excess burden and the marginal cost of public spending abstract the relationship between excess burden of taxation and the shadow price of public expenditure is explored an equality is established between compensated and uncompensated versions of the marginal social costs of taxation

does the public sector over provide club goods a general result abstract with nondistortionary user charges the first best and second best of a single club exogenous income economy with identical individuals coincide they differ if incomes differ overprovision of a superior club good then occurs in the second best

how should commodities be taxed market structure product heterogeneity and the optimal structure of commodity taxes abstract this paper is concerned with the form in which commodity taxes are best imposed and particularly with the appropriate balance between specific and ad valorem components this neglected issue is of policy importance in relation to the harmonization of tax structures within the eec and of theoretical interest as a point of contact between optimal tax theory and models of non price competition the roles of the two taxes as purely corrective devices under a variety of market forms are established and discussed the analysis suggests that heavily taxed commodities should normally be subject to high specific rather than high ad valorem taxes

pigou meets mirrlees on the irrelevance of tax distortions for the second best pigouvian tax this paper extends the mirrlees 1971 model of optimal income redistribution with optimal corrective taxes to internalize consumption externalities using general utility structures and exploring both linear and non linear taxes it is demonstrated that the optimal second best tax on an externality generating good should not be corrected for the marginal cost of public funds since it equals one in the optimal tax system in the optimum distortions of income taxes are equal to marginal redistributional gains if the government does not have access to a non distortionary marginal source of finance the marginal cost of public funds can be either larger or smaller than one depending on subjective preferences for income redistribution the optimal second best corrective tax is then either higher or lower than the pigouvian level the findings in this paper generalize and amend prior results based on representative agent models shedding new light on the weak double dividend hypothesis and on the welfare gains of recycling revenue from environmental taxes

distortionary taxes and the provision of public goods economists have long been concerned with finding an efficient level of public expenditure the classic statement of the problem was given by paul samuelson 1954 an optimal level of expenditure is where the sum of the marginal rates of substitution between the public good and a reference good equals the marginal rate of transformation between the public good and the reference good mrs mrt however samuelson s formula assumes that all of the revenue needed to finance public goods can be raised with lump sum taxes since this is not generally possible the formula must be modified to account for the distortionary effects of the tax system an appropriate modification is to multiply the cost side of the equation by a term that is commonly called the marginal cost of public funds mcf in the case of samuelson s formula where government is entirely financed with lump sum taxes the mcf would be exactly 1 0 in the traditional view of economists distortionary taxes cause the mcf to be greater than one thus raising the cost of providing public goods in this paper we discuss some cases where the mcf may be less than one we will illustrate this possibility using numerical examples for labor taxes

computing the non stationary replenishment cycle inventory policy under stochastic supplier lead times in this paper we address the general multi period production inventory problem with non stationary stochastic demand and supplier lead time under service level constraints a replenishment cycle policy r n s n is modeled where r n is the n th replenishment cycle length and s n is the respective order up to level we propose a stochastic constraint programming approach for computing the optimal policy parameters in order to do so a dedicated global chance constraint and the respective filtering algorithm that enforce the required service level are presented our numerical examples show that a stochastic supplier lead time significantly affects the structure of the optimal policy with respect to the case in which the lead time is assumed to be deterministic or absent

the british model in britain failing slowly in 1990 britain reorganised its electricity industry to run on competitive lines the british reforms are widely regarded as successful and the model used provides the basis for reforms of electricity industries worldwide the main reason for this perception of success is major reductions in the real price of electricity with no reduction in service quality this paper examines whether the reputation of the british reforms is justified it concludes that the reputation is not justified and that serious fundamental problems are beginning to emerge the central question is have the british reforms resulted in the creation of efficient wholesale and retail markets on this criterion the reforms have failed the wholesale market is dominated by obscure long term contracts privileged access to the market and self dealing within integrated generator retailers leaving the spot markets with minimal liquidity and unreliable prices the failure to develop an efficient wholesale market places the onus on consumers to impose competitive forces on electricity companies by switching regularly small consumers will not do this and they are paying too much for their power for the future there is a serious risk that the electricity industry will become a weakly regulated oligopoly with a veneer of competition

status effects and environmental externalities abstract this paper examines a static competitive economy where the production of a consumption good generates pollution that adversely affects human welfare preferences are defined over consumption leisure pollution and economic status each person s status increases with her own consumption but decreases with the average consumption of society the achievement of a pareto efficient resource allocation requires a consumption tax to offset the incentive to overconsume in the pursuit of enhanced status in contrast with standard prescriptions the efficient pollution tax generally exceeds the sum of individuals marginal willingness to pay for pollution abatement these findings remain unaltered when preferences are modified to incorporate altruistic concern for others well being altruism however suggests a potential role for government intervention to achieve a desirable i e pareto efficient distribution of welfare between individuals

