unemployment growth and taxation in industrial countries unemployeement and taxes do taxes affect the rate of umemployeement to the layman the upward trend in european unemployment is related to the slowdown of economic growth we argue that the layman s view is correct the increase in european unemployment and the slowdown in economic growth are related because they stem from a common cause an excessively rapid growth in the cost of labour in europe labour costs have gone up for many reasons but one is particularly easy to identify higher taxes on labour if wages are set by strong and decentralized trade unions an increase in labour taxes is shifted onto higher real wages this has two effects first it reduces labour demand and thus creates unemployment secondly as firms substitute capital for labour the marginal product of capital falls over long periods of time this in turn diminishes the incentive to invest and to grow the data strongly support this view according to our estimates the observed rise of 14 percentage points in labour tax rates between 1965 and 1995 in the eu could account for a rise in eu unemployment of roughly 4 percentage points a reduction of the investment share of output of about 3 percentage points and a growth slowdown of about 0 4 percentage points a year francesco daveri and guido tabellini

contracts as a barrier to entry it is shown that an incumbent seller who faces a threat of entry into his or her market will sign long term contracts that prevent the entry of some lower cost producers even though they do not preclude entry completely moreover when a seller possesses superior information about the likelihood of entry it is shown that the length of the contract may act as a signal of the true probability of entry

when does growth trickle down to the poor the indian case a theoretical analysis and several econometric tests have been undertaken to examine whether the trickle down effect took place in rural india over a long time period we found little evidence to suggest that the trickle down effect had occurred at all our analysis suggests that the emergence of capital labour substitution was primarily responsible for preventing growth from reducing poverty the decline in poverty and a higher growth rate that took place during the late 1970s and 1980s were largely a result of government anti poverty measures teamed with the more equitable distribution of credit and inputs to smaller and marginal farmers

planning under incomplete information and the ratchet effect abstract central planning of production is usually performed under asymmetric information the firm in general has more information about its productive possibilities than the central planner from now on for short cp this justifies the use of incentives schemes in which the cp does not directly fix activity levels casual observation of such existing schemes suggests that the time dimensions is crucial for their working typically the cp revises the incentive scheme over time to take into account the information provided by the firm s performance managers of centrally planned economies as well as economists have long recognized that this revision induces firms to underproduce in order to avoid demanding schemes in the future this is the ratchet effect it is purpose of the present paper to study the ratchet effect under the non commitment assumption which we believe to be more realistic the inadequacy of conceptual tools made if difficult in the past to consider such an assumption now basic research on dynamic games with incomplete information recently resulted in new ideas which look particularly relevant for a theoretical analysis of the problem

anomalies risk aversion economists ubiquitously employ a simple and elegant explanation for risk aversion it derives from the concavity of the utility of wealth function within the expected utility framework we show that this explanation is not plausible in most applications since anything more than economically negligible risk aversion over moderate stakes requires a utility of wealth function that is so concave that it predicts absurdly severe risk aversion over very large stakes we present examples of how the expected utility framework has misled economists and why we believe a better explanation for risk aversion must incorporate loss aversion and mental accounting

facilitating the provision of farm credit the role of interlocking transactions between traders and zamindars in crop marketing systems in sindh abstract formal credit institutions in pakistan have largely failed to provide access to farm credit to small and medium scale landowners or zamindars this paper examines interlocked transactions between traders and landowners in the cotton and wheat markets in sindh that facilitate the provision of credit by traders it is concluded that the case examined provides an example where traders lend to landowners in a segment of the credit market that approximates competitive behavior without surplus extraction by traders key conditions resulting in this favorable outcome are the existence of both competition for market share and information sharing on borrowers between traders whether this outcome is also beneficial for other rural groups who may borrow from landowners in particular sharecropping tenants is independent of market relations between landowners and traders and is not determined here

platform competition in two sided markets many if not most markets with network externalities are two sided to succeed platforms in industries such as software portals and media payment systems and the internet must get both sides of the market on board accordingly platforms devote much attention to their business model that is to how they court each side while making money overall this paper builds a model of platform competition with two sided markets it unveils the determinants of price allocation and end user surplus for different governance structures profit maximizing platforms and not for profit joint undertakings and compares the outcomes with those under an integrated monopolist and a ramsey planner jel l5 l82 l86 l96

