an analysis of the selection of arbitrators this paper analyzes alternative mechanisms for the selection of arbitrators the authors review key institutional features of the threemost prevalent mechanisms for selecting arbitrators rank veto alternate strike and rotating panel they present a more formal analysis in which these mechanisms are treated as economic games andanalyze the alternative mechanisms in terms of the incentives they provide for strategic behavior and the efficiency of any equilibrium strategies that exist some implications of varying selected parametersof each mechanism are derived and the general role of arbitrator selection mechanisms in the process of bargaining under the threat ofarbitration are considered copyright 1986 by american economic association

global trading versus linking architectures for international emissions trading abstract international emissions trading is widely seen as an indispensable policy pillar of climate change mitigation stern n 2007 the economics of climate change the stern review cambridge university press new york this article analyzes five different types of trading architectures classified into two top down unfccc driven and three bottom up driven by individual countries or regions approaches the two types of approaches are characterized by a trade off between environmental effectiveness and political feasibility respectively whereas their relative cost effectiveness depends on implementation details bottom up architectures constitute imperfect substitutes for top down architectures in terms of environmental effectiveness and thus remain mere fallback options however especially the formal linking architecture can act as complement in terms of cost effectiveness

who uses interest arbitration the case of british columbia s teachers 1947 1981 several researchers have attempted to identify the circumstances under which parties subject to compulsory interest arbitration will actually push a contract dispute to arbitration in this paper a simple model that incorporates elements of the leading hypotheses is tested using a unique data set spanning 35 years of compulsory conventional arbitration experience among teachers in british columbia the strongest empirical finding is that bargaining units that used arbitration in the previous round of negotiations were at least ten percent more likely than other units to use it in the current round on the other hand variables intended to capture attitudes toward risk changes in the degree of uncertainty associated with arbitral outcomes differing beliefs about likely arbitral outcomes and principal agent problems were found to have little impact on the estimated probability of using arbitration

strikes arbitration and teacher salaries a behavioral analysis this study uses bacharach and lawler s behavioral theory of bargaining to derive hypotheses about the impact of strikes and compulsory interest arbitration on teacher salaries those hypotheses are tested with data sets on illinois and iowa school districts and on a national sample of teachers drawn from the current population survey the results suggest that strike use affects teacher salaries but that arbitration use does not additional tests indicate that the availability of both arbitration and of the legal or de facto right to strike has similar effects on salary levels increasing salaries by about 10 percent the findings also suggest that arbitration and the strike are used as defensive rather than offensive strategies

the case for international emission trade in the absence of cooperative climate policy we evaluate the efficacy of international trade in carbon emission permits when countries are guided strictly by their national self interest to do so we construct a calibrated general equilibrium model that jointly describes the world economy and the strategic incentives that guide the design of national abatement policies countries decisions about their participation in a trading system and about their initial permit endowment are made noncooperatively so a priori it is not clear that permit trade will induce participation in international abatement agreements or that participation will result in significant environmental gains despite this we find that emission trade agreements can be effective that smaller groupings pairing developing and developed world partners often perform better than agreements with larger rosters and that general equilibrium responses play an important role in shaping these outcomes

the perception of man and the conception of society two approaches to understanding society the social sciences offer two distinct approaches to understanding society one originated with the scottish moral philosophers and shaped the discipline of economics the other emerged from the french enlightenment and influenced the study of sociology the two approaches are based on radically different perceptions of man and man s relation to society this paper explores these alternative hypotheses and examines some major implications it concludes that the hypothesis reaching back to the scottish philosophers provides the basis for a unified approach in the social sciences

an empirical analysis of the co2 shadow price in chinese thermal power enterprises abstract this paper estimates the shadow price of co2 and explores its determinants for thermal power enterprises in china using a parametric quadratic directional distance function we evaluate the inefficiency and shadow price of co2 for 124 power enterprises in 2004 applying deterministic and econometric methods a regression analysis is undertaken to examine the factors that drive shadow prices our results indicate that there are large inefficiencies in terms of electricity production and co2 emissions the shadow price is a negative function of firm size age and coal share and is positively correlated with the technology level this correlation between shadow prices and its determinants is not sensitive to changing assumptions regarding directional vectors although such changes do alter the distribution of shadow prices the large variation witnessed in shadow prices across power enterprises argues in favor of market based regulation such as an emissions trading system as opposed to the command and control regulation currently used in china to minimize overall abatement cost

