truth effort and the legal battle in lawsuits relative success depends upon two main factors the true degree of fault and the efforts invested on eachside a proposed litigation success function displays thisdependence while satisfying other essential properties undertwo different protocols nash cournot and stackelberg solutions are obtained for the litigation efforts proportionate success and values of the lawsuit on each side outcomes are evaluated in terms of two normative criteria i achieving justice interpreted as equality between defendantfault and relative plaintiff success and ii minimizingaggregate litigation cost achievement of these aims isdetermined by the decisiveness of litigation effort relativeto true fault

how to win the political contest a monopolist vs environmentalists this paper sheds light on the political economy of local energypolitics both from a theoretical and an empirical perspective first a case study of a small town in southern germany schonau is presented where environmentalists have won thepolitical contest against the regional energy monopolist and havefounded an energy supply firm themselves the different stagesof the political process are explained and analysed second apolitical economy model is developed where environmentalists anda monopolistic utility firm confront each other both on thepolitical and on the energy market in the lobbying equilibriumthe probability of the environmentalists winning the gamedepends on the monopoly rent and the perceived social costs ofenergy production it is shown that it is optimal for themonopolist to reduce his output below the monopolistic output finally the winning strategy in the schonau case is discussedin the light of the theoretical results of the paper

environmental regulation by private contest abstract it is widely expected that the recent trend in the us eu and elsewhere towards an increased role for private agents and agencies in the formulation and enforcement of environmental regulation will continue if environmental regulation is to be privatised in this way it is natural to ask how far the activities of environmental groups on whose shoulders much of the responsibility for defending the environment is likely to fall should be subsidised or taxed in this paper we identify the trade offs involved and characterise the optimal subsidy tax the analysis is argued to have significant implications for how governments should think about the way in which fiscal law treats environmental ngo s

setting the stakes in environmental contests abstract firms are frequently in conflict with environmental groups over planning and other decisions standard contest models assume that stakes are exogenously defined which is inappropriate in settings such as application for building permission in which one player also acts as proposer assuming that proposers foresee environmental opposition they will adjust their proposals strategically by introducing an additional stage to the lobbying game the full impact of the dispute process can be reckoned the structure of the game the order in which the players move is shown to have a significant impact on social welfare and may warrant intervention among other things there may be social gains to forcing the developer to move last in planning disputes

a guide to health care reform there are four rationales for health care reform increasing the efficiency of health delivery reforming the market for health insurance providing universal coverage and reducing the federal deficit these goals are reflected in most reform proposals achieving these goals involves several problems however paying for universal coverage may lead to labor supply or demand reductions in addition reform involves large federal risks that must be dealt with through deficit financing reduced benefits or lower subsidies

agency theory and franchising some empirical results this article provides an empirical assessment of various agency theoretic explanations for franchising including risk sharing one sided moral hazard and two sided moral hazard the empirical models use proxies for factors such as risk moral hazard and franchisors need for capital to explain both franchisors decisions about the terms of their contracts royalty rates and up front franchise fees and the extent to which they use franchising in this article i exploit several new sources of data on franchising to construct a cross section of 548 franchisors involved in various business activities in the united states in 1986 the data are most consistent with a model based on two sided moral hazard the empirical models are also more successful at explaining the extent to which franchisors choose to franchise stores than at explaining the terms of franchise contracts finally contrary to the predictions of several theoretical models i find that royalty rates and franchise fees are not negatively related

environmental policy incentives to adopt advanced abatement technology abstract we investigate incentives through environmental policy instruments to adopt advanced abatement technology first we study the case where the regulator makes long term commitments to policy levels and does not anticipate arrival of new technology we show that taxes provide stronger incentives than permits auctioned and free permits offer identical incentives and standards may give stronger incentives than permits second we investigate scenarios where the regulator anticipates new technologies we show that with taxes and permits the regulator can induce first best outcomes if he moves after firms have invested whereas this does not always hold if he moves first