labour taxes and unemployment evidence from a panel unobserved component model abstract this paper estimates the impact of labour taxes on unemployment using a panel of yearly observations 1970 2005 for 16 oecd countries possible heterogeneity of the unemployment incidence of taxes is taken into account by grouping countries according to their wage setting institutions panel data unit root and cointegration tests show that unemployment and labour tax rates are non stationary but not cointegrated as this finding may be induced by missing non stationary variables we set up a panel unobserved component model labour taxes are found to have a positive impact on unemployment only in countries characterised by strong but decentralised unions

cross country differences in unemployment fiscal policy unions and household preferences in general equilibrium we develop a five period overlapping generations model with individuals who differ by ability and with an imperfect labour market union wage setting for the individuals of lower ability the model explains human capital formation hours worked and unemployment within one coherent framework its predictions match the differences in the unemployment rate across 12 oecd countries remarkably well a shapley decomposition of these differences reveals an almost equal role for fiscal policy variables and union preferences as to fiscal policy differences in unemployment benefits play a much more important role than tax differences differences in households taste for leisure are unimportant

efficient patent pools the paper builds a tractable model of patent pools agreements among patent owners to license sets of their patents it provides a necessary and sufficient condition for patent pools to enhance welfare and shows that requiring pool members to be able to independently license patents matters if and only if the pool is otherwise welfare reducing the paper allows patents to differ in importance asymmetric blocking patterns and licensors to also be licensees we undertake some initial exploration of the impact of pools on innovation the analysis has broader applicability than pools being relevant to a number of co marketing arrangements

chicken and egg competition among intermediation service providers we analyze a model of imperfect price competition between intermediation service providers we insist on features that are relevant for informational intermediation via the internet the presence of indirect network externalities the possibility of using the nonexclusive services of several intermediaries and the widespread practice of price discrimination based on users identity and on usage efficient market structures emerge in equilibrium as well as some specific form of inefficient structures intermediaries have incentives to propose non exclusive services as this moderates competition and allows them to exert market power we analyze in detail the pricing and business strategies followed by intermediation services providers copyright 2003 by the rand corporation

why institutional credit agencies are reluctant to lend to the rural poor a theoretical analysis of the indian rural credit market abstract this paper examines why institutional credit facilities remain unable to extend credit to the rural poor analysis indicates that poor peasants at best can offer an entitlement set as a mortgage comprised only of future shares of their harvest which itself is subject to risk consequently lenders can not advance loans without risking extensive loss of loanable funds as the landlords income is subject to the same risk as that of peasants they advance loans to ensure that their own income is not affected by the peasants financial situation an extension of institutional credit to peasants results only in subsidization of landlords

network competition ii price discrimination our companion article developed a clear conceptual framework of negotiated or regulated interconnection agreements between rival operators and studied competition between interconnected networks under the assumption of nondiscriminatory pricing this article relaxes this assumption and allows networks to charge different prices for calls terminating on the subscriber s network and those terminating on a rivals network this creates a price differential between services that are identical for the consumer and generates network externalities despite network interconnection we show that in both the mature and entry phases of the industry the nature of competition is substantially affected by such price discrimination

differences in hours worked in the oecd institutions or fiscal policies we study the determinants of the level and the evolution of per capita hours worked in a panel of oecd countries since the 1970s following pesaran 2006 our empirical strategy allows for the possibility of cross sectionally correlated error terms due to unobserved common factors which are potentially nonstationary we find that much of the variation in per capita hours worked across countries and over time can be explained by differences in the level and structure of taxes and government expenditures differences in the evolution of labor and product market institutions have much less of a role to play our results show that a careful treatment of the time series properties of the data is crucial

fiscal policy elastic labor supply and endogenous growth abstract endogenizing labor supply leads to fundamental changes in the equilibrium structure of the ak growth model the balanced growth equilibrium can be described in terms of two tradeoff loci relating the equilibrium growth rate to the fraction of time devoted to leisure the implications of endogenous labor supply for fiscal policy are analyzed three issues are addressed first the effects of various distortionary tax changes and government expenditure changes on the equilibrium growth leisure employment tradeoff are analyzed second optimal fiscal policy is characterized finally the formal analysis is supplemented by numerical results focusing particularly on the quantitative welfare implications

