stochastic stability in a double auction abstract in a k double auction a buyer and a seller must simultaneously announce a bid and an ask price respectively exchange of the indivisible good takes place if and only if the bid is at least as high as the ask the trading price being the bid price with probability k and the ask price with probability 1 k we show that the stable equilibria of a complete information k double approximate an asymmetric nash bargaining solution with the seller s bargaining power decreasing in k note that ceteris paribus the payoffs of the seller of the one shot game increase in k nevertheless as the stochastically stable equilibrium price decreases in k choosing the seller s favorite price with a relatively higher probability in individual encounters makes him worse off in the long run

flexibility as a source of value in the production of alternative fuels the ethanol case there is typically a high degree of flexibility associated with the production of alternative fuels due to the ability to source from different input raw materials or to produce different output products based on market conditions in this paper we consider the particular example of ethanol and seek to quantify the incremental value from flexibility in its production from sugarcane in brazil we accomplish this by first jointly modeling the stochastic processes for the prices of the two relevant commodities sugar a food commodity and ethanol an energy commodity in discrete time as a bivariate lattice this framework allows us to value the option to switch output products based on the respective price signals of the two commodities however unlike the usual assumption of geometric brownian motion stochastic processes we use the more realistic case of mean reverting commodity price processes we estimate the parameters for these processes by applying a regression based procedure to empirical sugar and ethanol data collected during a period from 1998 through 2008 our results show that the option to switch outputs has significant value even under the assumption of mean reverting prices which has implications for both producers and policy makers alike

competition and corporate performance are people right to think that competition improves corporate performance my investigations indicate first that there are some theoretical reasons for believing this hypothesis to be correct but they are not overwhelming furthermore the existing empirical evidence on this question is weak however the results reported here based on an analysis of around 670 u k companies do provide some support for this view most important i present evidence that competition as measured by increased numbers of competitors or by lower levels of rents is associated with a significantly higher rate of total factor productivity growth

the perceived returns to education and the demand for schooling economists emphasize the link between market returns to education and investments in schooling though many studies estimate these returns with earnings data it is the perceived returns that affect schooling decisions and these perceptions may be inaccurate using survey data for eighth grade boys in the dominican republic we find that the perceived returns to secondary school are extremely low despite high measured returns students at randomly selected schools given information on the higher measured returns completed on average 0 20 0 35 more years of school over the next four years than those who were not

market share market value and innovation in a panel of british manufacturing firms this paper examines the empirical relationship between technological innovations market share and stock market value new developments in the estimation of dynamic count data models are used to control for unobserved firm specific heterogeneity we find a robust and positive effect of market share on observable headcounts of innovations and patents although increased product market competition in the industry tends to stimulate innovative activity furthermore the impact of innovation on market value is larger for firms with higher market shares we argue that our results are consistent with models where high market share firms have incentives to pre emptively innovate

political economy of income distribution dynamics abstract income distribution varies considerably across countries it tends to become more equal with development in some countries but just the opposite occurs in other countries this paper provides a theoretical investigation of the persistent differences in income distribution across countries over time motivated by the relationship between income distribution and public spending at different school levels for a broad range of countries over the past 30 years the analysis centers on the role of public education where specific investments interact with political involvement by different socio economic groups socio economic groups may form lobbies to influence education policy making the formation of lobbies is endogenous persistent inequality is caused by persistent lobbying efforts of the wealthy that lead to an allocation of public education spending more biased toward them

contractual solutions to the hold up problem this paper considers a general version of the hold up problem where n agents first make relation specific investments and then must agree on some collective action it is shown that first best solutions exist under a variety of different assumptions about the nature of information asymmetries

adjustment dynamics and rational play in games when a given strategic situation arises repeatedly the possibility arises that equilibrium predictions can be justified by a dynamic adjustment process we examine myopic adjustment dynamics a class that includes replicator dynamics from evolutionary game theory simple models of imitation models of experimentation and adjustment and some simple learning dynamics we present a series of theorems showing conditions under which behavior that is asymptotically stable under some such dynamic is strategically stable in the sense of kohlberg and mertens this behavior is thus as if the agents in the economy satisfied the extremely stringent assumptions that game theory traditionally makes about rationality and beliefs journal of economic literature classification number c72

