exclusive contracts and protection of investments we consider the effect of a renegotiable exclusive contract restricting a buyer to purchase from only one seller on the levels of noncontractible investments undertaken in their relationship contrary to some informal claims in the literature we find that exclusivity has no effect when all investments are fully specific to the relationship i e are purely internal exclusivity does matter when investments affect the value of the buyer s trade with other sellers i e have external effects we examine the effects of exclusivity on investments and aggregate welfare and the private incentives of the buyer seller coalition to use it

the effect of experience and quantity based pricing on the valuation of a curbside recycling program abstract quantity based pricing for garbage collection services and recycling programs are becoming increasingly popular methods of meeting municipal solid waste diversion objectives this article investigates household willingness to pay wtp for a pilot curbside recycling program crp in the presence of a quantity based pricing scheme for garbage collection services which allows a household to alter their garbage container size at a reduced price unlike previous studies that have modeled the simultaneity of these household decisions as a two step process we jointly estimate the household s intentions using a full information maximum likelihood fiml approach our results show a strong positive correlation between a household s wtp for a crp and its stated intention to reduce its garbage container size when a crp is offered the positive correlation suggests that wtp will be higher for households which are more likely to reduce their garbage container size thus in the presence of quantity based pricing a household s wtp for recycling more fully reflects the marginal social costs of garbage disposal

a comparison of contingent preference models i compare the informational efficiencies of contingent rating contingent ranking and two contingent paired comparison methods as alternatives to the referendum contingent valuation method the contingent rating method is hypothesized to be most efficient because ratings convey information on preference intensities and can uniquely represent respondent indifference or ambivalence survey data on hunters ratings of alternative hypothetical hunting trips are used to estimate four alternative indirect utility models from which marginal willingness to pay measures for individual trip attributes are derived model comparison wtp estimates and their confidence intervals confirm the relative efficiency of the contingent rating approach

patenting in the shadow of competitors this article empirically examines the patenting behavior of new biotechnology firms that have different litigation costs i show that firms with high litigation costs are less likely to patent in subclasses with many other awards particularly those of firms with low litigation costs this pattern is consistent with the literature on costly litigation which suggests that firms that have high litigation costs will take greater precautions to avoid litigation these results are robust to a variety of control variables and modifications that seek to test alternative explanations

discrete choice survey experiments a comparison using flexible methods abstract this study investigates the convergent validity of discrete choice contingent valuation cv and contingent rating ranking cr methods using flexible econometric methods our results suggest that cv and cr can produce consistent data achieve convergent validity when respondent s preferred choices and the same changes in environmental quality are considered we also find that cr models that go beyond modeling the preferred choice and include additional ranks cannot be pooled with the cv models accounting for preference heterogeneity via random coefficient models and their flexible structure does not make rejection of the hypothesis of convergent validity less likely but instead rejects the hypothesis to about the same degree or perhaps more frequently than fixed parameter models commonly used in the literature

multiple faces of preferential market access their causes and consequences this paper suggests an integrated approach to study selection into and consequences of five modes of preferential economic integration agreements peias goods trade agreements gtas services trade agreements stas double taxation treaties dtts bilateral investment treaties bits and currency unions as well as currency pegs cuas a detailed descriptive analysis reveals typical integration patterns with dtts and bits often being first steps towards deeper integration we consider the effects of peias on bilateral goods trade services trade and fdi and provide conclusive evidence that single and combined peias are associated with positive effects not only on single outcome but typically on all outcomes investment liberalization through dtts and bits seems to be particularly beneficial since concluding them alone or in any combination with other agreements encourages goods trade even more than the liberalization of goods trade per se peter egger and georg wamser

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

decentralized taxation and the size of government evidence from swiss state and local governments according to the leviathan model fiscal federalism is seen as a binding constraint on a revenue maximizing government the competitive pressure of fiscal federalism is supposed to reduce public sector size as compared to unitary states however empirical results concerning the leviathan hypothesis are mixed this study uses a state and local level panel data set of swiss cantons from 1980 to 1998 to empirically analyze the effect of different federalist institutions on the size and structure of government revenue because of the considerable tax autonomy of sub national swiss governments it is possible to investigate different mechanisms by which fiscal federalism may influence government size the results indicate that tax exporting has a revenue expanding effect whereas tax competition favors a smaller size of government fragmentation has essentially no effect on the size of government revenue for swiss cantons the overall effect of revenue decentralization leads to fewer tax revenue but higher user charges thus revenue decentralization favors a smaller size of government revenue and shifts government revenue from taxes to user charges