did community rating induce an adverse selection death spiral evidence from new york pennsylvania and connecticut using data from the 1987 to 1996 march current population surveys we find no evidence for the dire predictions of some that the imposition of pure community rating leads to a market wide reduction in insurance coverage by setting off an adverse selection death spiral specifically the percentage of individuals in small groups covered by health insurance did not fall in new york which enacted community rating legislation in 1993 relative to either pennsylvania which enacted no insurance reform or connecticut which enacted moderate insurance reforms without imposing community rating consistent with the predictions of the simple rothschild and stiglitz 1976 framework however we find that the new yorkreforms appear to have had a significant impact on the structure of the new yorkinsurance mark et specifically new yorkexperienced a dramatic shift away from indemnity insurance toward hmos while this shift tookplace during a period of nationwide increases in the percentage with managed care the increase in hmo penetration in new york s small group and individual markets was significantly greater than in pennsylvania or connecticut

adverse selection in health insurance markets evidence from state small group health insurance reforms abstract the past decade witnessed major changes in state laws governing the sale of health insurance to small employers states took measures to restrict insurers ability to distinguish between high and low risk customers because of concern about the low rate of coverage among workers in small firms the high prices in the small group market and the absence of federal health reform using both individual level and employer level data i test predictions about the effect of reforms on the employer provided health insurance market i estimate these effects for small firms and their workers using large firms and their workers in the same states as well as large and small firms and their workers in non reform states as comparison groups i find the reforms decreased the rate of employer coverage on average for workers in small firms by less than two percentage points within small firms low expenditure individuals experienced a larger decline in the rate of coverage through their employer while the coverage rate of high expenditure individuals rose slightly in some specifications there is also evidence that comprehensive reforms increased premiums slightly for small employers and that most of this increase was passed on to workers through higher employee contributions

does technological innovation really reduce marginal abatement costs some theory algebraic evidence and policy implications the existing literature models innovation in pollution control as a reduction in marginal abatement costs we show that this assumption is inappropriate for production process innovations such as fuel switching algebraically we examine the effects of different innovation types on marginal abatement cost curves showing that some desirable innovations increase marginal abatement costs empirically we estimate marginal abatement costs for sulfur dioxide by measuring the output distance function for electric power in korea regression results confirm that production process innovations did raise marginal abatement costs in this case one policy implication economic instruments do not always provide stronger innovation incentives than command and control policies

incentives to diffuse advanced abatement technology under environmental liability law polluting firms with advanced abatement technology at their disposal have incentives or disincentives to share this technology with other polluting firms the direction and extent of those incentives depends on the liability rule applicable and the way technical change impacts marginal abatement costs we establish that incentives for diffusion are socially optimal under strict liability and socially suboptimal under negligence if technical change lowers marginal abatement costs for all levels of abatement negligence may however induce better diffusion incentives than strict liability if technical change decreases increases marginal abatement costs for low high levels of abatement

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

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

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

an empirical look at franchising as an organizational form franchise contracts are identified as a hybrid form of economic organization motives for the dominance of franchise arrangements are identified by examining the theoretical literature on franchising and related literatures on the theory of the firm firm growth managerial and employee selection a nd brand name capital empirical tests are performed on the incidence of franchise contracts across states for three industries in which f ranchising is prominent and data are readily available the results s uggest that both principal agent incentives and informational incenti ves favor the use of franchise arrangements copyright 1988 by the university of chicago

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

climate change environmental and technology policies in a strategic context there are a number of features of climate change which make it one of the most challenging problems confronting policy makers and policy analysts in this paper we consider three such features i climate change is a global pollutant so there are strategic interactions between governments over climate policy ii cutting greenhouse gas emissions can have significant cost effects across a number of sectors of the economy raising concerns about the implications of climate change policy on competitive advantage iii the long time scales on which climate change operates means that an important dimension of climate change policy is policy towards r d to cut the costs of dealing with climate change in ulph and ulph 1996 ulph a ulph d 1996 in carraro c katsoulacos y xepapadeas a eds environmental policy and market structure kluwer dordrecht pp 181 208 we presented a model to analyse these issues but considered only environmental policies in this paper we extend that analysis to allow for both a richer set of policy instruments environmental and technology policies and a richer strategic context

health insurance and labor market outcomes joint decision making within households abstract most americans obtain access to health insurance through an employer in this paper we ask how the link between health insurance and employment affects labor market choices such as whether to work full time to understand the effect of the incentives embedded in the employer based insurance system we study the joint decision making of husbands and wives that determines the household s access to health insurance we estimate the effect on a wife s husband s labor market outcomes of husband s wife s health insurance allowing the health insurance of both spouses to be endogenous obtaining unbiased estimates of such effects is complicated by the likelihood that positive assortative mating creates correlations between a couple s characteristics and the possibility that there are important unobservable household income effects our innovation is to measure these biases by examining a second fringe benefit paid sick leave in addition to health insurance we find that as predicted spouse s insurance has statistically significant negative effects on being offered own employer insurance as well as on the probability of working full time with health insurance