is increased public schooling really a policy for equality abstract empirical findings suggest different causes for higher educational attainment among children of high income earners either that poor parents are credit constrained or that parental human capital per se is important in the educational process my theoretical results show how these two diverging results can be brought together parental and public investments complement each other in the educational process because higher educated parents take advantage of increased productivity educational equality between rich and poor children is not necessarily promoted by further investments in public schooling moreover i show that educational investments in low skilled parents have spill over effects on their children and therefore have an unambiguously positive impact on equality

why sunk costs matter for bargaining outcomes an evolutionary approach abstract two bargaining parties play the nash demand game to share a pie whose size is determined by one party s investment decision various investment levels are subgame perfect adding the investment decision to young s evolutionary bargaining model yields the following long run outcome efficient investment prevails and the investor s share of the pie approximates die maximum of i the smallest share that induces efficient investment even if the investor expects to appropriate the available pie from every inefficient investment and ii half of the pie the result favors forward induction to subgame consistency and equity theory to hold ups journal of economic literature classification numbers c78 l14

interdependent international relations and the expansion of ethanol production and consumption the brazilian perspective abstract the global production and consumption of ethanol are expected to increase the growing interdependence of markets and nations producers and consumers of biofuels has led actors to seek and devise mechanisms intended to develop the sector this paper aims to analyze the interdependent international relations between brazil and other ethanol biofuel producer and consumer countries to do so the paper explores the theory of complex interdependence and the game theory a quali quantitative study was conducted involving the application of two questionnaires to experts on biofuels and documentary analysis aided by qda miner software the results show that brazil shares highly interdependent relations with the united states an intermediate degree of interdependence with europe and a low degree of interdependence with china the dimensions of those interdependent relations can be ranked according to importance in the following order first the political then the economic technical and finally the social environmental dimensions a number of actions can be envisaged that could lead ethanol to achieve an increasingly strategic position in the diversification of the energy matrix in different countries technological efforts to improve production efficiency the creation of globally integrated policies designed to provide security and develop the production and consumption infrastructure the reduction of international tariffs on the product and the transformation of ethanol into a global commodity with a large number of countries buying and selling the product this paper faced the challenge of integrating approaches and concepts from two complex theoretical areas complex interdependence theory and game theory the research methodology and the insights gained from the ethanol case contribute to the literature on the applicability of these two theoretical approaches

comparison of historically simulated var evidence from oil prices abstract cabedo and moya cabedo j d moya i 2003 estimating oil price value at risk using the historical simulation approach energy economics 25 239 253 find that arma with historical simulation delivers var forecasts that are superior to those from garch we compare the arma with historical simulation to the semi parametric garch model proposed by barone adesi et al barone adesi g giannopoulos k vosper l 1999 var without correlations for portfolios of derivative securities journal of futures markets 19 5 583 602 the results suggest that the semi parametric garch model generates var forecasts that are superior to the var forecasts from the arma with historical simulation this is due to the fact that garch captures volatility clustering our findings suggest that cabedo and moya s conclusion is mainly driven by the normal distributional assumption imposed on the future risk structure in the garch model

property rights and investments an evolutionary approach abstract when contracts are not enforceable or property rights are not clearly defined individuals may lack an incentive to carry out costly investments even when they are socially efficient some recent contributions such as ellingsen and robles 2002 prove that this problem may be less dramatic than standard economic models would suggest they propose evolutionary models in which only efficient equilibria can be stochastically stable in this paper we show that these results are not robust with respect to the introduction of individual heterogeneity when individuals have different cost functions stochastically stable states may be inefficient even when they induce a positive suboptimal level of investment