investment under uncertainty with price ceilings in oligopolies abstract we study the impact of price cap regulation on the level and timing of investment in an oligopolistic cournot industry facing stochastic demand we find that a price ceiling affects investment decisions in two mutually competing ways it makes the option to defer investment more valuable but at the same time it reduces the incentive for firms to strategically underinvest in order to raise prices we show that while sensible price cap regulation speeds up investment a low price cap can be a disincentive for investment there exists an optimal price cap independent of market concentration the competitive investment price trigger that maximizes investment incentives and in the long term increases industry installed capacity this optimal price cap becomes less effective and less robust as the market becomes more competitive and as demand volatility increases errors in estimation of the optimal price cap have asymmetric effects underestimation has more dire consequences than overestimation

nature of transfers income tax function and empirical estimation of elasticity of taxable income for brazil abstractthis article aims to estimate the elasticity of taxable income eti taking into account the nature of transfers and their use as a redistribution package involving cash and in kind transfers to households in brazil our contributions are twofold first we provide a simple model with balanced budget government that reveals the role played by cash and in kind transfers on the labour supply and income tax revenues thereof next in order to estimate eti in the presence of cash and in kind transfers brazilian population surveys pesquisa nacional por amostra de domicilios pnad are used to explore a limited tax reform that was implemented between 1997 and 1998 this reform only affected the higher income tax bracket our findings suggest that in kind cash transfers are positively negatively associated with reported taxable income and precise estimation of eti requires estimates of both types of transfers last we estimate the eti for brazil in the range from 0 4 to 1 3 not different fro

inventory management for stochastic lead times with order crossovers we study the impact of stochastic lead times with order crossover on inventory costs and safety stocks in the order up to out policy to motivate our research we present global logistics data which violates the traditional assumption that lead time demand is normally distributed we also observe that order crossover is a common and important phenomenon in real supply chains we present a new method for determining the distribution of the number of open orders using this method we identify the distribution of inventory levels when orders and the work in process are correlated this correlation is present when demand is auto correlated demand forecasts are generated with non optimal methods or when certain ordering policies are present our method allows us to obtain exact safety stock requirements for the so called proportional order up to pout policy a popular implementable linear generalization of the out policy we highlight that the out replenishment policy is not cost optimal in global supply chains as we are able to demonstrate the pout policy always outperforms it under order cross over we show that unlike the constant lead time case minimum safety stocks and minimal inventory variance do not always lead to minimum costs under stochastic lead times with order crossover we also highlight an interesting side effect of minimizing inventory costs under stochastic lead times with order crossover with the pout policy an often significant reduction in the order variance

relief inventory modelling with stochastic lead time and demand the irregular demand and communication network disruption that are characteristics of situations demanding humanitarian logistics particularly after large scale earthquakes present a unique challenge for relief inventory modelling however there are few quantitative inventory models in humanitarian logistics and assumptions inherent in commercial logistics naturally have little applicability to humanitarian logistics this paper develops a humanitarian disaster relief inventory model that assumes a uniformly distributed function in both lead time and demand parameters which is appropriate considering the limited historical data on relief operation furthermore this paper presents different combinations of lead time and demand scenarios to demonstrate the variability of the model this is followed by the discussion of a case study wherein the decision variables are evaluated and sensitivity analysis is performed the results reveal the presence of a unique reorder level in the inventory wherever the order quantity is insensitive to some lead time demand values providing valuable direction for humanitarian relief planning efforts and future research

public goods and dynamic efficiency abstract it is well known that the use of distorting taxes to finance a public good in a static economy may indirectly raise the social cost of the public good because of the deadweight loss associated with the tax system however the tax system may also affect the dynamic efficiency of the economy we provide an example where the use of distorting taxes lowers the social cost of a public good in a steady state relative to the first best case due to the effect of the government s tax policy on the dynamic efficiency of the economy

welfare analysis of tax reforms using household data abstract this paper discusses a methodology for calculating the distribution of gains and losses from a policy change using data for a large sample of households estimates are based on the equivalent income function which is money metric utility defined over observable variables this enables calculations to be standardised and a computer program to compute the statistics presented in the paper is available for a general demand system equivalent income is related to measures of deadweight loss and standard errors are computed for each of the welfare measures an application to u k data for 5 895 households is given which simulates a reform that involves eliminating housing subsidies

