racism xenophobia and redistribution we model political competition as a contest between parties that represent constituents and which announce policies in a two dimensional policy space the first dimension concerns the degree of redistribution and the second the race or immigration issue given the distribution of voter preferences on this space a political equilibrium is determined we study the effect that racist or anti immigrant preferences in the polity have on equilibrium values of the redistributive policy for the united states there is a substantial reduction in distribution below what it counterfactually would have been absent racism for the uk france and denmark there are effects of the same sign but with different magnitudes jel d70 d72 d30

the political economy of conflicts over wealth why don t the rabble expropriate the rich the most striking feature of liberal democracies is the coexistence of large inequalities of wealth with a roughly egalitarian distribution of voting power so far most attempts to explain this have asked why don t the poor form a coalition to expropriate the rich this paper argues that this is not necessarily the best way to interpret the problem and attempts to provide an alternative unified political economic model that is more consistent with standard assumptions about voting this is done by studying what would happen if every possible coalition could form in a wealth distribution game among the main findings is that if the marginal contribution of every individual to production is increasing sufficiently there is a stable distribution of the product this may include the egalitarian distribution if individuals are not so valuable there is no stable distribution

the democratic political economy of progressive income taxation why do both left and right political parties typically propose progressive income taxation schemes in political competition analysis of this problem has been hindered by the two dimensionality of the issue space to give parties a choice over a domain that contains both progressive and regressive income tax policies requires an issue space that is at least two dimensional nash equilibrium in pure strategies of the standard two party game whose players have complete preferences over a two dimensional policy space generically fails to exist i introduce a new equilibrium concept for political games based on the fact of factional conflict within parties each party is supposed to consist of reformists militants and opportunists each faction has a complete preference order on policy space but together they can only agree on a partial order nash equilibria of the two party game where the policy space consists of all quadratic income tax functions and each party is represented by its partial order exist and it is shown that in such equilibria both parties propose progressive income taxation

candidate reputations and the incumbency effect abstract a major shortcoming of the classical median voter model is that its central prediction convergence of platforms to the median voter s ideal is seldom observed one reason is that the classical model neglects the importance of voter expectations as a determinant of votes here we associate voters expectations about candidates with past as well as current candidate pronouncements and assume that incumbents whose actions are consistent with their reputations are perceived as less risky than challengers in equilibrium candidates choose distinct platforms typically neither adopts the median voter s ideal point either candidate may win depending on how well the incumbent s reputation reflects current voter tastes and how relatively risky the electorate perceives the challenger to be

electoral competition with privately informed candidates we consider a model of elections in which two office motivated candidates receive private signals about the location of the median voter s ideal point prior to taking policy positions we show that at most one pure strategy equilibrium exists and provide a sharp characterization if one exists after receiving a signal each candidate locates at the median of the distribution of the median voter s location conditional on the other candidate receiving the same signal it follows that a candidate s position conditional on his her signal is a biased estimate of the true median with candidate positions tending to the extremes of the policy space we provide sufficient conditions for the existence of a pure strategy equilibrium essentially the pure strategy equilibrium exists if for each signal the other candidate is sufficiently likely to receive a signal in the same direction that is at least as extreme though the electoral game exhibits discontinuous payoffs for the candidates we prove that mixed strategy equilibria exist generally that equilibrium expected payoffs are continuous in the parameters of the model and that mixed strategy equilibria are upper hemicontinuous we investigate the robustness of the median voter theorem to private information pure strategy equilibria may fail to exist in models close to the downsian model but mixed strategy equilibria must and they will be close to the downsian equilibrium finally we provide bounds on the support of mixed strategy equilibria and restrictions on possible atoms of equilibrium mixed strategies

electoral competition in heterogeneous districts this paper considers a model of elections in which parties compete simultaneously for multiple districts i show that if districts are heterogeneous then a unique two party equilibrium exists under plurality rule in which further entry is deterred the equilibrium requires that parties choose noncentrist policy platforms and not converge to the ideal policy of the median voter these characteristics are consistent with empirical observation in contrast to those of single district models necessary and sufficient conditions for the existence of the equilibrium are then characterized and related to duverger s law the existence of multiple party equilibria in this environment is also considered

