the effects of hospitals governance on optimal contracts bargaining vs contracting we propose a two stage model to study the impact of different hospitals governance frameworks on the optimal contracts designed by third party payers when patients disease severity is the private information of the hospital in the second stage doctors and managers interact within either a bargaining or a contracting scenario in the contracting scenario managers offer a contract that determines the payment to doctors and doctors decide how many patients to treat in the bargaining scenario doctors and managers strategically negotiate on both the payment to doctors and the number of patients to treat we derive the equilibrium doctors payments and number of treated patients under both scenarios we then derive the optimal contract offered by the government to the hospital in the first stage results show that when the cost of capital is sufficiently low the informational rent is lower and the social welfare is higher in the contracting scenario

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

distributed photovoltaic power generation possibilities benefits and challenges for a widespread application in the mexican residential sector mexico plans to implement a national program to support the adoption of distributed photo voltaic generation dpvg among qualified households the main objectives of such a program would be to reduce the burden of the substantial federal energy subsidy and increase the share of renewable energy sources used to generate electricity in this paper we assess the current conditions under which the mexican residential electricity sector operates and quantify the potential effects that the massive adoption of dpv systems would have on household expenditure and welfare subsidy reduction pollution and water resource usage based on the positive results in terms of both economic and environmental effects our paper provides a significant support for further design and implementation of a dpvg program

energy populism and household welfare we study a cycle of subsidized energy prices and estimate its welfare impact on households in the buenos aires metropolitan region a simple framework explains its emergence in terms of the preference of a median household voter for receiving transfer gains followed by a future flow of transfer losses we evaluate actual transfers and welfare effects that a departure of prices of natural gas and electricity generation from opportunity costs since 2003 had on households and explore the impact of a way back to opportunity cost pricing

purchasing health care services from providers with unknown altruism cost sharing rules for paying physicians have been advanced as a way of generating incentives for the provision of quality care while recognizing their potential negative effects on production efficiency however the optimal sharing rate typically depends on the degree to which the physician acts in the interest of the patient what we identify as the physician s altruism since the degree of altruism is likely to vary across physicians and to be private information the standard rules for setting the cost sharing rate are unlikely to be optimal this paper derives conditions for the optimal non linear cost sharing mechanism in the presence of asymmetric information about altruism and shows how it can sometimes be implemented through a menu of linear cost sharing schemes the model can be used to rationalize the design of the fund holder system for general practictioners that operated in the 1990s in the united kingdom

the distributional impact of price changes in hungary and the united kingdom in soviet type economies commodity prices were distorted as part of the redistributive system of the state but with the transition prices have been liberalized and taxes made more uniform has this change adversely affected the distribution of purchasing power this paper develops a new method of measuring the distributional impact of price changes by computing the distributional characteristics of commodities from household budget survey data and applies it to hungary and the united kingdom finding that the distributional impacts over the past decade were negligible and not significantly different from zero in both cases copyright 1995 by royal economic society

the macroeconomics of populism in latin america by populism this paper refers to an economic approach that emphasizes growth and income redistribution and deemphasizes the risks of inflation and deficit finance external constraints and the reaction of economic agents to aggressive nonmarket policies it analyzes two instances of populism chile under allende and peru under garcia these experiences are described in detail not as a righteous assertion of conservative economics but as a warning that populist policies ultimately fail and always at a frightening cost to the groups they were supposed to benefit this paper explores the question of whether some variant of populist policies could succeed it suggests that populist policies could succeed if they stayed clear of foreign exchange constraints emphasized reactivation for a brief initial period and then shifted to growth policies most important expansionary policies must reflect awareness of capacity constraints and must rely for financing on an extremely orthodox fiscal policy and rigorous tax adminsitration the paper concludes by warning that imf style policies unconcerned with growth of social progress may establish financial stability in the short run but inevitably open the door to yet another round of destructive reaction in the form of populist policies

social security and wealth accumulation in developing economies evidence from the 1981 chilean reform summary wealth holdings are particularly important in developing economies as they allow individuals to insure themselves against income shocks in the absence of developed financial markets in this paper we test whether the existence of future social security benefits impacts wealth holdings by using the 1981 chilean social security reform our estimates are based on the eps 2004 which contains detailed data on wealth holdings assets and liabilities and social security account balances by means of different econometric methods we find no impact of social security on wealth accumulation with the exception of poorer individuals in that case each additional peso in social security wealth depresses other types of wealth by almost 0 1 pesos mainly in regard to real estate 2008 elsevier ltd all rights reserved