status effects public goods provision and excess burden abstract most studies of the optimal provision of public goods or the excess burden from taxation assume that individual utility is independent of other individuals consumption this paper investigates public good provision and excess burden in a model that allows for interdependence in consumption in the form of status relative consumption effects in the presence of such effects consumption and labor taxes no longer are pure distortionary taxes but have a corrective tax element that addresses an externality from consumption as a result the marginal excess burden of consumption taxes is lower than in the absence of status effects and will be negative if the consumption tax rate is below the pigouvian rate correspondingly when consumption or labor tax rates are below the pigouvian rate the second best level of public goods provision is above the first best level contrary to findings from models without status effects for plausible functional forms and parameters relating to status effects the marginal excess burden from existing u s labor taxes is substantially lower than in most prior studies and is negative in some cases

supply chain focus dependent supplier selection problem increasing globalization diversity of the product range and increasing customer awareness are making the market s highly competitive thereby forcing different supply chains to adapt to different stimuli on a continuous basis it is also well recognized that overall supply chain focus should be given an overriding priority over the individual goals of the players if one were to improve overall supply chain surplus among all the possible order winners cost and responsiveness seem to be the most significant metrics based on which majority of the supply chains compete with each other supplier selection problem is one of the crucial problems that need to be addressed in configuring a supply chain that could have far reaching ramifications on the total supply chain costs and order winnability our model that considers inventory costs and the supply chain cycle time reduction costs would aid a supply chain manager to make informed decisions with regard to supplier selection problem at any stage dependent upon the priorities attached to supply chain costs and cycle time inventory related costs and responsiveness related costs are the two primary cost elements that are considered in this model we are also making use of a novel dimensionless quantity called the coefficient of inverse responsiveness that not only facilitates the introduction of responsiveness related costs into the model but also improves the scalability and simplifies the analysis and interpretation of the results based on the strategic model developed we offer some very interesting managerial insights with respect to the effect of cost efficient operations and or location and cost of volume related flexibility at a stage on alternate suppliers which in turn affects the overall supply chain performance

on the calculation of safety stocks when demand is forecasted the inventory control literature generally assumes that the demand distribution and all its parameters are known in practical applications it is often suggested to estimate the demand variance either directly or based on the one period ahead forecast errors the variance of the lead time demand essential for safety stock calculations is then obtained by multiplying the estimated per period demand variance by the length of the lead time however this is flawed since forecast errors for different periods of the lead time are positively correlated even if the demand process itself does not show process auto correlation as a result these traditional procedures lead to safety stocks that are too low this paper presents corrected lead time demand variance expressions and reorder levels for inventory systems with a constant lead time where demand fluctuates around a constant level firstly we derive the exact lead time forecast error of mean demand conditional on the true demand variance secondly we derive for normally distributed demand the correct reorder level under uncertainty of both the demand mean and variance we show how the results can be implemented in inventory models and particularly discuss batch ordering policies combined with moving average and exponential smoothing forecasts we find that traditional approaches can lead to safety stocks that are up to 30 percent too low and service levels that are up to 10 percent below the target

public goods self selection and optimal income taxation using the self selection approach to tax analysis this paper derives a modified samuelson rule for the provision of public goods when the government deploys an optimal nonlinear income tax this approach gives a straightforward interpretation of the central result in this area generalises it and provides a simple characterisation of optimal policy in a wide range of circumstances the analysis also emphasises and clarifies the significance of the choice of numeraire for the optimality of decentralising public spending decisions it is well known that the famous samuelson rule for the provision of public goods may not be applicable when the tax revenues used to finance the public goods come from distorting taxes the principle was recognized as long ago as pigou 1947 long before the samuelson rule was devised pigou saw that in addition to the resource cost involved in transferring funds from the private to the public sector there was a deadweight loss involved from this insight he suggested that the criterion for providing public goods should be more stringent than the samuelson rule would later suggest in particular one might expect that the inclusion of the deadweight loss of taxes as part of the cost of providing a public good would lead to a reduction in its optimal provision relative to a situation in which lump sum taxes were available the problem was investigated more systematically by atkinson and stern 1974 who considered the case in which a public good is financed by a set of optimal commodity taxes all individuals were assumed to be identical so efficiency alone dictated the objective they found that no prima facie case could be made for the pigou position that the use of distortionary taxes called for a reduction in the supply of the public good their analysis clearly showed that there were two influences at work when the financing of a public good was by distorting taxes on the one hand

accurate lead time demand modeling and optimal inventory policies in continuous review systems abstract to construct an accurate probability density function for lead time demand in inventory management models a mixture of polynomials mops distributions is estimated using b spline functions from empirical data on demand per unit time this is accomplished by summarizing the empirical observations into separate datasets for each lead time value a mixture distribution approach is then applied to model lead time demand in a continuous review inventory system inventory policies can be determined without knowledge of the underlying demand and or lead time distributions an improvement to a mixture distribution approach that models the lead time demand distribution with a mixture of truncated exponentials mtes distribution is also presented and the mop and mte techniques are compared both methods provide reasonable accuracy but the mop approach requires lower computational time to determine optimal inventory policies the mixture distribution approach is also compared with solutions calculated using optimization through simulation and by compiling a discrete empirical lead time demand distribution

