estimating the foreclosure effect of exclusive dealing evidence from the entry of specialty beer producers this paper estimates an entry model to study the effect of exclusive dealing between anheuser busch and its distributors on rival brewers entry decisions and consumer surplus the entry model accounts for post entry demand conditions and strategic spillover effects i recover a brewer s fixed costs using a two step estimator and find spillover effects on brewers entry decisions i find that a brewer has higher fixed costs at locations where anheuser busch employ exclusive distributors but the effect is only statistically significant in certain local areas the estimates also show that a brewer is less likely to enter a location that is farther from its brewery has lower expected demand or is smaller in store size i implement counterfactual experiments to study the effect of banning exclusive contracts between anheuser busch and its distributors the results show that the welfare improvement associated with banning such contracts is very small

analyzing the welfare impacts of full line forcing contracts theoretical investigations have examined both anti competitive and efficiency inducing rationales for vertical bundling making empirical evidence important to understanding its welfare implications we use an extensive dataset on full line forcing contracts between movie distributors and video retailers to empirically measure the impact of vertical bundling on welfare we identify and measure three primary effects of full line forcing contracts market coverage leverage and efficiency we find that bundling increases market coverage and efficiency but has little impact on one distributor s gaining leverage over another as a result we estimate that full line forcing contracts increased consumer and producer surplus in this application

a bayesian model of voting in juries abstract we model voting in juries as a game of incomplete information allowing jurors to receive a continuum of signals we characterize the unique symmetric equilibrium of the game and give a condition under which no asymmetric equilibria exist under unanimity rule we offer a condition under which unanimity rule exhibits a bias toward convicting the innocent regardless of the size of the jury and give an example showing that this bias can be reversed we prove a jury theorem for our general model as the size of the jury increases the probability of a mistaken judgment goes to zero for every voting rule except unanimity rule for unanimity rule the probability of making a mistake is bounded strictly above zero if and only if there do not exist arbitrarily strong signals of innocence our results explain the asymptotic inefficiency of unanimity rule in finite models and establishes the possibility of asymptotic efficiency a property that could emerge only in a continuous model journal of economic literature classification numbers c72 d72

a theory of voting equilibria a voting equilibrium arises when the voters in an electorate acting in accordance with both their preferences for the candidates and their perceptions of the relative chances of various pairs of candidates being in contention for victory generate an election result that justifies their perceptions voting equilibria always exist and the set of equilibria can vary substantially with the choice of voting system we compare equilibria under the plurality rule approval voting and the borda system we consider a candidate positioning game and find that the plurality rule imposes little restriction on the position of the winning candidate in three candidate races while approval voting leads to a winner positioned at the median of the voter distribution we contrast campaign activities intended to influence voter preferences with activities meant to influence only perceptions of candidate viability

a nonequilibrium analysis of unanimity rule majority rule and pareto i introduction voting theory is important for understanding economics as well as politics international organizations vote on trade regulations legislatures vote on minimum wage and governments vote on the provision of public goods voting also affects industrial organization for instance limited partnerships may vote on the allocation of resources to various units and shareholders may vote on investment decisions carrera and richmond 1988 what voting rule best achieves pareto optimal outcomes in such cases in the absence of transactions costs it is widely believed that unanimity rule is the best voting rule for promoting pareto efficiency berggren 1996 buchanan and tullock 1962 mueller 2003 buchanan 1967 writes it is evident that unanimous consent is the political counterpart of the pareto criterion for optimality p 285 traditionally viewed unanimity rule guarantees more efficient outcomes than majority rule because unanimity rule only passes proposals that make everyone better off other voting rules like majority rule can pass proposals that make some individuals worse off one of the assumptions that is either explicit or implicit in the these studies is the assumption of rational proposals we define a proposal as rational if it helps maximize the proposer s utility at the end of the game in our analysis proposals are not rational instead they are generated either randomly or sincerely in a single dimensional voting model and evaluated by the pareto criterion or pareto optimality this produces two striking results with regard to pareto optimality first if proposal generation is random then majority rule is usually more likely to select a pareto optimal outcome than unanimity rule second if individuals propose their ideal points then majority rule always selects pareto optimal outcomes at least as well as unanimity rule considering all possible proposals as done in our random generation models has a long tradition in social choice literature arrow 1951 caplin and nalebuff 1988 niemi and weisberg 1968 riker 1982 sen 1979 it also has the advantage of modeling certain types of incomplete information modeling votes where bills are introduced for reasons other than making them pass see stewart 2001 pp 338 41 modeling exogenously generated proposals and for allowing mistakes by the proposer such foundational work should be of interest to those who relate unanimity rule to pareto principles in the study of public goods cornes and sandler 1996 lindahl 1967 political parties aldrich 1995 and legislative institutions colomer 2001 niou and ordeshook 1985 tsebelis 2002 to name a few ii previous studies perhaps the first in depth study of the relationship between unanimity rule and a pareto principle was buchanan and tullock s calculus of consent 1962 buchanan and tullock argued that if decision making costs were negligible unanimity rule would always be the most desirable k majority rule simply because it preserved the pareto principle p 88 although the exact pareto principle they had in mind is not entirely clear it seems that buchanan and tullock were arguing for the criteria of accepting a change from the status quo only if it lead to a pareto improvement otherwise the status quo should be preferred pp 92 93 sen 1979 p 25 1 mueller 2003 pp 138 and 140 41 further compared unanimity rule to majority rule and concluded that unanimity rule typically performs better in terms of the pareto criterion to illustrate his reasoning mueller describes a community voting on both the purchase of a new firehouse and the taxes needed to pay for it in a single bill if the decision was made under unanimity rule the distribution of taxes would be redefined until the firehouse benefited all otherwise the bill would not pass if the decision was made under majority rule a majority might distribute the taxes on a minority such that members of the majority would be net gainers and members of the minority would be net losers

