the futile quest for a grand explanation of long run government expenditure this paper carries out a critical reappraisal of the two contending theories purporting to explain long run government spending wagner s law and different variants of the ratchet effect we analyze data spanning from the early 19 th century until the present day in sweden and the united kingdom hence in contrast to previous studies we evaluate the validity of wagner s law and the ratchet effect hypothesis over a very long time period starting at the beginning of industrialization cointegration analysis is used to investigate the long run relationships between government expenditure and gdp focusing on sub periods and structural breaks moreover we test the ratchet effect hypothesis by estimating models which allow for asymmetric adjustment according to our main results wagner s law does not hold in the long run although the data are consistent with wagner s law between roughly 1860 and the mid 1970s this can be traced to the formation of the modern public sector including the introduction of public education health care and so forth yet wagner s law did not hold during the initial industrialization phase before 1860 and in recent periods gdp only affects the government spending share when we control for population age structure finally we find some evidence of asymmetric adjustment in the uk particularly in the post wwii period however the ratchet effect is not a general cause of the growth of government spending

collusion facilitating and collusion breaking power of simultaneous ascending and descending price auctions this article demonstrates that a robust tacit collusion evolves quickly in a collusion incubator environment but is destroyed by the simultaneous descending price auction theories of collusion producing behavior along with the detail of the states on which strategies are conditioned lead to a deeper understanding of how tacit collusion evolves and its necessary conditions these theories explain how the descending price auction destroys the collusion the experiments proceed by conducting simultaneous ascending price auctions in the collusion incubator then once the tacit collusion developed changing to the descending auction the change moved prices from collusive levels to near competitive levels

regret and feedback information in first price sealed bid auctions we investigate the effect of regret related feedback information on bidding behavior in sealed bid first price auctions two types of regret are possible in this auction format a winner of the auction may regret paying too much relative to the second highest bid and a loser may regret missing an opportunity to win at a favorable price in theory under very general conditions being sensitive to winning and paying too much should result in lower average bids and being sensitive to missing opportunities to win at a favorable price should result in higher bids for example the u s government s policy of revealing losing bids may cause regret sensitive bidders to anticipate regret and bid conservatively decreasing the government s revenue we test these predictions in the laboratory and find strong support for both

returns to regionalism the past decade has witnessed a renewed interest in regional trade agreements with many policymakers and academics seeming to believe that these provide more than the traditional gains from trade this article examines several possible benefits that regional trade agreements may confer on their partners including credibility signaling bargaining power insurance and coordination it assesses the necessary conditions for each possible channel to work gives stylized examples of specific types of policy where the benefit might be applicable examines cases where the explanation might be relevant and discusses their overall plausibility it concludes by examining the north american free trade agreement and the europe agreements

does feedback really matter in one shot first price auctions does the type of posterior feedback affect how people decide in one shot environments we revisit this question in first price auction markets we consider three feedback types minimal only knowing whether winning or not loser also knowing the winning bid and winner knowing the second highest bid if winning filiz ozbay and ozbay 2007 find that loser as opposed to minimal or winner feedback increases bids we use three novel protocols and additionally replicate theirs using a sample of 624 subjects we find that bidders ex ante knowledge of posterior feedback type has no systematic effect on the average bid value ratios

collusion and equilibrium selection in auctions we study bidder collusion and test the power of payoff dominance as an equilibrium selection principle in experimental multi object ascending auctions in these institutions low price collusive equilibria exist along with competitive payoff inferior equilibria achieving payoff superior collusive outcomes requires complex strategies that depending on the environment may involve signalling market splitting and bid rotation we provide the first systematic evidence of successful bidder collusion in such complex environments without communication the results demonstrate that in repeated settings bidders are often able to coordinate on payoff superior outcomes with the choice of collusive strategies varying systematically with the environment auctions for timber cars oil drilling rights and spectrum bandwidth are just a few examples of markets where multiple heterogeneous lots are offered for sale simultaneously in multi object ascending auctions the applied issue of collusion and the theoretical issue of equilibrium selection are closely linked in these auctions bidders can profit by splitting the markets by acting as local monopsonists for a disjoint subset of the objects the bidders lower the price they must pay as opposed to the sealed bid auction the ascending auction format provides bidders with the opportunity to coordinate tacitly on dividing markets and to punish non collusive bidding thus low price collusive equilibria co exist along with high price competitive equilibria even in a non repeated setting brusco and lopomo 2002 if there are complementarities in bidder values across objects and auctions are repeated bidders may further benefit by splitting the markets over time and taking turns in buying packages at low prices these opportunities make the multi object ascending auction an ideal institution for the study of equilibrium selection assuming that communication between the bidders is limited to the bidding any splitting of the markets must be tacitly coordinated in the early stages of the auction thus achieving payoff superior collusive outcomes requires complex strategies that depending on the environment may involve signalling market splitting and bid rotation while such tacit coordination is possible in theory it is an empirical question of whether it may be achieved in practice

