some issues in the measurement of comparative advantage this paper examines measurement of revealed comparative advantage in the light of recent evidence that such measures appear to yield poor results and of recent theoretical developments evidence is presented that the poor performance of these measures is not likely to be attributable to problems predominantly associated with measurement itself recent theoretical developments make clearer what can be expected of observed trade flows a measure based on theory s ex antepredictions measures the behaviour of the measure is evaluated for a sample of uk industries in 1979

adverse selection and moral hazard with risk neutral agents abstract this paper surveys some recent developments of the literature on adverse selection and moral hazard in agency problems it is concerned with the case where both aspects coexist and both agents are income risk neutral it shows that in most cases the moral hazard aspect does not entail welfare losses compared to the pure adverse selection case it moreover analyses different ways using a single contract or a family of contracts of deriving the optimal contracts from the optimal pure adverse selection solution

playing games in the forest state local conflicts of land appropriation this paper explores possible strategic interactions between the state and local community in games of tropical forestland appropriation three typical cases are discussed corresponding to a development over time of increased resource competition and market integration the local response to more state deforestation depends on the costs market and behavioral assumptions and less on the structure of the game cournot or stackelberg the state fuels local deforestation by providing infrastructure roads which reduces the net costs of agricultural expansion or when markets are imperfect and local behavior determined by survival needs the game structure is however important for total deforestation this paper explores possible strategic interactions between the state and local community in games of tropical forestland appropriation three typical cases are discussed corresponding to a development over time of increased resource competition and market integration the local response to more state deforestation depends on the costs market and behavioral assumptions and less on the structure of the game cournot or stackelberg the state fuels local deforestation by providing infrastructure roads which reduces the net costs of agricultural expansion or when markets are imperfect and local behavior determined by survival needs the game structure is however important for total deforestation

coordination problems in local level resource management starting from the observation of important returns to scale effects in conservation of common property resources we identify some of the factors that impinge upon the chances of success of a decentralized group based management of local natural resources particular attention is paid to the influence of asset inequality among resource users in particular it is shown that by redistributing incentives among landowners land reform has an ambiguous impact on the latter s willingness to undertake conservation investments

designing payments for environmental services in theory and practice an overview of the issues abstract payments for environmental services pes have attracted increasing interest as a mechanism to translate external non market values of the environment into real financial incentives for local actors to provide environmental services es in this introductory paper we set the stage for the rest of this special issue of ecological economics by reviewing the main issues arising in pes design and implementation and discussing these in the light of environmental economics we start with a discussion of pes definition and scope we proceed to review some of the principal dimensions and design characteristics of pes programs and then analyze how pes compares to alternative policy instruments finally we examine in detail two important aspects of pes programs their effectiveness and their distributional implications pes is not a silver bullet that can be used to address any environmental problem but a tool tailored to address a specific set of problems those in which ecosystems are mismanaged because many of their benefits are externalities from the perspective of ecosystem managers pes is based on the beneficiary pays rather than the polluter pays principle and as such is attractive in settings where es providers are poor marginalized landholders or powerful groups of actors an important distinction within pes is between user financed pes in which the buyers are the users of the es and government financed pes in which the buyers are others typically the government acting on behalf of es users in practice pes programs differ in the type and scale of es demand the payment source the type of activity paid for the performance measure used as well as the payment mode and amount the effectiveness and efficiency of pes depends crucially on program design

common property institutions and sustainable governance of resources abstract the literature on common property based resource management comprises many important studies that seek to specify the conditions under which groups of users will self organize and sustainably govern resources upon which they depend using three of the more comprehensive such studies and with an extensive review of writings on the commons this paper demonstrates that the enterprise of generating lists of conditions under which commons are governed sustainably is a flawed and impossibly costly research task for a way out the paper examines the relative merits of statistical comparative and case study approaches to studying the commons it ends with a plea for careful research design and sample selection construction of causal mechanisms and a shift toward comparative and statistical rather than single case analyses such steps are necessary for a coherent empirically relevant theory of the commons

push or pull performance pay incentives and information we study a principal agent model wherein the agent is better informed of the prospects of the project and the project requires both an observable and unobservable input we show 1 performance pay may not be optimal even if output is the only informative signal of an essential input 2 total surplus tends to be higher if one input is unobservable than if both inputs are observable and 3 bunching may arise amongst low and intermediate types we explore the implications for push and pull programs used to encourage r d activity but our results have applications beyond this context