wicksell lindahl and the theory of public goods wicksell s and lindahl s ideas on public goods and decisions are reviewed in light of later developments in the theoretical economics literature i begin by discussing their normative ideals in particular the notion of justness and the sources of the difficulties in reaching them wicksell s and lindahl s ideal states as well as the obstacles that they perceive are compared to more recent views on free riding and on the behavior of elected representatives their views on political bargaining are then related to later concepts in particular to the core of the economy

fairness self interest and the politics of the progressive income tax all advanced democracies have adopted income taxes with considerable progression in marginal tax rates to explain this we examine the nature of individual and collective preferences over alternative tax schedules in the context of a simple two sector model we first consider the case of altruistic or sociotropic citizens who view the income tax as a means of achieving a fairer or more egalitarian distribution of income we show that greater marginal rate progressivity may well be less fair that a fairest tax however defined is always a linear or flat rate schedule in which all incomes are taxed at the same marginal rate and that with a purely sociotropic electorate there exists a flat rate schedule which is a majority equilibrium we then show that with self interested voters who seek to minimize their own tax burdens greater marginal rate progression may well be preferred by middle and upper income voters that for middle income citizens the optimal schedule is a sharply progressive one and that within the set of individually optimal schedules there exists a majority equilibrium which is a progressive schedule which minimizes the burden on median income or middle class citizens at the expense of lower and upper income taxpayers

representative democracy and marginal rate progressive income taxation abstract this paper develops a political economy model that is consistent with the fact that democracies have a preference for increasing marginal tax rates on income we present a model in which there is an exogenous set of political parties with preferences over the set of admissible tax schedules this set contains virtually any increasing and piecewise linear continuous function each party decides whether or not to present a candidate for election there is a fixed cost of running the elected candidate implements one of her preferred tax policies our main results provide conditions under which a strong nash equilibrium exists and a tax schedule with increasing marginal tax rates is implemented in some nash equilibria and in any strong nash equilibrium

evaluating natural resource investments notwithstanding impressive advances in the theory of finance over the past 2 decades practical procedures for capital budgeting have evolved only slowly the standard technique which has remained unchanged in essentials since it was originally proposed see dean 1951 bierman and smidt 1960 derives from a simple adaptation of the fisher 1907 model of valuation under certainty under this technique expected cash flows from an investment project are discounted at a rate deemed appropriate to their risk and the resulting present value is compared with the cost of the project this standard textbook technique reflects modern theoretical developments only insofar as estimates of the discount rate may be obtained from crude application of single period asset pricing theory but see brennan 1973 bogue and roll 1974 turnbull 1977 constantinides 1978 the inadequacy of this approach to capital budgeting is widely acknowledged although not widely discussed its obvious deficiency is its the evaluation of mining and other natural resource projects is made particularly difficult by the high degree of uncertainty attaching to output prices it is shown that the techniques of continuous time arbitrage and stochastic control theory may be used not only to value such projects but also to determine the optimal policies for developing managing and abandoning them the approach may be adapted to a wide variety of contexts outside the natural resource sector where uncertainty about future project revenues is a paramount concern

partisan politics and election failure with ignorant voters abstract we analyze candidate competition when some voters do not observe a candidate s policy choice voters have a personality preference when both candidates offer the same policy in equilibrium the candidate with a personality advantage may get elected with a partisan policy even though his opponent s policy is preferred by all voters the departure from the downsian prediction is most pronounced when candidates have a weak policy preference and care mostly about winning the election in that case uninformed voters choose the candidate with the preferred personality even if electing this candidate implies a lower payoff on average

party polarization in legislatures with office motivated candidates we develop a theory of legislative competition in which voters care about local candidate valence and national party positions that are determined by the parties median legislators as long as election outcomes are sufficiently predictable the only stable equilibria exhibit policy divergence between the parties if the degree of uncertainty about election outcomes decreases and if voters place less weight on local candidates valence polarization between the parties increases furthermore a systematic electoral shock makes the party favored by the shock more moderate while the disadvantaged party becomes more extreme finally we examine data on state elections and the ideological positions of state legislatures and find patterns that are consistent with key predictions of our model

spatial equilibrium with entry this paper examines spatial equilibrium in political competition when established parties choose their platforms competitively while rationally anticipating entry of a vote maximizing third party the resulting equilibrium is substantially different from the hotelling median equilibrium established parties are spatially separated and third parties will generally lose the election this provides one theoretical explanation for the stability of two party systems namely that non cooperative behavior between established parties can effectively prevent third parties from winning

