a cost benefit analysis of a condom social marketing programme in tanzania this article uses the revealed preference willingness to pay approach to estimate the benefits in a cost benefit analysis of a condom social marketing csm programme in tanzania the demand curve used to derive the consumer surplus had unit elasticity and it was estimated from a cross sectional sample of 1272 persons people were willing to pay different prices for the condoms because perceived quality varied net benefits were close to zero for the minimum estimate that ignored external benefits with external benefits included the csm programme was judged socially worthwhile with our best estimate producing a benefit cost ratio ranging from 1 31 to 1 72

alleviating transitory food crises in sub saharan africa international altruism and trade the donor community has responded to unexpected or transitory drops in domestic food production in many countries in sub sabaran africa an empirical framework estimates and analyzes the correlation between this food aid and domestic production both emergency food aid and commercial imports are used to offset the effects of negative output shocks in sub saharan african countries the major recipients of global emergency food aid on average every one ton drop in cereal production is offset by the delivery of 0 8 tons of cereal and dairy products from abroad over four years most food aid arrives within a year of a shock and correlation of shocks over time along with the differences between crop years and calendar years may explain the link between aid and production the economic and political considerations also determine the global response to the emergency food needs of countries in africa the international response is not contingent on the form of government or the level of political and human rights violations poorer countries and those with well established nonemergency food aid programs receive larger amounts of emergency aid when needed food aid has long helped low income countries to sustain domestic food supplies and cope with transitory food insecurity and it has also been used to accelerate agricultural development and increase food production but food aid has been heavily criticized in the past decade on several grounds first it has been charged that the international response to food crises is slow meager and inefficient a related accusation suggests that countries granting emergency food aid disciriminate on the basis of the political and economic orientation of the recipient country second food aid has been thought to discourage domestic food production thus leading to long term dependence on donors finally it has

information and the persistence of private order contract enforcement institutions an experimental analysis abstract we study an experimental market in which some sellers are prone to moral hazard and in which a private order contract enforcement institution exists that can mediate trade and prevent sellers from reneging on their contractual obligations using the institution to resolve the moral hazard problem is costly we demonstrate that in this market the utilization of the private order contract enforcement institution may make public and private market signals uninformative and inhibit learning we study whether this potential information externality can limit adaptation away from the private order institution when it is efficient to do so consistent with theory we find inefficient persistence when the institution is used but by contrast efficient adaptation in other situations providing information to individuals who are using the private order institution allows them to partially adapt

if we knew ability how would we tax individuals abstract the suggestion to tax people on earnings capacity instead of earnings has been around for a long time and is attractive in terms of economic efficiency in this paper we reflect on the feasibility of such a system and give an exploratory empirical implementation we apply the leyden welfare function of income a survey based measure of an individual s welfare associated with income to derive implications for ability taxation under the assumption that iq and schooling reflect earnings capacity we derive the tax functions using different criteria to distribute the utility loss due to taxation

supplementing an emissions tax by a feed in tariff for renewable electricity to address learning spillovers abstract in the presence of learning spillovers related to renewable energy technologies an optimal strategy to mitigate climate change should complement an emissions tax by a subsidy for renewables this article addresses the question how such subsidy should be designed it is shown that the widely used approach of a revenue neutral fixed feed in tariff can yield an optimal outcome under restrictive conditions only it has to be adapted continuously as the electricity price changes moreover funding the tariff by a surcharge on the electricity price has important implications for the design of the emission tax the optimal tax rate has to be below the pigovian level differentiated across fossil fuels and adapted over time as the patterns of technological development change these requirements may pose a formidable challenge for practical decision making however it is important to point out that the eventual choices made with respect to the design and funding of a feed in tariff have to be based on a careful and more comprehensive policy assessment including inter alia economic effects beyond the electricity sector and existing institutional constraints

some observations on power and property rights in the inland fisheries of bangladesh abstract this paper examines the causes behind the failure of the fishermen to establish property rights over fishing grounds in the inland fisheries of bangladesh property rights are eventually transferred to socially powerful agents called the lessees who are not part of the fishing community differential costs of establishing and maintaining property rights have been observed as the key element behind the transfer of rights this differential cost stems from power asymmetries and consequently more rent is generally realizable by the lessees differential capacity to realize rent creates the potential for an exchange of rights between them 1997 elsevier science ltd all rights reserved