final offer arbitration with uncertainty averse parties abstract final offer arbitration foa is a widely used binding dispute resolution mechanism where an impartial arbitrator is constrained to choose one of the two final offers proposed by two disputing parties we build an equilibrium model of foa with players averse to arbitral uncertainty to study three important issues the role of foa in incentivizing negotiated settlements the convergence of final offers and the normative effect of diversity of arbitrator opinion we show that increase in arbitral uncertainty increases the likelihood of negotiated agreements and make the final offers converge to each other risk aversion is not necessary for convergence of offers precision and mean of arbitral uncertainty matter differently and can be controlled separately moreover as also argued by the industry practitioners carefully selected level of diversity of opinion in the arbitrator roster increases the welfare of negotiating parties

a positive theory of discretionary policy the cost of democratic government and the benefits of a constitution we offer an explanation of government s preference for discretionary policy action the main elements are asymmetric information and the ability and desire of governments to maximize reelection prospects discretionary policy imposes a social cost we show that the cost is eliminated if all voters have the same information as the government an optimal state contingent policy rule that precommits government through a constitution eliminates the cost by removing government s opportunities to exploit its informational advantage rules of this kind and constitutional restrictions are difficult to enforce in the presence of uncertainty and different information available to government and the public

parental altruism and self interest child labor among late nineteenth century american families intergenerational relationships within late nineteenth century industrial families are analyzed using several large scale contemporary household surveys nonaltruistic behavior by parents was pervasive even among families with positive assets child labor was common in certain industrial settings suggesting that child labor or nonschooling did not simply reflect parental borrowing constraints neither did physical asset transfers offset human capital losses among working youth a quantitative estimate of parental nonaltruism is derived from an equilibrium labor market model approximately 90 percent of all child earnings was implicitly competed away through lower adult wages as families migrated to areas with abundant child labor opportunities

george stigler s contribution to the economic analysis of regulation george stigler changed the way economists analyze government regulation this enormous legacy is essentially embodied in two articles his 1962 analysis of electricity rates with claire friedland and his 1971 theoretical piece there were to be sure precursors and successors in his own work but none of them so profoundly affected the course of intellectual inquiry as these two the importance of both articles rests more i believe with the questions each posed than with the answers even by the standards of the day neither piece evinced the sort of technical sophistication that the profession has come to admire neither produced conclusions that were impervious to all serious subsequent challenges but both produced insights that have altered the course of research in the area to this day to understand stigler s contribution it is best to proceed chronologically and to begin with the state of the field around 1962 there is room here only for caricature rather than extensive survey however i think it is fair to say that the field derived its main energy from the normative economics of marginal cost pricing the proper role of government was to correct the private market failures that prevented attainment of marginal cost pricing applied economic analysis of regulation was then largely descriptive and its main tendency was to show how the regulatory institutions constrained departures from marginal cost pricing monopoly was viewed as the main barrier to marginal cost pricing and the natural monopoly occupied center stage in the economics of regulation the prime examples of natural monopoly were sup1 man made monopolies were the main subject matter of industrial organization stigler s profound influence on this field is summarized by harold demsetz s article in this issue

burden sharing in a greenhouse egalitarianism and sovereignty reconciled the allocation of emission entitlements across countries is the single most controversial issue in international climate policy extreme positions within the policy debate range from entitlements based on current emission patterns sovereignty to entitlements based on equal per capita allocations egalitarianism this paper shows that gradual convergence from sovereignty towards egalitarianism could provide a pragmatic solution to the equity debate when combined with international emissions trading the convergence approach stands out for offering the developing countries substantial incentives for participation in the international greenhouse gas abatement effort without imposing excessive burdens on the industrialized countries

strategic delegation in bargaining abstract principals have the opportunity to delegate to an agent in the context of the nash bargaining model this paper resolves a shortcoming in the related bargaining literature in equilibrium a symmetric outcome typically will not result and multiple equilibria exist

industry level emission trading between power producers in the eu in this paper we investigate how restrictions for emission trading to the energy intensive power sector will affect the magnitude and distribution of abatement costs across eu countries vis a vis a comprehensive eu emission trading regime we find that emission trading between european power sectors allows the harvest of a major part of the efficiency gains provided by full trade as compared to strictly domestic action however trade restrictions may create a more unequal distribution of abatement costs across member states than is the case for a comprehensive trade regime the reason for this is that restricted permit trade enhances the secondary terms of trade benefits to eu member countries with low marginal abatement costs at the expense of the other eu member states