communication and coordination in a two stage game we study the impact of communication on behavior in a two stage coordination game with asymmetric payoffs we test experimentally whether individuals can avoid a head to head confrontation by means of coordinated strategies in particular we analyze whether and how quickly a conflict avoidance take turn strategy can emerge first our results show that players learn to solve the conflict by choosing opposite options at both stages of the game second many adopt a take turn strategy to sustain coordination over time and alleviate the inequality induced by the asymmetry of payoffs third communication increases the likelihood of conflict resolution even when a single pair member has the right to communicate

state government expenditure determinants and tax revenue determinants revisited the primary aim of the research was to test the general hypothesis that many institutional and political variables affect fiscal outcomes that the preferences of public officials and the decision processes used to act on those preferences matter state government data state only not state and local from 1980 1985 and 1990 were used to specify state tax revenue and expenditure models a previous merrifield 1991 state tax revenue model identified many significant institutional and political variables but it was based only on 1985 data 49 observations the larger data set 147 observations including better data for some of the variables indicated that most of merrifield s 1991 findings are robust the state expenditure models facilitated a second test of the general institutional and political variable hypothesis as well as the hypotheses about specific variables the expenditure model also facilitated comparisons of expenditure and tax determinants and comparisons with results published in the literature though there are some noteworthy differences between the expenditure and tax models the expenditure models also supported many of the institutional and political variable hypotheses

team selection with asymmetric agents abstract in shallow markets where there are mutual gains from cooperation among agents collusive behavior may occur even if it does not constitute a nash equilibrium yet such behavior is rarely sustainable bolle 1994 reports the results of one period team selection experiments in which subjects often did not follow the nash equilibrium behavior but engaged in tacit collusion we test the robustness of bolle s findings by introducing asymmetry into subjects characteristics and repeating the experiment for a number of periods we find that collusion is not sustainable and the outcomes converge to levels close to the nash equilibrium however the agent s actions stayed slightly above the nash equilibrium level in all experiments

the effects of market organization on conspiracies in restraint of trade abstract mindful of the market structure conduct performance paradigm fundamental to industrial organization research this paper uses laboratory experimental techniques to study the impact of conspiratorial opportunities on market performance we compare posted offer markets where sellers but not buyers are all conspiratorial opportunities with observations from three control groups 1 posted offer markets without conspiratorial opportunities 2 double auction markets with conspiratorial opportunities and 3 posted offer markets with true single seller monopolists the basic conclusions generated by our experimental design are 1 seller conspiracies in posted offer markets tend to raise prices but not profits relative to similarly organized markets without conspiracies 2 posted offer conspiracies tend to generate higher prices but not profits than double auction conspiracies and 3 posted offer monopolies tend to generate higher profits but not prices then posted offer conspiracies

the economic impacts of climate change evidence from agricultural output and random fluctuations in weather fisher et al 2012 hereafter fhrs have uncovered coding and data errors in our paper deschenes and greenstone 2007 hereafter dg we acknowledge and are embarrassed by these mistakes we are grateful to fhrs for uncovering them we hope that this reply will also contribute to advancing the literature on the vital question of the impact of climate change on the us agricultural sector fhrs main critiques of dg are as follows i there are errors in the weather data and climate change projections used by dg ii the climate change projections are based on the hadley 2 model and scenarios rather than the more recent hadley 3 model and scenarios iii standard errors are biased due to spatial correlation iv the inclusion of state by year fixed effects does not leave enough weather variation to obtain meaningful estimates of the relationship between agriculture profits and weather v storage and inventory adjustment in response to yield shocks invalidate the use of annual profit data and vi fhrs argue that a better specified hedonic model produces robust estimates unlike the results reported in dg four of these critiques have little basis and we respond to them here in the introduction specifically with respect to ii the more recent daily climate predictions were not available when we wrote dg nevertheless the most important issue is providing the reliable estimates of climate change and in this note we report estimates based on the climate model we used in dg and a more recent one that we gained access to in the meantime iii in the primary table on agricultural profits dg reports two sets of standard errors with the first clustered at the county level and the second based on a variance covariance matrix that accounts for spatial correlation using the method proposed in conley 1999 thus the claim of fhrs 2012 seems overblown nevertheless to ease comparisons of papers in this literature this note will adopt the fhrs convention of reporting estimated standard errors clustered at the county and state levels we find that inference is largely unaffected by the choice between these different assumptions about the variance covariance matrix