is there a hold up problem most literature on the hold up problem starts from the assumption that ex post bargaining outcomes are insensitive to prior investment costs we argue that this approach is unsatisfactory if the bargaining procedure is relatively symmetric it typically admits multiple perfect equilibria some of which give the investor a high enough payofi to sustain e cient investment even if the bargaining procedure is asymmetric and rigged against the investor there may be investment if agents are driven by moral concerns or if communication creates commitment laboratory experiments indicate that communication is necessary and su cient for agents to coordinate on e cient outcomes when the bargaining game is symmetric when the bargaining game is rigged against the investor the hold up problem is mitigated but not eliminated by moral behavior communication is quite credible and we flnd that promises are more believable than threats

game theoretic analysis of competitive agri biomass supply chain abstract this research aims to explore the optimal strategies for managing competitive agri biomass supply chain first a game model of a supply chain consisting of one supplier and two buyers is used to develop the optimal strategies for the supplier and buyers as well as the total equilibrium profit then the industrial coexistence conditions are analyzed and the effects of the model parameters on game equilibrium are evaluated finally the methodology is illustrated with a case study in china

an evolutionary model of bargaining abstract individuals from two populations of bargainers are randomly matched to play the nash demand game they make their demands by choosing best replies based on an incomplete knowledge of the precedents and occasionally they choose randomly there is no common knowledge over the long run typically one division will be observed almost all of the time this stochastically stable division is close to the nash solution when all agents in the same population are alike when the populations are heterogeneous a generalization of the nash solution results if there is some mixing between the two populations the stable division is fifty fifty journal of economic literature classification number c78

regional decentralization and fiscal incentives federalism chinese style abstract aligning the interests of local governments with market development is an important issue for developing and transition economies using a panel data set from china we investigate the relationship between provincial government s fiscal incentives and provincial market development we report three empirical findings first we find that during the period of fiscal contracting system the discrepancy between ex ante contracts and ex post implementation was relatively small suggesting that the fiscal contracts were credible second we find a much higher correlation about four times between the provincial government s budgetary revenue and its expenditure during 1980s and 1990s as compared to 1970s demonstrating that provincial governments faced much stronger ex post fiscal incentives after reform third we find that stronger ex ante fiscal incentives measured by the contractual marginal retention rate of the provincial government in its budgetary revenue are associated with faster development of the non state sector as well as more reforms in the state sector in the provincial economy this holds even when we control for the conventional measure of fiscal decentralization finally we compare federalism chinese style to federalism russian style

clean air and renewable fuels the market for fuel ethanol in the us from 1984 to 1993 abstract ethanol made from corn has become an increasingly important fuel additive in the us over the past decade the market for ethanol has grown from 550 million gallons in 1984 to approximately 1 5 billion gallons in 1995 recent clean air legislation has mandated the use of cleaner burning fuels in the us in specific regions and seasons the fundamental role of fuel ethanol is changing from a gasoline substitute and octane enhancer to being one of a number of possible clean air additives in addition to these changing market conditions the institutional structure surrounding the ethanol market has changed while there is a uniform national subsidy for ethanol use each state has its own supplemental subsidy level which varied from zero to over 0 40 per gallon recently many state subsidy levels have been declining but significant incentives still remain including the federal 0 54 per gallon incentive this paper explores the economic characteristics of the us ethanol market the market supply and demand for ethanol are estimated econometrically the results highlight the importance of the state and federal incentives and mandates along with transportation costs in making corn based ethanol an attractive alternative to gasoline further investigation using a probit model to predict whether a state has an ethanol market or not reinforces the results of the supply demand market model the implications of the market characteristics for current and future us ethanol policy and clean fuels use are discussed

a prospect theory nash bargaining solution and its stochastic stability abstract we consider the long run outcomes of bargaining games when players obey prospect theory we extend the evolutionary bargaining model of young 1993 to a two stage nash demand game two players simultaneously choose whether to exercise an outside option in the first stage and play the nash demand game in the second stage which will be reached only if neither player exercises the outside option we address the influence on the stochastically stable division of reference dependent preferences where the reference point is the value of the outside option we show that the division consistently differs from the nash bargaining solution under expected utility theory inspired by this we propose a prospect theory nash bargaining solution which coincides with the stochastically stable division