privatizing the commons an improvement recent years have seen political economists turning to an institutional paradigm wherein the extent to which property rights are defined and enforced is an important determinant of human action furubotn 1972 the institutional or property rights approach has become an important component of explanations of both economic growth and economic inefficiency the institutional environment now holds a prominent place in explanations of differential growth rates among political units and over time 1 the property rights approach has also become commonplace in the analysis of the environmental crisis where the lack of well defined property rights is seen as the cause of environmental problems and movement toward a more complete specification of those rights as the solution even bureaucratic inefficiencies have been analyzed in the context of property rights mckean 1965

tax effects versus budget effects on labor supply this paper analyzes the effects on labor supply of parallel changes in taxes and public spending of various types a number of important recent developments in the labor supply behavior of households are highlighted by such a study of various types of budget effects rather than isolated tax effects this comes out in particular when considering cross substitution effects on labor supply of changes in public spending on goods and services or of the subsidization of goods and services provided by private markets moreover the income effects of tax changes are often mitigated or possibly even removed by the income effects of the accompanying expenditure changes

history s role in coordinating decentralized allocation decisions what causes individual suppliers to allocate goods in such a way that the aggregate allocation satisfies the law of one price a satisfactory answer to this question must confront two related problems equal net prices at all allocations provide no information to suppliers about the quantity to deliver to a specific location and strategic uncertainty makes an observed violation of the law of one price an unreliable indicator of a profit opportunity this paper develops a simple analytical framework to formalize these two problems reviews some solutions found in the literature and reports laboratory evidence on how people solve them in addressing these issues we focus on the role historical prices play in coordinating decentralized allocation decisions

the citizen candidate model an experimental analysis citizen candidate models represent a significant advance in the analysis of public choice they provide added realism to models of endogenous policy formation relate the number of candidates to the benefits and costs associated with electoral competition and support equilibria with differentiated candidate positions even with a multidimensional policy space in this paper experimental methods are utilized to test two of the model s equilibrium predictions the results support the prediction that an increase in the net benefits to winning an election increases the number of citizens entering electoral contests when the net benefits to winning an election are low the results support the prediction that the only candidate has the median preference further the results suggest that when net benefits are high two members of the electorate with preferences close to and symmetric about the median enter the election although convergence to this equilibrium takes time because entry is costly having multiple candidates lowers group payoffs and may be seen as inefficient

links between economic liberalization and rural resource degradation in the developing regions this paper examines evidence of the effects of economic liberalization and globalization on rural resource degradation in developing countries the principal resource effects of concern are processes of land use change leading to forestland conversion degradation and deforestation the main trends in globalization of interest are trade liberalization and economy wide reforms in developing countries that have opened up the agroindustrial sectors thus increasing their export orientation such reforms have clearly spurred agroindustrialization rural development and economic growth but there is also concern that there may be direct and indirect impacts on rural resource degradation the direct impacts may occur as increased agricultural activity leads to conversion of forests and increased land degradation from unsustainable production methods however there may also be indirect effects if agroindustrial development displaces landless near landless and rural poor generally who then migrate to marginal agricultural lands and forest frontier regions this paper explores these direct and indirect effects of globalization and agroindustrialization on rural resource degradation both generally plus through examining case study evidence the paper focuses in particular on the examples of structural adjustment trade liberalization and agricultural development in ghana and maize sector liberalization in mexico under north american free trade agreement nafta

the theory of taxation for developing countries tax policy has far reaching implications for economic development and public administration this book which presents a modern theory of public finance brings together many of the most distinguished economists who have written on the subject they provide coherent principles for tax design and a systematic framework for the analysis of practical questions of tax reform and pricing policy in developing countries the book is especially timely as countries experience increasing shortages of government revenue and the distortions brought about by poorly designed tax systems it pays particular attention to the special problems of developing countries such as the taxation of agriculture the aim throughout is to develop techniques that can be quantitatively applied given the data available and empirical case studies illustrate the methods in action the authors analyze the links between tax theory social cost benefit analysis and the pricing of publicly supplied goods and services they also explore the empirical and econometric problems of identifying the tradeoffs between equity and efficiency other topics treated include the analysis of labor markets the taxation of foreign private investment and of fuel and the pricing of education although the models used concentrate on developing countries most of the methods and discussion apply as well to the problems of more affluent countries