the regulation of multiproduct firms part i theory abstract this paper develops a normative model of the regulation of a multiproduct firm with private information about its technology and cost reducing activity it first characterizes the optimal regulatory scheme and illustrates it through examples it then derives necessary and sufficient conditions for the pricing incentive dichotomy to hold i e conditions under which the cost reimbursement rule but not pricing is used to provide incentives last the paper studies the regulation of the multiproduct firm in a general equilibrium framework both to assess the validity of the partial equilibrium approach and to formalize the notion of taxation by regulation

the role of shocks and institutions in the rise of european unemployment the aggregate evidence two key facts about european unemployment must be explained the rise in unemployment since the 1960s and the heterogeneity of individual country experiences while adverse shocks can potentially explain much of the rise in unemployment there is insufficient heterogeneity in these shocks to explain cross country differences alternatively while explanations focusing on labour market institutions explain current heterogeneity well many of these institutions pre date the rise in unemployment based on a panel of institutions and shocks for 20 oecd nations since 1960 we find that the interaction between shocks and institutions is crucial to explaining both stylised facts

iq in the production function evidence from immigrant earnings the cross country growth literature especially sala i martin 1997 sala i martin doppelhofer and miller 2004 has found that traditional education measures rarely have a robust relationship with growth and productivity elementary education being a rare exception by contrast a new empirical growth literature jones and schneider 2006 lynn and vanhanen 2002 ram 2007 weede 2004 weede and kampf 2002 has shown that a nation s average iq has a remarkably robust relationship with its productivity figure 1 that a test designed by psychologists should have such a robust relationship with economic variables is a puzzle that demands explanation for instance jones and schneider showed that national average iq was more robust than other human capital variables and was statistically significant at the 1 level in all 455 growth regressions that controlled for all 18 factors that passed sala i martin doppelhofer and miller s 2004 robustness tests of course as with all the growth regression literature a key difficulty is disentangling cause and effect thus in this article we run no growth regressions whatsoever instead we perform a simple calibration of the iq productivity relationship based on widely agreed upon microeconomic parameters that means we can directly estimate one causal channel running from cognitive ability to productivity in the process we learn the following 1 if one knows the average iq of a nation s citizens as estimated by lynn and vanhanen 2002 2006 one can predict the average wages that immigrants from that country will earn upon their arrival in the united states whether or not one controls for immigrant education and even if the test is completely visual rather than verbal in other words national average iq predicts part of what hendricks 2002 calls unmeasured worker skill 2 we find that a 1 point increase in national average iq predicts 1 higher immigrant wages precisely the value found repeatedly in microeconometric studies note that by construction 1 iq point approximately equal to 1 15th of a standard deviation within any large national population together points 1 and 2 provide further evidence that cross country iq tests are valid predictors of worker productivity 3 when iq is added to the production function in the form implied by traditional externality free human capital theory differences in national average iq are quantitatively significant in explaining cross country income differences that said our productivity accounting exercise does not resolve the puzzle of why high iq countries are 15 times richer than low iq countries in a related vein hanushek and kimko 2000 use national math and science test scores to verify that cognitive skills appear to matter more for groups than for individuals like us they use immigrants to the united states as a way to test whether immigrants bring their home country productivity levels along with them when they immigrate to the united states when they interpret their results within a solow type framework they conclude that the cross country growth equation results are much larger than the corresponding results for individual earnings in sum our article rigorously explores the quantitative magnitude of the puzzle uncovered by hanushek and kimko 2000 and hanushek and woessman 2007 but by using iq tests rather than other widely used math and science test scores we can often double our sample size while simultaneously using the most widely analyzed best understood form of cognitive test we begin with an overview of the recent psychological literature on the validity of iq tests and then proceed to our discussion of the link between iq and immigrant wages the discussion of iq and immigrant wages yields a key parameter gamma the iq semi elasticity of wages which we use in our development accounting exercise we then discuss the questions of reverse causality and trends in the iq productivity relationship over the past 40 yr and conclude by discussing how our results fit into the growth literature