collective bargaining interest arbitration and police salaries previous research and conventional wisdom suggest that the practice of collective bargaining the availability of interest arbitration and the use of arbitration when available all have a positive

bargaining and the role of expert agents an empirical study of final offer arbitration abstract expert agents such as lawyers play a prominent role in conflict resolution yet little is known about how they affect outcomes we construct a model that permits us to estimate the influence of agents and test whether the parties in a dispute face prisoner s dilemma incentives using eighteen years of final offer arbitration data from new jersey we find the parties do significantly better when they retain agents and that the parties learn about this benefit over time however we also find that the gain to using an agent is fully offset when the opposing party also hires an agent since agents are costly this noncooperative equilibrium is pareto inferior

the causes of government expenditure growth a survey of the u s evidence abstract the growth of government budgets can be broken down into a institutional and institutional components the former component the familiar substitution income and population public goods tax sharing effects is estimated to contribute about two fifths of the growth of u s government spending the latter component rent seeking political redistributions bureaucracy and perceptual informational impedimentia is important too but an exact imputation cannot be asserted given the state of the art in empirical public choice theory the cross effects on spending of the growth of regulation and tax preferences or tax expenditures though interesting is not pursued

arbitration and bargaining across the pacific this paper reports laboratory experiments comparing arbitration behavior between and across two countries with extensive trade relations the united states and japan besides comparing disputes in both locations we evaluate disputes between them while we find nominal differences between the countries we observe significant changes in both groups behavior when facing someone from the other country specifically americans seek larger profits when facing a japanese counterpart and japanese subjects settle more frequently with an american counterpart our results suggest that the literature on bargaining behavior across cultures paints an incomplete picture of international comparisons by failing to consider bargaining interactions

market power and hot air in international emissions trading the impacts of us withdrawal from the kyoto protocol ten years after the initial climate change convention from rio in 1992 the industrialized world is finally likely to ratify the kyoto protocol which will impose legally binding greenhouse gas emission reductions on the developed world however the kyoto protocol will enter into force without the usa which withdrew under president bush in march 2001 accounting for hot air and market power of the former soviet union on emission permit markets it is shown that us withdrawal has important consequences on environmental effectiveness compliance costs and excess costs of market power under the kyoto protocol non compliance of the usa implies a dramatic decrease in environmental effectiveness as well as compliance costs of oecd countries whereas the former soviet union and transitional economies in eastern europe suffer from a huge decline in permit sales revenues excess costs of market power in permit trade increase in relative terms but decline substantially in absolute terms due to us withdrawal pol

can prior offers and arbitration outcomes be used to predict the winners of subsequent final offer arbitration cases preferences is past outcomes given its goal of driving negotiated settlements an effective foa process requires bargainers to infer useful information about arbitrator preferences from past outcomes using data from major league baseball this article provides evidence that past foa decisions are positively correlated with the outcomes of future foa cases

is there a case for carbon based border tax adjustment an applied general equilibrium analysis concern that unilateral greenhouse gas ghg emission reductions could foster carbon leakage and undermine the international competitiveness of domestic industry has led to growing calls for carbon based border tax adjustments btas this article uses a global general equilibrium model to assess the economic effects of btas and comes to three main conclusions first btas can reduce carbon leakage if the coalition of countries taking action to reduce ghg emissions is small because in this case leakage while typically small mainly occurs through international trade competitiveness losses rather than through declines in world fossil fuel prices second even though the economic effects of btas vary somewhat depending on how they are implemented their welfare impact is typically small and slightly negative at the world level third and perhaps more strikingly btas do not necessarily curb the output losses incurred by the domestic energy intensive industries eiis they are intended to protect in the