risk aversion and overbidding in first price sealed bid auctions new experimental evidence bidding above the risk neutral nash equilibrium in first price sealed bid auctions has traditionally been ascribed to risk aversion later studies however offer other explanations and even argue that risk aversion plays no or a minor role in a novel experimental design we directly test the relationship between risk aversion and overbidding by systematically varying the distribution of risk attitudes in auction markets we find a significant relationship between our measure of risk aversion and overbidding jel d44 c91

opening up international trade with eastern europe trade with eastern europe carl b hamilton and l alan winters previous economic policy in the soviet union and eastern europe sought to restrict international trade with market economies hence liberalization and reform should now lead to a huge increase in such trade this will have a major impact both on the reforming economies and on their new trade partners first we develop an empirical model of trade flows between existing market economies and use this to forecast long run trade flows as the former soviet union and eastern europe are reabsorbed into the world economy second we provide a more detailed analysis of one key sector agricultural trade we compare and contrast three regime changes reform in the east admission of the east to the ec cap and worldwide success on agricultural liberalization in the gatt third we adduce evidence of high quality human capital in eastern europe and argue that this will tend to confer a comparative advantage in quite sophisticated products we conclude by stressing that since trade cannot be permanently and profoundly unbalanced western market economies can enjoy potential gains from trade only if they allow market access to emergent producers from the former soviet union and eastern europe

tacit collusion in auctions and conditions for its facilitation and prevention equilibrium selection in laboratory experimental markets the paper studies bidder behavior in simultaneous continuous ascending price auctions we design and implement a collusion incubator environment based on a type of public symmetrically folded and item aligned preferences tacit collusion develops quickly and reliably within the environment once tacit collusion developed it proved remarkably robust to institutional changes that weakened it as an equilibrium of a game theoretic model the only successful remedy was a non public change in the preference of participants that destroyed the symmetrically folded and item aligned patterns of preferences creating head to head competition between two agents reminiscent of the concept of a maverick

the impact of global warming on agriculture a ricardian analysis reply we measure the economic impact of climate on land prices using cross sectional data on climate farmland prices and other economic and geophysical data for almost 3 000 counties in the united states we find that higher temperatures in all seasons except autumn reduce average farm values while more precipitation outside of autumn increases farm values applying the model to a global warming scenario shows a significantly lower estimated impact of global warming on u s agriculture than the traditional production function approach and in one case suggests that even without co sub 2 fertilization global warming may have economic benefits for agriculture 16 refs 5 figs 5 tabs

anticipated loser regret in third price auctions abstract losing the auction at an affordable price generates loser regret in third price auctions if bidders anticipate loser regret then in line with the experimental findings in a symmetric equilibrium the bids are more than the risk neutral nash equilibrium

entry decisions and bidding behavior in sequential first price procurement auctions an experimental study abstract though many real life auctions are run independently of each other from the bidders point of view they often form sequences of auctions we investigate how behavior responds to the additional incentives that are present in such auction sequences comparing subjects decisions in single first price procurement auctions with their decisions in a game consisting of two subsequent first price procurement auctions we find that in line with the theoretical prediction entry and bidding behavior is crucially affected by the opportunity cost of early bid submission though entry decisions and average bids in the auction sequence systematically deviate from the perfect bayesian equilibrium prediction while the nature of the opponent human being or computer has no significant effect on these findings giving subjects additional feedback on winners and prices seems to reduce the deviations from the equilibrium prediction

step level reasoning and bidding in auctions step level models of reasoning slr proved to be very successful in predicting behavior in the beauty contest game recently a quantified version of the model was suggested as a more general model of thinking in particular it was found that the distribution of choices could be represented by a poisson distribution i test the model in stylized first and second price common value sealed bid auctions equilibrium for both auction types prescribes that players undercut each other and profits are small the slr prediction on the other hand is different for the two auctions nash equilibrium predicts the outcomes poorly the slr model predicts the outcomes well in the second price auction however while bids in the first price auction could be represented by a poisson distribution this could not be attributed to step level reasoning