access pricing and competition abstract in many industries electricity telecommunications railways the network can be described as a natural monopoly a central issue is how to combine the necessary regulation of the network with the organization of competition in activities which use the network as an input and are potentially competitive generation of electricity value added services road transportation in this paper we derive access pricing formulas in the framework of an optimal regulation under incomplete information first we study how access pricing formulas take into account the fixed costs of the network and the incentive constraints of the natural monopoly over the network second we examine the difficulties coming from the accounting impossibility to disentangle costs of the network and costs of the monopoly s competitive goods third the analysis is extended to the cases where governmental transfers are prohibited where the competitors have market power and where competitors are not regulated fourth the possibility some consumers bypass the network is taken into account finally the role of access pricing for inducing the best market structure is assessed the conclusion summarizes our results and suggests avenues of further research

labor income taxation human capital and growth the role of childcare in this paper we examine the effects of labor income taxation on growth in an overlapping generations model in which schooling and childcare play a role in the production of human capital we compare such effects with those obtained in a model in which only schooling matters for skill formation we show that the omission of childcare from the technology of skill formation can bias the results related to the impact of labor income taxation on growth

the dynamics of incentive contracts the paper studies a simple two period principal agent model in which the principal updates the incentive scheme after observing the agent s first period performance the agent has superior information about his ability the principal offers a first period incentive scheme and observes some measure of the agent s first period performance cost or profit which depends on the agent s ability and unobservable first period effort the relationship is entirely run by short term contracts in the second period the principal updates the incentive scheme and the agent is free to accept the new incentive scheme or to quit the strategies are required to be perfect and updating of the principal s beliefs about the agent s ability follows bayes rule the central theme of the paper is that the ratchet effect leads to much pooling in the first period first for any first period incentive scheme there exists no separating equilibrium second when the uncertainty about the agent s ability is small the optimal scheme must involve a large amount of pooling the paper also gives necessary and sufficient conditions for the existence of partition equilibria and looks at the effect of cost uncertainty

disneyland monopoly interlinkage and usurious interest rates abstract interlinkage between labour and credit markets is interpreted as a consequence of a monopolistic moneylender s attempt to extract consumer s surplus from the borrower by levying a two part tariff this analogy enables us to draw on the literature on non linear pricing to high light issues in agrarian structure the consequence of policy interventions like taxes and minimum wage legislation is studied it is shown that the moneylender will charge usurious interest rates if wages are rigid downwards or there is a tax on agricultural income or borrowers have heterogeneous preferences some geometry for analysing interlinkage is developed and used for deriving some of the results

distortionary taxation and labor supply this paper examines empirically the effects of distortionary taxation on labor supply using a general equilibrium framework the long term relations predicted by the model are derived and tested using data from canada united states germany and japan in all these countries labor tax changes are found to be persistent and to have played an important role in the observed downward trend in hours worked

the regulation of multiproduct firms part ii applications to competitive environments and policy analysis abstract this paper extends our companion paper part i laffont and tirole 1990 on the regulation of the rate of return and prices of a multiproduct firm in two directions first it studies optimal pricing by a regulated firm competing with regulated or unregulated rivals with or without market power or other distorted pricing it then focuses on the access pricing problem and its potential foreclosure effects second it shows how optimal pricing can be decentralized to the regulated firm in the absence of cost and demand information

contracting with externalities the paper studies inefficiencies arising in contracting between one principal and n agents when the utility of each agent depends on all agents trades with the principal when the principal commits to a set of publicly observable bilateral contract offers the arising inefficiency is due entirely to the externalities imposed on non signers in contrast when the principal s offers are privately observed the distortion is due to the externalities given agents equilibrium trades comparison of the two externalities determines the relative efficiency of the two contracting regimes in both cases we show that when n is large each agent can be treated as non pivotal provided that appropriate continuity assumptions are satisfied we also study the case in which the principal can condition each agent s trade on other agents messages we characterize the set of such mechanisms in which each agent s participation is voluntary when the principal can commit to any such mechanism she implements the first best outcome while threatening each deviator with the harshest possible punishment however in the presence of noise that goes to zero slower than n goes to infinity in the limit we obtain a generally inefficient outcome in which each agent feels non pivotal

cooperation among competitors some economics of payment card associations we analyze platforms in two sided markets with network externalities using the specific context of a payment card association we study the cooperative determination of the interchange fee by member banks the interchange fee is the access charge paid by the merchants banks the acquirers to cardholders banks the issuers we develop a framework in which banks and merchants may have market power and consumers and merchants decide rationally on whether to buy or accept a payment card after drawing the welfare implications of a cooperative determination of the interchange fee we describe in detail the factors affecting merchant resistance compare cooperative and for profit business models and make a first cut in the analysis of system competition