technology adoption and agricultural price policy market interventions such as price supports or fertilizer subsidies can lead to gains from speeding up adoption of new technologies but the policies distort resource allocation a framework is developed for optimizing policies in light of the adoption allocation trade off based on adoption coefficients and production parameters from third world agriculture levels and duration of policies are estimated sensitivity analyses are performed gains are small at best and may be zero or negative in view of farmer costs of adjustment and deadweight losses from taxes profit technology adoption if new technologies are desirable why not use price supports or input subsidies to encourage faster technology adoption while frequently raised in policy deliberations this question has received little serious analysis particularly neglected has been the conflict or trade off between a gains in output as producers switch from old to new technologies and b the losses from resource use distortions brought about by price policies when output prices are raised or prices of inputs such as fertilizer are lowered the

nafta and mexico s maize producers abstract the fall in the producer price of maize that will accompany implementation of trade liberalization and nafta has led to dire predictions of falling incomes and labor displacement in mexican agriculture we use a household survey of the ejido sector to show that a majority of maize producers are in fact not producing for the market and will consequently not be directly affected as producers by a drop in the price of maize while a significant share will benefit as consumers for the net sellers we explore the determinants of two solutions to a falling maize price diversification toward high value crops and modernization of maize production for both of these results show the fundamental importance of reconstructing supportive institutions for marketing credit and technical assistance in replacement of the services formerly offered by government and subsequently discontinued under state contraction

a marginal cost of funds approach to multi period public project evaluation implications for the social discount rate abstract although the use of marginal cost of funds mcf has been widely appreciated in public finance literature discussions of mcf have been confined to a static setting this paper develops a multi period project evaluation rule that is based on mcf unlike previous approaches the parameters required for implementing the mcf rule are independent of projects under consideration a lesson from this paper is that the government discount rate policies that are largely based on the concepts of social discount rate and shadow price of capital should be rewritten with the use of parameters representing mcf

on the marginal welfare cost of taxation this paper develops a rigorous partial equilibrium analysis of the determinants of margin al welfare cost mwc of taxes on labor earnings it shows that four key parameters interact to determine the magnitude of mwc using aggregate data and plausible ranges of values for the parameters mwc can vary from under 10 percent to more than 300 percent of marginal tax revenue intermediate parameter values sugge st mwc is in the 25 50 percent range however the more extreme estimates cannot be ruled out on the basis of available evidence suggesting that mwc cannot yet be copyright 1987 by american economic association

the substantial bias from ignoring general equilibrium effects in estimating excess burden and a practical solution we show that under typical conditions the simple excess burden triangle formula substantially underestimates the excess burden of commodity taxes in some cases by a factor of 10 or more this formula performs poorly because it ignores general equilibrium interactions most important interactions between the taxed commodity and the labor market many prior studies have shown that general equilibrium interactions affect excess burden but have not appreciated the bias associated with ignoring these interactions or the quantitative importance of this bias we derive an implementable alternative to the simple formula this alternative formula captures interactions that the simple formula omits as a result it is both unbiased and usually more accurate

multimarket analysis of agricultural price policies in an operational context the case of cyprus this article presents a method of analysis of agricultural price policies its basic features are i the incorporation of important supply and demand substitution possibilities ii a flexible structure which can account for institutional features of the agricultural sector and its relationships with the rest of the economy and iii a focused policy oriented approach an application to cyprus is presented which highlights the differences between this approach and analyses of single markets the method incorporates supporting software on personal computers with the longer term objective of developing this type of approach as a standard tool in pricing policy analysis