do antitrust laws facilitate collusion experimental evidence on costly communication in duopolies bertrand supergames with non binding communication are used to study price formation and stability of collusive agreements on experimental duopoly markets the experimental design consists of three treatments with different costs of communication zero cost low cost and high cost prices are found to be significantly higher when communication is costly moreover costly communication decreases the number of messages but more importantly it enhances the stability of collusive agreements mccutcheon 1997 presents an interesting application to antitrust policy by letting the cost of communication symbolize the presence of an antitrust law that prohibits firms from discussing prices although our experimental results do not support the mechanism of mccutcheon s 1997 argument the findings point in the direction of her prediction that antitrust laws might work in the interest of firms

information feedback in first price auctions i apply the notion of a self confirming equilibrium sce to study how feedback in first price auctions influences bidders perceptions about their strategic environment and consequently their bidding behavior in a private values setting revealing the two highest bids at the end of each auction is sufficient for bidders to have correct beliefs justifying the assumption of nash equilibrium in contrast in every symmetric sce of a symmetric affiliated private values model bidding strategies and revenue are weakly higher if only the highest bid is revealed i also consider interdependent valuations and discuss implications for the empirical auction literature

subjective probabilities in games an application to the overbidding puzzle this article illustrates how the joint elicitation of subjective probabilities and preferences may help us understand behavior in games we conduct an experiment to test whether biased probabilistic beliefs may explain overbidding in first price auctions the experimental outcomes indicate that subjects underestimate their probability of winning the auction and indeed overbid when provided with feedback on the precision of their predictions subjects learn to make better predictions and to curb significantly overbidding the structural estimation of different behavioral models suggests that biased probabilistic beliefs are a driving force behind overbidding and that risk aversion plays a lesser role than previously believed

rent seeking with regretful agents theory and experiment abstract we investigate both theoretically and experimentally the role that information disclosure has on behavior in all pay environments in which all agents must exert costly effort but only the winner is rewarded through the lens of all pay auctions we show that bidders who have regret concerns when they lose an auction may alter their bids whether or not information about the winning bid is disclosed all losing bidders regret not bidding 0 however when feedback on the winning bid is provided those bidders who lost at an affordable price may regret not bidding more we show that the former effect causes bidders to lower their bids while the latter effect causes bidders to raise their bids our experimental results indicate overbidding whether or not the winning bid is disclosed to losing bidders however disclosing the winning bid leads to even more aggressive bidding increases revenues decreases the frequency of dropouts and also leads to more efficient allocations thus our results show that information disclosure is a powerful tool that mechanism designers may wish to exploit to extract more rents in all pay environments

information and conspiracy in sealed bid auctions abstract this paper examines the allocative properties of the sealed bid institution when different aspects of the available information to bidders are considered specifically we examine a the effect on price determination in repeated sealed bid auctions of post auction revelation of losing bids and b the effect on price determination when conspiratorial discussions are allowed

collusion in procurement auctions an experimental examination bart j wilson i introduction questioning the value of efforts to enforce federal anticonspiracy laws raises spirited debate among antitrust economists although everyone recognizes the welfare costs of successful conspiracies commentators such as armentano 1990 and cohen and scheffman 1989 argue that conspiratorial arrangements are pervasively ineffective and thus that social resources spent prosecuting cob lusion are wasted others including marvel et al 1988 express more ambivalence about the seriousness of conspiracies as a social problem but believe that the government manages to detect only the most ineffective arrangements still other economists clearly believe in the effectiveness of current government efforts see e g werden 1989 and froeb et al 1993 ultimately the pervasiveness of conspiratorial behavior and the magnitude of the consequent damages are empirical issues however the illegality of collusion complicates the collection of relevant data tip offs or complaints frequently expose conspiracies but good reasons exist for suspecting that conspiracies detected in this fashion tend to be the least profitable a conspirator likely rats on co conspirators only if he or she is disenchanted with the scheme suggesting that the conspiracy is about to collapse anyway similarly suspect are conspiracies that are sufficiently clumsy to raise the protests of buyers the detection problem would be vastly simplified if conspiracies could be identified in the absence of a smoking gun posner 1969 argues that such explicit evidence of conspiratorial behavior is unnecessary because conspiring firms exhibit identifiable patterns of activity that are alone sufficient to determine illegality kuhlman 1969 and gallo 1977 go still further and advocate the continuous computerized monitoring of pricing and sales data to detect conspiracies however as marshall and muerer 1998 observe a potentially condemning defect of any attempt to detect collusion via behavior is that depending on underlying conditions virtually any suspect pattern of behavior can be generated as a noncollusive nash equilibrium identical prices for example are often cited as an indication of coordinated activity e g mund 1960 1 but in games such as the one modeled by anton and yao 1992 agents submit identical bids in a nash equilibrium in the absence of collusion furthermore some evidence from collusion cases prosecuted by the department of justice suggests that identical prices are rarely part of collusive arrangements except when the industry is not very concentrated comanor and schankerman 1976 market rotations a second pricing scheme that is typically cited as a suspect pattern may also be consistent with a subgame perfect noncooperative nash equilibrium zona 1986 for example identifies a number of approximate equilibria involving contract rotations when sellers have steeply increasing cost structures also lang and rosenthal 1991 characterize a noncooperative static equilibrium for a multiproduct contracting environment where sellers both divide the market and submit noncompetitively high bids in the market where they do not expect to win 2 still other pricing patterns are possibly suspect porter and zona 1993 report evidence of bid rigging in procurement auctions from the pattern of losing bids the intuition is that in a competitive environment bids should be correlated with costs when prices are fixed however this correlation breaks down this article reports a laboratory experiment designed to explore the relationship between suspect behavior and collusion we focus on coordinated behavior in procurement auctions a context where collusion is often suspected and has been frequently observed 4 two environments are examined a set cost regime that contains some features critical to standard government procurement auctions for goods and an endogenous cost regime which exhibits some critical elements of procurement bidding for construction contracts