complementarities of trade advantage and trade competitiveness measures the complementarities of trade advantage and trade competitiveness measures for agro food trade of five central european ce 5 countries with the european union are analysed the stability and duration of the trade measures over time is investigated by the survival analysis using the nonparametric kaplan meier product limit estimator and the consistency test between the trade measures is conducted by the stratified cox proportional hazard model the ce 5 countries experienced a greater number of products with relative trade disadvantages and greater significance of one way imports unlike the czech republic poland slovakia and slovenia hungary experienced relative trade advantages rtas for bulk raw commodities processed intermediates and horticulture with the greatest significance of successful quality competition and one way exports and the lowest significance of unsuccessful price and unsuccessful quality competition the duration of rtas is longer than the duration for the successful trade co

on the endogeneity of resource comanagement theory and evidence from indonesia we examine theoretically the emergence of participatory comanagement agreements that share between state and user the management of resources and the benefits from use going beyond user user interactions our state user model addresses a critical question when will comanagement arise in order to consider the right baseline for evaluating comanagement s forest and welfare impacts we then compare our model s hypotheses concerning de facto rights negotiated agreements and transfers all endogenous with community level data including observed agreements in a protected indonesian forest these unique data could refute the model despite being limited but instead offer support

noisy observation in adverse selection models we consider a principal agent contracting problem under incomplete information where some of the agent s actions are imperfectly observable contracts take the form of reward schedules based on the noisy observation of the agent s action we first review situations where the principal can reach the same utility as in the absence of noise then we focus on the use of linear reward schedules which allow universal implementation i e implementation of a given mechanism for any unbiased noise of observation and on quadratic reward schedules which only require the knowledge of the variance of the noise we exhibit sufficient conditions under which linear reward schedules implement a given mechanism finally we characterize necessary conditions for a mechanism to be implementable under noisy observation by a linear schedule and by quadratic schedules we give the geometric intuition behind all results

complexities of decentralization in a globalizing world in many developing countries decentralization programmes for natural resource management aim to induce incentives for sustainable resource management at the local level the effectiveness of such programmes has however suffered from weak property rights to the resource and by the presence of externalities growing economic integration among countries has exacerbated these problems by increasing the exposure of local user groups to commercial actors interested in resource extraction in this paper the interplay of decentralization and globalization in affecting environmental outcomes and community welfare is analysed through a game theoretic model of community firm interactions the results highlight the complexities of policy design first by raising the extractive value of the resource globalization may lead to communities negotiating resource extraction agreements with firms second with a lack of effective state enforcement of community resource rights communities may be unable to assume de facto ownership over the resource while commercial actors succeed in exploiting resources without community consent no single policy option provides a panacea to counteracting these negative effects instead a mix of policies combining incentive payments along with the provision of more secure property rights and poverty alleviation is shown to have the potential to improve both environmental outcomes and community welfare

a unique informationally efficient allocation mechanism in economies with consumption externalities this article investigates the informational requirements of resource allocation processes in pure exchange economies with consumption externalities it is shown that the distributive lindahl mechanism has a minimal informational size of the message space and thus it is informationally the most efficient allocation process that is informationally decentralized and realizes pareto efficient allocations over the class of economies that include nonmalevolent economies furthermore it is shown that the distributive lindahl mechanism is the unique informationally efficient decentralized mechanism that realizes pareto efficient and individually rational allocations over a certain class of nonmalevolent economies

for better or for worse local impacts of the decentralization of indonesia s forest sector this paper quantifies the local impacts of mechanized logging on forest dependent communities in indonesia before and after decentralization a conceptual framework incorporates financial social enforcement rent seeking and environmental impacts using data from 60 communities in east kalimantan the empirical results suggest that significantly more households received financial and in kind benefits after decentralization compared to before many communities engaged in self enforcement activities against firms both before and after decentralization post decentralization a significantly higher proportion of households perceived community forest ownership there were few significant differences in perceived environmental impacts little evidence exists of a post decentralization trade off between environmental and financial contractual provisions

land tenure and property rights theory and implications for development policy this article explores the nature of property rights systems their evolution and their effect on resource allocation it is argued that certain institutional arrangements for land rights have evolved in order to reduce uncertainty and increase efficiency in credit as well as in land markets of particular relevance to developing countries the article emphasizes the contribution of public sector infrastructure to effective land rights systems an appendix to the article presents a formal model analyzing the effects of security of land rights on land prices the intensity of cultivation and the use of credit empirical evidence from thailand supports several of the propositions derived from the model

empirical relevance of the hillman condition for revealed comparative advantage 10 stylized facts the theoretically necessary and sufficient condition for the correspondence between revealed comparative advantage and pre trade relative prices derived by hillman 1980 is analysed empirically for virtually all countries of the world over an extended period of time this yields 10 stylized facts including that i violations of the hillman condition are small as a share of the number of observations but substantial as a share of the value of world exports ii violations occur relatively frequently in the period 1970 1984 and more rarely in the period 1985 1997 and iii violations occur foremost in primary product and natural resource intensive sectors and for countries in africa the middle east latin america and central and eastern europe an additional bonus of verifying the hillman condition in empirical research is its ability to identify erroneously classified trade flows