coordination matching and wages we analyse the coordination problem in the labour market by endogenizing the matching function and the wage share each firm posts a wage to maximize the expected profit anticipating how the wage affects the expected number of applicants in equilibrium workers apply to firms with mixed strategies which generate coordination failure and persistent unemployment we show how the wage share unemployment and the welfare loss from the coordination failure depend on the market tightness and the market size the welfare loss from the coordination failure is as high as 7 5 per cent of potential output jel classification c78 j64 les auteurs analysent le probleme de la coordination dans le marche du travail en endogeneisant la fonction arrimage et la part des revenus qui va aux salaires chaque entreprise definit le niveau de salaire qui maximise ses profits anticipes en tenant compte de l effet de ce niveau de salaire sur le nombre des applications qu elle peut anticiper de meme les travailleurs font application aupres d une entreprise a un salaire donne en tenant compte d une certaine relation d equivalence entre niveau de salaire et probabilite d obtenir l emploi voila qui engendre incoordination et chomage persistant on montre que la part des revenus qui revient aux salaires le niveau de chomage et les pertes de bien etre attribuables au manque de coordination dependent de la taille du marche et du degre de rarete de la main d oeuvre les pertes de bien etre attribuables au manque de coordination correspondent a quelques 7 5 pour cent de la production potentielle

what can we learn from past price stabilization policies and market reform in mexico abstract this paper reviews experience with policy reforms in the maize sector in mexico beginning in the 1980s with particular reference to impacts on price variability it analyses mexico s transition from past price stabilization policies under a state trading enterprise to market reforms implemented during the 1990s the nature extent and costs to producers and consumers of maize policies is discussed for both the pre reform and the reform periods although wide ranging reforms have been introduced impacts on efficiency and fiscal outlays have been less than expected

maize and the free trade agreement between mexico and the united states setting the price of maize in rural mexico above the world price is inefficient and likely to have negative distributional effects because many subsistence producers and all landless workers are net buyers in fact it screens out the relatively poor rather than the relatively rich the policy objective therefore should be to move toward free trade this would yield large gains in efficiency the free trade agreement provides an ideal opportunity to pursue this objective it will provide freer entrance into the united states for other agricultural products as well as a broad range of manufactured products ensuring secure and sustained access for labor intensive agricultural and manufactured products can help ease the impact on the labor market of a transition away from subsistence maize cultivation

labor supply taxes and government spending a microeconometric analysis the effect of government spending on labor supply behavior is critical to predicting the balanced budget effect of income taxes and to estimating the marginal social cost of public funds yet its very existence not to mention direction and magnitude has not been empirically investigated this research estimates a labor supply function that incorporates income taxation and government spending using microeconomic data for men and women the empirical results suggest that public sector spending may have a significant effect on labor supply thereby leading to estimates of the marginal social cost of public funds that differ from those typically calculated

the cost disease and government growth qualifications to baumol changes in real world wage movements across sectors account for about a third of the rise in the cost of u s government services between 1959 and 1989 while relatively slower productivity in the public sector accounts for the remaining two thirds even though it is slower however the productivity record still is positive even in the labor intensive government sector consequently baumol argues that the public s likely future objection to necessary increases in the share of expenditures over the next 50 years will betray a fiscal illusion unless policymakers take pains to dissolve it but slower productivity may be equally due to the structural organization removing public monopolies reducing bureaucracies and undertaking privatization in education for example are other policy options that could radically change the productivity record meanwhile in his recent calculations of dramatic government expenditure increases expected in the next half century baumol omits reference to the marginal welfare cost of public funds which on our estimates will increase at least ten times to reach 1 71 by the year 2040

an explanation of anomalous behavior in models of political participation this paper characterizes behavior with noisy decision making for models of political interaction characterized by simultaneous binary decisions applications include voting participation games candidate entry the volunteer s dilemma and collective action problems with a contribution threshold a simple graphical device is used to derive comparative statics and other theoretical properties of a quantal response equilibrium and the resulting predictions are compared with nash equilibria that arise in the limiting case of no noise many anomalous data patterns in laboratory experiments based on these games can be explained in this manner

revenue equivalence revisited the conventional wisdom in the auction design literature is that first price sealed bid auctions tend to make more money while ascending auctions tend to be more efficient we re examine these issues in an environment in which bidders are allowed to endogenously choose in which auction format to participate our findings are that more bidders choose to enter the ascending auction than the first price sealed bid auction and this extra entry is enough to make up the revenue difference between the formats consequently we find that both formats raise approximately the same amount of revenue they also generate efficiency levels and bidder earnings that are roughly equivalent across mechanisms though the earnings in the ascending might be slightly higher