what do we learn from the weather the new climate economy literature a rapidly growing body of research applies panel methods to examine how temperature precipitation and windstorms influence economic outcomes these studies focus on changes in weather realizations over time within a given spatial area and demonstrate impacts on agricultural output industrial output labor productivity energy demand health conflict and economic growth among other outcomes by harnessing exogenous variation over time within a given spatial unit these studies help credibly identify i the breadth of channels linking weather and the economy ii heterogeneous treatment effects across different types of locations and iii nonlinear effects of weather variables this paper reviews the new literature with two purposes first we summarize recent work providing a guide to its methodologies datasets and findings second we consider applications of the new literature including insights for the damage function within models that seek to assess the potential economic effects of future climate change jel c51 d72 o13 q51 q54

is there a local knowledge advantage in federations evidence from a natural experiment in economics the local knowledge advantage is arguably one of the key arguments in favor of decentralizing the public sector however empirical investigations of this particular effect have been scarce this paper tests the existence of the local knowledge advantage in a real world setting specifically it looks at the variation in local knowledge across regions based on the origins and careers of regional politicians assuming that politicians who have spent more time in a particular region possess more and better knowledge of that region than outsiders to avoid the reverse causality problem the paper investigates how local origins affected the performances of politicians in a natural experimental environment studying the responses of regional governors in russia to disastrous forest fires in 2010 we confirm that local knowledge improves gubernatorial performance in a highly centralized federation such as russia though the effect is dependent on access to federal resources obtainable through close ties to the federal center we also discuss alternative interpretations of the local origins of politicians and test whether the effects found are indeed more plausibly explained by local knowledge

auctions with anticipated regret theory and experiment this paper demonstrates theoretically and experimentally that in first price auctions overbidding with respect to the risk neutral nash equilibrium might be driven from anticipated loser regret felt when bidders lose at an affordable price different information structures are created to elicit regret bidders know they will learn the winning bid if they lose loser regret condition or the second highest bid if they win winner regret condition or they will receive no feedback regarding the other bids bidders in loser regret condition anticipated regret and significantly overbid however bidders in the winner regret condition did not anticipate regret jel d44

auction markets for evaluations when the value of a product or service is uncertain outcomes can be inefficient a market for evaluations can theoretically increase efficiency by voluntarily eliciting an evaluation that would otherwise not be provided this paper uses a controlled laboratory experiment to test the performance of four market mechanisms to provide product evaluations the mechanisms considered are derived from the oft studied uniform price sealed bid discriminatory price sealed bid english clock auction and dutch clock auction our results indicate for this nonrivalrous product that i each of these institutions improves social welfare and ii the performances of the four mechanisms are equivalent this second point is particularly noteworthy given that differing behavior is routinely observed in traditional private value auctions

collusion in private value ascending price auctions we investigate the effects of bid improvement rules and bidder value asymmetry on bidder collusion in experimental ascending price auctions without communication we find that the strict bid improvement rule and private values are not always sufficient to break collusion among well motivated bidders collusion still occurs as long as bidder gains from collusion are high