social security and household wealth accumulation refined microeconometric evidence this study examines the relationship between social security wealth and fungible wealth using relatively recent micro data the authors find that a ceteris paribus increase in social security wealth has no effect on fungible wealth suggesting that ricardian equivalence holds of the individual wealth categories comprising fungible wealth only pension wealth is negatively and significantly affected by an increase in social security wealth and if some of this pension wealth is not fully funded ricardian equivalence will not hold the authors conclude therefore that the social security system might adversely affect capital accumulation but not necessarily to the degree suggested by others copyright 1993 by mit press

power in a theory of the firm transactions take place in the firm rather than in the market because the firm offers power to agents who make specific investments past literature emphasizes the allocation of ownership as the primary mechanism by which the firm does this within the contractibility assumptions of this literature we identify a potentially superior mechanism the regulation of access to critical resources access can be better than ownership because i the power agents get from access is more contingent on their making the right investment and ii ownership has adverse effects on the incentive to specialize the theory explains the importance of internal organization and third party ownership

contracting for health services when patient demand does not reflect quality this paper analyses contracts to keep down costs while maintaining quality of health services when patient demand does not reflect quality there is then a natural role for forms of contract that have emerged during the reforms of the nhs in britain that differ from pure fixed price or cost reimbursement contracts the optimal form depends on whether the provider is entirely self interested or benevolent in having genuine concern for patient welfare with fully benevolent providers there are roles for block and cost and volume contracts with partially benevolent providers some degree of cost sharing is typically optimal

medical care costs how much welfare loss hardly a week goes by without a front page newspaper article on rising health care costs and the uninsured in this article i focus mainly on costs arguing that the issue has been somewhat misconceived while the level of medical care spending in the u s is a cause for concern the welfare losses associated with rises in that level of spending may not be as large as the public rhetoric can make them seem in fact cost containment may not be as urgent as is widely supposed and some proposed cost containment policies may result in welfare losses for the insured and even increase the number of uninsured

aggregate consumption function and public social security the first time series study for a developing country turkey this article is the first attempt in the literature to investigate the effects of public social security on aggregate consumption in a time series setting for a developing country turkey that has one of the most generous social security systems in the organization for economic cooperation and development oecd region in order to quantify the social security variable this article uses the social security wealth ssw series calculated for turkey in a separate study this study indicates that ssw is the largest part of the household wealth in turkey and therefore should not be ignored in the aggregate consumption studies the results show that its effect on consumption is positive and robust

life cycle individual thrift and the wealth of nations this paper provides a review of the theory of the determinants of individual and national thrift that has come to be known as the life cycle hypothesis lch of saving applications to some current policy issues are also discussed part i deals with the state of the art on the eve of the formulation of the lch some 30 years ago part ii sets forth the theoretical foundations of the model in its original formulation and later amendment calling attention to various implications distinctive to it and sometimes counter intuitive it also includes a review of a number of crucial empirical tests both at the individual and the aggregate level part iii reviews some applications of lch to current policy issues though only in sketchy fashion as space constraints prevent fuller discussion this abstract was borrowed from another version of this item

contracting with externalities and outside options this paper proposes a model of multilateral contracting where players are engaged in two parallel interactions they dynamically form coalitions and play a repeated normal form game with temporary and permanent decisions we show that when outside options are independent of the actions of other players all markov perfect equilibrium without coordination failures are efficient regardless of externalities created by interim actions otherwise in the presence of externalities on outside options all markov perfect equilibrium may be inefficient this formulation encompasses many economic models and we analyze the distribution of coalitional gains and the dynamics of coalition formation in four illustrative applications

cost sharing in health service provision an empirical assessment of cost savings fixed price payments for treatment of patients with a specified diagnosis are widespread in both us medicare and the british nhs even though there are substantial variations in the cost of treatment theory suggests that when there is asymmetric information about those costs total payment can be reduced by cost sharing this paper uses data from medicare to assess the cost savings that might be feasible in practice from cost sharing for diagnosis related groups with low cost variation the calculated cost savings are approximately 7 for those with high cost variation the calculated cost savings are more than 60