market power in emissions trading markets ruled by a multiple unit double auction further experimental evidence we discuss selected methodological problems of previous double auction da experiments and test the hypothesis that a multiple unit double auction muda is able to prevent market power in an emissions trading market additionally we analyze how the information subjects receive about the market structure and different levels of subjects experience influence the behavior based on a larger number of independent observations than analyzed in previous studies the experiment generates two main results first emissions trading markets ruled by a muda realize a high degree of efficiency even under market power conditions however a muda is in general not able to restrict market power we observe persistent price discrimination in two market power environments i e the distribution of profits is strongly shifted in favor of the strong market side without greatly harming efficiency this result is independent of the information to subjects about the market structure second when subjects are experienced the efficiency is higher and the ability of the strong market side to exercise market power declines strongly however the variability of behavior is large and the strong market side is still able to realize supracompetitive profits in some groups

marginal abatement costs of co2 emission reductions geographical flexibility and concrete ceilings an assessment using the poles model abstract the kyoto protocol envisage the setting up of flexibility mechanisms allowing annex b countries to fulfil their commitments to reducing greenhouse gases with respect for the principle of economic efficiency the current negotiations relate in particular to the possibility of setting up a system of tradable emissions permits for annex b countries and also of introducing ceilings to trade this paper analyses the stakes and economic potential of adopting this instrument both for those countries that made commitments in kyoto and for developing countries it is based on a formal approach that allows for a consistent framework of analysis the emission permit market is in fact simulated on the basis of a reference scenario and of marginal abatement cost curves and estimated by the poles model after analysing these marginal abatement cost curves and comparing them with those produced by other models we explore two different configurations for a competitive market a market limited to the annex b countries and a world market the results produced by the model show that widening the market to include developing countries is more effective than the annex b market solution it reduces the cost of implementing kyoto for oecd countries and at the same time allows the countries of the south to benefit from selling the permits this research also shows that introducing restrictions on exchanges for annex b countries could have a counter productive redistribution effect with the ethical argument that underlies that particular measure

welfare consequences of emission credit trading programs abstract the welfare consequences of moving from a command and control approach to pollution control to an emission credit trading program that attains the same environmental quality are shown to depend on the competitiveness of the output markets in which polluting firms compete if the output markets are competitive then the introduction of trading increases aggregate welfare in contrast if the output markets in which these firms participate are not competitive then the adoption of an emission credit trading program may reduce social welfare this is so even if emission credit markets are perfectly competitive

exclusionary manipulation of markets for pollution rights abstract strategic price manipulation can affect the distribution of transferable pollution rights across polluters and the efficiency of pollution control efforts prior research has concentrated on market manipulation by firms seeking only to minimize the sum of pollution rights costs and pollution abatement costs in this paper we explore the potential for the exclusionary manipulation of pollution permit markets intended to drive up the costs of one s rivals and we distinguish between the resource allocation effects of exclusionary manipulation and cost minimizing manipulation we find that exclusionary manipulation can sometimes worsen and sometimes ameliorate the abatement inefficiency which occurs under cost minimizing manipulation and that an overbuying rule can obviate or at least limit damages from this form of strategic behavior

environmental regulation whose self interests are being protected special interest can explain why environmental policy limits economic activity in areas where air quality is above minumum standards locational competition among region helped create a policy that raised factor mobility cost from slower to faster growing regions analysis of votes shows greater support for this policy was received from northern urban constituencies and the greatest opposition came from the south and the west pollution abatement costs per unit of output are higher in areas with higher not lower air quality

a comparison of interest arbitrator decision making in experimental and field settings recent studies have investigated arbitrator decision rules in both experimental and field settings the authors of this paper evaluate the external validity of experimental studies by comparing the decisions made in an experiment with those made in actual cases by the same arbitrators the results show that when the single issue decisions made in the experiment are compared with the multi issue decisions made in many field cases the arbitrators decision models in the two settings as indicated by the weights they attached to various facts of the case and their level of uncertainty about which offer to choose appear to differ but when the experimental data are compared to the decisions in the sample of field cases in which the wage was the only issue the decision models are substantially the same

climate policy induced investments in developing countries the implications of investment risks international climate policy has assigned the leading role in emissions abatement to the industrialized countries while developing countries remain uncommitted to binding emission reduction targets however cooperation between the industrialized and the developing world through joint implementation of emission abatement promises substantial economic gains to both parties in this context the policy debate on joint implementation has addressed the question of how investment risks to project based emission crediting between industrialized countries and developing countries affect the magnitude and distribution of such gains in our quantitative analysis we find that the incorporation of country specific investment risks induces rather small changes vis a vis a situation where investment risks are neglected only if investors go for high safety of returns is there a distinct decline in the overall volume of emission crediting and the associated total economic benefits while the welfare effects of risk incorporation for industrialized countries are unequivocally negative the implications across developing countries are ambiguous whereas low risk developing countries attract higher project volumes and benefit from higher effective prices per emission credit compared to a reference scenario without risk the opposite applies to high risk countries sensitivity analysis with respect to higher risk estimates show that shifts in the comparative advantage of emission abatement against high risk countries may become dramatic as only very low cost mitigation projects will be realized driving down the country s benefits from emission crediting to the advantage of low risk developing countries this result is supported by empirical evidence on regional imbalances of activities implemented jointly under the pilot phase of the kyoto protocol