an economic model of representative democracy this paper develops an approach to the study of democratic policy making where politicians are selected by the people from those citizens who present themselves as candidates for public office the approach has a number of attractive features first it is a conceptualization of a pure form of representative democracy in which government is by as well as of the people second the model is analytically tractable being able to handle multidimensional issue and policy spaces very naturally third it provides a vehicle for answering normative questions about the performance of representative democracy

political competition between differentiated candidates abstract we introduce a framework of electoral competition in which voters have general preferences over candidates immutable characteristics such as gender race or previously committed policy positions as well as their policy positions which are flexible candidates are uncertain about the distribution of voter preferences and choose policy positions to maximize their winning probability we characterize a property of voter utility functions uniform candidate ranking ucr that captures a form of separability between fixed characteristics and policy when voters have ucr preferences candidates equilibrium policies converge in any strict equilibrium in contrast notions like competence or complementarity lead to non ucr preferences and policy divergence in particular we introduce a new class of models that contains the probabilistic voting model as a special case and in which there is a unique equilibrium that generically features policy divergence

micro targeting and polarization abstract this paper connects the rise in polarization to changes in media technology which allow for higher precision in the advertising strategy of candidates candidates place ads in media outlets whose audiences differ in ideology and size we develop the concept of media centrality which takes into account differences in the media network and in ideology media centrality leads to a simple characterization of both the optimal targeting strategy and policy we show that generally a more fragmented media landscape leads to an increase in polarization

investment opportunity in china s overseas oil project an empirical analysis based on real option approach abstract china s overseas oil investments uphold national energy security located in the complex international economic and political environment the benefits of overseas oil projects are affected by various uncertainties oil companies call for a set of evaluation method dealing with these uncertainties especially when encountering low oil price conditions it is much more crucial to answer when to optimally invest rather than whether to invest this paper analyzes the investment opportunity of an oil project in the development and production phase considering uncertainty irreversibility and management flexibility the decision making process combines discounted cash flow dcf method and the trinomial tree model of real option approach roa for practical purposes tools of hurdle price cumulative probability and decision tree are adopted in addition results of the case project show the economic feasibility at present and optimal start up timing at the end of 2016 besides the lower cost parameters generally make it easier to meet the opportunity the scenario analysis suggests the higher risk contributes to an earlier start up furthermore the issues of method applicability investment signals and decision lag effects are discussed

disentangling effects of policy reform and environmental changes in the norwegian coastal fishery for cod we construct a detailed bioeconomic model of the norwegian coastal cod fishery this fishery has been open access up to the policy change during the cod crisis of 1989 1990 to answer to what extent the subsequent increase in biomass and profits was due to improved management we isolate the effect of environmental variability projecting stock and harvest forward in the counterfactual scenario of no intervention we show that the policy had a small positive impact on biomass but a pronounced positive effect on profit the main drivers of profit gains are increases in productivity and savings in fuel and labor costs jel d23 q22

is there a demand for income tax progressivity recently marhuenda and ortuno ortin economics letters 48 1995 319 have provided a popular support for progressivity theorem that says that a marginal progressive tax always defeats a marginal regressive tax as long as individuals vote for the tax scheme minimizing their tax liabilities and the median income is less than the mean income in this paper we provide under similar circumstances a popular support for regressivity theorem according to which for any existing tax scheme there is always a majority support for a regressive reform reducing marginal progressivity or increasing marginal regressivity this regressive reform is supported by both extremes of the income distribution combining this result with marhuenda and ortuno ortin s result implies that vote cycling between regressive and progressive tax reform is inevitable and thus that the demand for progressivity cannot be established in the standard downsian framework with self interested voters

effectiveness of electoral systems for reducing government corruption a game theoretic analysis abstract a theoretical model is developed for predicting the relative effectiveness of different electoral systems for reducing government corruption we consider voting games in which parties with known corruption levels and known positions on a major policy question compete for legislative seats we find that approval voting and proportional representation are fully effective in the sense that all equilibria exclude corrupt parties from legislative seats plurality voting is partly effective in the sense that there always exist some equilibria that exclude corrupt parties borda voting is ineffective because for some political situations no equilibria can guarantee the exclusion of corrupt parties journal of economic literature classification number d72