fighting collusion in auctions an experimental investigation the danger of collusion presents a serious challenge for auctioneers in this paper we compare the collusive properties of two standard auctions the english auction and the first price sealed bid auction and a lesser known format the amsterdam second price auction in the amsterdam auction the highest losing bidder earns a premium for stirring up the price we study two settings in one all bidders can collude and in another only a subset is eligible the experiments show that the amsterdam auction triggers less collusion than the standard auctions we compare experimental results to theoretical predictions and provide an explanation where they differ

theory and experiments on spatial competition we present theoretical and experimental results on spatial competition between two firms firms choose locations simultaneously along a line representing a linear market identical consumers with non increasing demand functions are uniformly distributed along this line we solve for symmetric equilibrium payoffs in an infinitely repeated game for the case of linear demand and an arbitrary discount factor the set of equilibriums found includes both competitive and collusive payoffs in laboratory experiments in which the final period was unknown to the players in advance we observed both competitive and collusive outcomes non binding communication led to collusion

some experimental testing of the cournot nash hypothesis in small group rivalry situations abstract this study parallels a previous study by friedman and hoggatt 1980 but uses more realistic information conditions in addition to confirming the central tendency results of friedman and hoggatt we find that in the three to six corporation range the number of corporations in the experiment seems to have no effect on the tendency to grope towards the cournot nash solution on the other hand it seems clear that convergence to cournot nash is more likely if the subjects are experienced and less likely the higher the cournot nash markup over unit cost overall there is a strong tendency to converge to cournot nash

the fiscal implications of hurricane strikes in the caribbean abstract this paper empirically traces the fiscal impacts of hurricane strikes to this end a hurricane damage index is derived from a physical wind field model for a panel of caribbean countries over 36 years results based on panel var and impulse response functions analysis show that overall hurricane strikes exert a short term impact indeed the study finds that the response of government spending is positive and significant while public investment debt and tax revenue do not appear to respond significantly to hurricane strikes moreover the study finds that governments respond to hurricane strikes by engaging in short term deficit financing

the impact of collusion on price behavior empirical results from two recent cases abstract we use extended arch and garch models to examine the differences in the behavior of the first two moments of the price distribution during collusive and competitive phases of two recently discovered conspiracies citric acid and lysine according to our results the conspirators managed to raise prices by 9 and 25 cents per pound in the short run relative to non collusive periods also the variance of prices during the lysine conspiracy was lower and the variance of prices during the citric acid conspiracy was higher than during more competitive periods the proposed methodology may be used for antitrust screening and prosecution purposes

individual behavior of first price auctions the importance of information feedback in computerized experimental markets abstract this article reports the results of an individual choice experiment designed to test the nash equilibrium predictions of the first price sealed bid auction a subject faced in 100 auctions always the same resale value and competed with computer simulated bids the design used between subjects variation and involved information feedback as the treatment variable earlier experimental work on first price auctions has frequently reported an overbidding relative to the risk neutral nash equilibrium our data provide evidence that overbidding can be fostered by the standard information feedback in auction experiments which after each auction reveals the winning bid only by means of learning direction theory we explain the individual bidding dynamics in our experiment finally we apply impulse balance theory and make long run predictions of individual bidding behavior

growth in transition what we know what we don t and what we should abstract this essay surveys macroeconomic issues that marked the transition from planned to market economy in central and eastern european and former soviet union countries we first establish stylized facts of the transition so far we then critically survey the theoretical literature on transition discussing explanations for the initial output fall and mediumterm issues such as optimal speed of transition disorganization institutions and sectoral reallocation as source of output dynamics we review the empirical literature to assess how well it translates the theoretical models and explains the stylized facts we conclude with suggestions for future research

the opportunity for conspiracy in restraint of trade an experimental study a study is a limited exploration into the relationship between the opportunity for conspiracy in restraint of trade and the resulting market performance laboratory experimental methods are applied to separate competing theories the competitive model predicts well relative to cartel models nevertheless when measurements are taken relative to the performance of markets where conspiracies are not possible the effects of attempted conspiracies can be determined

impulse balance equilibrium and feedback in first price auctions abstract experimental sealed bid first price auctions with private values in which feedback on the losing bids is provided yield lower revenues than auctions where this feedback is not given the concept of weighted impulse balance equilibrium which is based on a principle of ex post rationality and incorporates a concern for social comparison captures the data