the timing of arbitration and sequential bargaining this paper links two literatures the paper adds to results on disagreement in per fect information bargaining games it is found that under certain conditions the possibility of third party intervention induces delay the paper is also the first attempt to model the arbitration process in a sequential bargaining framework it therefore adds to the theoretical arm of the industrial relations literature by permitting an explicit temporal setting for the chilling effect and alternative mechanisms for the timing of arbitration

arbitrator compromise in final offer arbitration evidence from major league baseball i introduction the purpose of interest arbitration is to encourage two bargainers to reach a mutually agreeable settlement in the event of impasse an independent arbitrator determines the settlement in conventional arbitration ca each of the bargainers submits an offer the arbitrator may select one of the two offers or one of his or her own choosing as the settlement critics have argued that arbitrators split the difference between the offers to enhance their chances of being rehired in future cases this gives each bargainer an incentive to submit an extreme offer to increase its expected gains from arbitration as a result ca chills rather than encourages productive negotiation final offer arbitration foa was created by stevens 1966 to remedy the chilling effect he proposed that arbitrators select one of the two submitted offers as the award unable to compromise between the offers the arbitrator will presumably choose the most reasonable offer as the award ironically arbitrator compromise may exist even in foa according to theory foa arbitrators maximize their chances of being rehired by formulating a notion of the ideal settlement the preferred award and selecting the nearest offer importantly bazerman and farber 1985 farber and bazerman 1986 and gibbons 1988 noted that the preferred award is not exogenous but reflects the perspectives of the bargainers consequently although foa arbitrators may not compromise by splitting the difference between the offers they may formulate preferred awards that compromise between the bargainers perspectives because farber 1980 and gibbons 1988 showed that submitted offers should be strategically aligned around the arbitrator s preferred award an empirical analysis of final offers should reveal any compromises implicit in the preferred award to test the compromised preferred award hypothesis this study examines foa offers in major league baseball unique characteristics in baseball foa allow for a test of the compromised preferred award baseball players become eligible for foa after completing roughly three years of major league service during these first three years the players bargain in a purely monopsonistic environment the players may not freely negotiate with other clubs until they have completed six years of service the coexisting monopsonistic and oligopsonistic free agency markets have led to extraordinary differentials in player salaries that have been well documented in economic literature as in kahn 1993 although players with three to six years of experience continue to be bound to one club they may unilaterally opt for foa consequently the arbitrator must determine the appropriate payscale for an eligible player because the clubs prefer to extend monopsony salaries into the arbitration eligibility years they are likely to stress the importance of the player s prior salary i e the size of the raise a player is entitled to receive whereas the players would rather have the arbitrators rely on free agent salaries to determine the proper wage although the arbitrators could side with one of the positions theory predicts the preferred award will reflect a compromise between the two perspectives the results strongly support the existence of compromised preferred award the submitted final offers are a weighted average between the mean free agent salary and the player s salary in the previous season the notion that the preferred award represents a compromise between the two perspectives is strengthened when one examines the weights of losing offers specifically for both hitters and pitchers the losing player offer does not differ significantly from the mean free agent salary for a comparable player winning player offers on the other hand are less than the comparable free agent salary perhaps the most intriguing finding is that by compromising between the perspectives of players and clubs baseball foa has generated its own unique labor market through which player salaries lie between the monopsony and free agent levels

arbitrator decisions in wisconsin teacher wage disputes this study examines the role of wage comparability in the decisions of arbitrators in final offer wage disputes between wisconsin teachers and school boards in 1977 86 the authors find that wage increases agreed to earlier in the bargaining round by comparable school districts specifically other districts within the same athletic conference had a substantial impact on the decisions of the arbitrators this result is not predicted by most theoretical studies of interest arbitration but it is consistent with previous institutional research the written awards of wisconsin arbitrators and the bargaining strategies of the parties