bargaining under incomplete information fairness and the hold up problem in the hold up problem incomplete contracts cause the proceeds of relation speciflc investments to be allocated by ex post bargaining the present paper investigates the e ciency of incomplete contracts if individuals have heterogeneous preferences implying heterogeneous bargaining behavior and equally important preferences are private information as the sunk investment costs can thus potentially signal preferences they can in uence beliefs and consequently bargaining outcomes the necessities of signalling are shown to generate very strong investment incentives these incentives are based on the desire not to reveal information that is unfavorable in the ensuing bargaining after flnding all perfect bayesian equilibria in pure strategies the paper derives the necessary and su cient conditions under which it is optimal to invest and trade e ciently

decentralization of governance and development all around the world in matters of governance decentralization is the rage even apart from the widely debated issues of subsidiarity and devolution in the european union and states rights in the united states decentralization has been at the center stage of policy experiments in the last two decades in a large number of developing and transition economies in latin america africa and asia the world bank for example has embraced it as one of the major governance reforms on its agenda for example world bank 2000 burki perry and dillinger 1999 take also the examples of the two largest countries of the world china and india decentralization has been regarded as the major institutional framework for the phenomenal industrial growth in the last two decades in china taking place largely in the nonstate nonprivate sector india ushered in a landmark constitutional reform in favor of decentralization around the same time it launched a major program of economic reform in the early 1990s on account of its many failures the centralized state everywhere has lost a great deal of legitimacy and decentralization is widely believed to promise a range of benee ts it is often suggested as a way of reducing the role of the state in general by fragmenting central authority and introducing more intergovernmental competition and checks and balances it is viewed as a way to make government more responsive and efe cient technological changes have also made it somewhat easier than before to provide public services like electricity and water supply relatively efe ciently in smaller market areas and the lower levels of government have now a greater ability to handle certain tasks in a world of rampant ethnic cone icts and separatist movements decentralization is also regarded as a way of diffusing social and political tensions and ensuring local cultural and political autonomy these potential benee ts of decentralization have attracted a very diverse range

does evolution solve the hold up problem abstract the paper examines the theoretical foundations of the hold up problem at the first stage one agent decides on the level of a relationship specific investment there is no contract so at the second stage the agent must bargain with a trading partner over the surplus that the investment has generated we show that the conventional underinvestment result hinges crucially both on the assumed bargaining game and on the choice of equilibrium concept in particular we prove the following two results i if bargaining proceeds according to the nash demand game any investment level is subgame perfect but only a particular efficient outcome is stochastically stable ii if bargaining proceeds according to the ultimatum game with the trading partner as proposer only the minimal investment level is subgame perfect but any investment level is stochastically stable journal of economic literature classification numbers l14 c78

dynamic pricing in the spanish gasoline market a tacit collusion equilibrium abstract during the last twenty years the spanish petrol market has undergone an intensive restructuration process it has changed from being a state owned monopoly to total liberalization and privatization this liberalization process was accompanied by measures that facilitated the creation of a national champion the repsol group which is a huge vertically integrated company with a high market share in all the industry s segments using a dynamic model this paper analyses whether the prices established by companies in the spanish gasoline market after the restructuration process fits with a tacit collusion equilibrium the empirical results show that a strategic behaviour of companies occurs and is compatible with a tacit collusion price strategy so the restructuration process does not seem to have introduced effective competition into the spanish gasoline market

does an intra household flypaper effect exist evidence from the educational fee reduction reform in rural china abstract we test for evidence of an intra household flypaper effect by evaluating the impact of an educational fee reduction reform in rural china on different categories of household expenditure including spending on individual children using pre and post reform data this study exploits cohort comparisons variation in the extent of school fee reductions across different villages and variation in the subsidies received by children enrolled in different grades within the same family to identify the impact of the reform the results show that educational fee reductions are matched by increased voluntary educational spending on the same children who receive the fee reductions providing strong evidence of an intra household flypaper effect