production economics and optimal stock size in a north atlantic fishery this paper contains an analysis of a fishery production function and an empirical analysis of the north sea herring fishery an intertemporal profit function is defined by introducing stock dynamics and the concept of a sole resource manager some new results with respect to the relationship between the optimal stock level and production technology are derived estimates of the optimal stock level for herring are also presented

fractionalization and the size of government i study the effect of voters with a group based social conscience voters care more about the well being of those belonging to their own group than the rest of the population within a model of political tax determination both fractionalization and group antagonism reduce the support for redistribution whereas within group inequality increases support for redistribution inequality between groups has the opposite effect these results hold even if a poor group forms a majority using a panel constructed from us micro data i find support for the hypothesis that within race inequality increases redistribution while between race inequality decreases redistribution

why vote for losers voting theory generally concludes that in first past the post elections all votes should go to effective candidates duverger s law and parties should adopt a similar platform median voter theorem however such predictions are not always met in practice we show why divergence and vote dispersion is a natural outcome when a parties are opportunistic b there is uncertainty on the position of the median voter and c elections are repeated voting for losers increases the informational content of elections and may induce mainstream parties to relocate towards extremists as a result to maximize their probability of being elected they do not adopt median

valence politics and equilibrium in spatial election models spatial models of two party or two candidatecompetition almost never have pure strategy nashequilibria when the issue space has more than onedimension this paper shows that the introduction ofvalence issues can create conditions where equilibriaexist even in a multidimensional setting we derivesufficient conditions for the existence of equilibria and characterize the spatial locations of twocompeting parties or candidates when such equilibriaexist the party with the advantage on the valencedimension will generally take a moderate position onthe positional issues we consider the implications ofthese results for public perceptions of the parties incumbency advantages and realigning elections

presidential coattails versus the median voter senator selection in us elections abstract we show that senators elected in presidential elections are more ideologically extreme than senators elected in midterm elections this finding is in contrast to the literature suggesting that voters in presidential elections are more ideologically moderate than voters in midterm elections to explain this incongruence we propose a theory of spillover effects in which party labels enable voters to update their beliefs about candidates across contemporaneous races for office unexpected support for a candidate in one race carries marginal candidates from the same party in other races our theory implies that presidential coattails may skew representative government away from the median voter ideal

endogenous credible commitment and party competition over redistribution under alternative electoral institutions political parties competing in elections for the power to set public policy face the problem of making credible their policy promises to voters i argue that this commitment problem crucially shapes party competition over redistribution the model i develop shows that under majoritarian electoral rules parties efforts to achieve endogenous commitment to policies preferred by the middle class lead to different behavior and outcomes than suggested by existing theories which either assume commitment or rule out endogenous commitment thus left parties can have incentives to respond to rising income inequality by moving to the right in majoritarian systems but not under proportional representation the model also generates new insights about the anti left electoral bias often attributed to majoritarian electoral rules and the strategic use of parliamentary candidates as a commitment device i find evidence for key implications of this logic using panel data on party positions in 16 parliamentary democracies

primaries the unifying force we present a formal model of intra party politics to explain candidate selection within political parties we think of parties as heterogeneous groups of individuals who aim to implement a set of policies but who differ in their priorities when party heterogeneity is too great parties are in danger of splitting into smaller yet more homogeneous political groups in this context we argue that primaries can have a unifying role if the party elite cannot commit to policy concessions our model shows how three factors interact to create incentives for the adoption of primary elections namely 1 the alignment in the preferred policies of various factions within a party 2 the relative weight of each of these factions and 3 the electoral system we discuss the existing empirical literature and demonstrate how existing studies can be improved in light of our theoretical predictions to provide a new structured perspective on the adoption of primary elections

redistributing income under proportional representation although majoritarian decision rules are the norm in legislatures relatively few democracies use simple majority rule at the electoral stage adopting instead some form of multiparty proportional representation moreover aggregate data suggest that average income tax rates are higher and distributions of posttax income flatter in countries with proportional representation than in those with majority rule while there are other differences between these countries this paper explores how variations in the political system per se influence equilibrium redistributive tax rates and income distributions a three party proportional representation model is developed in which taxes are determined through legislative bargaining among successful electoral parties and the economic decision for individuals is occupational choice political economic equilibria for this model and for a two party winner take all majoritarian system are derived and compared