learning from interest arbitration the next round in final offer arbitration the decision of the arbitrator provides the parties with information about the preferences of the arbitrator that is not available prior to the award using data from wisconsin teacher negotiations from 1977 to 1986 the authors find that the information contained in an award altered the parties expectations about the arbitrator s preferences and influenced the subsequent negotiated settlement the negotiated settlement following an award was higher when the union s final offer was selected than when the employer s offer was selected in the round following an award the variance in negotiated settlements declined and the wage structure toward which the settlements converged was one that conformed with the arbitrator s views of fairness

market power and transferable property rights the appeal of using markets as a means of allocating scarce resources stems in large part from the assumption that a market will approximate the competitive ideal when competition is not a foregone conclusion the question naturally arises as to how a firm might manipulate the market to its own advantage this paper analyzes the issue of market power in the context of markets for transferable property rights first a model is developed that explains how a single firm with market power might exercise its influence this is followed by an examination of the model in the context of a particular policy problem the control of particulate sulfates in the los angeles region

intertemporal emission trading with a dominant agent how does a restriction on borrowing affect efficiency in this paper we analyze how restricting intertemporal trading by prohibiting borrowing of emissions permits affects the ability of a dominant agent to exploit its market power we show that the monopolist could take advantage of the constraint on borrowing by not distributing the sale of permits cost effectively across periods furthermore we show that a constant present value price over time does not imply a cost effective distribution of abatement permit sales across periods

what is discrimination gender in the american economic association 1935 2004 we illustrate problems of measuring discrimination using elections to aea offices with a new econometric technique we find female candidates have a much better than random chance of victory this advantage is either reverse discrimination or reflects beliefs that women are more productive the former interpretation could be explained by an unchanging median voter whose preferences were not satisfied by suppliers of candidates but there was a structural change in voting behavior in the mid 1970s the results suggest it is generally impossible to claim differences in rewards for different groups measure the extent of discrimination or even its direction jel a11 d72 j16

why economic reforms fail in the soviet system a property rights based approach jan winiecki why do economic reforms fail in soviet type systems despite the obvious interest of ruling groups in improving the performance of their ailing economies the author applies a property rights based analysis stressing modes of rent maximization by ruling groups as a crucial explanatory variable party apparatchiks and economic bureaucrats particularly benefit from persistent interference in the economic sphere and consequently are most interested in maintaining the status quo the author surveys the impact of these motivations on the content of economic reforms outlines the strategies of counterreformers and predicts the future of reforms in soviet type economies 1 introduction in analyzing the disequilibrium characteristics of contemporary western economies mancur olson 1982 1984a 1984b agrees with the neoclassical macroeconomists in finding that given the tendencies of markets to clear and given the rational expectations of economic agents any disequilibrium indicates that all mutually advantageous transactions have not been consummated having made this point however he asks what can make agents ignore the potential gains from unconsummated transactions and turns his attention toward the structure of incentives and thus of institutions and policies olson insists and rightly so that a satisfactory static and dynamic macroeconomic theory has to explain who among key actors has the incentive to generate economic growth and equilibrate the economy and who does not furthermore no government even an authoritarian one has an incentive to generate serious recessions or disequilibria olson 1984a 637 writes that even in dictatorial systems the dictator has an incentive to make the economy of the country he controls work better since this will generate more tax receipts he can use as he pleases and usually also reduce dissent olson s arguments about incentives institutions and disequilibria offer an ideal basis for an inquiry into why reforms fail in soviet type economies stes in olson s theories of incentives the old roman principle of criminal law cui prodest who gained is applied to modem economies and the results suggest that contrary to widespread opinion it is not necessarily the small but powerful group of high and highest leaders that stands to gain most in terms of power and privilege from the preservation of the existing order a powerful political elite could satisfy its desires for both power and privilege through an alternative undemocratic system one which involves authoritarian don ts rather than totalitarian do s in that perspective the inefficient system of economic control typical in stes involving centrally planned production goals and input rationing would not be a condition sine qua non of an authoritarian solution since totalitarian command and control systems persist however one must seek groups other than the powerful and privileged few which have incentives to resist reforms and keep the economy inefficient the following sections identify the membership and motives of groups having strong incentives to keep the stes inefficient and prevent successful i e market oriented reforms we show how those groups operate and analyze their effects on the economic performance of their countries first the incentives for these groups to prevent decentralized management in the state sector are spelled out then their incentives to prevent the expansion of the more efficient private sector are outlined third having identified who benefits from the status quo and why the paper discusses when and how market oriented reforms are aborted limited or reversed by those who stand to gain from the reforms failure the last two sections consider the prospects of current attempts at economic reform in three specific countries poland the ussr and china and the prospects for economic reform in stes more generally