estimating oil price value at risk using the historical simulation approach abstract in this paper we propose using value at risk var for oil price risk quantification var provides an estimation for the maximum oil price change associated with a likelihood level and can be used for designing risk management strategies we analyse three var calculation methods the historical simulation standard approach the historical simulation with arma forecasts hsaf approach developed in this paper and the variance covariance method based on autoregressive conditional heteroskedasticity models forecasts the results obtained indicate that hsaf methodology provides a flexible var quantification which fits the continuous oil price movements well and provides an efficient risk quantification

supply and demand elasticities in the u s ethanol fuel market abstract the market for ethanol has grown from approximately 1 2 billion gallons in 1997 to almost 5 billion gallons in 2006 with the huge increase in ethanol demand in recent years the growth in derived demand for corn has driven up many food prices this paper uses monthly data from 1997 2006 to estimate the market supply and demand for ethanol at the national level the simultaneous determination of the supply and demand curves using two stage least squares allows for the calculation of supply and demand side elasticities which are important results in light of the tremendous growth in this market and recent legislation concerning ethanol

are subsidies for biodiesel economically efficient abstract biodiesel produces less pollution than petrodiesel however it is more expensive and will only be a viable alternative if market prices of the products are comparable this paper examines whether the external benefits from biodiesel use justify subsidies required for adoption outside of niche alternative fuel markets the authors establish a range of subsidies required to make biodiesel a viable substitute for petrodiesel published estimates of the emissions reductions from biodiesel and the dollar benefits of unit reductions in emissions are used to compute a per gallon external benefit from use of biodiesel versus petrodiesel under conservative estimates of the benefits from biodiesel use in non road equipment the external benefits outweigh the required subsidies jel q48 q42 h2

biofuel support policies in europe lessons learnt for the long way ahead biofuel consumption in the eu is growing rapidly but major efforts will need to be undertaken if the eu s objectives for 2010 and beyond are to be achieved this article analyses the strengths and weaknesses of different biofuel support policies based on the experiences gained in pioneering countries and explores scenarios for their possible impacts in the long term it comes to the conclusion that important pre conditions such as fuel standards and compatibility with engines are in place or being introduced on an eu wide basis current and future policy support therefore focuses on creating favourable economic or legal frameworks to accelerate the market penetration of biofuels the ambitious targets endorsed in terms of biofuel market shares require the implementation of efficient policy instruments at the same time large consumption volumes and the advent of innovative production technologies make it possible for member states to promote specific types of biofuels depending on their main objectives and natural potentials this will require complementary instruments such as subsidies for production facilities user incentives or feedstock subsidies

wealth varying intertemporal elasticities of substitution evidence from panel and aggregate data abstract this paper constructs and estimates a model of consumer preferences in which the intertemporal elasticity of substitution ies of consumption expenditure rises with the level of wealth the purpose of this paper is to measure the effect that systematic variation in the ies of poor and rich consumers has on the ies of aggregate consumption expenditure we find economically significant differences in the ies of poor and rich consumers in indian panel data on the consumption of individual households we also find economically significant differences in the ies measured in aggregate time series data for the u s and india

experimental estimates of education production functions this paper analyzes data on 11 600 students and their teachers who were randomly assigned to different size classes from kindergarten through third grade statistical methods are used to adjust for nonrandom attrition and transitions between classes the main conclusions are 1 on average performance on standardized tests increases by four percentile points the first year students attend small classes 2 the test score advantage of students in small classes expands by about one percentile point per year in subsequent years 3 teacher aides and measured teacher characteristics have little effect 4 class size has a larger effect for minority students and those on free lunch 5 hawthorne effects were unlikely

the emerging liquid biofuel market in argentina implications for domestic demand and international trade while the world s transport energy matrix is still strongly linked to limited and heavily polluting fossil fuels new markets are appearing for the production and use of alternative transport fuels such as liquid biofuels due to an interconnected global economy such markets today are developing on a global scale with actors looking to meet local as well as potential international demand the aim of this paper is to describe and evaluate the emergence of markets for liquid biofuels in argentina it reveals that biodiesel production for international supply is likely to emerge in the short run up to 2010 giving the opportunity to be switched back to local supply in the medium run post 2010 it also suggests that a bioethanol market demand and supply does not seem to be likely in the short run and it is highly uncertain in the medium run as the most influential actors oppose its development on the other hand the current constellations of the biodiesel market appear to leave many uncertainties regarding its sustainability especially in regard to a limited role of small and medium sized enterprises and a suitable and diversified biodiesel feedstock currently the focus lies solely on very large scale production of biodiesel derived from soybean oil for the export market