the theory of reform and indian indirect taxes abstract given a set of value judgements an initial state and a model of the economy one can ask whether some feasible tax change would increase welfare we do this by defining the marginal cost in terms of welfare of raising an extra rupee from the i th good the inverse optimum problem is the calculation of non negative welfare weights on households which imply that the initial state is optimum if no such welfare weights exist then a pareto improvement is possible we illustrate the concepts and results using data from the indian economy for 1979 1980 directions of tax reform for a number of specific social welfare functions and for pareto improvements are presented

a political theory of populism when voters fear that politicians may have a right wing bias or that they may be in uenced or corrupted by the rich elite signals of true left wing conviction are valuable as a consequence even a moderate politician seeking reelection chooses populist policies i e policies to the left of the median voter as a way of signaling that he is not from the right truly right wing politicians respond by choosing more moderate or even left of center policies this populist bias of policy is greater when the value of remaining in o ce is higher for the politician when there is greater polarization between the policy preferences of the median voter and right wing politicians when politicians are indeed more likely to have a hidden right wing agenda when there is an intermediate amount of noise in the information that voters receive when politicians are more forward looking and when there is greater uncertainty about the type of the incumbent we show that similar results apply when some politicians can be corrupted or in uenced through other non electoral means by the rich elite we also show that soft term limits may exacerbate rather than reduce the populist bias of policies

engel curves household characteristics and low user tariff schemes in natural gas abstract we explore the relative importance of income and household characteristics such as family size in explaining differences in household consumption of natural gas and lpg in a simple model of vertically willingness to pay ordered households we posit that the relative importance of the income elasticity of demand vs the family size elasticity depends positively on the price faced by households thus very low prices tend to depress the across households income elasticity of demand relative to the characteristic elasticity and the opposite holds for under high prices we test this hypothesis using for the first time in argentina data from the household expenditure survey on natural gas and lpg and compare the cross consumption equations for both fuels which have quite different price regimes finally we explore welfare implications for low user tariff scheme reforms in natural gas

bargaining over a menu of wage contracts we investigate an infinite horizon bargaining problem in which a firm and a worker bargain over two dimensions quality and wage the worker has private information about his type only the uninformed firm makes an offer and it can offer a menu of quality wage contracts instead of single one we show that for all discount factors the unique sequential equilibrium outcome is separating without delay the firm separates the types of worker with a menu of contracts in the first period our result shows that in multi dimensional bargaining the coase conjecture holds in the sense that the game ends in the first period but it fails in the sense that the uninformed party can preserve the entire bargaining power

is health care really a luxury much of the work which has led to a widely held view that the income elasticity of health care spending exceeds one has been based on international cross section data or on pooled cross sections and time series in this paper we re examine this view in the context of long run equilibrium relationships between non stationary time series possibly including autonomous trends our results cast doubt upon the usefulness of pooling and upon the notion of an elasticity above one

government debt government spending and private sector behavior a current period tax reduction financed by issuing government debt shifts the timing of tax collection from the current period to the future if the future taxes implied by government debt are not fully perceived and discounted by the private sector there will be a net wealth effect that increases private sector consumption thus reducing capital accumulation and growth if on the other hand the implied future taxes are perceived and discounted by the private sector the current period tax reduction will be used to increase private saving to pay for the future taxes and government debt will be absorbed without any real effects on the economy the effects of government spending financed by current period taxation also depend upon private sector perceptions 2 if the benefits of government spending are ignored private sector consumption will decrease in accordance with the reduction in permanent disposable income to the extent that government spending is on consumption type goods that are perceived as substitutes for privately provided consumption goods there will be a relatively greater reduction in private sector consumption to the extent that government spending is on investment type goods yielding future goods and services that are perceived as substitutes for future privately provided consumption goods there will be a relatively smaller reduction in private sector consumption the standard approach to modeling private sector consumption saving behavior involves a rather asymmetric set of assumptions as to how the private sector perceives the various elements of government fiscal policy 3 current period taxes are assumed to be fully perceived but current period government spending is implicitly assumed to be completely ignored by the private sector in considering permanent personal disposable income the private sector is assumed to be forward looking in its assessment of income and taxation the stock of government debt is nevertheless included as part of the stock of private wealth the implicit assumption associate professor of economics graduate school of business university of chicago 1101 east 58th street chicago il 60637 i thank eugene fama levis kochin michael mussa paul evans and an anonymous referee for helpful comments i am particularly grateful to daniel benjamin for contributing many hours of discussion and laura lahaye who was a research assistant and valuable adviser on earlier drafts the theoretical debate on the burden of the debt has been long standing gerald o driscoll 1977 documents ricardo s nineteenth century position robert barro 1974 reopened the debate by introducing the fundamental issue of intergenerational transfers also discussed in merton miller and charles upton 1974 the empirical side of the debate was initiated by levis kochin s 1974 attempt to test for the effects of deficits on consumption and by martin feldstein s 1974 attempt to test for the effects of social security wealth on consumption other empirical contributions include jess yawitz and laurence meyer 1976 myself 1978 and j earnest tanner 1978 1979 with respect to the effects of government deficits and debt and barro 1978 michael darby 1979 and dean leimer and selig lesnoy 1982 with respect to social security wealth see also interesting recent papers by john seater 1982 who generates detailed tests of the effects of deficits and debt on consumption charles plosser 1982 who explores the effects of government spending and debt shocks on interest rates and feldstein 1982 who attempts tests similar to some in this paper see fn 29 2martin bailey s 1962 1971 development of the effects of government spending on private consumption and aggregate economic activity is the seminal contribution paul david and john scadding 1974 extend bailey s ideas and provide some supporting empirical evidence more recently willem buiter 1977 and myself 1978 developed models based on bailey s earlier work barro 1981 has an interesting paper on related issues see also david aschauer 1982 3the standard approach incorporates fiscal policy through the concept of personal disposable income and by including the stock of government debt as part of personal wealth see for example the empirical specification of albert ando and franco modigliani 1963 which has been the basis of most empirical consumption studies since and feldstein 1974 for one of the more influential papers based on the ando modigliani specification

