period projects such as infrastructure this hypothesis can be tested using data generated by a natural experiment in the early part of this century when a wave of municipal reform transformed the governments of many u s cities controlling for city and time effects adoption of civil service is found to increase the share of total municipal expenditure allocated to road and sewer investment other estimates imply that this increased share raises the growth rate of city manufacturing employment by one half percent per year this abstract was borrowed from another version of this item

consumers demand in the long run some evidence from uk data a system of demand functions is estimated with quarterly uk data using recently developed techniques for the estimation and testing of cointegrated systems these fully modified methods aim to remove nuisance parameters from the limiting distributions which arise with non stationary data so that conventional inferntial procedures can be applied it is found that the homogeneity and symmetry restrictions of consumer theory appear to be reasonable descriptions of aggregate behaviour

inherited corporate control and returns on investment this paper contributes to the literature on management in family firms by investigating how succession in family firms affects returns on investment the identities of the chief executive officer ceo and the chairman of the board cob were used to establish whether the management of the firm can be characterized as founder descendant or external management a unique unbalanced panel data set on listed swedish firms covering the period from 1990 to 2005 was used in the analysis the results show that founder management has a positive effect on the returns on investment in family firms whereas descendant management has a negative impact an external ceo as a successor in family firms leads to more efficient investment policies with increased firm value as a result that is when studying corporate governance in family firms it is important to account for what type of management the firm has further studies are required to understand the relationship between ownership control management and firm performance

infrastructure and development a critical appraisal of the macro level literature this survey reviews the existing macro level empirical literature on the link between infrastructure and development outcomes in a critical light after providing a general framework that casts the relevant terms of the controversy on the real effect of infrastructure on growth in the context of an aggregate production function it signals what are the relevant empirical questions to be addressed this guides the systematic review of a number of empirical studies and the discussion of the main econometric challenges to the identification of the effect of infrastructure on output and productivity finally building on related research in particular in contract theory and political economy the paper spells out several promising research avenues

bureaucrats and short term politics this paper proposes a simple probabilistic voting model where the society consists of three groups of voters belonging to different generations since the youngest generation is excluded from participating in elections the political process results in an allocation of public expenditures that is shifted towards public consumption we show that the influence of bureaucrats who favor an excessive supply of public goods increases investment expenditures and limits the leeway of politicians to capture rents for themselves finally we discuss the conditions under which the impact of bureaucrats is welfare enhancing

agglomeration adjustment and state policies in the location of foreign direct investment in the united states abstract using u s state level data we show that agglomeration externalities influence the level of foreign invested capital in a location our empirical model allows the separation of agglomeration effects from the rate of capital stock adjustment two forces that previous research has conflated we estimate an agglomeration elasticity of investment of 0 11 to 0 15 with respect to same source country investment lower than previous estimates we also investigate the influence of state policies and find that although general investment incentives do not affect the location of fdi targeted policies such as unitary taxation and state foreign offices influence investment

bribery in international business transactions globalization leads to cross border business transactions between societies with very different norms and regulations regarding bribery bribery in international business transactions can be seen as a function of not only the demand for such bribes in different countries but the supply or willingness to provide bribes by multinational firms and their representatives this study addresses the propensity of firms from 30 different countries to engage in international bribery the study incorporates both domestic economic development culture and domestic corruption in the supplying country and international factors those countries patterns of trade and involvement in international accords in explaining the willingness to bribe abroad the propensity to provide bribes was the lowest when corruption was not tolerated in the multinational firms home countries when the firms countries were signatories of the organization for economic cooperation and development oecd anti bribery convention and when those countries traded heavily with wealthier nations further these findings are maintained when controlling for levels of economic development and cultural values in the supplying country in terms of culture firms from high power distance countries showed a somewhat greater propensity for providing bribes in transactions with less developed nations