governance institutions resource rights regimes and the informal mining sector regulatory complexities in indonesia summary this study examines how shifting resource governance regimes affect labor inequities in the small scale mining sector in indonesia it focuses on the implications of governance decentralization processes and mining regulation reforms for indigenous and migrant populations who rely on informal unlicensed mining for income in central kalimantan while the findings illustrate the territorially uneven impacts of recent reforms they highlight how dominant paradigms that prioritize the enforcement of property rights schemes have contributed to problems of livelihood insecurity and poor environmental governance the article urges for more nuanced attention to contested articulations of power as well as local resource rights and institutional arrangements to assist rural communities in reversing marginalization

symposium on management of local commons in the public image of industrially advanced countries the commons problem relates to global warming acid rain depletion of the ozone layer and the like in the developing countries the daily livelihood of the poor depends more substantially and directly on the local commons irrigation forestry grazing in shore fisheries and so on these restricted access common property resources usually involve small local communities which opens the possibility for local level community organizations to manage resources and resolve conflicts as an alternative to the polar opposites of private and state control which usually hog the limelight in public policy discussion in fact many developing countries have a long history of balanced resource management under highly informal local community institutions in these countries the erosion of the local commons set in only with major demographic and institutional changes in recent years often accelerated by private commercialization or bureaucratic appropriation of the traditional historical rights of local communities over these resources

on the design of incentive schemes under moral hazard and adverse selection abstract this paper characterizes a class of optimal incentive schemes in a simple principal agent model which allows for moral hazard and adverse selection we show that incentive compatible allocation can always be approximately implemented through a menu of quadratic incentive schemes it is also proved that the set of incentive compatible allocations is independent of the distribution of the additive uncertainty which affects the outcome informational requirements and economic interpretation of quadratic and linear schemes are discussed

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

multiproduct nonlinear pricing typically work on mechanism design has assumed that all private information can be captured in a single scalar variable this paper explores one way in which this assumption can be relaxed in the context of the multiproduct nonlinear pricing problem it is shown that the firm will choose to exclude some low value consumers from all markets a class of cases that allow explicit solution is derived by making use of a multivariate form of integration by parts in such cases the optimal tariff is cost based

community industry contracting over natural resource use in a context of weak property rights the case of indonesia decentralization in indonesia has resulted in an increased influence of local communities over the terms of logging agreements with timber companies the outcomes of such community company negotiations vary significantly across communities what are the conditions that cause this variation and how can the outcomes be more effectively and efficiently influenced by third party actors such as the local government or ngos this paper addresses these questions by developing a game theoretic model to illustrate the strategic interactions between communities and companies the model allows for endogeneity of de facto property rights and bargaining positions we show that third party actions to improve the community s bargaining position by raising its reservation utility may result in an increase in the area logged and thereby harm the environment our results indicate that the strategy of intervention matters in particular strategies that raise the sensitivity of interventions to local logging threats are likely to be more cost effective in supporting communities and reducing forest degradation than more indiscriminatory strategies the model will be relevant to other situations where communities negotiate contracts over natural resource use with outside actors in a context of weak property rights a situation increasingly observed in other developing countries

consistency tests of alternative measures of comparative advantage the commodity pattern of comparative advantage across countries is a central concept in international trade theory since the concept is based upon autarkic prices which are not observable in post trade equilibria its use in empirical research is most difficult the literature reports numerous alternative indices that purport to measure comparative advantage this paper examines the extent to which various measures are consistent using a large sample of trade flows the results have important implication for judging empirical studies based upon particular choices of a measure for comparative advantage

locational advantage and us foreign direct investment in uk manufacturing the relationship between foreign direct investment fdi and international trade is examined with specific reference to us fdi in the uk four complementary hypotheses are tested on a cross section of uk industries there is evidence of us fdi being located in uk industries which have a revealed comparative advantage and that large market size effects are important on the other hand little evidence was found for the protection jumping and industrial concentration hypotheses

multi task incentive contract and performance measurement with multidimensional types abstract this paper provides a new explanation for the dominance of the low powered incentive contract over the high powered incentive contract using a hybrid model of moral hazard and adverse selection we first show that unobservable risk aversion or cost leads to low powered incentives we then consider the case where both risk aversion and cost of the agent are unobservable to the principal this multidimensional mechanism design problem is solved under two assumptions with regard to the structures of performance measurement system and wage contract it is shown that if the deterministic and stochastic components of performance measures vary proportionally the principal is inclined to provide a low powered incentive contract moreover it is shown that if the base wage depends on a quadratic function rather than the direction of the performance wage vector no incentive is provided for most of the performance measures in an orthogonal performance measurement system