the settlement of patent litigation in this article i develop a model to analyze patent licensing that is induced as part of a settlement agreement to avoid litigation of the issue of patent validity the patentee possesses private information about patent validity and makes a take it or leave it settlement offer to a single potential rival an essentially unique sequential equilibrium exists if out of equilibrium beliefs are restricted appropriately the model analyzes the effect of the probability of settlement and litigation

characteristics of patent litigation a window on competition we examine the patenting behavior of firms in an industry characterized by rapid technological change and cumulative innovation recent survey evidence suggests that semiconductor firms do not rely heavily on patents to appropriate returns to r d yet the propensity of semiconductor firms to patent has risen dramatically since the mid 1980s we explore this apparent paradox by conducting interviews with industry representatives and analyzing the patenting behavior of 95 u s semiconductor firms during 1979 1995 the results suggest that the 1980s strengthening of u s patent rights spawned patent portfolio races among capital intensive firms but it also facilitated entry by specialized design firms copyright 2001 by the rand corporation

effects of norms and opportunity cost of time on household recycling social and moral norms and the opportunity cost of time will affect household recycling efforts a model is developed to describe how norms affect the recycling decision through feelings of self respect guilty conscience and warm glow as well as respect in and sanctions from the community we find that the opportunity cost of time has a significant negative effect on household recycling all indicators of warm glow social and moral norms increase household recycling efforts we find no evidence of crowding out neither when recycling is perceived as mandatory nor when economic incentives are introduced in the form of a differentiated garbage fee

cross licensing and competition we study bilateral cross licensing agreements between n 2 firms that engage in competition after the licensing phase it is shown that the most collusive cross licensing royalty i e the one that allows the industry to achieve the monopoly profit is sustainable as the outcome of bilaterally efficient agreements in a symmetric setting if the terms of the cross licensing agreements are not observable to third parties the monopoly royalty is the unique symmetric bilaterally efficient royalty however when the terms of the agreements are public the most competitive royalty i e zero can also be bilaterally efficient policy implications regarding the antitrust treatment of cross licensing agreements are derived from these results

patent pools and cross licensing in the shadow of patent litigation this paper develops a framework to analyze the incentives to form a patent pool or engage in cross licensing arrangements in the presence of uncertainty about the validity and coverage of patents that makes disputes inevitable it analyzes the private incentives to litigate and compares them with the social incentives it shows that pooling arrangements can have the effect of sheltering invalid patents from challenges this result has an antitrust implication that patent pools should not be permitted until after patentees have challenged the validity of each other s patents if litigation costs are not too large

household responses to pricing garbage by the bag this paper estimates household reaction to the implementation of unit pricing for the collection of residential garbage we gather original data on weight and volume of weekly garbage and recycling of 75 households in charlottesville virginia both before and after the start of a program that requires an eighty cent sticker on each bag of garbage this data set is the first of its kind we estimate household demands for the collection of garbage and recyclable material the effect on density of household garbage and the amount of illegal dumping by households we also estimate the probability that a household chooses each method available to reduce its garbage in response to the implementation of this unit pricing program we find that households 1 reduced the weight of their garbage by 14 2 reduced the volume of garbage by 37 and 3 increased the weight of their recyclable materials by 16 we estimate that additional illegal or at least suspicious disposal accounts for 0 42 pounds per person per week or 28 of the reduction in garbage observed at the curb this abstract was borrowed from another version of this item

predation mergers and incomplete information this article examines the strategic pricing of duopolists in anticipation of a takeover of one by the other in equilibrium the acquiring firm may expand its output to signal that it is a low cost rival and thereby improve the takeover terms if the merged firm willface potential entry a premerger expansion of output may be necessary to deter entry and to make the merger profitable in that case the acquiringjirm s output expansion increases industry concentration by facilitating the takeover and by deterring entry this establishes the rationality of predatory output expansions even when a merger or a takeover is possible and indeed anticipated a voluminous literature is devoted to exploring the role of pricing in altering industry structure to achieve monopoly power that literature discusses both price cutting to drive existing rivals from the industry predatory pricing and setting low prices to deter potential entrants limit pricing the former has received the lion s share of the attention of antitrust commentators and enforcers but the rationality of predatory pricing has been seriously questioned the major criticism has two parts i takeovers are a superior means of achieving monopoly power and where legal should therefore be used instead of price cutting and ii if a takeover is anticipated premerger price cutting merely dissipates some of the value of the merging parties and would thus be irrational the first argument was originally advanced by mcgee 1958 and later by telser 1965 and bork 1978 the essential idea is that since predation is costly firms should realize that a more profitable arrangement in the form of a merger exists and ought to be negotiated the second argument is a natural extension of the first in response to this criticism yamey 1972 provides two arguments first the aggressor knows that he may face other rivals in the future entrants into this or other markets those potential rivals may draw inferences from his current behavior about the response they will face if they enter in that case the aggressor may wish to develop a reputation for aggressive behavior second even if a takeover is anticipated the terms of the takeover may be affected by the pretakeover pricing