a system approach to the demand for salmon in the european union this study addresses the demand for salmon in the european union a system of demand equations are specified with an almost ideal demand system aids to analyse the demand structure for fresh frozen and smoked salmon using quarterly data for the period 1984 92 the time series porperties of the data series are explored and the data series are found to be non stationary but cointegrated to avoid the invalild inference and spurious regression problems that may be created by non stationary data series the fully modified least squares fmls estimatior is utilized

separation of powers and political accountability political constitutions are incomplete contracts and therefore leave room for abuse of power in democracies elections are the primary mechanism for disciplining public officials but they are not sufficient separation of powers between executive and legislative bodies also helps to prevent the abuse of power but only with appropriate checks and balances checks and balances work by creating a conflict of interest between the executive and the legislature yet requiring both bodies to agree on public policy in this way the two bodies discipline each other to the voters advantage under appropriate checks and balances separation of powers also helps the voters elicit information

snow removal auctions in montreal costs informational rents and procurement management using semiparametric and nonparametric estimation techniques we infer cost distributions and informational rents from 457 snow removal contracts o ered for tender by the city of montreal our results are compatible with standard received theory of competitive auctions there is a positive correlation between costs and bids and rents increase with the variance of costs bids and costs have decreased over the sample period while rents remained relatively constant the city deserves credit for these results as it has succeeded in exploiting economies of scale and triggering innovations while maintaining competition further it has been successful in adjusting its reserve prices to keep up with the decreasing cost of snow removal

is growth corrupted or bureaucratic panel evidence from the enlarged eu abstractthis article aims at analysing the issue of conditional convergence in the new enlarged european union eu over the period 1995 2012 by means of panel data techniques we examined the issue of conditional convergence in the enlarged eu giving particular attention to the effects of corruption and bureaucracy on growth controlling for a widely used set of explanatory variables such as investment domestic and foreign human capital formation inflation general government final consumption and trade openness furthermore we examine if growth responds differently to corruption and bureaucracy in the new eu members by means of two group specific interaction variables to capture possible different responses to corruption and bureaucracy the analysis reveals evidence of conditional convergence in the enlarged eu with investment share foreign direct investment human capital and country openness appearing as robust growth drivers in contrast inflation and government consumption rather hamper gro

do economic effects justify the use of fiscal incentives the community of location this presumption serves as the basis for the granting of lucrative economic development incentives to footloose businesses this article examines whether large mobile firms generate significant net benefits for the region of location panel data and nonrandom estimation techniques are applied to a primary database of large firms that made location decisions in the 1980s to explore the impact of location on regional economic performance the empirical analysis explores different treatment regions both effects within the county and the metropolitan statistical area msa of location and different control regions the results show that large firms fail to produce significant net benefits for their host communities calling into question the high stakes bidding war over jobs and investment

game theory econometric models application to procurements in the space industry abstract this paper presents a structural econometric analysis of procurements in the space industry we analyse bidimensional tenders in price and quality the econometric specification assumes that bidders use nash equilibrium strategies these strategies are derived analytically or computed by monte carlo procedures

the impact of corruption on investment predictability matters abstract this paper argues that it is not only level of corruption that affects investment but also the nature of corruption corruption regimes that are more predictable in the sense that those seeking favors from government do obtain those favors have less negative impact on investment than those that are less predictable using the data collected by world bank in preparing the world development report of 1997 we provide empirical support for the conjecture

the financial and operating performance of newly privatized firms an international empirical analysis this study compares the pre and postprivatization financial and operating performance of 61 companies from 18 countries and 32 industries that experience full or partial privatization through public share offerings during the period 1961 to 1990 our results document strong performance improvements achieved surprisingly without sacrificing employment security specifically after being privatized firms increase real sales become more profitable increase their capital investment spending improve their operating efficiency and increase their work forces furthermore these companies significantly lower their debt levels and increase dividend payout finally we document significant changes in the size and composition of corporate boards of directors after privatization the last fifteen years have witnessed a significant global shift away from state socialism towards entrepreneurial capitalism one of the most important and visible aspects of this trend has been the enthusiasm with which governments of all political persuasions have sold their state owned enterprises soes to private investors in hopes that the generally unsatisfactory economic performance of these firms can be improved by the discipline of private ownership this denationalization process given its current title of privatization by the conservative government of margaret thatcher in