what drives value creation in investment projects an application of sensitivity analysis to project finance transactions abstract evaluating the economic attractiveness of large projects often requires the development of large and complex financial models model complexity can prevent management from obtaining crucial information with the risk of a suboptimal exploitation of the modelling efforts we propose a methodology based on the so called differential importance measure d to enhance the managerial insights obtained from financial models we illustrate our methodology by applying it to a project finance case study we show that the additivity property of d grants analysts and managers full flexibility in combining parameters into any group and at the desired aggregation level we analyze investment criteria related to both the investors s and lenders perspectives results indicate that exogenous factors affect investors sponsors and lenders in different ways whether exogenous variables are considered individually or by groups

the size and scope of government comparative politics with rational politicians we try to demonstrate how economists may engage in research on comparative politics relating the size and composition of government spending to the political system a downsian model of electoral competition and forward looking voting indicates that majoritarian as opposed to proportional elections increase competition between parties by focusing it into some key marginal districts this leads to less public goods less rents for politicians more redistribution and larger government a model of legislative bargaining and backward looking voting indicates that presidential as opposed to parliamentary regimes increase competition between both politicians and voters this leads to less public goods less rents for politicians less redistribution and smaller government we confront these predictions with cross country data from around 1990 controlling for economic and social determinants of government spending we nd strong and robust support for the prediction that the size of government is smaller under presidential regimes and weaker support for the prediction that majoritarian elections are associated with less public goods

income distribution and equilibrium multiplicity in a stigma based model of tax evasion abstract this paper incorporates continuous income distribution into the stigma based model of tax compliance the paper investigates the effect of income distribution on the existence of multiple equilibria and characterizes the conditions under which multiple equilibria emerge precisely multiple equilibria exist if taxpayer incomes are sufficiently homogeneous because the social coordination effect dominates the individual characteristics effect numerical simulations show that the main proposition is robust to allowing two step audit policies on the part of the tax agency under the presumption that the best or good equilibrium is selected whenever there are multiple equilibria as a byproduct the effect of various forms of tax reforms on the optimal two step audit policy the equilibrium compliance and fiscal revenue is analyzed

inequality redistribution and the rise of outsider candidates abstract we provide a model of electoral competition between an establishment and an outsider candidate in which each candidate has a fixed characteristic that voters care about and promises a policy of redistribution from skilled to unskilled voters the voters perceive the establishment candidate to be more beholden to special interests and therefore more likely to renege on a promise of a large policy change in favor of the status quo after the election the equilibrium features policy divergence and greater targeting of the electorally dominant voter group by the outsider candidate furthermore while higher income inequality leads to polarization of support for the two candidates it benefits the outsider candidate in a radical equilibrium with promises of greater redistribution these results provide a theoretical underpinning for the recent evidence that links voters economic distress due to trade exposure or skill biased technological change to support for outsider candidates

the endogeneity problem in applied fisheries econometrics a critical review the purpose of this essay is to bring attention to some serious problems that exist in econometric application of fisheries economic models these problems in application are serious to the point of impeding our ability to do policy work this essay will focus on two areas of econometric application first the violation of the fundamental exogeneity condition for applied econometrics e varepsilon x 0 where varepsilon is a stochastic error term and x is a matrix of right hand side explanatory variables and second the inappropriate use of data that is available for analysis both problems deal with the econometric issues of omitted and proxy variables i will also comment on data necessary to carry out proper fisheries econometric research and policy analysis simulation techniques based on a known population regression equation are used to illustrate the extent of the empirical problems injecting real data into the simulations shows the bias that we can bring forward to the policy arena

understanding preferences for income redistribution abstract recent research suggests that income redistribution preferences vary across identity groups we employ statistical learning methods that emphasize pattern recognition classification and regression trees cart and random forests randomforests to uncover what these groups are using data from the general social survey we find that out of a large set of identity markers only race gender age and socioeconomic class are important classifiers for income redistribution preferences further the uncovered identity groupings are characterized by complex patterns of interaction amongst these salient classifiers we explore the extent to which existing theories of income redistribution can explain our results but conclude that current approaches do not fully explain the findings