optimal dynamic carbon taxes in a climate economy model with distortionary fiscal policy how should carbon be taxed as a part of fiscal policy the literature on optimal carbon pricing often abstracts from other taxes however when governments raise revenues with distortionary taxes carbon levies have fiscal impacts while they raise revenues directly they may shrink the bases of other taxes e g by decreasing employment this article theoretically characterizes and then quantifies optimal carbon taxes in a dynamic general equilibrium climate economy model with distortionary fiscal policy first this article establishes a novel theoretical relationship between the optimal taxation of carbon and of capital income this link arises because carbon emissions destroy natural capital they accumulate in the atmosphere and decrease future output consequently this article shows how the standard logic against capital income taxes extends to distortions on environmental capital investments second this article characterizes optimal climate policy in sub optimal fiscal settings where income taxes are constrained to remain at their observed levels third this article presents a detailed calibration that builds on the seminal dice approach but adds features essential for a setting with distortionary taxes such as a differentiation between climate change production impacts e g on agriculture and direct utility impacts e g on biodiversity existence value the central quantitative finding is that optimal carbon tax schedules are 8 24 lower when there are distortionary taxes compared to the setting with lump sum taxes considered in the literature

effects of economic integration in industrial countries on asean and the asian nies abstract this paper assesses the effect of the proposed north american free trade area the second enlargement of the european community ec and ec 1992 on association of southeast asian nations asean and south korea by matching the commodities exported by asean or south korea to an integrating market such as the united states with those exported to the same market from internal sources such as canada it identifies the industries that would bear the brunt of the discrimination total trade diversion is estimated as a terms of trade effect at 4 of asean exports and 5 of south korean exports to north america and 8 and 5 of their respective exports to the ec ec 1992 is expected to have further discriminatory influences the effect of integration on direct foreign investment in asean and south korea is also evaluated

a generalized approach to multigeneration project evaluation 1 introductionit is well known that the choice of discount rate plays a significant role in the ranking of projects with varying time paths of costs and benefits for public projects the choice of the appropriate social discount rate sdr is not clear cut even in the context of short lived projects in which costs and benefits occur within a single generation in particular when capital taxes produce a wedge between gross and net rates of return should one discount at the economy s rate of return the before tax rate or the individual s rate of return the after tax rate in the single generation context the literature falls in two camps 1 one camp argues that the appropriate sdr is a weighted average of the gross and net rates of return with weights typically determined by the fractions of resources drawn from consumption and private investment respectively 2 a second camp argues that future benefits should be discounted at the net rate of return but that the initial investment should be multiplied by a scale factor so that the direct costs of the project can be expressed in terms of consumption units 3both approaches suffer from severe implementation problems for the first approach there is no general formula for the weights needed to calculate the sdr as a weighted average of two market rates of return dreze 1974 indeed the appropriate sdr to use is project specific stiglitz 1982 without a systematic methodology to derive project specific sdrs the weighted average approach is hard to implement for the second approach which equalizes the sdr to the net rate of return the scale factor the opportunity cost of public investment must be quantified the opportunity cost of public investment depends on whether resources come from private investment or consumption and on the calculation of the present value of the future consumption yielded by a unit of capital discounted at the net rate of return that is the shadow price of capital as lind 1997 points out however there is no general agreement on a specific procedure for calculating the shadow price of capital indeed the concept of the opportunity cost of public investment suffers the same project dependence problem as the first view of the sdr diamond 1968 multigeneration projects such as nuclear waste disposal natural resource conservation or even social security reform further complicate discount rate choice specifically intergenerational equity in addition to intertemporal efficiency plays a role in determining the appropriate social discount rate for multigeneration public project evaluation 4 as in the single generation context there are two competing views on the appropriate discount rate when evaluating multigeneration projects the descriptive and the prescriptive approaches 5the descriptive approach to discounting is a market based approach it does not rely on an explicit social welfare function swf or the pure time preference rate embedded in the swf however the descriptive approach works under the assumption that intergenerational compensation through changes in the tax debt policy is available 6 it is argued that under appropriate intergenerational compensation the market rates of return are still relevant for calculating the sdr for multigeneration project evaluation and in general the sdr should be a weighted average of the gross and net rates of return this descriptive view of setting the sdr equal to the market return appears to underlie the office of management and budget s omb adoption of 7 as the appropriate discount rate for federal programs 7the intent of the prescriptive approach is to use the social discount rate as an expression of ethical judgment on how consumption of future generations should be compared to consumption of current generations