bureaucratic discretion or congressional control regulatory policymaking by the federal trade commission this paper extends stigler and peltzman s approach to regulation by incorporating a legislature the model yields comparative statics results and hence testable implications the paper then tests between two opposing approaches about regulatory agency behavior the first assumes agencies operate independently of the legislature and hence exercise discretion the second assumes that congress controls agency decisions the recent behavior of the federal trade commission provides the empirical setting substantial evidence is found for the specific predictions of the model including the hypothesis of systematic congressional influence over ftc decisions

the king and i monarchies and the performance of business groups large highly diversified business groups are a prominent feature of the industrial landscape of most emerging economies their competitiveness has been the topic of much debate in the international business literature this paper intervenes in this debate by utilising data from thailand and demonstrating that whereas business groups create value by filling institutional voids the political context of a country and the investment of powerful actors in particular groups can cause great variance across business groups performance copyright oxford university press

an anatomy of state control in the globalization of state owned enterprises integrating agency theory with institutional analysis in international business we propose a state control perspective to analyze government control mechanisms in emerging economies globalization of state owned enterprises soes we identify two types of state control that influence soes globalization decisions and the degree of globalization dog state ownership control and executives political connections both of which are contingent upon the home country s evolving institutional environments using a two step corporate globalization decision model and 17 272 firm year observations of non financial chinese listed companies we find a strong impact of both types of state control on soes globalization although the impacts differ between the periods before and after domestic governance reform and across different globalization decision steps the diminishing impact of executives political connections and the increasing impact of state ownership control on firms dog demonstrate the evolving relationship between the state and the managers as well as the dynamics of state control in globalizing soes

bureaucratic structure and bureaucratic performance in less developed countries abstract we argue that several easily identifiable structural features constitute the key ingredients of effective state bureaucracies and should help to predict ratings of bureaucratic performance competitive salaries internal promotion and career stability and meritocratic recruitment we collect a new dataset on these features for bureaucracies of 35 less developed countries controlling for country income level of education and ethnolinguistic diversity we find that our measure of meritocratic recruitment is a statistically significant determinant of ratings supplied by two of three country risk agencies the importance of competitive salaries and internal promotion and career stability could not be clearly established

public capital and total factor productivity this paper examines the impact of the stock of public capital on output levels and productivity growth rates in the united states the analysis is based on the estimation of parameters in a translog profit function prices of intermediate goods are introduced into a quasiproduction function for value added recently developed econometric techniques for dealing with nonstationary time series are used in the estimation the authors find that the services of public capital are an important part of the production process and that about 40 percent of the productivity decline is explained by a fall in the public capital labor ratio copyright 1993 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

civil service and the growth of government abstract i study a model of elections which links the scale of government activity to civil service rules without tenure protections bureaucrats career prospects are tied to the electoral prospects of the party that hires them to avoid wasteful partisan spending voters only consent to minimal taxation if bureaucrats are protected by tenure they have no incentive to favour one party over another and governments only produce public goods in turn voters consent to high taxes however because higher tax revenues increase the ability of governing parties to co opt the bureaucracy through favourable compensation large scale government activity is accompanied by inefficiently high public sector wages

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

evaluating the impact of investment incentives the case of italy s law 488 1992 abstract italy s law 488 1992 allows firms willing to invest in lagging areas to receive a public subsidy by comparing subsidized firms with firms with rejected applications this paper evaluates whether the program made investments possible that otherwise would not have been made we find evidence that financed firms brought forward investment projects originally planned for the post intervention period to take advantage of the incentives we also find some support that subsidized firms may have taken some of the investment opportunities that unsubsidized firms would have exploited in the absence of incentives