stimulating the use of biofuels in the european union implications for climate change policy the substitution of fossil fuels with biofuels has been proposed in the european union eu as part of a strategy to mitigate greenhouse gas emissions from road transport increase security of energy supply and support development of rural communities in this paper we focus on one of these purported benefits the reduction in greenhouse gas emissions the costs of subsidising the price difference between european bioethanol and petrol and biodiesel and diesel per tonne of co2 emissions saved are estimated without including the benefits from increased security of energy supply and employment generation in rural areas the current costs of implementing european domestic biofuel targets are high compared with other available co2 mitigation strategies the policy instrument of foregoing some or all of the excise duty and other taxes now applicable to transport fuels in eu15 on domestically produced biofuels as well as the potential to import low cost alternatives for example from brazil are addressed in this context

public education spending and private substitution in urban china abstract this paper documents robust evidence that increases in public spending on basic education are associated with significant reductions in household private tutoring spending in urban china this reduction comes primarily from the top and bottom income households suggesting multi dimensional demands for private tutoring it concentrates on households with an only boy and is larger for middle school than primary school children increases in public education spending are associated with significant reduction in school tuition which is homogeneous across households of different income levels changes in household spending on textbooks in response to more public education spending are modest but statistically insignificant

school inputs and educational outcomes in south africa we examine the relationship between educational inputs primarily pupilteacher ratios and school outcomes in south africa immediately before the end of apartheid government black households were severely limited in their residential choice under apartheid and attended schools for which funding decisions were made centrally by white controlled entities over which they had no control the allocations resulted in marked disparities in average class sizes controlling for household background variables we find strong and significant effects of pupilteacher ratios on enrollment on educational achievement and on test scores for numeracy

exploring a pioneering bioenergy system the case of enkoping in sweden in order to contribute to knowledge on how to expand bioenergy this paper examines an example of success from sweden the idea is to identify factors that can explain the difference between success and failure of bioenergy systems in the aftermath of the oil crises in the 1970s the local government in the town of enkoping in sweden was cautioned by the local swedish military regiment to shift towards domestic energy supplies rather than imported fossil fuels during the decades that followed the local energy companies developed a pioneering bioenergy system there are 3 important conditions relevant to explain the success 1 the introduction of the carbon tax in sweden provided market conditions making bioenergy sufficiently competitive with fossil fuels 2 the know how developed by the local energy companies through experimentation and collaboration with research institutions encouraged investments in local opportunities and 3 the formation of partnerships in a regional network of actors including private companies providing biofuels and technology research institutions and local government helped to co ordinate the development of the bioenergy system less

extreme event risk management a review of lee b preston f 2012 preparing for high impact low probability events lessons from eyjafjallajőkull london chatham house abstract this paper provides a short communication based on a review of bernice lee and felix preston with gemma green 2012 this white paper received 36 survey responses from businesses related to the impact of the eyjafjallaj kull volcano most reported negative profit impacts although 47 reported that it took less than a week to return to normal operations this volcanic incident represents events that have significant impact on supply chains that have low enough rates of occurrence that they cannot be expected to be forecast therefore there is a great deal of value to put the organization in a position to adapt to whatever might occur and to have contingency plans in effect

hold up and the evolution of investment and bargaining norms abstract the purpose of this paper is to explore the evolution of bargaining norms in a simple production problem with two sided relationship specific investments and competition the puzzle we wish to address is why efficient bargaining norms do not evolve even though there exist efficient sequential equilibria conditions under which stochastically stable bargaining conventions exist are characterized and it is shown that there is a hierarchy of norms with a stochastically stable division rule that is independent of the long run investment strategy due to this independence efficient sequential equilibria are not in general stochastically stable this result may help us understand why institutions such as firms may be needed to ensure efficient relationship specific investments