price discrimination copyright law and technological innovation evidence from the introduction of dvds u s copyright law effectively prevents direct price discrimination for copyright holders that sell to different markets in response these firms can engage in indirect price discrimination i derive theoretical predictions about the use of indirect price discrimination and i analyze how optimal pricing strategies differ for different products using data on vhs and dvd movie distribution i find that firms pricing choices are consistent with the predictions of theory and that firms use of indirect price discrimination benefits consumers but harms ancillary retailers finally i examine what optimal pricing strategies might look like in a legal environment that permits direct price discrimination

oligarchic family control social economic outcomes and the quality of government wealthy families as opposed to small public shareholders characterize ownership of the large corporate sectors of many countries around the world this paper shows that greater oligarchic family control over large corporations is associated with worse social economic outcomes it also correlates with more bureaucratic and more interventionist governments and less developed financial markets further tests show that red tape price controls and the lack of shareholder rights protection are the paramount factors relating to the extent of family control of large firms these results are broadly consistent with olson and others who argue that economically entrenched wealthy insiders pursue rent seeking activities to preserve the status quo and that this increases corruption and impedes growth

unanimous rules in the laboratory we study the information aggregation properties of unanimous voting rules in the laboratory in line with theoretical predictions we find that majority rule with veto power dominates unanimity rule we also find that the strategic voting model is a fairly good predictor of subject behavior finally we exploit a framing effect to study how the presence of less sophisticated agents affects veto s welfare properties

research on the motion picture industry state of the art and new directions off the beaten track away from theatrical release the motion picture industry has been subject of extensive academic research over the last decades however most scholars focused on the u s theatrical motion picture market the number of research activities regarding even more profitable release windows such as home video or television has been substantially lower although international distribution is essential for a motion picture project to break even there has been little significant re search on most other markets this paper aims at summarizing the current state of research on the motion picture industry particularly from marketing and management perspective revealing research gaps and proposing recommendations for future research endeavors therefore a three pillar scheme is developed to systemize previous findings research on intraorganizational decision making contractual relationships between national stakeholders and international market competition are differentiated since these insights are mainly derived from u s theatrical exhibition they can hardly be applied to other markets and exhibition windows thus potential research areas are identified to expand knowledge of posttheatrical and international markets

cheap tuesdays and the demand for cinema many movie markets are characterised by extensive uniform pricing practices hampering the ability to estimate price elasticities of demand australia presents a rare exception with most cinemas offering cheap tuesday ticket prices we exploit this feature to estimate a random coefficients discrete choice model of demand for the sydney region in 2007 we harness an extensive set of film cinema and time dependent characteristics to build a rich demand system our results are consistent with a market expansion effect from the practice of discounted tuesday tickets and suggest that cinemas could profit from price dispersion by discounts based on observable characteristics

on data a case study of the evolution of income inequality across time and across countries this paper takes income distribution as a case study of the role of data in economics after describing the transformation which has taken place with regard to the availability of data on income inequality it discusses how the comparability of these estimates is brought into question by differences in methodology that cannot be eliminated by simple adjustments recent analyses of the relationships between income inequality and growth or globalisation are shown to be based on time series plagued by discontinuities which can seriously affect regression results the paper concludes by calling for greater attention to data quality in applied economics

inequality and violent crime abstract we investigate the robustness and causality of the link between income inequality and violent crime across countries first we study the correlation between the gini index and homicide and robbery rates within and between countries second we examine the partial correlation by considering other crime determinants third we control for the endogeneity of inequality by isolating its exogenous impact on these crime rates fourth we control for measurement error in crime rates by modeling it as both unobserved country effects and random noise finally we examine the robustness of this partial correlation to alternative measures of inequality the panel data consist of nonoverlapping 5 year averages for 39 countries during 1965 95 for homicides and 37 countries during 1970 94 for robberies crime rates and inequality are positively correlated within countries and particularly between countries and this correlation reflects causation from inequality to crime rates even after controlling for ot