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

elected or appointed how the nomination scheme of the city manager influences the effects of government fragmentation abstract empirical research on the causal effect of government fragmentation derives diverse results one reason for this diversity might be that studies are typically settled in a variety of institutional environments to assess the extent to which the local political system might shape the effects of fragmentation this study measures the causal effect of a change in the nomination scheme of the city manager on the council size effect i combine a regression discontinuity design with a difference in differences approach in a large panel dataset of german municipalities the study finds that when the manager is appointed by council there is no significant council size effect but that there is a negative effect when the manager is elected by voters for those expenditure categories over which the manager has the most discretion these findings suggest that the nature of the political system does indeed matter

does governance cause growth evidence from china this study tests the causal relationships between quality of governance and economic growth at the provincial level in china during the post mao reform era exploiting the wide cross provincial variation and rapid change over time in governance institutions and economic performance in china during this period covering 1985 2005 the study provides a new perspective on the relationship between governance and growth whereas a large body of prior literature has demonstrated a strong positive association between high quality governance institutions and good economic performance at the cross country level few quantitative studies have explicitly tested the direction of causality between changes in governance quality and changes in economic outcomes this study aims to address this gap in the literature by testing two causal hypotheses on the interplay between provincial level governance and economic performance in china i improvements in provincial quality of governance predict subsequent economic growth rates and ii increases in provincial economic growth rates predict subsequent changes in quality of governance using new heterogeneous granger causality tests that allow for potential differences in the causal relations across provinces i show a significant and positive effect of economic growth on subsequent quality of governance largely driven by growth in the secondary sector but no significant effect of quality of governance on economic growth these findings suggest that improvements in formal governance have not been a key factor driving china s rapid growth instead the observed positive association between governance and growth reflects the ability of provincial governments to harness the potential created by economic growth to implement subsequent governance improvements for researchers studying the effect of governance on growth the results suggest that greater attention should be paid to possible reverse causality from economic outcomes to governance changes

institutional voids or organizational resilience business groups innovation and market development in latin america summary the paper compares the innovativeness of group affiliated firms gafs and standalone firms safs and it investigates how country specific institutional factors affect the group innovation relationship the paper analyzes the contrasting predictions of two competing views the institutional voids and the organizational resilience theses the empirical analysis focuses on a large sample of firms in latin america in line with the organizational resilience thesis the results point out that the superior innovation performance of gafs is stronger for national economies with more efficient financial legal and labor market institutions

corruption and development a review of issues in this paper we start with a discussion of some of the different denotations of the problem of corruption we then consider the ways in which the damaging consequences of corruption operate in a developing economy while not ignoring its possible redeeming features in some cases we pursue the question of why corruption is perceptibly so different in different societies and also persistent finally we examine the feasible policy issues that arise in this context

both sides of the coin motives for corruption among public officials and business employees the aim of this study is to better understand why public officials and business employees engage in corruption insight into individual level explanations for corruption was obtained with the aid of a self report survey the results suggest that the most indicative factors of whether or not individuals are corruption prone are as follows the moral conviction they have to refrain from corruption perceptions of whether their colleagues approve of and engage in corruption and difficulties experienced in complying with the rules on corruption this result pattern was identical for public officials and business employees alike and as a consequence for both sides of corrupt acts the latter indicates that the same motives may not only underlie corruption in both private and public sectors but also the act of corruption in its active and passive forms the results of the current study do not provide strong support for the assumption that economic considerations expected costs and benefits are crucial in predicting corruption based on the findings that norms and the perceived opportunity to comply are dominant factors in explaining corruption this article focuses on the practical implications for the development of anti corruption strategies within both public and private sectors

civil service reform abstract civil service rules governing the selection and motivation of bureaucrats are among the defining institutions of modern democracies although this is an active area of reform in the us and elsewhere economic analyses of the issue are virtually nonexistent this paper provides a welfare evaluation of civil service reform it describes the effect of reform on the interaction of politicians voters and bureaucrats and shows that society often faces trade offs between improving the bureaucracy and improving the performance of politicians my results characterize the conditions under which merit based recruitment and civil service protections such as tenure can improve welfare