political models of the business cycle should be revived political models of the business cycle have typically been ignored because they appear inconsistent with rational behavior and because empirical evidence is inconclusive this paper addresses the second issue demonstrating for u s real gnp unemployment and inflation that electoral cycles persistent patterns across electoral terms are significant but apparently only for republican incumbents and that partisan cycles persistent differences between parties are also significant these findings are consistent with the conjecture that a minority party is more constrained by electoral concerns whereas a majority party is freer to pursue partisan objectives

ideology and legislator shirking we argue that legislator shirking voting on the basis of personal ideology rather than the interests of one s constituents can exist but its appearance should conform to the law of demand we test and confirm this theory using votes on defense expenditure bills in the u s senate in 1982 we assume the cost of shirking is relatively higher on narrowly focused bills on specific weapons systems with well defined beneficiaries and relatively lower on general defense expenditure bills with uncertain final distribution of funds we find greater influence for senators ideology in general versus specific bills

institutions transaction costs and economic growth this essay develops a theoretical framework which explores the historical obstacles to economic growth these obstacles are examined in the context of the political economic institutional framework of economies in history and consequent transaction costs that determine economic performance and growth the essay concludes with specific suggestions for the study of economic growth

random coefficient models for stated preference surveys abstract this paper combines the use of random coefficient discrete choice models that allow for correlated errors in the form of unobserved preference heterogeneity with an investigation of the reliability and usefulness of rankings data for the data we examine we find significant unobserved preference heterogeneity in the rankings which violates the underlying assumptions of the rank ordered logit model further directly modeling unobserved preference heterogeneity results in significant improvement in the precision of the parameter estimates and in estimated willingness to pay wtp the reliability and usefulness of rankings data should be re examined with econometric models not subject to the independence of irrelevant alternatives iia

tradeable emission permits regulations in the presence of imperfectly competitive product markets welfare implications in the present paper we analyse the interaction of a competitive market for emission permits with an oligopolistic product market it is well known that a competitive permits market achieves the cost minimizing distribution of abatement effort among the polluting firms for a given reduction in emissions however when the product market is oligopolistic it may redistribute production inefficiently among firms it has been suggested that this inefficiency can outweigh the gains obtained from using emission permits instead of command and control although this argument is clearly correct under full information it is shown in the present paper that it reverses under incomplete information in particular it is shown that when tradeable emission permits are specified according to the standard textbook example they yield higher social welfare than the command and control regulation

beyond kyoto backstop technologies and endogenous prices on co2 permits and fossil fuels this paper analyses the markets for fossil fuels given that the limits the kyoto protocol sets on co2 emissions from annex b countries extend beyond 2008 2012 a forward looking model with endogenous prices for fossil fuels is applied under different assumptions concerning the technological progress for a carbon free backstop technology both the time profile of the international permit price needed for the kyoto forever targets as well as the implications through reduced demand and lower producer prices for fossil fuels are calculated the permit price has to rise at least up to 2030 in order to fulfil the emission targets from then on the necessary permit price shows different future developments dependent on when the backstop technology starts to replace oil since changes in the availability of the backstop technology shift the time profile of the permit price the loss of petroleum wealth for oil and gas producers varies between the scenarios but is never more than 20 findings indicate that the