the impact of climate change on regional government expenditures evidence from russia this paper explores an almost untouched topic in the fast growing climate econometrics literature the implications of climate change for government expenditures using a rich sub national dataset for russia covering 1995 2009 we estimate the impacts of changes in climatic conditions through short term variation and medium term changes in average regional temperatures and precipitation we show a strong and robust negative but non linear relation between regional budget expenditures and population weighted temperature the results indicate that an increase in temperature results in a decrease in public expenditures and that the magnitude of this effect diminishes the warmer the region further our results suggest that the benefits from warming accumulate and that adaptation measures could help leverage those benefits the estimated decreases in regional government expenditure are however quite small in mild warming scenarios according to our estimates russia saves roughly usd 3 4 billion in regional government expenditures between 2000 and the 2020s without undertaking adaptation measures depending on the scenario it should be noted that our results are estimated for a scenario of mild temperature increase 1 2 circ c larger temperature increases are likely to have dramatic consequences e g from loss of permafrost and methane release that are impossible to predict with available historical data

simultaneous allocation of bundled goods through auctions assessing the case for joint bidding we study the costs and benefits of allowing joint bidding in multiple simultaneous first price sealed bid auctions for bundled goods with private values joint bidding raises the prospect of higher allocative efficiency but also reduces the number of bidders resulting in an ambiguous net impact on seller revenue the research was carried out using laboratory experiments in which groups of up to six buyers competed for eight bundles of two separable goods each the main results show that in our experimental environment allowing joint bidding increases efficiency by 11 3 and revenue by 9 4 the research has immediate applications to the sale of public forest stands that arbor a mixture of species for this reason we explore how the results are affected by excess supply the presence of dominant firms and the removal of an allocation rule requiring multiple bidders under certain circumstances

an institutional approach to cross national distance cross national distance is a key concept in the field of management previous research has conceptualized and measured cross national differences mostly in terms of dyadic cultural distance and has used the euclidean approach to measuring it in contrast our goal is to disaggregate the construct of distance by proposing a set of multidimensional measures including economic financial political administrative cultural demographic knowledge and global connectedness as well as geographic distance we ground our analysis and choice of empirical dimensions on institutional theories of national business governance and innovation systems in order to overcome the methodological limitations of the euclidean approach we calculate dyadic distances using the mahalanobis method which is scale invariant and takes into consideration the variance covariance matrix we empirically analyze four different foreign expansion choices of us companies to illustrate the importance of disaggregating the distance construct and the usefulness of our distance calculations which we make freely available to managers and scholars

the size and composition of government expenditure abstract this paper tests several leading hypotheses on determinants of government expenditure the purpose is to avoid omitted variables bias by testing the prominent theories in a comprehensive specification to identify persistent puzzles for the current set of theories and to explore those puzzles in greater depth by looking at the composition of government expenditure and the level of government at which it takes place as well as its magnitude using government financial statistics data from the imf covering over 100 countries from 1970 2000 i look at cross sectional and inter temporal variation in government expenditure and both individual categories of expenditure such as defense education health care and different levels of government central and local among other results i find a new explanation for wagner s law widespread evidence that preference heterogeneity leads to decentralization rather than outright decreases in expenditures that a great deal of the expenditure associated with increased trade openness is not in categories that explicitly insure for risk and evidence that both political access and income inequality affect the extent of social insurance

waves of international banking integration a tale of regional differences abstract we propose an original measure of international banking integration based on gravity equations and a spline function on a panel of 14 countries and their 186 partners between 1999 and 2012 contrary to the conventional wisdom we uncover that 1 the international banking integration outside the euro area has been tenaciously increasing since 1999 and has even strengthened after the crisis 2 in contrast the international banking integration of the euro area has been cyclical since 1999 with a peak in 2006 and a complete reversal since then 3 this decline is not a correction of previous overshooting but a marked disintegration 4 outside the euro area the level of income does not affect the shape of banking integration

collusion and information revelation in auctions abstract the theoretical literature on collusion in auctions suggests that the first price mechanism can deter the formation of bidding rings however such analyses neglect to consider the effects of failed collusion attempts wherein information revealed in the negotiation process may affect bidding behaviour we experimentally test a setup in which theory predicts no collusion and no information revelation in first price auctions the results reveal a hitherto overlooked failing of the first price mechanism failed collusion attempts distort bidding behaviour resulting in a loss of seller revenue and efficiency moreover the first price mechanism does not result in less collusion than the second price mechanism we conclude that while the features of the first price mechanism may have the potential to deter bidder collusion the role of beliefs in guiding bidding behaviour make it highly susceptible to distortions arising from the informational properties of collusive negotiation auction designers should take this phenomenon into account when choosing the auction mechanism