estimation of a continuous time dynamic demand system a continuous time dynamic model of consumers demand explicitly taking account of the roles of depreciation interest rates habits and stocks is estimated using recently developed techniques from discrete quarterly uk data on three broad commodity groupings the results suggest that whilst being a significant determinant of demand the actual magnitude of the influence of changes in interest rates may be relatively small in the long run the cross price effects of durable goods are also found to be statistically significant and symmetry of long run compensated price responses is not rejected copyright 1992 john wiley sons ltd

the ownership structure contingency in the sequential international entry mode decision process family owners and institutional investors in family dominant versus family influenced firms extending our understanding of family firms and international business research with respect to entry mode decisions this study explains how entry mode choice is the product of a sequential decision making process with an important ownership structure contingency we propose that firms with a dominant family owner family dominant firms prefer low equity ownership as their entry mode for the purpose of preserving their socioemotional wealth their preference is persistent even when the institutional investors are the dominant shareholders in the firm family influenced firms this nuanced examination of the role family values play in the entry mode decision extends our understanding of how family firms enter international markets

econometrics of first price auctions in this paper we propose an estimation method for the empirical study of theoretical auction models we focus on first price sealed bid and descending auctions and we adopt the private value paradigm where each bidder is assumed to have a different private value only known to him for the object that is auctioned following mcfadden 1989 and pakes and pollard 1989 our proposed method is based on simulations specifically the method relies on a simulated nonlinear least squares objective function appropriately adjusted so as to obtain consistent estimates of the parameters of interest we illustrate the proposed method by studying a market of agricultural products where descending auctions are used our analysis takes into account heterogeneity of the auctioned objects and the fact that only the winning bid is observed we estimate the parameters that characterize the distribution of the unobserved private values for each auctioned object

estimating the performance effects of business groups in emerging markets business groups confederations of legally independent firms are ubiquitous in emerging economies yet very little is known about their effects on the performance of affiliated firms we conceive of business groups as responses to market failures and high transaction costs in doing so we develop hypotheses about the effects of group affiliation on firm profitability affiliation could either boost or depress firm profitability and members of a group are likely to earn rates of return similar to other members of the same group using a unique data set compiled largely from local sources we test for these effects in 14 emerging markets argentina brazil chile india indonesia israel mexico peru the philippines south africa south korea taiwan thailand and turkey we find evidence that business groups indeed affect the broad patterns of economic performance in 12 of the markets we examine group affiliation appears to have as profound an effect on profitability as does industry membership yet strategy scholars have a much clearer grasp of industries than of groups moreover membership in a group raises the profitability of the average group member in several of the markets we examine this runs contrary to the wisdom conventional in advanced economies that unrelated diversification depresses profitability overall our findings suggest that the roots of sustained differences in profitability may vary across institutional contexts conclusions drawn in one context may well not apply to another copyright 2001 john wiley sons ltd

macroeconomic effects of ownership structure in oecd countries the paper investigates the impact of ownership concentration on gdp growth for a sample of 18 oecd countries over the period 1980 to 2004 the econometric analysis shows that more concentrated ownership can speed up growth for countries approaching the technological frontier provided that labour market regulation is sufficiently tight in the absence of employment regulation the logic of financial markets discipline applies and dispersed ownership appears as more favorable for growth based on econometric results impact coefficients are calculated allowing to evaluate the growth points gained lost following a given change in ownership concentration this exercise reveals that a reform in the domain of ownership structure can yield sizeable effects in terms of growth importantly these effects are unequally distributed across countries anglo saxon countries would take more advantage of deregulation i e increased dispersion of ownership in a context of deregulated labour markets while continental european countries would benefit more from increased concentration of ownership in a context of reinforced labour regulation