the unanimous voting rule is not the political equivalent to market exchange the unanimous voting rule is often viewed as analogous to voluntary market ex change this paper demonstrates that when third party pecuniary effects exist this analogy breaks down because unlike markets unanimous voting requires compensation for these ef fects thus efficient market outcomes typically will be rejected by the unanimous voting rule even when transactions costs are low enough to make compensation feasible the political outcome under unanimity will differ from the market outcome the distributional effects of unanimity provide the incentive for people to substitute rent seeking behavior for productive activity and reduce the incentive for productive change providing additional reasons why a less than unanimous voting rule may be optimal when resources are to be allocated politically

vertical contracts in the video rental industry a large body of theoretical work has explored the channels through which vertical contracts can induce efficiency improvements however it is also important to study vertical contracts empirically in order to gain insight into the relative size of different types of efficiency gains in this paper i empirically analyse a contractual innovation in the vertically separated video rental industry prior to 1998 video stores obtained inventory from movie distributors using simple linear pricing contracts in 1998 revenuesharing contracts were widely adopted i investigate the effect of the introduction of revenue sharing contracts on firms profits and consumer welfare i analyse a new panel data set of home video retailers that includes information on individual retailers contract and inventory choices as well as rentals and contract terms for 246 movie titles and 6137 retailers in the u s during each week of 1998 and 1999 and the first half of 2000 a structural econometric model of firms behaviour is developed that describes the nature of firms contract choices estimates from this model indicate that both upstream and downstream profits increase by 10 under the revenue sharing contract for popular titles for less popular titles the effects can be even larger i also estimate that consumers benefit when revenue sharing contracts are adopted

information aggregation and turnout in proportional representation a laboratory experiment abstract this paper documents a laboratory experiment that analyzes voter participation in common interest proportional representation pr elections comparing this with majority rule consistent with theoretical predictions poorly informed voters in either system abstain from voting thereby shifting weight to those who are better informed a dilution problem makes mistakes especially costly under pr so abstention is higher in pr in contrast with private interest environments and welfare is lower deviations from nash equilibrium predictions can be accommodated by a logit version of quantal response equilibrium qre which allows for voter mistakes

china s uneven progress against poverty while the incidence of extreme poverty in china fell dramatically over 1980 2001 progress was uneven over time and across provinces rural areas accounted for the bulk of the gains to the poor though migration to urban areas helped the pattern of growth mattered rural economic growth was far more important to national poverty reduction than urban economic growth agriculture played a far more important role than the secondary or tertiary sources of gross domestic product gdp rising inequality within the rural sector greatly slowed poverty reduction provinces starting with relatively high inequality saw slower progress against poverty due both to lower growth and a lower growth elasticity of poverty reduction taxation of farmers and inflation hurt the poor external trade had little short term impact

how well do children insure parents against low retirement income an analysis using survey data from urban china abstract as population aging becomes more pronounced in the developing world the uneven implementation of social safety nets raises important questions as to how well traditional family based mechanisms insure elderly incomes when pension systems fail using a unique dataset from a recent household survey conducted in urban china we find evidence that private transfers respond to low household income of retired workers when income falls below the poverty line this finding is consistent with an altruistic motive for transfers at low levels of household income at the same time however the transfer response to elderly pre transfer income is not sufficient to fully cover shortfalls that arise with severe pension arrears and low retirement income

bundle size pricing as an approximation to mixed bundling multiproduct firms can set separate prices for all possible bundled combinations of its products mixed bundling however this is impractical for firms with more than a few products because the number of prices increases exponentially with the number of products we find that simple pricing strategies are often nearly optimal specifically we show that bundle size pricing setting prices that depend only on the size of bundle purchased tends to be more profitable than offering the individual products priced separately and tends to closely approximate the profits from mixed bundling jel d24 d42 l11 l13 l25

bundling as an entry barrier in this paper we look at the case for bundling in an oligopolistic environment we show that bundling is a particularly effective entry deterrent strategy a company that has market power in two goods a and b can by bundling them together make it harder for a rival with only one of these goods to enter the market bundling allows an incumbent to credibly defend both products without having to price low in each the traditional explanation for bundling that economists have given is that it serves as an effective tool of price discrimination by a monopolist although price discrimination provides a reason to bundle the gains are small compared with the gains from the entry deterrent effect i introduction in this paper we look at the case for bundling in an oligopolistic environment we show that bundling is a particularly effective entry deterrent strategy a company that has market power in two goods a and b can by bundling them together make it harder for a rival with only one of these goods to enter the market bundling allows an incumbent to defend both products without having to price low in each while it is still possible to compete by offering a rival bundle a monopolist can significantly lower the potential profits of a one product entrant without having to engage in limit pricing prior to entry we also show that bundling continues to be an effective pricing tool even if entry deterrence fails or if there is already an existing one product rival a company with a monopoly in product a and a duopoly in product b makes higher profits by selling an a b bundle than by selling a and b independently leveraging market power from a into b and accepting some one product competition against the bundle is better than using the monopoly power in good a all by itself since bundling mitigates the impact of competition on the incumbent an entrant can expect the bundling strategy to persist even without any commitment the traditional explanation for bundling that economists have given is that it serves as an effective tool of price discrimination by a monopolist see stigler 1968 adams and yellen