a dynamic model of bertrand competition with entry abstract this paper analyzes a simple repeated game of simultaneous entry and pricing we report a surprising property of the symmetric equilibrium solution if the number of potential competitors is increased above two the market breaks down with higher probability and the competitive outcome becomes less likely more potential competition lowers welfare another bertrand paradox the model can also be applied to auctions to explore whether a revenue maximizing auctioneer should restrict the number of bidders if bidder participation is costly

agricultural price policy employment and migration in a diversified rural economy a village town cge analysis from mexico using the village town computable general equilibrium cge model this paper explores the implications of resource mobility across farm and non farm activities and alternative model closure rules in shaping agricultural policy impacts two sets of agricultural policy experiments on three alternative model closure scenarios were conducted using data from a 1993 survey of 196 households in michoacan mexico including 53 in a town or county seat and 143 in the surrounding villages experiment 1 simulates the village town economy wide impact of a 10 decrease in the support price for staples experiment 2 combines this support price decrease with a compensating lump sum income transfer to staple producers similar to what actually occurred under mexicos procampo program results show that the prediction made by the aggregate cge model that mexicos agricultural price liberalization reduces rural employment and incomes and stimulates migration was not materialized the decline in staple production has been relatively small and it has concentrated on large commercial farms rather than in small farm sector in which most producers are found and from which most migrants originate however with the use of village town model and microsurvey data the authors demonstrated that under plausible market closure conditions mexicos staple price liberalization has a minimal effect on rural wagers and migration this is contrary to the predictions of the aggregated cge model

when fishery rhymes with poverty a first step beyond the old paradigm on poverty in small scale fisheries abstract in this paper we first look retrospectively at the perceptions embraced by academics international agencies and practitioners of the relation between fisheries and poverty in developing countries and we try to identify the underlying paradigms which have structured these perceptions the review reveals how the debate has focused on the economic low income and biological overexploitation aspects of the problem we then revisit these perceptions in the light of the recent conclusions drawn from other sectors and in particular from the new consensus on poverty proposed by the international community incorporation of the recent research on poverty helps to show how socio institutional mechanisms governing people s access to fisheries resources rather than the resources themselves play such a critical role in vulnerability to poverty finally a typology identifying four different categories of intrasectoral exclusion mechanisms is developed and illustrated through empirical studies derived from african and asian fisheries

the assignment of workers to jobs in an economy with coordination frictions this paper studies the assignment of heterogeneous workers to heterogeneous jobs owing to the anonymity of a large labor market workers use mixed strategies when applying for jobs this randomness generates coordination frictions two workers may apply for a particular job whereas an identical job gets no applications the model generates assortative matching with a positive but imperfect correlation between matched workers and firms types it predicts that a worker s wage is increasing in her job s productivity and a firm s profit is increasing in its employees productivity the model also yields a version of the welfare theorems

tax revenue and the marginal cost of public funds in sweden abstract we assess the welfare cost of raising a marginal unit of tax revenue in a balanced budget general equilibrium framework the calculated social cost of an increment of public funds is sensitive to both the specific type of tax increase and the type of public spending used on the margin best guess assumptions on labor supply elasticities yield marginal costs of public funds for different fiscal mixes of between 0 67 and 4 51 at prevailing tax rates in sweden alternative labor supply assumptions well within the range of current estimates substantially affect the results and can imply infinite marginal welfare costs marginal welfare costs are also sensitive to assumptions about both the income and substitution effects of labor supply

smallholder livelihood adaptation in the context of neoliberal policy reforms a case of maize farmers in southern veracruz mexico governments around the world have embraced trade liberalisation as a means of enhancing efficiency to realise economic growth and alleviate poverty likewise the mexican government implemented neoliberal policy reforms the nafta in particular to stimulate sustainable development using the mexican maize sector as illustration this article describes the adaptation process of smallholders to market changes shaped by these reforms going beyond the aggregated level we have investigated smallholders livelihood strategies contrary to what economic models estimated our data suggests that farmers intensified the cultivation of maize rather than switch to sectors in which mexico has a comparative advantage