fluidity of regulation csr nexus the multinational corporate corruption example corporate social responsibility csr is a relatively undeveloped concept despite its increasing importance to corporations one difficulty is the possible inexactness of csr another is the apparent reluctance by regulatory authorities and policy makers to intervene in the area this is largely a result of inhibitions created by traditional approaches to company law with emphasis on shareholder protection and financial disclosure the consequence is the stultification of independent development of csr by tying social issues to financial performance this attitude might not be unconnected to the theoretical and practical challenges in justifying csr and defining its scope the underlying impediment is a factual and theoretical failure to distinguish instrumental and pure ethical csr this article demonstrates that ethical csr highlights the role of regulation and a principal stance is that regulation is neither incompatible nor irreconcilable with ethical csr the article argues that cognizance of the intrinsic moral justification of pure csr is required for delineating the scope of csr as well as for clarifying the desirability and extent of its regulation it argues that the dynamic history and visage of multinational corporate corruption illuminates the fluidity of the regulation csr relationship the current and widening backlash against transnational corporate corruption is arguably a demonstration of the position that regulation and csr are not mutually exclusive and absolute concepts this article submits that recognition and application of this ethical and instrumental csr distinction is fundamental to the development of csr and resolution of connected questions of regulation

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

corruption and the composition of government expenditure abstract this paper asks whether predatory behavior by corrupt politicians distorts the composition of government expenditure corruption is found to reduce government spending on education in a cross section of countries

forecasting with the almost ideal demand system evidence from some alternative dynamic specifications the almost ideal demand system is used as a representation of long run demands in discrete time and continuous time error correction models to produce forecasts of budget shares beyond the sample period the estimated models are subjected to a battery of tests and an analysis of the forecasts indicates that continuous time adjustment mechanisms based around fully modified estimates of the long run preference parameters provide a remarkably accurate method of forecasting budget shares

auctioning and bargaining an econometric study of timber auctions with secret reservation prices this article considers a first price sealed bid auction at which the seller s reservation price is not announced in advance we allow for a second round of bargaining and consider the nash bargaining outcome when the object is unsold after the auctioning round we characterize the bidders and seller s bayesian nash equilibrium strategies the distributions of the buyers and seller s private values are estimated by nonlinear least squares from auction data on standing timber while solving numerically the differential equations characterizing the seller s and buyers equilibrium strategies the performance of the estimated model is then compared to a model in which the players behave myopically

rules of thumb in games abstract a steady state random matching game model is proposed in which rules of thumb which assign strategies to individual games are the units of choice for individuals costs which reflect complexity or difficulty of use are associated with the rules independently of the games in which they are employed a population equilibrium is a distribution of rules across the population of players such that no individual has an incentive to change rules given the current distribution examples illustrate the concept and existence is demonstrated

strengthening state capabilities the role of financial incentives in the call to public service we study a recent recruitment drive for public sector positions in mexico different salaries were announced randomly across recruitment sites and job offers were subsequently randomized screening relied on exams designed to measure applicants intellectual ability personality and motivation this allows the first experimental estimates of i the role of financial incentives in attracting a larger and more qualified pool of applicants ii the elasticity of the labor supply facing the employer and iii the role of job attributes distance attractiveness of the municipal environment in helping fill vacancies as well as the role of wages in helping fill positions in less attractive municipalities a theoretical model guides each stage of the empirical inquiry we find that higher wages attract more able applicants as measured by their iq personality and proclivity towards public sector work i e we find no evidence of adverse selection effects on motivation higher wage offers also increased acceptance rates implying a labor supply elasticity of around 2 and some degree of monopsony power distance and worse municipal characteristics strongly decrease acceptance rates but higher wages help bridge the recruitment gap in worse municipalities

the glittering prizes career incentives and bureaucrat performance bureaucracies are configured differently to private sector and political organizations across a wide range of civil services entry is competitive promotion is constrained by seniority jobs are for life and retirement occurs at a fixed age this implies that older entering officers who are less likely to attain the glittering prize of reaching the top of the bureaucracy before they retire may be less motivated to exert effort using a nationwide stakeholder survey and rich administrative data on elite civil servants in india we provide evidence that i officers who cannot reach the senior most positions before they retire are perceived to be less effective and are more likely to be suspended and ii this effect is weakened by a reform that extends the retirement age together these results suggest that the career incentive of reaching the top of a public organization is a powerful determinant of bureaucrat performance