minority voting rights can maximize majority welfare i use condorcet s information aggregation model to show that sometimes the best possible decision procedure for the majority allows the minority to enforce its favored outcome even when overruled by a majority special voting power gives the minority an incentive to participate meaningfully and more participation means more information is aggregated which makes the majority better off this result can be understood as a mathematical corroboration of lani guinier s arguments that voting procedures can be designed to encourage minority participation benefitting everyone

crime and local inequality in south africa the authors examine the effects of local inequality on property and violent crime in south africa their findings are consistent with economic theories relating inequality to property crime and also with sociological theories that imply that inequality leads to crime in general burglary rates are 20 30 percent higher in police station jurisdictions that are the wealthiest among their neighbors suggesting that criminals travel to neighborhoods where the expected returns from burglary are highest the authors do not find evidence that inequality between racial groups fosters interpersonal conflict at the local level

voting behavior and information aggregation in elections with private information we analyze two candidate elections in which voters are uncertain about the realization of a state variable that affects the utility of all voters each voter has noisy private information about the state variable we show that the fraction of voters whose vote depends on their private information goes to zero as the size of the electorate goes to infinity nevertheless elections fully aggregate information in the sense that the chosen candidate would not change if all private information were common knowledge equilibrium voting behavior is to a large extent determined by the electoral rule i e if a candidate is required to get at least x percent of the vote in order to win the election then in equilibrium this candidate gets very close to x percent of the vote with probability close to one finally if the distribution from which preferences are drawn is uncertain then elections will generally not satisfy full information equivalence and the fraction of voters who take informative action does not converge to zero

divided majority and information aggregation theory and experiment this paper studies theoretically and experimentally the properties of plurality and approval voting when a majority gets divided by information imperfections the majority faces two challenges aggregating information to select the best majority candidate and coordinating to defeat the minority candidate under plurality the majority cannot achieve both goals at once under approval voting it can welfare is strictly higher because some voters approve of both majority alternatives in the laboratory we find i strong evidence of strategic voting and ii superiority of approval voting over plurality finally subject behavior suggests the need to study equilibria in asymmetric strategies

equivalence scale relativities and the extent of inequality and poverty most inequality and poverty theory analyzes equivalent income distributions for homogeneous populations incomes are assumed to be deflated by an equivalence scale that accounts for differences in needs between households yet in practice there is no consensus about what the appropriate equivalence scale is the authors analyze how the choice of equivalence scale affects inequality and poverty measures and show that there is a systematic relationship between equivalence scale generosity and the extent of inequality and poverty they consider most of the measures in common use and provide some empirical illustrations copyright 1992 by royal economic society

welfare and economic growth in kenya 1914 76 abstract in this paper we present estimates of per capita income income distribution and poverty in kenya for the period between 1914 and 1976 the estimates indicate that per capita incomes mostly increased up to 1974 inequality increased most of the time until 1950 then fell and increased again until 1971 and then finally fell poverty declined until 1964 but has since then increased slightly a decomposition analysis shows that modern sector enrichment contributed more to growth than modern sector enlargement and that traditional sector enrichment was of greater importance to the poor than modern sector enlargement

manipulated electorates and information aggregation we study information aggregation with a biased election organizer who recruits voters at some cost voters are symmetric ex ante and prefer policy a in state a and policy b in state b but the organizer prefers policy a regardless of the state each recruited voter observes a private signal that is imperfectly informative about the unknown state but does not learn the size of the electorate in contrast to existing results for large elections there are equilibria in which information aggregation fails as the voter recruitment cost disappears a perfectly informed organizer can ensure that policy a is implemented independent of the state by appropriately choosing the number of recruited voters in each state

deliberation preference uncertainty and voting rules a deliberative committee is a group of at least two individuals who first debate about what alternative to choose prior to these same individuals voting to determine the choice we argue first that uncertainty about individuals private preferences is necessary for full information sharing and second demonstrate in a very general setting that the condition under which unanimity can support full information revelation in debate amounts to it being common knowledge that all committee members invariably share identical preferences over the alternatives it follows that if ever there exists an equilibrium with fully revealing debate under unanimity rule there exists an equilibrium with fully revealing debate under any voting rule moreover the converse is not true of majority rule if there is uncertainty about individuals preferences

price discrimination and bargaining empirical evidence from medical devices many important issues in business to business markets involve price discrimination and negotiated prices situations where theoretical predictions are ambiguous this paper uses new panel data on buyer supplier transfers and a structural model to empirically analyze bargaining and price discrimination in a medical device market while many phenomena that restrict price discrimination are suggested as ways to decrease hospital costs e g mergers group purchasing organizations and transparency i find that 1 non discriminatory pricing actually works against hospitals because competition is more intense under price discrimination and 2 results depend ultimately on a previously unexplored bargaining effect

perceptions of equity and the distribution of income this article develops a model in which quit rates and thus the income distribution depend on employee perceptions of the accuracy of employer assessments of individual productivity because these latter assessments affect wages when employees believe that these assessments are accurate income inequality tends to be high the model can account for the negative correlation across some countries of inequality and the extent to which inequality is deemed to be excessive it also fits the contrast in u s and french experiences concerning the tenure of highly educated workers with high wages relative to the tenure of lower paid workers