environmental groups in monopolistic markets we examine a market in which a monopolistic firm supplies a good the production of the good causes damage to the environment consumers are heterogeneous with respect to their disutility of the environmental damage an environmental group can enter the market and set up a campaign in order to influence consumers preferences we characterize the equilibrium of the resulting entry deterrence game and investigate its properties it turns out that the aggregated environmental damage is lowest if the firm is able to deter entry of the environmental group and moreover the fixed entry cost of the environmental group is small enough

where do the sick go health insurance and employment in small and large firms this research was supported by a grant from the economic research initiative on the uninsured at the university of michigan

incentives for advanced pollution abatement technology at the industry level an evaluation of policy alternatives abstract in this research we evaluate the incentive effects of five environmental policy instruments to promote the development and adoption of advanced pollution abatement technology in a heterogenous industry from most to least incentive the policy instruments can be rank ordered as follows i auctioned permits ii emissions taxes and subsidies iii issued marketable permits iv performance standards including performance standards in this list necessitates the assumption that they are differentiated between heterogeneous firms before the technology adoption in a way which replicates the initial emissions control distribution of the efficient incentive based instruments with the starting point normalized in this fashion the instrument rankings are invariant with respect to the size of firms the size of the industry or the industry s abatement cost structure

labor market consequences of state health insurance regulation this study based mainly on the 1989 98 march current population surveys finds that state mandated health insurance benefits and small group health insurance reform had no statistically significant effects on labor market outcomes such as the quantity of work wages and whether an employee worked for a small or large firm the number and type of state mandated health insurance benefits were unrelated to weeks of work wages and the prevalence of private insurance coverage but positively associated with weekly work hours extensive small group health insurance reform was associated with a slight decline in the prevalence of private insurance coverage in small firms and this reform affected both full and part time employees less extensive reforms were not generally related to the prevalence of private insurance coverage overall the authors do not find strong evidence that insurance regulations affected labor market outcomes although they appear to cause a small decrease in private coverage

the economic effects of franchise termination laws we would like to thank blake rhodes and pam schommer for excellent research assistance participants in workshops at arizona state university university of california berkeley the university of chicago dartmouth college iowa state university the justice department the university of rochester and the university of utah as well as jeff coles arnold cowan jim dana franklin m fisher stuart gilson ben hermalin cliff holderness gregg jarrell alan krueger wayne mikkelson walter oi jim poterba ajai singh cliff smith kathy spier david weisbach jamie zender jerry zimmerman and especially kevin j murphy and an anonymous referee for comments on an earlier draft brickley and weisbach thank the managerial economics research center of the university of rochester and the john m olin foundation and dark thanks the college of business at iowa state university for financial support brickley also thanks the garn institute of finance at the university of utah for financial assistance 1 see mark robichaut franchise rules are back off drawing board wall st j july 6 1990 at bl note that in this article we focus on laws that apply to business format franchises for an analysis of state laws in automobile franchising see richard l smith ii franchise regulation an economic analysis of state restrictions on automobile distribution 25 j law econ 125 1982 richard a epstein unconscionability a critical appraisal 18 j law econ 293 314 15 1975 and paul h rubin the theory of the firm and the structure of the franchise contract 21 j law econ 223 1978 other work on the economics of franchising includes james a brickley frederick h dark the choice of organizational form the case of franchising 18 j fin econ 401 1987 james a brickley frederick h dark michael s weisbach an agency perspective on franchising 20 fin mgmt 1991 in

the political economy of pollution taxes in a small open economy abstract this paper develops a positive theory explaining pollution tax policy outcomes in a small open economy the equilibrium tax rate depends on lobby group membership the relative importance of lobbying activities and the tax elasticity of pollution the equilibrium properties are investigated the model is extended to incorporate pollution abatement and a pollution abatement subsidy we show that total pollution may be increasing in the pollution abatement subsidy rate this effect arises because the equilibrium pollution tax rate may be decreasing in the subsidy rate due to altered political influence of the lobby groups in the political equilibrium