mapping the cost risk of agricultural residue supply for energy application in rural china this research aims to shed light on the interaction mechanism of cost risks for biomass material supply in power generation especially for biomass coal dual fuel systems firstly a game model is established to analyze interactions among factors including unit procurement cost unit transportation cost basic price and coal price for crop residue collection secondly a monte carlo simulation is implemented to compare the profit increase under material competition with that under price alliance the methodology is illustrated with a case study in a biomass power plant in shandong province china it shows that developing a price alliance will benefit both the allied enterprises and the local collection area in most circumstances thirdly a risk tolerance area approach is applied in mapping the cost risk and in explaining the risky circumstances of the case study

evolutionary stability with equilibrium entrants abstract the strategy that upsets a potential evolutionarily stable strategy may in itself be very unstable or may differ from the candidate strategy only in irrelevant ways this paper develops a solution concept addressing these difficulties we lood for a set of nash equilibria such that small groups of entrants whose members are satisfied with their entry cannot take the population out of the set such a set is robust to the iterated removal of weakly dominated strategies depends only on the reduced normal form and has the never a weak best response property for generic two person extensive form games such sets generate payoffs consistent with proper equilibria

local capture evidence from a central government transfer program in uganda according to official statistics 20 percent of uganda s total public expenditure was spent on education in the mid 1990s most of it on primary education one of the large public programs was a capitation grant to cover schools nonwage expenditures using panel data from a unique survey of primary schools we assess the extent to which the grant actually reached the intended end user schools the survey data reveal that during 1991 1995 the schools on average received only 13 percent of the grants most schools received nothing the bulk of the school grant was captured by local officials and politicians the data also reveal considerable variation in grants received across schools suggesting that rather than being passive recipients of flows from the government schools use their bargaining power to secure greater shares of funding we find that schools in better off communities managed to claim a higher share of their entitlements as a result actual education spending in contrast to budget allocations is regressive similar surveys in other african countries confirm that uganda is not a special case

a dynamic model of equilibrium selection in signaling markets in his work on signaling spence proposed a dynamic model of a market in which a buyer revises prices in light of experience and in which sellers with private information about their types choose utility maximizing signals given these prices we follow spence s suggestion of introducing perturbations into the resulting dynamic process in a broad class of markets our model selects a separating equilibrium outcome if and only if the equilibrium outcome satisfies a version of the undefeated equilibrium concept whereas a pooling equilibrium outcome is selected if and only if the equilibrium outcome is both undefeated and satisfiesd1

public provision of private goods government may provide a good that can if legally permitted be supplemented by private purchases policy is determined by majority rule under standard assumptions on preferences a majority voting equilibrium exists a regime of positive government provision with no restriction on private supplements is shown to be majority preferred to a regime of either only market provision or only government provision combined public and private expenditure on the good is higher under this dual provision regime than under either of the alternatives under some preference configurations the median income voter is pivotal under others a voter with income below the median is pivotal

clean air regulation and heterogeneity in us gasoline prices in order to improve public health in areas with air quality problems the us clean air act imposes a variety of federal regulations on gasoline which have led to a proliferation of fuel blends known as boutique fuels more than 45 fuel blends are sold nationwide we examine the effects of this program on wholesale gasoline prices the methodological innovation in this study is the use of a regulatory distance measure as a proxy for measuring market power that arises from product differentiation we find that clean air regulation increases gasoline prices by increasing the cost of refining but more importantly by creating regulatory islands it segments the market and increases the market power of firms our estimation controls for the potential endogeneity of the regulatory variables we find that ols techniques systematically underestimate the effect of regulation on gasoline prices