endogenous formation of coalitions the formation of coalitions is a fundamental problem in game theory by a coalition is meant a group of players e g economic or political agents which decide to act together as one unit relative to the rest of the players this includes the instances of syndicates unions cartels blocks political parties parliamentary coalitions etc we would like to emphasize that forming a coalition does not eliminate the individual players as decision makers in all interactions with the other players coalition members act as one unit it may be useful to think of a representative agent taking their place 2 however this arrangement will continue only as long as each player finds it desirable to act this way further bargaining occurs among the members of each coalition on how to divide what they obtained together thus the existence of coalitions implies that the interactions among the players will be conducted on two levels first among the coalitions and second within each coalition most of the existing models in economics and game theory assume that the coalition structure is given exogenously instead we try here to obtain it as an endogenous outcome of our model namely we want to be able to predict which coalitions will in fact form in each given situation 3 our theory combines two kinds of game theoretic concepts value and stability the basic idea is first to evaluate the players prospects in the various coalition structures and then based on these values to find which ones are stable we will call this value coalition structure value or cs value for short the reason we are considering coalition structures i e partitions of the set of players into disjoint coalitions rather than just coalitions is that in general players may find it to their advantage to join forces in some situations and to act separately in others all depending on the way the other participants are organized this implies that both the value and the stability concepts should depend on the entire coalition structure the cs value we analyze in this paper was first developed by owen 7

hospital quality choice and market structure in a regulated duopoly this paper analyzes the optimal structure of a regulated health care industry in a model in which the regulator cannot enforce what hospitals do unverifiable quality of health or does not know what hospitals know incomplete information about production costs or both we show that if quality is unverifiable the choice between monopoly and duopoly does not change with respect to the verifiable case but if there are fixed costs assumed to be quality dependent and the monopoly is the optimal market structure the quality level of the operative hospital decreases asymmetry of information introduces informational rents that can be reduced by increasing the most efficient hospital s market share a monopoly is chosen more often

the long run macroeconomic impacts of fuel subsidies abstract many developing and emerging market countries have subsidies on fuel products using a small open economy model with a non traded sector i show how these subsidies impact the steady state levels of macroeconomic aggregates such as consumption labor supply and aggregate welfare these subsidies can lead to crowding out of non oil consumption inefficient inter sectoral allocations of labor and other distortions in macroeconomic variables across steady states aggregate welfare is reduced by these subsidies this result holds for a country with no oil production and for a net exporter of oil the distortions in relative prices introduced by the subsidy create most of the welfare losses how the subsidy is financed is of secondary importance aggregate welfare is significantly higher if the subsidies are replaced by lump sum transfers of equal value