the economic benefits of reducing the environmental effects of landfills heterogeneous distance decay effects this paper estimates the economic benefits of different alternative policies considered for reducing the external effects caused by the utilization of landfills in solid waste management the preferences of the local population in the surrounding areas of a landfill are evaluated utilizing a discrete choice experiment in which subjects are presented with alternative policy decisions that involve reducing the material processed through the landfill various models were employed in order to capture heterogeneous preferences resulting in a mixture of normals modelling approach mn mnl outperforming other alternative models of heterogeneity the results show that the policy of moving the landfill away from the population does not provide the most benefits when compared to a policy of increasing recycling in the household the economic benefits of the waste management policies are heterogeneous across the population surrounding the landfill and so the distance decay functions thus the economic benefits for most waste management policies can increase or decrease the further away the subject lives from the landfill depending on the preferences of his her segment and the type of policy employed

economics and identity this paper considers how identity a person s sense of self affects economic outcomes we incorporate the psychology and sociology of identity into an economic model of behavior in the utility function we propose identity is associated with different social categories and how people in these categories should behave we then construct a simple game theoretic model showing how identity can affect individual interactions the paper adapts these models to gender discrimination in the workplace the economics of poverty and social exclusion and the household division of labor in each case the inclusion of identity substantively changes conclusions of previous economic analysis

promoting recycling private values social norms and economic incentives individual behaviors that benefit the environment are potentially influenced by personal values of environmental quality social norms that encourage proenvironmental actions and economic incentives economic incentives often loom particularly large including those that result from environmental policies less well understood are the respective roles of private values and social norms do people undertake proenvironmental actions more out of their per sonal valuations of the environment that might be characterized as warm glow effects or from the social norms that reinforce proenvironmental behaviors the least explored component of these deter minants of proenvironmental behavior is that of social norms we characterize social norms in terms of what is normatively appropriate rather than what is the conventional mode of behavior there is a burgeoning economics literature modeling social norms but not a commensurate empirical investigation of their practical impor tance if norms do matter what is the respective role of personal norms that a person imposes on others compared with the external norms that people perceive are imposed on them by others to what extent are these social norms the result of legal regimes and regulatory policies that establish standards for behavior our empirical analysis estimates the role of these influences the empirical case study for this article is based on an analysis of recycling of plastic water bottles recycling policies are becoming

the economics of household solid waste generation and disposal abstract we develop a household production model of waste management that explicitly incorporates many of the technical and behavioral elements germane to current regulatory and non regulatory solid waste policy initiatives examination of first order conditions shows the interaction among household preferences these production options and external prices and fees a simplified simulation of our model illustrates these relationships showing that household response elasticities can vary widely over common price ranges and that relatively large household welfare gains may be obtained by adopting curbside recycling and unit pricing programs

how strong are weak patents economists usually conceive of patents as property rights that prevent others from practicing the patenting technology unless they first obtain a license from the patent holder even for ironclad patents i e for patents that are certain to be valid the existing literature has shown that the analysis of equilibrium licensing contracts is surprising subtle and complex 1 for example the analysis is quite different depending upon whether one firm s licensing contract is observable to the other firms likewise equilibrium outcomes are quite different if royalties must be linear than in the case where two part tariffs and other non linear royalties are permitted in that literature a downstream firm that refuses to sign a contract with the upstream supplier either exits the industry in the case that the upstream supplier controls an essential input or must rely on more costly inputs in the case of a non essential input in other words the downstream firm s threat point is to use some backstop technology in practice however patents are issued after a brief examination by the patent office to see if they meet the statutory requirements for novelty and non obviousness mounting evidence indicates that many weak patents i e patents unlikely to be found valid if challenged in court are issued by the u s patent and trademark office uspto 2 some observers view this with great alarm arguing that uspto is handing out undeserved monopolies others by contrast have suggested that these weak patents are of little concern because they will have little commercial impact because they will be licensed at commensurately low royalty rates or not enforced at all we study the commercial impact of weak patents more precisely we define a patent s strength as the probability that it will be found valid if challenged in court and we examine the relationship between a patent s strength and the royalties that it can command the distinctive

preemptive patenting and the persistence of monopoly this article takes a different tack and inquires whether institutions such as the patent system create opportunities for firms with monopoly power to maintain their monopoly power the results apply to other situations such as brand identification spatial location and capacity expansion which share the characteristic that early or preemptive actions may lower the returns to potential competitors