an experimental comparison of dispute rates in alternative arbitration systems this paper reports the results of a systematic experimental comparison of the effect of alternative arbitration systems on dispute rates the key to our experimental design is the use of a common underlying distribution of arbitrator fair awards in the different arbitration systems this allows us to compare dispute rates across different arbitration procedures where we hold fixed the amount of objective underlying uncertainty about the arbitration awards there are three main findings first dispute rates are inversely related to the monetary costs of disputes dispute rates were much lower in cases where arbitration was not available so that the entire pie was lost in the event of a dispute this confirms the empirical importance of the so called chilling effect on bargaining that has been conjectured is produced by the adoption of arbitration systems second the dispute rate in a final offer arbitration system is at least as high as the dispute rate in a comparable conventional arbitration system contrary to the usual argument we find no evidence that final offer arbitration eliminates the chilling effect third dispute rates are inversely related to the uncertainty costs of disputes dispute rates were lower in conventional arbitration treatments where the variance of the arbitration award was higher and imposed greater costs on risk averse negotiators our results can also be interpreted as providing tentative evidence that the negotiators were risk averse on average finally we find general agreement between the dispute rates in our experiment and dispute rates found in the field in comparable settings

a panel data heterogeneous bayesian estimation of environmental kuznets curves for co2 emissions this article investigates the environmental kuznets curves ekc for co2 emissions in a panel of 109 countries during the period 1959 to 2001 the length of the series makes the application of a heterogeneous estimator suitable from an econometric point of view the results based on the hierarchical bayes estimator show that different ekc dynamics are associated with the different sub samples of countries considered on average more industrialized countries show evidence of ekc in quadratic specifications which nevertheless are probably evolving into an n shape based on their cubic specification nevertheless it is worth noting that the eu and not the umbrella group led by us has been driving currently observed ekc like shapes the latter is associated to monotonic income co2 dynamics the eu shows a clear ekc shape evidence for less developed countries consistently shows that co2 emissions rise positively with income though there are some signs of an ekc analyses of future performance neverthe

the welfare costs of rationing by waiting with price controls and rationing by waiting rational consumers increase the quantity boughtperpurchase this individually rational response is socially wasteful and the cost of making it is a deadweight loss this cost plus the value of time spent in queues may exceed the total rent transferred from suppliers to consumers by price controls i e the value of resources spent competing for the rent may exceed the rent itself this point is illustrated by an empirical application to gasoline price controls rent seeking exhausts an estimated 116 percent of the rent trangerred the efficiency of the price system is often illustrated lby pointing to the obvious wastes associated with alternative allocation mechanisms for example the queues that accompany price controls and first come first served allocations although rationing by waiting wastes resources in a dramatically visible fashion the magnitude of the waste and the factors that determine it seldom have been examined empirically moreover existing theory on the subject is incomplete unless the first come first served rule is precisely specified consumers will compete for available supplies in ways other than waiting in the model developed below queues cause consumers to compete by increasing amounts bought per trip to the market the analysis demonstrates that such individually rational adjustments only increase the welfare cost of rationing by waiting and thus are socially self defeating the theoretical model is illustrated empirically by estimating the welfare costs of a market wide ceiling on gasoline prices this application was motivated by the availability of two key pieces of information the value of time spent in gasoline queues and the effect of waiting lines on amounts bought per purchase this information was obtained from a survey of motorists conducted during the era of federal gasoline price regulations to focus on competition among consumers one of the inefficiencies that results from price controls is ignored the supply reduction leading to the

empirical advances in political economy editor s note i wish to thank coeditor mark zupan who took responsibility for organizing and implementing both the special symposium on public choice and the processing of papers through the refereeing and editorial process for this special section on behalf of all the editors i also would like to express thanks to carolyn williams editorial coordinator for taking on yet another responsibility in arranging the conference symposium meetings and the management of the files the symposium on public choice was held at lake tahoe during the 1993 we a meetings the many efforts of authors referees editors and staff have resulted in an exciting complement to this year s economic inquiry offerings

learning in equilibrium models of arbitration this paper analyzes strategic communication in equilibrium models of conventional and final offer interest arbitration both models emphasize the role of learning by the arbitrator from the parties offers about the state of the employment relationship which is known to the parties but not to the arbitrator in both models the arbitrators equilibrium behavior is identical to the reduced form decision rule typically assumed in the empirical literature the paper thereby provides a structural interpretation for the existing empirical work the paper also represents progress towards a complete theory of arbitration because it satisfies three conditions that will be required of any such theory first the models predictions match the existing empirical evidence second the models describe equilibrium behavior and third the models are built on a common set of assumptions about preferences information and commitment the paper therefore not only provides an equilibrium foundation for the intuition that the arbitrator might learn from the parties offers but also uses the idea of learning to develop a unified analytical treatment of the two major forms of interest arbitration this abstract was borrowed from another version of this item