credit and sharecropping in agrarian societies this paper considers a model of linkage between land labor and credit transactions in the context of sharecropping the paper s objectives are a to derive and characterize the equilibrium in a model of a land scarce labour abundant economy under sharecropping given an infinitely elastic supply of identical sharecroppers at a reservation utility and b to demonstrate that in an imperfect market a landlord may offer credit to his tenant sometimes even at a subsidized rate of interest without necessarily insisting that the sharecropper borrow only from him precluding an involuntary linkage between credit and land transations it has been demonstrated that regardless of the presence or absence of linkage or any other control by the landlord as long as he can vary the size of the plot given to a tenant and there are enough potential tenants in equilibrium contracts a tenants utility under sharecropping will be the same as that which he could have obtained as a full time wage laborer this result implies that policies other than land reform will not affect the welfare of tenants

economic performance through time prize lecture to the memory of alfred nobel december 9 1993 this abstract was borrowed from another version of this item

regional effects of taxes in canada an applied general equilibrium approach this paper reports on an applied general equilibrium regional model for canada which is used to investigate the regional effects of taxes earlier literature on regional tax effects is reviewed and the main features of the model are briefly described existing literature on regional tax effects is largely non quantitative and does not discuss several important regional features of taxes such as taxes which are predominantly on products or industries located in particular regions results suggest that regional effects of taxes can be significant and in the canadian case at least do not tend to counterbalance one another in general richer regions tend to lose and poorer regions gain from federal taxes but other regional characteristics such as manufacturing non manufacturing or resource non resource can be important this abstract was borrowed from another version of this item

using cost observation to regulate firms the paper emphasizes the use of accounting data in regulatory or procurement contracts when the supplier 1 has superior information about the cost of the project and 2 invests in cost reduction the main result states that under risk neutrality the supplier announces an expected cost and is given an incentive contract linear in cost overruns this optimal contract moves toward a fixed price contract as the announced cost decreases an investment choice is then introduced and the use of a rate of return regulation is studied

assessing consumer benefits in the ontario residential retail natural gas market ontario residential retail natural gas market why marketer entry did not help abstract when the institutions governing transactions in the energy sector changed in canada thirty years ago the changes were heralded as pro competitive for natural gas markets and subsequently authorities and some stakeholders have suggested that households would benefit from gas commodity marketer entry using an analysis of the institutions together with a model of the cost pass through regulatory process i show that households as a group would not benefit from purchasing the gas commodity from unregulated commodity marketers rather than buying it bundled with delivery from the regulated utility i next use monthly price data collected from the public web pages of these unregulated sellers to confirm the theoretical prediction depending on the time period five year natural gas contract commodity prices average more than 75 higher than the utility s regulated cost of gas on average over the sample period signing up meant paying over c 400 more for the gas commodity annually the analysis suggests that claims about the effects of policy change should be informed by a careful assessment of the specific institutional arrangements and the new incentives created by institutional evolution