a new data set measuring income inequality this article presents a new data set on inequality in the distribution of income the authors explain the criteria they applied in selecting data on gini coefficients and on individual quintile groups income shares comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect inter temporal and international comparability based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality they do find a strong positive relationship between growth and reduction of poverty

get rid of unanimity rule the superiority of majority rules with veto power we study unanimous decision making under incomplete information we argue that unanimous decision rules are not all equivalent we show that majority rules with veto power are i pareto superior to commonly used unanimous rules and ii ex ante efficient in a broad class of situations

long term development perspectives of sub saharan africa under climate policies abstract ambitious climate policy increases the cost of energy and therefore has important interactions with the prospects of development in the countries of sub saharan africa these interactions include the potential for gain for the continent in the form of new trade opportunities and climate finance in this paper we quantify the costs and benefits of climate policy in sub saharan africa using an integrated assessment model we consider key characteristics of the continent including the favorable conditions for renewable energy a newly designed scenario analysis allows identifying the main drivers of the results we show that sub saharan africa could implement climate policy in line with the 2 c target at roughly net zero costs if the international community follows up on its commitment towards supporting developing countries as declared in the paris agreement sub saharan africa could become an important supplier of energy from biomass and could thus even benefit from more ambitious climate policy due to higher demand for this source of energy the absence of a painful trade off between short term development and long term climate stabilization could provide policy makers with a much richer policy option space than previously considered one such option is to link climate policy with poverty reduction through for example the provision of clean electricity

voting and vetoing the consequences of veto power in committees is analyzed using the appro ach of noncooperative bargaining theory it is first shown that in equilibrium nonveto players do not share in the benefits gained by the decision making of the committee that is in every equilibrium outcome of the bargaining game nonveto players earn zero some measures for reducing the excessive power of veto members in committees are analyzed specifically i study the effects of imposing a deadline on negotiations and of expanding the committee by increasing the number of nonveto players quantitative results are given for the case of the un security council

tying foreclosure and exclusion in recent years the leverage theory of tied good sales has faced heavy and influential criticism in an important sense though the models used by its critics are actually incapable of addressing the leverage theory s central concerns here the author reconsiders the leverage hypothesis and argues that tying can indeed serve as a mechanism for leveraging market power the mechanism through which this leverage occurs its profitability and its welfare implications are discussed in detail copyright 1990 by american economic association

the welfare effects of bundling in multichannel television markets we measure how the bundling of television channels affects short run welfare we estimate an industry model of viewership demand pricing bundling and input market bargaining using data on ratings purchases prices bundles and input costs we conduct simulations of a la carte policies that require distributors to offer individual channels for sale to consumers we estimate that negotiated input costs rise by 103 0 percent under a la carte these higher input costs offset consumer benefits from purchasing individual channels mean consumer and total surplus change by an estimated 5 4 to 0 2 percent and 1 7 to 6 0 percent respectively jel d12 l11 l51 l82 m31

social contagion and income heterogeneity in new product diffusion a meta analytic test standard diffusion models capture social contagion only coarsely and do not allow one to operationalize different contagion mechanisms moreover there is increasing skepticism about the importance of contagion and as has long been known s shaped diffusion curves can also result from heterogeneity in the propensity to adopt we present hypotheses about conditions under which specific contagion mechanisms and income heterogeneity are more pronounced and test these hypotheses using a meta analysis of the q p ratio in applications of the bass diffusion model the ratio is positively associated with the gini index of income inequality in a country supporting the heterogeneity in thresholds interpretation the ratio also varies as predicted by the gamma shifted gompertz diffusion model but the evidence vanishes after controlling for national culture as to contagion the q p ratio varies with the four hofstede dimensions of national culture for three of them in a direction consistent with the social contagion interpretation furthermore products with competing standards have a higher q p ratio which is again consistent with the social contagion interpretation finally we find effects of national culture only for products without competing standards suggesting that technological effects and culturally moderated social contagion effects might not operate independently from each other

the use of full line forcing contracts in the video rental industry bundling is at the forefront of many policy debates as new technologies allow firms to implement more complex bundling arrangements realistic analyses of bundling particularly between suppliers and retailers require detailed data on both supply arrangements and consumer demand we analyze firms use of bundling as a vertical restraint known as full line forcing using extensive supply and demand data from the video rental industry our model captures key details of the market that determine firms contractual choices and sheds light on the implications of these decisions the empirical approach provides a model for how to analyze bundling when detailed data are available jel d86 l14 l81 l82

why is income inequality so low in china compared to other countries the effect of household survey methods many studies suggest that income inequality in china is comparatively low but if income inequality in urban china was measured using monthly income as in many other countries it would be from 17 to 69 higher depending on the inequality measure used 2001 elsevier science b v all rights reserved