on the elasticities of harvesting rules abstract in this paper we rank the relative importance of the exogenous parameters upon the optimal harvesting size in a stochastic rotation problem we show that when the tree growth follows geometric brownian motion the harvesting size is most elastic to the harvesting cost followed by the interest rate and is least elastic to the parameters of tree growth similar ranking holds for the linear growth case in both cases the harvesting size is increasing and concave in the harvesting cost bounded between two parallel lines the harvesting decision is made according to a stochastic extension of the faustmann formula

using conjoint analysis to derive estimates of compensating variation abstract we use several approaches to derive estimates of hicksian compensating variation from conjoint ratings data the different estimation approaches produced mixed results with respect to consistency with utility theory statistical significance of key variables magnitude of welfare estimates and confidence bounds on welfare estimates these findings suggest conjoint analyses are not a panacea for the problems being debated regarding contingent valuation and travel cost methodologies and conjoint questions appear to share many of the advantages and disadvantages associated with dichotomous choice contingent valuation questions

willingness to pay for curbside recycling with detection and mitigation of hypothetical bias in this article we estimate willingness to pay for curbside recycling using a unique data set we also test for and detect significant hypothetical bias using stated and revealed preference data a short scripted cheap talk statement is used to mitigate the bias and provide more efficient estimates of the welfare impacts of curbside recycling programs copyright 2003 oxford university press

the cold shiver of not giving enough on the social cost of recycling campaigns governments sometimes try to increase individuals contributions to public goods through appeals to consumer responsibility rather than by economic incentives for example in recycling campaigns using standard consumer theory one would hardly expect such campaigns to work at all but if consumers are motivated by norms appeals may work through changing consumers perception of the normrequirement however increasing voluntary contributions through appeals may come at a social cost the reason is that appeals work through imposing a heavier perceived responsibility on consumers this represents a welfare loss which is not necessarily outweighed by warm glow benefits

heterogeneous preferences for community recycling programs this paper examines household preferences for community recycling programs which have both public and private good dimensions the data come from a survey conducted in seattle wa which elicited stated preference contingent ratings for different recycling programs relative to status quo with experimental variation in the overall community recycling rate achieved and expected household cost the recycling rate is interpreted as capturing the public benefits of recycling programs and constitutes the most common measure used by policy agencies for setting waste management objectives and evaluating policy initiatives the analysis begins with fixed parameter models that explore different ways of handling rating data and mixed logit estimations that capture household preference heterogeneity both within and across different recycling programs this analysis yields unique estimates of willingness to pay for an increase in the community recycling rate predicted individual specific utility parameters are then regressed on household background information to explicitly examine the nature of preference heterogeneity overall this paper generates interpretable policy relevant insights into the public and private good dimensions of community recycling programs

effects of unit based garbage pricing a differences in differences approach using a unique 10 year dataset of all 458 dutch municipalities we apply a differences in differences approach to estimate the effect of unit based pricing on household waste quantities and recycling community level studies of unit based pricing typically do not include fixed effects at the local level we find that failure to do so may substantially inflate the estimated price effect we also find that unit based pricing may be endogenous and use instrumental variables to account for this our analysis shows that user fees depend on user fees in neighboring jurisdictions policy interaction our estimate of the garbage reduction per 1 user fee is lower than any previous estimate bar one the price effect depends on the pricing system weight based systems reduce garbage quantities more than volume based systems user fees increase recycling especially of paper but not nearly as much as they reduce garbage quantities we find no evidence for waste tourism or illegal dumping

social norms morals and self interest as determinants of pro environment behaviours the case of household recycling this paper considers the role which selfish moral and social incentives and pressures play in explaining the extent to which stated choices over pro environment behaviours vary across individuals the empirical context is choices over household waste contracts and recycling actions in poland a theoretical model is used to show how cost based motives and the desire for a positive self and social image combine to determine the utility from alternative choices of recycling behaviour we then describe a discrete choice experiment designed to empirically investigate the effects such drivers have on stated choices a hybrid logit model is used to link statements over attitudes to recycling to choices dealing with a potential endogeneity problem caused by the joint effects of un observables on attitudes and choices we find that a substantial share of our respondents prefer to sort their waste at home rather than in a central sorting facility this preference is associated with a moral intrinsic motivation involving a belief that sorting at home is more thorough than central sorting

patent litigation as an information transmission mechanism patent litigation reveals important information about the validity of the contested patent to other potential entrants this paper explores the implications of such informational externalities for entry dynamics in the presence of multiple potential entrants the nature of the entry game can be one of either waiting or preemption depending on the degree of patent protection therefore the payoffs for the patentee and the initial imitator are discontinuous in the degree of patent protection furthermore strengthening intellectual property rights is not necessarily desirable for the patentee the analysis may also help explain the apparently puzzling practice of delaying patent suits copyright 1998 by american economic association