why do europeans work much less it is taxes and government spending i introduction the reason why europeans work less than americans is the subject of intense discussion in recent literature prescott 2004 cardia kozhaya and ruge murcia 2003 and roeger and de fiore 1999 emphasize the negative effects of high taxes in europe other authors like blanchard 2004 and alesina glaeser and sacerdote 2005 point to differences in the desire for leisure cultural differences or differences in unionization and labor market regulations may be at the basis of a higher european taste for leisure freeman and schettkat 2005 explain higher employment in the united states as the result of a much more extensive shift of traditional household production to the market lower taxes on wages and higher degrees of labor market flexibility in the united states may be among the factors that have contributed to this shift there is no doubt that these hypotheses contain relevant elements to account for the employment differences between europe and the united states however they are also incomplete first of all each of these hypotheses will have difficulty explaining employment in the nordic countries countries like sweden norway and denmark also have high taxes which increased during the last decades according to nicoletti and scarpetta 2005 they also combine many of the european labor and product market rigidities yet as we show in table 1 for 19952004 the average employment rate in persons in the nordic countries is about the same as in the united states the employment rate in hours is lower than in the united states but it is still much higher than in the core countries of the euro area or in convergence countries like spain and ireland second these explanations ignore the other side of the performance gap between europe and the united states they neglect per capita growth differences a coherent theory should also be able to explain why in the last decade most of the core countries of the euro area have had lower potential per capita growth than the united states while again several of the nordic countries have performed at least as well as the united states or even better table 1 1 our contribution in this paper is double first we explain not only employment differences between the united states and europe as most of the above mentioned literature does but also employment differences within europe 2 second our explanation also accounts for per capita growth differences a critical explanatory variable in our analysis is the composition of fiscal policy taxes are important but not only taxes the allocation of government spending to productive or nonproductive purposes is at least as important by contrast our results would suggest that any differences in taste for leisure or labor market rigidity are not critical the structure of the paper is as follows in section ii we develop a theoretical model that explains both employment and long run growth within a coherent framework we basically build on seminal work by barro 1990 we show the impact of income taxes transfers in the case of nonemployment and productive government expenditures in section ill we calibrate the model on actual data and compare its predictions with the facts reported in table 1 it should be clear from the outset that we take fiscal policy differences across countries as given we investigate their effects on employment and growth but we do not try to explain why policy differs this approach is not unusual in related literature like roeger and de fiore 1999 cardia kozhaya and ruge murcia 2003 and prescott 2004 section iv concludes the paper anticipating we find that our model explains well employment in the united states is higher than in the core euro area thanks to lower income tax rates and much lower transfers in the case of nonemployment the nordic countries have higher employment than the core euro area mainly thanks to a higher share of productive government expenditures and lower nonemployment transfers

an ex post welfare analysis of natural gas regulation in the industrial sector the current structure of the us natural gas industry is a result of the evolution of regulatory policy over the past three decades which began with the deregulation of natural gas prices at the wellhead ngpa of 1978 and culminated with the deregulation of interstate transportation of natural gas ferc order 636 focusing on the industrial sector this paper estimates the welfare and price effects associated with the changes in regulatory policy overtime actual prices converge towards estimated equilibrium prices consequently deadweight losses diminished an estimated 15 47 billion 2003 dollars of welfare loss had been incurred from 1977 to 2000

choice welfare and development a festschrift in honour of amartya k sen professor amartya sen has been a distinguished and influential scholar in development economics for over twenty years and this edited volume seeks to reflect his interests and the inspiration he has provided for others the editors have succeeded in creating a coherent and stimulating set of papers from well known contributors the volume deals with the enduring themes of amartya sen s work ranging through theoretical issues of development economics to the philosophical foundation of welfare systems and ethics in society contributors kenneth arrow a b atkinson pranab bardhan j l coles rajat deb jean dreze louis gevers peter hammond ravi kanbur eric maskin robert nozick siddiq osmani martin ravallion kevin roberts robert solow s wibaut

potential impacts of the proposed west african monetary zone on cowpea trade member countries of the economic community of west african states ecowas are expected to form a west african monetary zone wamz by december 2009 whereby members would use a common currency in an attempt to promote regional integration evidence suggests that reduction in transaction cost as a result of a decrease or elimination of nontariff barriers ntbs and real interest rates in response to elimination of exchange rate differentials positively influence trade the objective of this study is to quantify the effects of a a 7 real interest rate on capital and b zero ntbs within ecowas countries on cowpea vigna unguiculata l walp trade to provide a measure of the potential impacts of the wamz on grain trade the study applies a spatial and temporal price equilibrium model formulated in a mixed complementary programming mcp framework and solved using gams path the focus is on the nigerian cowpea grainshed ncg comprising benin burkina faso cote d ivoire ghana mali niger nigeria and togo in ecowas and cameroon chad and gabon in the central african economic and monetary community caemc the results show that if wamz results in reduced real interest rates within ecowas the larger of the two monetary unions consumers in the relatively larger coastal economies and producers in the smaller sahelian economies would benefit while all others lose however net social welfare would increase by 0 19 over the base case of 6 3 billion us bus removing ntbs among countries in the larger trading bloc may alter the pattern of cowpea flows with total trade volume increasing by 3 but inter bloc trade decreasing by about 8 the net total regional social welfare would increase by 0 14 or 15 million us mus benefiting only consumers in importing countries and producers in exporting countries the results emphasize the importance of specialization based on regional comparative advantage but also draw attention to the need to devise ways to ensure acceptable welfare distribution among producers and consumers in line with policy objectives of the individual countries within the proposed wamz finally this article contributes to the literature on the application of spatial and temporal models incorporating both ad valorem tariffs and differential interest rates in developing economies