capacity constraints and information revelation in procurement auctions i introduction procurement auctions are one of the most widely used mechanisms in modern economies to disburse funds for public works projects a substantial portion of these funds are spent on the construction and maintenance of roads and highways an activity on which the u s government for instance spends 160 billion annually in this article we examine the bidding behavior of experimental participants in order to shed light on the strategic incentives generated by these auctions our investigation is centered on two observations made in the existing literature in a typical state level procurement auction held in the united states firms submit sealed bids for a particular project that has been advertised in advance by the state s department of transportation subject to some qualifications the lowest bidder wins the project and is paid the amount of its bid empirical work analyzing these auctions has found that construction firms suffer from capacity constraints whereby a firm with a larger backlog of preexisting work commitments finds it more costly to add new work to its roster de silva dunne and kosmopoulou 2003 jofre bonet and pesendorfer 2003 1 bidders with larger backlogs therefore tend to submit higher bids and win fewer auctions because a typical department of transportation auctions off hundreds of such projects a year capacity constraints create an intertemporal linkage between adjacent auctions a bidder that wins a given auction incurs an opportunity cost in terms of forgoing expected profits in future auctions on account of its anticipated higher costs our first research question therefore is how does the presence of capacity constraints affect the bidding behavior of experiment participants our second research question is inspired by the fact that procurement markets have been found to be vulnerable to collusion by bidders bajari and ye 2003 porter and zona 1993 in most states contracts are typically won by a small set of firms that interact repeatedly in procurement auctions over the course of the year this can provide an ideal setting for a bid rigging scheme in procurement auctions where firms compete by setting prices observing the prices set by one s rivals can be crucial to the feasibility of any collusive scheme porter 2005 if bidders are not colluding and if past bids are not correlated with current costs then observing a rival s past bids will not lead to observable variation in a firm s bids if however firms are attempting to collude a change in the bid revelation policy of the procurer might lead to a measurable change in bids thus revealing the past bids of players can influence their strategic behavior as it alters the ways in which they can provide information to each other about their strategies even in the absence of explicit collusion when all bids are revealed a firm may be able to signal its desire to tacitly collude by submitting noncompetitive bids 2 this leads us to the question what is the effect of varying the amount of information revealed about past bids on the current bids of experimental participants competing in dynamic auctions the answer to this question may be useful for policy makers given that currently most state departments of transportation in the united states publicize all the bids from past auctions the central contribution of our article is to answer the two questions posed with evidence collected from laboratory economic experiments in the experimental sessions bidders play one shot two round and infinite horizon procurement auction games where winning an auction can increase a bidder s cost in the next auction in half of the experimental sessions only the winning bid is revealed after each auction this is done to restrict the amount of information that is shared between bidders explicit communication is not allowed in the other half of the sessions we reveal winning and losing bids at the conclusion of each auction

trade policy and quality leadership in transition economies trade policy and quality leadership in transition economies are analyzed in a duopoly model of trade and vertical product differentiation we first show that the incidence of trade liberalization is sensitive to whether firms in transition economies are producers of low or high quality second we find that neither free trade nor the absence of a domestic subsidy are optimal both a tariff and a subsidy increase price competition and while the former extracts foreign rents the latter results in quality upgrading third there exists a rationale for a government to commit to a socially optimal policy to induce quality leadership by the domestic firm when cost asymmetries are low finally we establish an equivalence result between the effects of long run exchange rate changes and those of trade policy on price competition but not on social welfare

outside options another reason to choose the first price auction abstract in this paper we study equilibrium and experimental bidding behaviour in first price and second price auctions with outside options we find that bidders do respond to outside options and to variations of common knowledge about competitors outside options however overbidding in first price auctions is significantly higher with outside options than without first price auctions yield more revenue than second price auctions this revenue premium is significantly higher with outside options in second price auctions the introduction of outside options has only a small effect

trade reorientation and recovery in transition economies how do we define transition and when can we say that transition to a market economy is complete here we suggest that one way of addressing this issue is to analyse current economic data and ask whether in ignorance of the past we can identify countries in central and eastern europe as being somehow different from comparable western market economies in this paper we focus on international trade and argue that several indicators such as the geographical structure of trade and the undervaluation of the exchange rate cannot distinguish the more advanced countries in central and eastern europe we also seek to explain how the reorientation of trade towards the west has been achieved and in particular assess whether improvements on design and quality are a prerequisite for export expansion copyright 1997 by oxford university press