a feedstock supply model integrating the official organization for china s biomass generation plants abstract shortage of feedstock has hindered the development of china s biomass power generation because it is highly difficult to collect straw in china we pioneered a new feedstock supply model in which the formal official organization of villagers committees is introduced different from the previous feedstock supply patterns the immaterial utility of relative stakeholders and the impact of villagers committees on farmers behavior are considered in this paper to compare this pattern s performance with that of the conventional ones this paper developed a multi agent model specifically for china s situation we applied the model to simulate the operation of a biomass supply chain the results show that the proposed feedstock supply pattern can significantly increase the profits of biomass plants biomass supply amounts and farmers participation and in contrast with the broker pattern it can lower feedstock prices through disintermediation sensitivity analyses show that preferential feed in tariffs are still necessary for biomass power and that the new pattern can ease the government s subsidy burdens additionally farmers opportunity costs for supplying biomass their perceptions of immaterial utility and the cooperative s financial resource schemes of the public welfare fund all have differing impacts on the achievement of the new pattern

private tutoring and demand for education in south korea abstract private tutoring in south korea is quite pervasive in 2006 the household sector spent 2 57 of the nation s gdp on private tutoring for primary and secondary school students government spending on those students was about 3 5 of gdp which is about the average level among oecd countries despite the substantial government expenditure on the formal education system and strong policies that try to reduce private tutoring activities household spending on private tutoring has been increasing very rapidly we argue that the prevalence of private tutoring is a market response to the government s rigid and uniform education policy the desire to enter elite universities in a very hierarchical higher education system and a heavily regulated and equalized secondary school system has created an enormous demand for supplementary private tutoring empirical analyses indicate that students with high academic ability and high family income whose parents are highly educated spend more on private tutoring

signaling future actions and the potential for sacrifice we consider extensions of games where some players have the option of signaling future actions by incurring costs the main result is that in a class of games if one player can incur costs then forwards induction selects her most preferred outcome surprisingly the player does not have to incur any costs to achieve this the option alone suffices however when all players can incur costs one player s attempt to signal a future action is vulnerable to a counter signal by the opponent this vulnerability to counter signaling distinguishes signaling future actions from signaling types

toward an optimal u s ethanol fuel subsidy abstract enhanced environmental quality fuel security and economic development along with reduced prices of ethanol gasoline blends are often used as justifications for the u s federal excise tax exemption on ethanol fuels however the possible effect of increased overall consumption of fuel in response to lower total price mitigating the environmental and fuel security benefits are generally not considered taking this price response into account the optimal u s ethanol subsidy is derived estimated values of the optimal subsidy reveal that the subsidy s environmental and security benefits are questionable however positive environmental and security benefits from the ethanol tax exemption subsidy may be obtained if the subsidy is combined with an increase in the excise tax on gasoline

hold up and intergenerational transmission of preferences we present an overlapping generations model with cultural transmission of preferences in which players face in each period a simplified hold up problem in our model both the distribution of preferences in the population and the investment policies in the long run influence one another and are determined endogenously and simultaneously in the stable steady state of the economy there is a mixed distribution of preferences where both selfish and other regarding preferences are present in the population moreover the presence of a significant fraction of individuals with other regarding preferences alleviates post contractual opportunism and improves efficiency in the investment decisions 2003 elsevier b v all rights reserved

sell or not sell biodiesel local competition and government measures the introduction of biofuels is one of the objectives of the european union for this reason measures to promote the production and consumption of this product have been implemented such as tax exemptions fixing a minimum amount of mixture or the introduction of public transport that consume biofuels in this paper we test different factors that can affect the introduction of biodiesel in the spanish gasoline market these factors are mainly the level of local competition technical difficulties and local government action empirical evidence shows that a higher level of competition more buses that consume biodiesel and a lower adjustment costs increase significantly the probability of sell biodiesel at service stations these results show how the promotion of competition and public procurement of vehicles can improve the commercialization of biofuels

fiscal competition and the pattern of public spending much attention has been given to the impact of fiscal competition on the level of public expenditure but relatively little to the impact on its composition using a broadly familiar and reasonably rich model of fiscal competition in the presence of mobile capital this paper establishes a systematic bias in public spending patterns starting from the non cooperative equilibrium and holding tax rates constant welfare would be improved by a coordinated reduction in the provision of local public inputs and a corresponding increase in the public provision of local public goods benefiting immobile consumers c 1997 elsevier science s a