is democracy more expropriative than dictatorship tocquevillian wisdom revisited abstract we reexamine the incentive effect of political democracy on the tax rate by defining a political regime over two dimensions the extent of the franchise and the extent that the redistribution of tax revenues is biased towards the rich standard tocquevillian models assume that even if there is limited franchise there is no redistribution bias from this it follows that democracy is more expropriative than oligarchy because a poorer median voter opts for higher taxes introducing the realistic assumption of a redistribution bias we find a countervailing effect democratization decreases exploitation by the rich on the disenfranchised poor since tax revenues are redistributed over a larger base the median voter may gain less from redistributive taxation we call this the olson effect

the swing voter s curse in the laboratory this paper reports the first laboratory study of the swing voter s curse and provides insights on the larger theoretical and empirical literature on pivotal voter models our experiment controls for different information levels of voters as well as the size of the electorate the distribution of preferences and other theoretically relevant parameters the design varies the share of partisan voters and the prior belief about a payoff relevant state of the world our results support the equilibrium predictions of the feddersen pesendorfer model and clearly reject the notion that voters in the laboratory use naive decision theoretic strategies the voters act as if they are aware of the swing voter s curse and adjust their behavior to compensate while the compensation is not complete and there is some heterogeneity in individual behavior we find that aggregate outcomes such as efficiency turnout and margin of victory closely track the theoretical predictions

committee design with endogenous information this paper is concerned with the arrangements for collective decision making in a world where agents must be motivated to acquire information the analysis identifies some basic forces shaping the design of panels of decision makers referees managers jurors etc in situations where decision makers are useful only in so far as they expend some effort to gain information about the alternatives at hand these situations are common one being the refereeing process where an editor requires the opinions of a number of experts who must read the paper acquire information in order to give an opinion as to publication analogously in committees which screen applicants to a programme the committee members must gain information about the applicant s qualifications and likelihood of success in order to evaluate whether to admit him her finally in trial juries it is important that jurors pay attention to the evidence in order to make an informed judgement 1 we focus on environments where information is a public good in the sense that the social benefits of one decision maker acquiring information exceed the private benefits a good mechanism in this environment must not only aggregate information efficiently but also induce the decision makers to acquire information we analyse the design of voting mechanisms our problem is to choose two parameters which determine both the incentive to acquire information and the efficiency with which information is aggregated the first parameter is the size of the decision making unit the number of committee members the second is the plurality required to overturn the status quo the voting rule our main result is this a voting rule that requires a large plurality in the extreme unanimity to upset the status quo can be optimal only if the information available to each committee member is sufficiently accurate when individual information is noisy the drawback

tying investment and the dynamic leverage theory the idea that an incumbent supplier may tie two complementary products to fend off potential entrants is popular among practitioners yet is not fully understood in formal economic theory this article makes sense of the argument by formally deriving a dynamic version of the old leverage doctrine we show that when an incumbent monopolist faces the threat of entry in all complementary components tying may make the prospects of successful entry less certain discouraging rivals from investing and innovating tie in sales may reduce consumer and total economic welfare copyright 2001 by the rand corporation

would rational voters acquire costly information abstract we analyze an election in which voters are uncertain about which of two alternatives is better for them voters can acquire some costly information about the alternatives in agreement with downs s rational ignorance hypothesis individual investment in political information declines to zero as the number of voters increases however if the marginal cost of information is near zero for nearly irrelevant information there is a sequence of equilibria such that the election outcome is likely to correspond to the interests of the majority for arbitrarily large numbers of voters thus rationally ignorant voters are consistent with a well informed electorate

a strategic motivation for commodity bundling the analytical literature on commodity bundling explains the practice of selling two or more differentiated products in a single package as a surrogate for direct price discrimination in contrast this paper shows that imperfect competition creates a strategic incentive to bundle the profitability of bundling whether it adversely affects rival producers and whether it yields an overall efficiency gain depends inter alia on the nature of product market competition the role of complementarity in explaining why firms bundle is also explored copyright 1990 by blackwell publishing ltd

parametric equivalence scales and scale relativities we respond to banks and johnson s 1994 comment on coulter et al 1992 drawing on a more general discussion of parametric equivalence scale and scale relativity issues and new empirical results we show that criticisms of our earlier work are unfounded when the mcclements scale is properly characterised the scale does indeed provide lower estimates of poverty and inequality levels than most other scales we reiterate our conclusion that relationships between scale relativities and inequality and poverty indices may be index specific moreover the picture about distributional trends may differ from that about levels

profitability of product bundling using copulas to model the stochastic dependence of values this article establishes new general conditions for the profitability of product bundling a multiproduct monopolist generally achieves higher profit from mixed bundling than from separate selling if consumer values for two of its products are negatively dependent are independent or have sufficiently limited positive dependence the profitability of monopoly bundling also extends to situations where a multiproduct firm competes with a single product rival