politics and administration this paper develops a theory of the eectiveness of government programs in the model a bureaucrat chooses a mechanism for assigning a good such as a license or a benet payment to a client of uncertain qualications the mechanism uses a means test to verify the client s eligibility a politician who values the payos of a subset of client types exercises oversight by designating the resources available for means testing and the population of clients that can be served the model makes predictions about common administrative pathologies including inecient and politicized distribution of resources program errors and backlogs when the politician favors marginally qualied clients programs will tend to be universal with low per capita spending and high error rates when the politician favors highly qualied clients programs have smaller client populations higher per capita spending and lower error rates notably the bureaucrat can only use discriminatory testing in the latter case and programs with larger budgets do not spend more per client

business groups and social welfare in emerging markets existing evidence and unanswered questions abstract this paper reviews existing studies of the role of emerging market business groups a ubiquitous but poorly understood organizational form i first suggest that understanding the definition of business groups is itself an interesting albeit under studied research issue i then argue that the existing evidence suggests that the performance effects of group affiliation are large and generally positive there is substantial evidence that part of this is due to welfare enhancing functions originating in the idea that groups substitute for missing outside institutions but that part is also due to welfare reducing minority shareholder exploitation evidence is lacking on the extent to which groups facilitate rent seeking or the exercise of market power evidence is also lacking on the extent to which groups hamper the future development of markets the paper identifies areas where research is needed before current competition policy experiments in countries like china india and korea can be evaluated

international experience and fdi location choices of chinese firms the moderating effects of home country government support and host country institutions we examine the extent to which chinese government support of foreign direct investment fdi projects and host country institutional environments interact with prior entry experience by chinese firms and how this interrelationship affects fdi undertaken by chinese firms we hypothesize that home country government support and well established host country institutions enhance organizational capabilities to take risks in fdi as such they reduce the need to accumulate experiential knowledge and capabilities relating to entering host countries based on prior entry experience in a particular country when undertaking follow up investment projects using a unique hand collected panel data set of chinese publicly listed firms during 2002 2009 we find that home government support and well developed host country institutions reduce the importance of prior entry experience and significantly increase the likelihood of fdi entry into a host country further from our subsample analyses we identify differences between entering developed and developing host countries in terms of the impact of home country government support and quality of host country institutions our findings help explain the puzzle concerning why emerging economy firms have rapidly internationalized in a short period of time and do not follow the pattern predicted by classical ib theories

economic policy economic performance and elections this paper explores the role of reelection pressures in determining economic policy by assuming that voters are uncertai n as to the efficacy of different policies a reelection process is derived that depends on both a politician s past policies and the level of economic activity during his time in office it is shown th at the less uncertain are voters as to which policy is best the more likely is a politician to manipulate policy for reelection purposes manipulation entails implementing the policy that is more likely to be well received rather than the one that maximizes income copyright 1993 by american economic association

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

fostering corporate social responsibility through public initiative from the eu to the spanish case should csr be approached only on a voluntary basis or should it be complemented with a compulsory regulatory framework what type of government intervention is more effective in fostering csr among companies this paper is an attempt to answer these questions reviewing the debate between proponents of the voluntary case and the obligatory case for csr and critically analysing current international government led initiatives to foster csr among companies and national government led initiatives in the eu area finally the paper focuses on the spanish case as an example of the failure of an exclusively voluntary approach despite the rapid uprise of csr spain is still far behind late in csr promotion strategies most action has been undertaken by companies themselves with no common guidelines governmental support or independent verification the lack of a regulatory framework for csr or ethical investment issues and the virtual absence of other indirect incentives explains the misbalance between private public and third sector initiatives based on the spanish context which is quite similar to other non oecd countries the authors call for a more proactive government position in csr related issues the conclusions of the paper detail the features of this regulatory framework and other policies to promote csr in spain as well as in other oecd countries