competence and ideology we develop a dynamic repeated election model in which citizen candidates are distinguished by both their ideology and valence voters observe an incumbent s valence and policy choices but only know the challenger s party our model provides a rich set of novel results in contrast to existing predictions from static models we prove that dynamic considerations make higher valence incumbents more likely to compromise and win re election even though they compromise to more extreme policies consequently we find that the correlation between valence and extremist policies rises with office holder seniority this result may help explain previous empirical findings despite this result we establish that the whole electorate gains from improvements in the distribution of valences in contrast fixing average valence the greater dispersion in valence associated with a high valence political elite always benefits the median voter but can harm a majority of voters when voters are sufficiently risk averse we then consider interest groups igs or activists who search for candidates with better skills we derive a complete theoretical explanation for the intuitive conjectures that policies are more extreme when igs and activists have more extreme ideologies and that such extremism reduces the welfare of all voters

competition between specialized candidates opposing candidates for a political office often differ in their professional backgrounds and previous political experience leading to both real and perceived differences in political capabilities we analyze a formal model in which candidates with different productivities in two policy areas compete for voters by choosing how much money or effort they would allocate to each area if elected the model has a unique equilibrium that differs substantially from the standard median voter model although candidates compete for the support of a moderate voter type this cutoff voter differs from the expected median voter moreover no voter type except the cutoff voter is indifferent between the candidates in equilibrium the model also predicts that candidates respond to changes in the preferences of voters in a very rigid way from a welfare perspective candidates are excessively moderate almost certainly a majority of voters would prefer that the winning candidate focus more on his or her strength

an institutional theory of divided government and party polarization this paper develops a simple model of institutionally driven party competition which may explain the persistence of divided government in the basic model two parties that are solely motivated to win elections compete for two offices the legislature and the executive parties offer positions in a single dimension to a single district sophisticated electorate that understands the institutionally defined relationship between electoral and policy outcomes when parties are risk averse competition for the two offices leads to a prisoner s dilemma the parties can jointly improve on the one shot nash equilibrium in which they adopt convergent positions several extensive form election games are shown to allow the parties to solve their prisoner s dilemma in a subgame perfect nash equilibrium in such an equilibrium parties adopt widely separated positions and divided government and splitticket voting occur with high probability unlike typical voting models in the basic model there is no tendency for electoral equilibrium to produce the expected median voter s ideal policy outcome these results are robust to a variety of extensions including significant sincere voting multiple policy dimensions and defections by incumbent candidates

elections with platform and valence competition abstract we study a game in which candidates first choose platforms and then invest in costly valences e g engage in campaign spending the marginal return to valence depends on platform polarization the closer platforms are the more valence affects the election outcome consequently candidates without policy preferences choose divergent platforms to soften valence competition moreover exogenous increases in incentives for valence accumulation lead to both increased valence and increased polarization the latter because candidates seek to avoid the costs of extra valence as a result the increase in valence is smaller than it would have been with exogenous platforms finally the model highlights the overlooked substantive importance of common modeling assumptions changing the source of uncertainty in our model from noise around the median voter s ideal point to a shock to one candidate s valence as is common in the literature leads to complete platform convergence for all parameter values

elections with privately informed parties and voters this paper studies a situation in which parties are betterinformed than voters about the optimal policies for voters weshow that voters are able to infer the parties information byobserving their electoral positions even if parties have policypreferences which differ substantially from the median voter s unlike previous work that reach opposite conclusions we assumethat voters have some private information of their own if theinformation available to voters is biased parties attempts toinfluence voters beliefs will result in less than fullconvergence even if parties know with certainty the optimalpolicy for the median voter

valuing risky projects option pricing theory and decision analysis in the academic literature and professional practice there are a number of alternative and apparently competing methods for valuing risky projects in this paper we compare and contrast three different approaches risk adjusted discount rate analysis option pricing analysis and decision analysis focusing on the last two we show that in contrast to some of the claims made in the real options literature when both option pricing and decision analysis methods are correctly applied they must give consistent results we also explore ways in which option pricing and decision analysis methods can be profitably integrated in particular we show how option pricing techniques can be used to simplify decision analysis when some risks can be hedged by trading and conversely how decision analysis techniques can be used to extend option pricing techniques to problems with incomplete securities markets