market failures and public policy industrial organization studies the exercise and control of market power to this purpose it builds models that capture the essence of the situation the predictions of the model can then be tested econometrically and possibly in the lab or the field in the end the reasonableness of and robustness to modeling assumptions and the quality of empirical fit determine how confident economists are in making recommendations to public decision makers for intervention and to companies for the design of their business model industrial organization has a long tradition first theoretical with the work of french engineer economists antoine augustin cournot 1838 and jules dupuit 1844 then policy oriented with the enactment of the sherman act 1890 and subsequent legislation then descriptive with the studies of the harvard school structure conduct performance comforting and refining the antitrust drive and finally skeptical with the chicago school the chicago school correctly pointed out the lack of underlying theoretical doctrine and went on to cast doubt on the whole edifice it however did not develop an alternative antitrust doctrine perhaps because

network interconnection in telecommunications this paper discusses industries such as telecommunications where firms each have their own customers and must interconnect with other firms to provide a comprehensive service two scenarios are considered i the case of a symmetric unregulated industry and ii the case of an industry with a dominant regulated incumbent in the first provided there is sufficient product differentiation it is shown that firms agree to set interconnection charges above associated costs in order to obtain the joint profit maximising outcome in the second a formula for the welfare maximizing interconnection charge is derived relations with the efficient component pricing rule are discussed

network competition i overview and nondiscriminatory pricing we develop a model of unregulated competition between interconnected networks and analyze the mature and transition phases of the industry in this deregulated environ ment networks pay negotiated or regulated access charges to each other and com pete in prices for customers we show that a competitive equilibrium may fail to exist for large access charges or for large network substitutability and that freely negotiated access charges may prevent effective competition in the mature phase of the industry and erect barriers to entry in the transition toward competition last we examine the meaning and impact of policies such as the efficient component pricing rule

debt in rural south india fragmentation social regulation and discrimination this micro level study combines multivariate and qualitative analyses to highlight the fragmented nature of debt in southern indian rural households it finds that debt is socially regulated in the sense that social interactions shape the cost use and access to debt caste social class and location affect how individuals borrow varying amounts from distinct money providers for varied purposes and at differing costs debt thus is not purely an economic but first and foremost a social transaction which inscribes debtors and creditors into local systems of hierarchies furthermore we find that debt is an illustration and catalyst of broader socio economic and political trends namely a lack of social protection persistent under employment and rising consumerism in terms of policy implications the study highlights the ambiguities and illusions inherent to financial inclusion policies aiming to eradicate informal debt

interactions between institutional and informal credit agencies in rural india in an attempt to expand rural credit and displace the village moneylender india created a system of rural cooperatives in the 1950s and expanded branch banking into rural areas in the 1970s this article examines how these measures affected the rural market it begins with the question of how large the expansion of institutional credit has been and the extent to which it has dislodged the village and nonresident moneylenders a detailed comparison of three major surveys of the indian rural credit market suggests that in various guises the moneylender is still a major source of loans the article also examines the weak evidence on intermediation between the formal and informal sectors a formal model of the interaction between the informal moneylender and institutional lender is constructed under a variety of assumptions about the exclusivity of loan contracts and the competitive structure of the informal sector the conclusions are drawn together in the form of five proposals for public policy

public expenditures and the unemployment rate in the american states panel evidence we reexamine the unemployment rate ur government expenditure nexus in a panel of 50 state and local governments slgs over the period 1977 2006 to provide new pre recession empirical evidence that helps put the expectations on the effects of the federal relief to slgs in a broader context we found that 1 per capita real public spending total and capital assistance and subsidies wages and salaries and social insurance categories was part of a cointegrating relationship with ur and real per capita state personal income 2 with the exception of social insurance other spending variables when statistically significant actually had a depressing effect on ur the magnitude of this effect however was generally small ur was most sensitive to increases in wages and salaries 3 long term causality analysis based on panel error correction coefficients provided consistent evidence of a causal effect from spending to ur but less consistent evidence of such effect in the opposite direction soci