traveling agents political change and bureaucratic turnover in india abstract we develop a framework to empirically examine how politicians with electoral pressures control bureaucrats with career concerns and the consequent implications for bureaucrats career investments unique microlevel data on indian bureaucrats support our key predictions politicians use frequent reassignments transfers across posts of varying importance to control bureaucrats high skilled bureaucrats face less frequent political transfers and lower variability in the importance of their posts we find evidence of two alternative paths to career success officers of higher initial ability are more likely to invest in skill but caste affinity to the politician s party base also helps secure important positions

merit tenure and bureaucratic behavior evidence from a conjoint experiment in the dominican republic bureaucratic behavior in developing countries remains poorly understood why do some public servants yet not others work hard to deliver public services misuse state resources and or participate in electoral mobilization a classic answer comes from weber bureaucratic structures shift behavior toward integrity neutrality and commitment to public service our study conducts the first survey experimental test of the effects of bureaucratic structures it does so through a conjoint experiment with public servants in the dominican republic looking at merit examinations and job stability we find that weber was right but only partially recruitment by examination curbs corruption and political services by bureaucrats while enhancing work motivation job stability by contrast only decreases political services tenured bureaucrats are less likely to participate in electoral mobilization examinations thus enhance the quality of bureaucracy motivation and lower corruption and democracy electoral compe

political budget cycles and the civil service evidence from highway spending in us states abstract we study political budget cycles in infrastructure spending that are conditional on bureaucratic organization bureaucrats can facilitate or hinder politicians ability to engage in voter friendly spending around elections to test this idea we use civil service reforms undertaken by us states in the second half of the 20th century to study political budget cycles in highway spending under civil service and patronage we find that under patronage highway spending is 12 higher in election years and 9 higher in the year before an election by contrast under civil service highway spending is essentially smooth over the electoral cycle these findings provide a novel way through which civil service rules can stabilize government activity

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

competing for global capital or local voters the politics of business location incentives the competition for global capital has led to interjurisdictional competition between countries states and cities as to who can offer the most attractive incentives to firms in this study we examine the domestic politics of this competition by focusing on incentive use in the united states from 1999 to 2012 we define incentives as the targeted tax deductions or exemptions that are used to lure businesses into a locality drawing on data from municipal incentive programs we examine how electoral competition shapes the use and oversight of targeted incentives we find evidence that cities with elected mayors provide larger incentives than non elected city managers by taking advantage of exogeneity in the assignment of city government institutions and a database of over 2000 investment incentives from 2010 to 2012 we also find that elected mayors enjoy more lax oversight of incentive projects than their appointed counterparts our results have important implications for the study of interjurisdictional competition and the role of electoral institutions in shaping economic policy

estimating long run economic equilibria with stochastic trends an asymptotic theory is provided to analyze a menu of currently existing estimators of cointegrated systems we study in detail the single equation ecm seecm approach of hendry our theoretical results lead to prescriptions for empirical work such as specifying seecm s nonlinearly and including lagged equilibrium relationships rather than lagged differences of the dependent variable as covariates simulations support these prescriptions and point to problems of overfitting not encountered in the semiparametric approach of phillips and hansen 1990

the price of international business morality twenty years under the foreign corrupt practices act last year marked the 20th anniversary of the foreign corrupt practices act fcpa of 1977 the fcpa is the first and only statute prohibiting bribery and other corrupt business practices by u s citizens and companies conducting business overseas this paper provides an overview of the fcpa during the two decades of its existence more specifically the objectives of this paper are four fold first the paper provides background information about the fcpa of 1977 and subsequent amendments in 1988 second the paper discusses the enforcement of the fcpa since its passage by examining the number of cases prosecuted under the fcpa and the respective penalties imposed third the paper discusses the economic impact of the fcpa by addressing whether the fcpa places u s firms at a competitive disadvantage fourth the paper provides public policy recommendations to expand the reach and scope of the fcpa it covers efforts to criminalize bribery through multilateral organizations such as the organization for economic cooperation and development oecd the world trade organization wto and the organization of american states oas it also covers bilateral arrangements and efforts by non governmental organizations such as transparency international