antitrust and the new industrial economics my assignment here is to assess the implications of recent theoretical work in industrial economics for antitrust in the united states i don t have space enough to present a comprehensive survey of that work nor even to catalog all recent developments with apparent antitrust implications i attempt instead to describe the general character of those implications limiting myself to a few illustrative specifics industrial economics affects antitrust policy in three different ways first it is used in positive analysis aimed at determining whether or not current law has been violated in specific cases and at assessing damages due injured parties second it should be used in evaluating the desirability of relief that might be imposed in particular cases in order to alter structure or conduct if a violation is found finally the tools and results of industrial economics are important inputs in the formulation of general rules of law i argue here that the new industrial economics can contribute a lot to the positive analysis of individual cases but it has much less to say about the desirability of particular relief or of general rules of law a final section briefly examines some implications of this situation

a graphical analysis of bundling by comparing the demand for a bundle and the vertical sum of the demands for its components this article analyzes the profitability and welfare consequences of bundling if it does not lower costs bundling tends to be profitable when reservation values are negatively correlated and high relative to costs if bundling lowers costs and costs are high relative to average reservation values positively correlated reservation values increase the incentive to bundle bundling and charging a price equal to the sum of the components prices lowers consumer surplus bundling can however increase consumer surplus when it results in lower prices copyright 1995 by university of chicago press

strategic voting over strategic proposals prior research on strategic voting has reached the conclusion that unanimity rule is uniquely bad it results in destruction of information and hence makes voters worse off we show that this conclusion depends critically on the assumption that the issue being voted on is exogenous that is independent of the voting rule used we depart from the existing literature by endogenizing the proposal that is put to a vote and establish that under many circumstances unanimity rule makes voters better off moreover in some cases unanimity rule also makes the proposer better off even when he has diametrically opposing preferences in this case unanimity is the pareto dominant voting rule voters prefer unanimity rule because it induces the proposing individual to make a more attractive proposal the proposing individual prefers unanimity rule because the acceptance probabilities for moderate proposals are higher we apply our results to jury trials and debt restructuring

noncomparable poverty comparisons poverty estimates based on enumeration from a single point in time form the basis for most country level analysis of poverty cross country comparisons of poverty and global counts of the poor implicitly assume that country level poverty headcounts are comparable this paper illustrates that the assumption of comparability is potentially invalid when households are interviewed multiple times throughout the year as opposed to a single visit interview an example from jordan illustrates how the internationally comparable approach of handling data from repeat visits yields a poverty rate that is 26 per cent greater than the rate that is currently reported as the official estimate

multiproduct monopoly commodity bundling and correlation of values through what selling strategy can a multiproduct monopolist maximize his profits when his knowledge about individual consumers preferences is limited one possibility extensively studied in the context of a single good monopoly is to use quantity dependent pricing as a means of discriminating among customers with differing tastes see for example oi 1971 and maskin and riley 1984 an alternative technique for price discrimination first suggested by stigler 1968 and analyzed further by adams and yellen 1976 is for the monopolist to package two or more products in bundles rather than selling them separately through a series of examples adams and yellen illustrate that bundling can serve as a useful price discrimination device even when all consumers willingnesses to pay for each of the goods individually are unaffected by whether they are also consuming the other product a typical example is illustrated in figure i adapted from figure iv in adams and yellen where there are two goods three consumers ab c who consume at most one unit of each good with reservation values for each good that are independent of whether the other good is consumed and zero costs of production there a bundle offered at a price of 100 fully extracts all potential surplus which would be impossible pricing the goods independently unfortunately though these authors do not provide any general characterization of the circumstances in which bundling is actually a multiproduct monopolist s optimal strategy their examples however such as figure i create the impression that the profitable use of bundling

recovering comparable poverty estimates in cote d ivoire recent studies on cote d ivoire show a four fold increase in poverty rates between 1985 and 2008 however multiple revisions in the survey design questions the validity of the ivorian poverty trend in this paper we follow two simple steps to recover the comparable poverty trend first we construct a common consumption basket over time second we follow a two stage method of moments framework tarozzi 2007 to re estimate poverty headcounts on average the adjusted trend shows a two percentage point difference in poverty rates from 1985 to 2008 a number of robustness checks provide robust support to this revised poverty trend

distributive politics and economic growth a crude distinction between economics and politics would be that economics is concerned with expanding the pie while politics is about distributing it in this paper we analyze the relationship between the two we focus on how an economy s initial configuration of resources shapes the political struggle for income and wealth distribution and how that in turn affects long run growth our main conclusion is that inequality is conducive to the adoption of growth retarding policies we derive this result from a simple political economy model of growth and present cross country evidence consistent with it the key feature of our model is that individuals differ in their relative factor endowments we distinguish between two types of factors an accumulated factor called capital and a nonaccumulated factor called labor growth is driven by the expansion of the capital stock which is in turn determined by individual saving decisions long run growth is endogenous as the aggregate production function is taken to be linearly homogeneous in capital and productive government services taken together the provision of government services is financed by a tax on capital because government services are productive a small tax on

inequality and growth in the united states is there asymmetric response at the state level a previous study that tried to assess the impact of economic growth on income inequality in the u s used state level data and an ardl panel model to conclude that economic growth worsens income in