agricultural policies in the presence of distorting taxes this article analyzes how distortionary factor taxes affect the welfare impacts of production subsidies production quotas acreage controls subsidies for acreage reductions and cash transfers to farmers pre existing taxes substantially raise the costs of all these policies these additional costs reflect the welfare losses from financing certain policies by distortionary taxes they also reflect interactions with factor markets caused by changes in the costs of producing agricultural output previous studies ignore the latter types of effect consequently they significantly overstate the costs of production subsidies and understate the costs of production quotas acreage controls and subsidies for acreage reductions

a theory of price control price or rent control is but one of many forms of legislative action which interfere with private contracting in the market place to delimit the scope of my analysis i shall use the term price control to refer only to any set of regulations which satisfies the following three conditions first the control must fix the price or income terms of private contracts this categorically excludes any laws which regulate the distribution of income among the contracting parties on a share or percentage basis 2 second the control must involve no appropriation of proceeds to or from the government taxation and subsidization are thus excluded finally the fixing of price must not be associated with direct government sales purchases or manipulation of resources so as to maintain the regulated price 3 by this stipulation price support is also excluded even on such terms legal regulations to control price are still many and varied to evaluate our understanding of the class of phenomena which we seek to explain it is essential that we discover implications refutable by facts by this criterion the available body of economic theory pertaining to price control is deficient indeed the massive literature on the subject offers few such implications 4 an alternative approach to analyzing the observable effects of price control is presented here

reexamination of the relative efficiency of the draft and the all volunteer army economists are in almost universal agreement that the all volunteer approach to recruiting military personnel is more efficient than the draft several related considerations form the basis for this agreement first the draft imposes a discriminatory tax on recruits equal to the difference between their market wages and the below market military wage plus a compensating differential for serving in the military second below market pricing of personnel under the draft leads to a military with too many recruits third the all volunteer approach attracts those recruits with the lowest opportunity costs and hence secures a given number of recruits at less cost these standard economic arguments for the all volunteer approach over the draft have been heavily influenced by hansen and weisbrod 7 and oi 10 the purpose of this paper is to argue that under certain conditions the above considerations fail to make a compelling case for the all volunteer approach over the draft the conventional economic case for the all volunteer approach fails to recognize that the relative difference between the cost of the all volunteer approach and the draft depends on the percentage of the eligible population recruited into the military and the dead weight loss associated with conventional taxation as the number of recruits increases relative to the eligible population the advantage of being able to discriminate between high and low opportunity cost recruits diminishes also the larger

reconciling alternative views about the appropriate social discount rate abstract this paper shows that in an economy with an exogenous rate of return and a given capital income tax distortion and with lump sum taxes as the marginal tax instrument the soc and mcf criteria both correctly identify all worthwhile projects if the criteria are properly applied the equivalence between the soc and mcf criteria continues to hold i if distortionary taxes are used to balance the budget and ii if the rate of return to capital is endogenous apparent differences between the soc and mcf criteria arise from different definitions of a project s indirect revenue effect neither criterion has an implementation advantage because the information requirements for each are identical

mobility costs frictional unemployment and efficiency with imperfect job information flows it is plausible that the distribution of job offerings becomes more attractive when there are more vacancies and more unemployed with word of mouth communication this condition is derived given this condition steady state equilibrium is not efficient with welfare increased by the introduction of unemployment compensation even though all agents are risk neutral in this way workers become more selective in the jobs they accept

on the construction of marginal federal personal and social security tax rates in the u s abstract in this article i correct and extend my earlier series on marginal federal personal income tax rates i also construct a measure of the marginal social security tax rate and add this to the income tax rate to obtain a measure of the effective marginal tax rate on income due to federal taxes finally i compare my series on marginal income tax rates and its method of construction with those of barro and sahasakul

learning with fixed rules the minority game abstract this paper gives a critical account of the literature on adaptive behaviour in the minority game a simple congestion game the literature has proposed a model which differs markedly from many standard learning models in that players are endowed with a fixed subset of behavioural rules or response modes which map the observed history to actions these rules need not have a behavioural interpretation or be derived from some form of optimizing behaviour nonetheless this model gives rise to behaviour that is close to equilibrium behaviour at the aggregate level the individual level behaviour predicted by the model seems to capture some aspects of observed experimental behaviour that are difficult to explain using standard models