innovation in pollution control comparisons of the various institutional arrangements for controlling pollutant emissions from individual sources effluent fees effluent control subsidies marketable permits and direct command and control regulation have usually focused on their static efficiency properties and institutional feasibility e g dales 1968 zerbe 1970 baumol and oates 1975 kneese and schultze 1975 marin 1978 mills and white 1978 spence and weitzman 1978 russell 1979 a relatively neglected area has been the study of how each arrangement influences innovation in pollution control a few studies e g kneese and schultze 1975 marin 1978 mills and white 1978 russell 1979 have casually claimed that the control methods that rely on economic incentives provide superior incentives for innovation but there have been few systematic studies of the question this paper provides a simple model of pollution control innovation by a profitmaximizing polluter who is subject to the various control methods the consequences of the methods will be explored in three major contexts first we assume that the polluter and the innovation is a small enough part of the overall pollution problem so that none of the important marginal conditions are changed by the innovation second we assume that the polluter and the innovation are important enough so that marginal conditions are changed by the innovations but that the governmental authority determining pollution control incentives or levels fails to make the appropriate adjustments third we again assume that the innovation causes marginal conditions to change but in this case the governmental authority makes the appropriate adjustments we use the term ratcheting to describe this last phenomenon in all cases we assume that the innovating polluter correctly predicts the reactions of the governmental authority and bases his innovation decisions on that prediction a profit maximizing entrepreneur would normally be expected to adopt any innovation that promised gains present discounted value to him in excess of initial

dynamic incentives by environmental policy instruments a survey abstract in this paper i survey and discuss recent developments on the incentives provided by environmental policy instruments for both adoption and development of advanced abatement technology a main conclusion to be drawn from the literature is that under competitive conditions market based instruments usually perform better than command and control moreover taxes may provide stronger long term incentives than tradable permits if the regulator is myopic if the government can anticipate new technology or is able to react on it optimally regulatory policies by virtue of administered prices taxes and policies by setting quantities issuing tradable permits are almost equivalent the literature also shows that under competitive conditions there is no difference between auctioning permits and grandfathering moreover timing and commitment of environmental policy is not crucial for adoption under competitive conditions commitment has positive incentive effects however if an r d sector has market power in the presence of market imperfections the ranking of the different policy instruments is ambiguous

timing and commitment of environmental policy adoption of new technology and repercussions on r d we investigate the interplay between environmental policy incentives to adoptnew technology and repercussions on r d we study a model where a monopolistic upstream firm engages in r d and sells advanced abatement technology to polluting downstream firms we consider four different timing and commitment regimes of environmental tax and permit policies ex post taxation or issuing permits interim commitment to a tax rate a quota of permits after observing r d success but before adoption and finally two types of ex antecommitment before r d activity one with a unique tax rate quota of permits the other one with a menu of tax rates permit quotas we study the second best tax and permit policies and rank these with respect to welfare in particular we find that commitment to a menu of tax rate dominates all other policy regimes

when the weak win the role of investment in environmental lobbying abstract old and environmentally damaging industries often lobby effectively for less stringent regulations and are slow to adopt new and cleaner technologies this paper explains the lobbying success of these industries in terms of the strategic role of investment as a credible commitment device it is demonstrated that if governments are predisposed to special interest groups underinvestment in new technology enables firms to lobby more effectively such industries are shown to be better placed to extract policy concessions despite contributing less to the government in political donations the analysis therefore suggests that political considerations may provide a significant incentive for firms to reject environmentally beneficial investments even when these lower production costs

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

how has small group market reform affected employee health insurance coverage abstract in the early 1990s over 40 states passed legislation designed to limit a number of exclusionary practices by insurers in the small group market in order to improve the availability and affordability of health insurance to employees in small firms in this paper we address the effects of reform on the likelihood that workers are offered insurance have employment based coverage or are policyholders of an employment based plan we use differences in differences dd and differences in differences in differences ddd estimators to evaluate the differential effects of alternative reform measures on high and low risk workers we generally find little effect of reform on offer rates and find that in states with the most stringent reform employment based coverage and policyholder rates increased for high risk workers relative to low risk workers our results also indicate that the effects of reform varied significantly by the extent to which states adopted guaranteed issue