the swing voter s curse the authors analyze two candidate elections in which some voters are uncertain about the realization of a state variable that affects the utility of all voters they demonstrate the existence of a swing voter s curse less informed indifferent voters strictly prefer to abstain rather than vote for either candidate even when voting is costless the swing voter s curse leads to the equilibrium result that a substantial fraction of the electorate will abstain even though all abstainers strictly prefer voting for one candidate over voting for another copyright 1996 by american economic association

commodity bundling by single product monopolies consider two products that have independent demands in the sense that all individual buyers consider them neither substitutes nor complements then if the two products are priced separately the demand for either is independent of the price of the other in his classic analysis of block booking of feature films george stigler shows that it may be profitable for a monopoly seller of two such products to bundle them by requiring a buyer to take both in order to get either his work provides a rationale for tying arrangements that does not depend on technological or other dependencies among the products involved 2 adams and yellen extend the analysis of multiproduct monopoly with independent demands 3 they discuss two different bundling strategies pure bundling in which the seller only offers the products in fixed proportions and mixed bundling in which buyers may either buy the products separately or purchase a bundle with fixed proportions of each in this note i consider a single product monopoly and investigate the profit and welfare implications of bundling its product for some other

the simultaneous evolution of growth and inequality research on inequality and growth can be divided into two strands one deriving from kuznets and lewis has tried to identify a mechanistic relationship between growth or level of income and inequality the other has tried to find causal explanations of growth and inequality treating each independently in this paper we draw from both strands to test whether growth and inequality are the joint outcomes of other variables and processes we find that simultaneous examination of growth and inequality yields significantly different results and has different consequences for policy from previous independent studies the empirical literature on growth and inequality can be divided into two broad strands one following the pioneering work of kuznets and lewis is motivated by the pessimistic conjecture that the process of growth and development somehow requires increasing inequality at least in the early stages this has led to many efforts to identify a mechanical relationship between the level of development and inequality anand and kanbur 1993 or to determine whether faster growth requires higher or lower inequality the second strand has sought to identify the causal factors influencing the evolution of growth and inequality independently this research has looked either at growth for example barro and sala i martin 1995 or at inequality li et al 1997 but has not tried to identify those factors that might simultaneously influence both growth and inequality 2 thus the literature that looks simultaneously at growth and inequality descending most notably from kuznets 1955 relates them in a mechanistic manner that ignores or minimises the role of other causal factors including policy while the literature that incorporates other causal factors including policies looks independently at growth and inequality neither approach is particularly convincing from a theoretical standpoint the evolution of growth and inequality must surely be the outcome of similar processes in addition neither approach is particularly useful for the policy maker who needs to balance the impact of policies on both growth and distribution in this paper we investigate whether growth and inequality are simultaneously determined and if so whether or not they are subject to

dynamic collective choice with endogenous status quo we analyze a bargaining situation in which preferences evolve over time and the previous agreement becomes the next status quo the endogeneity of the status quo exacerbates the players conflict of interest players disagree more often than under exogenous status quo this leads to inefficiencies and status quo inertia under certain conditions the negotiations can come to a complete gridlock players never reach an agreement gridlock can occur between players with arbitrarily similar preferences provided they are sufficiently patient in legislative settings our model predicts polarization and explains why legislators may fail to react promptly to economic shocks

capturing strategic rent full line forcing brand discounts aggregate rebates and maximum resale price maintenance this paper examines the implications of a retailer s shelf space stocking decisions on the optimal marketing strategy of an upstream multiproduct monopolist when the retailer s opportunity cost of shelf space is known full line forcing brand discounts and maximum resale price maintenance are sufficient to achieve the monopolist manufacturer s first best profit when these strategies are adopted the retailer s profit is reduced to the scarcity rents obtainable on her shelf space when the retailer s opportunity cost of shelf space is unknown the use of aggregate rebates can act as a screening device to maximize channel profit copyright 1991 by blackwell publishing ltd

aggregating information by voting the wisdom of the experts versus the wisdom of the masses this article analyzes participation and information aggregation in a common value election with continuous private signals in equilibrium some citizens ignore their private information and abstain from voting in deference to those with higher quality signals even as the number of highly informed peers grows large however citizens with only moderate expertise continue voting so that voter participation remains at realistic levels e g 50 to 60 percent for simple examples the precise level of voter turnout along with the margin of victory are determined by the distribution of expertise improving a voter s information makes her more willing to vote consistent with a growing body of empirical evidence but makes her peers more willing to abstain providing a new explanation for various empirical patterns of voting equilibrium participation is optimal even though the marginal voter may have very little e g below average expertise and even though nonvoters information is not utilized copyright oxford university press

the geography of inequality difference and determinants of wage and income inequality across us metros florida r and mellander c the geography of inequality difference and determinants of wage and income inequality across us metros regional studies this paper examines the geographic variation in wage inequality and income inequality across us metros the findings indicate that the two are quite different wage inequality is closely associated with skills human capital technology and metro size in line with the literature but these factors are only weakly associated with income inequality furthermore wage inequality explains only 15 of income inequality across metros income inequality is more closely associated with unionization race and poverty no relationship is found between income inequality and average incomes and only a modest relationship between it and the percentage of high income households