distortionary taxation and optimal public spending on productive activities mutsumi matsumoto using a general equilibrium model with endogenous factor supplies this article investigates the provision of factor augmenting public inputs such inputs are intermediate goods that affect production functions in a collective manner and give rise to increasing returns unlike with collective consumption goods deviation from the first best condition for a public input is inappropriate if taxes are set optimally when taxes are not optimal a second best rule must include a feedback effect on revenue as well as the deadweight cost of taxes implications for benefit cost analysis and for interpretation of estimates of the social returns to public capital are explored jel h21 h54 o4 i introduction government spending on public infrastructure and on human capital formation are often cited as important contributing forces to economic growth with reference to less developed economies isham and kaufmann 1999 show that the returns from public infrastructure investments are very high where the overall policy regime is basically sound turning to human capital psacharopolous and woodhall 1985 point out the sizable excess of social over private returns from education temple 1999 indicates that the importance of these public investments and others like them for example research and development is not limited to less developed countries appropriate levels are important across all economies the key characteristic of these sorts of commodities is that they exhibit positive externalities across productive entities in short they may be categorized as public intermediate goods or public inputs although such commodities are beneficial they are also costly spending on them takes a large portion of p ublic budgets moreover government financing of these costs typically involves the use of distortionary taxes those taxes create excess burden the magnitudes of which may be substantial for instance in an influential contribution browning 1987 21 suggests the marginal excess burden of taxes on labor income ranges from 31 8 to 46 9 the crux of this article is the relevance of distortionary taxes to decisions about public input expenditure bruce 1998 457 and musgrave et al 1987 288 89 suggest the incorporation of the deadweight cost of taxation as a cost when evaluating public projects boardman et al 1996 62 64 in their authoritative benefit cost text recommend the inclusion of deadweight loss in the assessment of net benefits of tax funded public projects these recommendations are intuitively appealing they are also consistent with the second best expenditure condition for spending on public consumption goods atkinson and stern 1974 show that marginal cost of a public consumption good must include the excess burden of the tax system indeed some of the most important recent empirical work on the returns from public capital have assessed those returns after netting out the deadweight loss of the tax system see morrison and schwartz 1996 and nadiri and mamuneas 1994 this article investigates the theoretical basis for deviating from the first best rule for public input provision when taxes are distortionary 1 one finding is that despite the deadweight losses a second best rule for public inputs should not be followed when taxes are set optimally the first best condition remains appropriate in effect the production efficiency theorem of diamond and mirrlees 1971 extends to a public input economy however and importantly for actual policy when taxes are not optimal then not only the excess burden but the impact of the public input on the government s budgetary position must be taken into account these qualifications need to be incorporated into empirical studies and benefit cost analysis ii the model the analysis makes use of a general equilibrium model of a competitive economy in which factor supplies are variable and there is a public input

the trade off between equality and efficiency this paper uses a 1976 microdata base to estimate the marginal cost of reducing income inequality with a policy that has distributional effects similar to the present tax transfer system the analysis uses a simulation methodology in which only the labor supply effects are evaluated other behavioral effects are ignored the most striking finding is that marginal cost is quite high even for modest labor supply elasticities for example in the benchmark case with a weighted average economy wide uncompensated wage elasticity of 0 2 and compensated elasticity of 0 31 the disposable money income of upper income quintiles of households is depressed by 9 51 for each dollar increase in the disposable money income of lower income quintiles when income equivalent values that take account of the value of leisure are compared the marginal cost for this case is estimated to be 3 49

revisiting the cost of protectionism abstract most studies of the welfare impacts of trade policy have ignored interactions between these policies and pre existing distortions from the income tax this paper demonstrates that when these interactions are taken into account the potential gains or losses from tariffs import quotas or voluntary export restrictions are significantly magnified however as long as the trade barrier doesn t generate rents for domestic households the optimal level of the trade barrier is unchanged from the first best case trade policies which do increase domestic rents either in the form of quota rents or rents to fixed factors in production suffer an additional efficiency cost and the optimal policy in this case is less strict than in the first best case