the politics of progressive income taxation with incentive effects this paper studies majority voting over quadratic taxation and investigates under which conditions marginal progressivity emerges as a voting outcome in our model with endogenous income there is no majority condorcet winning tax schedule we then investigate less demanding political equilibrium concepts in order to see under which conditions the set of equilibria is composed only of progressive tax functions we follow three strategies i reduction of the policy space to the tax functions that are ideal for some voter ii elimination of weakly dominated strategies and the use of mixed strategies in a standard downsian two party competition game iii assumption that political parties interact repeatedly and care about the size of their majority although each approach captures a different aspect of political behavior they point to the same simulation based conclusion that progressivity is more likely to emerge for most distributions of abilities and that it is actually the only possible voting outcome if the distribution is sufficiently concentrated at the middle

valuing exploration and production projects by means of option pricing theory abstract this paper provides a general introduction to the valuation of investment projects with option pricing theory opt furthermore a specific application of opt to value exploration and production projects in the petroleum industry is shown to model the various nested options of such investments the discrete approach of the binomial model is preferred to the continuous model by black and scholes furthermore two kinds of binomial trees are used one tree represents the pre drilling period and the other represents the production phase of the reservoir due to the use of a multiplicative binomial process for the oil price trend unrealistic prices may occur to exclude them from the calculation an oil price band is introduced additionally uncertainty of all input parameters not only of the oil price is considered this is achieved by combining opt with the monte carlo simulation

a model of candidate location when one candidate has a valence advantage that under some fairly weak assumptions for all levels of the valence advantage the advantaged candidate chooses a more moderate position than the disadvantaged candidate empirical studies of congressional elections by fiorina 1973 and ansolabehere snyder and stewart 2001 support this result d owns 1957 seminal work presents a puzzle for scholars of u s elections why do candidates not converge to the median voter one of the best explanations is that the candidates themselves have ideological preferences as calvert 1985 and wittman 1977 1983 have shown when candidates have such preferences and they are sufficiently uncertain about the preferences of the median voter then they do not converge although they may moderate their positions from their ideal point the basic version of the calvert wittman model however does not account for another basic fact of u s elections often one of the candidates has an advantage due to a nonpolicy factor such as incumbency greater campaign funds better name recognition superior charisma superior intelligence and so on stokes has dubbed such factors valence factors and he has noted their importance in u s elections stokes 1963 1992 1 in this article i extend the basic calvert wittman model by giving one candidate a valence advantage over the other i show that if the valence characteristics of the candidates are approximately equal then when a candidate s valence advantage increases this causes her to move toward the

valuing patents on cost reducing technology a case study we present an approach for valuing patents on production process improvements specifically we focus on valuing a patent on cost reducing process improvements from the viewpoint of the patent holding firm we do this by considering the relevant cash flows that result from owning the patent the patent value is determined by 1 licensing fees and royalty income 2 competitive advantage resulting from the patent 3 patent maintenance costs we discuss a case study that presents the difficulties and challenges in finding the relevant information that is needed to estimate the cash flows we show that valuation of patents on production process improvements cannot be done without good knowledge of technology markets and competitors

indifference or indecisiveness choice theoretic foundations of incomplete preferences abstract a commonly held belief in economics is that an individual s preferences that are revealed by her choices must be complete this paper takes issue with this position by showing that one may be able to distinguish between indifference and indecisiveness of an agent upon observing her choice behavior we relax the standard weak axiom of revealed preferences warp and show that a potent theory of individual choice with and without risk can be founded on this weaker axiom when it is coupled with some other standard postulates the most notable features here are that an agent is allowed to be indifferent between certain alternatives and indecisive about others moreover an outside observer can identify which of these actually occur upon examining the observable choice behavior of the decision maker as an application we also show how our theory may be able to cope with the classical preference reversal phenomenon

signaling character in electoral competition we study a one dimensional hotelling downs model of electoral competition with the following innovation a fraction of candidates have character and are exogenously committed to a campaign platform this is unobservable to voters character is desirable and a voter s utility is a convex combination of standard policy preferences and her assessment of a candidate s character this structure induces a signaling game between strategic candidates and voters since a policy platform affects voters utilities not only directly but also indirectly through inferences about a candidate s character the model generates a number of predictions starting with a failure of the median voter theorem jel d72 d82