the effect of peru s cdm investments on households welfare an econometric approach abstract the clean development mechanism cdm under the kyoto protocol has two main objectives reducing emissions of greenhouse gases ghgs and contributing to sustainable development sd in developing countries the empirical evidence indicates that the first goal has been fulfilled however the literature mostly provides ex ante evidence regarding the second goal this paper contributes to the literature by assessing the ex post quantitative effect that cdm projects have had on sd employment and monetary welfare in peru a country ranked among the most important cdm investment host countries worldwide the econometric model estimates the direct and indirect effects of the cdm projects investments on peruvian households monetary welfare for 2011 2015 our results suggest that cdm investments had a slight effect on household consumption expenditure and had no effect neither on employment nor in poverty alleviation our findings suggest the need to strengthen cdm s institutional framework by identifying key development definitions and indicators

distributional effects of reducing energy subsidies evidence from recent policy reform in argentina abstract we analyze the distributional effects of the reduction in energy subsidies in argentina since 2016 as the policy reform also includes the introduction of a scheme to protect less well off families social tariff we also review how well the targeting mechanism works we apply traditional benefit incidence analysis using household surveys and administrative data focusing on residential subsidies to piped natural gas and electricity in the buenos aires metropolitan area we find that the social tariff is relatively pro poor with significantly higher coverage among the poorest households there are some exclusion errors in the low income deciles and large inclusion errors in the medium and high income deciles the distributive incidence of subsidies does not appear to have changed substantially energy subsidies in argentina albeit lower in aggregate terms continue to be although progressive pro rich this is in large part due to the prevalence of the general flat subsidy rate mechanism over the social tariff mechanism regarding energy budget shares monthly spending on electricity has increased from 1 1 of total household income to 3 4 monthly spending on piped natural gas rose from 1 3 to 3 3 these shares are in line with many other countries in the region naturally there has been a convergence of tariffs towards service provision costs which becomes central in order to incentive sectoral investment and stimulate a good provision of services

moonlighting public service and private practice we study job incentives in moonlighting when public service physicians may refer patients to their private practices some doctors in the public system are dedicated and behave sincerely but others the moonlighters are utility maximizers allowing moonlighting always enhances aggregate consumer welfare but equilibrium public care quality may increase or decrease if quality increases moonlighting improves each consumer s expected utility unregulated moonlighting may reduce consumer welfare as a result of adverse behavioral reactions such as moonlighters shirking more and dedicated doctors abandoning their sincere behavior price regulation in the private market limits such adverse behaviors in the public system and improves consumer welfare

regulating a monopolist with unknown costs we consider the problem of how to regulate a monopolistic firm whose costs are unknown to the regulator the regulator s objective is to maximize a linear social welfare function of the consumers surplus and the firm s profit in the optimal regulatory policy prices and subsidies are designed as functions of the firm s cost report so that expected social welfare is maximized subject to the constraints that the firm has nonnegative profit and has no incentive to misrepresent its costs we explicitly derive the optimal policy and analyze its properties in their classic papers dupuit 2 and hotelling 5 considered pricing policies for a bridge that had a fixed cost of construction and zero marginal cost they demonstrated that the pricing policy that maximizes consumer well being is to set price equal to marginal cost and to provide a subsidy to the supplier equal to the fixed cost so that a firm would be willing to provide the bridge this first best solution is based on a number of informational assumptions first the demand function is assumed to be known to both the regulator and to the firm while the assumption of complete information may be too strong the assumption that information about demand is as available to the regulator as it is to the firm does not seem unnatural a second informational assumption is that the regulator has complete information about the cost of the firm or at least has the same information about cost as does the firm this assumption is unlikely to be met in reality since the firm would be expected to have better information about costs than would the regulator as weitzman has stated an essential feature of the regulatory environment i am trying to describe is uncertainty about the exact specification of each firm s cost function in most cases even the managers and engineers most closely associated with production will be unable to precisely specify beforehand the cheapest way to generate various hypothetical output levels because they are yet removed from the production process the regulators are likely to be vaguer still about a firm s cost function 12 p 684 as this observation suggests it is natural to expect that a firm would have better information regarding its costs than would a regulator the purpose of this paper is to develop an optimal regulatory policy for the case in which the regulator does not know the costs of the firm one strategy that a regulator could use in the absence of full information about costs is to give the firm the title to the total social surplus and to delegate the pricing decision to the firm in pursuing its own interests which would then be to maximize the total social surplus the firm would adopt the same marginal cost pricing strategy that the regulator would have imposed if the regulator had