the mean voter theorem necessary and sufficient conditions for convergent equilibrium formal models of elections have emphasized the convergence of party leaders towards the centre of the electoral distribution this paper attempts to resolve the apparent disparity between the formal result and the perception of political divergence by considering a model incorporating valence valence can be interpreted as the non policy basis of political judgement made by the electorate concerning the quality of political contenders the theorem presented here shows that there is a necessary condition for convergence the condition involves the difference in party valences and the electoral variance when the condition fails the low valence parties will be forced to adopt policy positions far from the electoral centre the inference appears to be substantiated by an empirical model of the israel election in 1996 copyright 2007 wiley blackwell

electoral competition and special interest politics have fixed positions on some issues but vary their positions on others in order to attract votes and campaign contributions in this context we examine whether special interest groups are governed by an electoral motive or an influence in their campaign giving and how their contributions affect the equilibrium platforms we show that each party is induced to behave as if it were maximizing a weighted sum of the aggregate welfares of informed voters and members of special interest groups the party that is expected to win a majority of seats caters more to the special interests

production technology costs and multiproduct industry structure an application of the long run profit function to the new england fishing industry the long run multiproduct profit function is developed to provide a more general procedure than the static minimum cost function to examine the technological and cost determinants of multiproduct industry structure and the likely form of any market equilibrium in this approach outputs are endogenous and the long run equilibrium levels of quasi fixed factors are endogenously determined the multiproduct structure of the multispecies new england fishing industry and the likely multi

resource rent in individual quota fisheries traditional fisheries management schemes generate incentives for vessels to maximize catch resulting in rent dissipation and overcapacity individual vessel quota management schemes change the incentives to maximize profit and have the potential to generate resource rent and reduce capacity an interesting question is whether it is the changed incentives due to individual quota or the capacity reduction due to transferability of individual quota that is most important in generating rent in this study a cost function approach is used to model and measure rent generated and potential rent in a fishery managed with individual vessel quotas

parties as political intermediaries this paper argues that parties regulate competition among like minded factions so as to enhance reputation building by and voter trust in the politicians standing for a given cause while intra and interparty competition contributes to keeping politicians on their toes unbridled competition may encourage politicians to challenge good platforms and to wage competition along socially suboptimal dimensions for example by privileging form over content the paper builds a simple model of intraparty competition and studies whether various hierarchical or democratic party institutions constitute an efe cient form of party governance the paper shows that intraparty disagreements when they occur hurt the party s position in the general election but that their possibility enhances party image and that parties must be able to avoid behind the scene allocations of portfolios and spoils in order to be credible last it analyzes the impact of political polarization and interparty competition on the choice of party governance

diversity and redistribution abstract in this paper we analyze the interaction of income and preference heterogeneity in a political economy framework we ask whether the presence of preference heterogeneity arising for example from different ethnic groups or geographic locations affects the ability of the poor to extract resources from the rich we study the equilibrium of a game in which coalitions of individuals form parties parties propose platforms and all individuals vote with the winning policy chosen by plurality political parties are restricted to offering platforms that are credible in that they belong to the pareto set of their members the platforms specify the values of two policy tools a general redistributive tax which is lump sum rebated or used to fund a general public good and a series of taxes whose revenue is used to fund specific targeted goods tailored to particular preferences or localities our analysis demonstrates that taste conflict first dilutes but later reinforces class interests when the degree of taste diversity is low the equilibrium policy is characterized by some amount of general income redistribution and some targeted transfers as taste diversity increases in society the set of equilibrium policies becomes more and more tilted towards special interest groups and against general redistribution as diversity increases further however the only policy that can emerge supports exclusively general redistribution

political competition and mirrleesian income taxation a first pass we study downsian competition in a mirrleesian model of income taxation the competing politicians may dier in competence if politicians engage in vote share maximization the less competent politician s policy proposals are attractive to the minority of rich agents whereas those of the competent politician are attractive to the majority of poor agents the less competent politician wins with positive probability which gives rise to a political failure in the sense of besley and coate 1998 political failures are avoided if politicians maximize winning probabilities nevertheless the two equilibria cannot be pareto ranked the minority may be better o under vote share maximization

a model of political competition with citizen candidates the authors develop a model of electoral competition in which citizens choose whether or not to run as candidates a winner implements her favorite policy the equilibrium number of candidates depends negatively on the cost of running and positively on the benefits of winning for some parameter values all equilibria under plurality rule have exactly two candidates whose positions are distinct two candidate elections are more likely under plurality rule than under a runoff system the candidates positions are less differentiated under a runoff system there exist equilibria under both systems in which some candidates have no chance of winning