economists and the welfare state abstract this paper constrasts the views of the welfare state of economists in the 1940s and 1950s with those of the current generation it is argued that economists as a profession in particular in the scandinavian countries have changed from being strong spokesmen for the welfare state to becoming much more critical the reasons for this are sought both in the expansion of the public sector in recent decades and in the development of economic theory in the areas of public finance insurance and incentives and public choice an attempt is made to evaluate the importance of the empirical and theoretical developments for the changing views of the welfare state

integrated safety stock optimization for multiple sourced stockpoints facing variable demand and lead time abstract the safety stock placement problem of a multi stage supply chain comprising multiple sourced stockpoints is addressed in this paper each stockpoint faces variability in its downstream demand and suppliers lead time the maximum among these suppliers lead time is determined by employing concepts of order statistics it is required to find the fill rate and safety stocks at each stockpoint that leads to satisfying the end customer service level at minimum safety stock placement cost hence the fill rates and the safety amounts are decided from a global supply chain perspective two models are proposed a decentralized safety stock placement model and a centralized consolidation model the decentralized model finds the safety amounts at each stockpoint required to face its underlying lead time demand variability the consolidation model finds the consolidated safety amounts that will be kept in the relevant consolidation center at each stage a benders decomposition technique is developed to handle the nonlinearity and binary restrictions involved in the safety stock consolidation model strategies proposed by the consolidation model achieve 45 2 62 reduction in safety amounts that results in a cost savings ranging between 22 2 44 2 as compared to the strategies proposed by the decentralized model

determining safety stock in the presence of stochastic lead time and demand we consider the problem of setting safety stock when both the demand in a period and the lead time are random variables there are two cases to consider in the first case the parameters of the demand and lead time distributions are known in the second case they are unknown and must be estimated for the case of known parameters a standard procedure is presented in the literature in this paper examples are used to show that this procedure can yield results that are far from the desired result a correct procedure is presented when the parameters are unknown it is assumed that a simple exponential smoothing model is used to generate estimates of demand in each period and that a discrete distribution of the lead time can be developed from historical data a correct procedure for setting safety stocks that is based on these two inputs is given for two popular demand models the approach is easily generalized to other models of demand safety stock calculation is simplified when certain normality assumptions are valid simulation results in the appendix indicate when these assumptions about normality are reasonable

evaluating electricity sector reforms in argentina lessons for developing countries abstract in argentina prior to the macroeconomic crisis of early 2002 power sector reforms had proven successful in delivering low electricity tariffs and increasing private investments this had been achieved through the unbundling of electricity supply businesses and the introduction of competition paying due attention to the lessons learned by forerunners in power sector reform including neighbouring chile the reforms that had been implemented in argentina were therefore deemed to have been a success however in the wake of the macroeconomic crisis and the devaluation of the peso generators and gas suppliers found themselves in critical financial straights which caused a halt to additional investment the current challenge facing reforms in the argentine power sector is to rebound from the financial ramifications of peso devaluation and to promote private investment given these basic facts this paper traces the history of reforms in the argentine electricity sector assessing the progress that has been achieved and suggesting lessons for developing countries it is often the case in developing countries that the unbundling of vertically integrated state owned industries into privatised enterprises requires efforts to improve infrastructure as a prerequisite for the introduction of competitive practices bearing this in mind this paper lays out measures that would be useful to consider for electricity sector reforms in developing countries from the following three perspectives 1 transition from a state owned power companies to private enterprises 2 development of conditions required to promote infrastructure projects and 3 development of conditions for the establishment of a healthy and fair competitive environment assuming that liberalisation is achieved once the conditions in 1 and 2 are met

the marginal cost of raising tax revenue and redistributing income we present analytic formulas for calculating marginal welfare costs when taxes are levied against the wages of a heterogeneous population of households and marginal tax revenue finances either the supply of a public good or lump sum transfers the formulas are applied to explain the wide discrepancy between estimates of marginal welfare costs for redistribution previously obtained through computer simulation procedures our calculations reveal that these procedures introduced lump sum transfers that were not specified as part of the reforms to be simulated but explain most of the differences between their estimates we also show that welfare cost estimates are quite sensitive to the elasticity of labor supply with respect to exhaustive public spending

a sectoral approach balancing global efficiency and equity this paper explores the idea that a properly designed sectoral approach could be the answer to two sets of constraints that hinder international agreements on climate change namely a genuine concern from developing countries for economic growth and competitiveness issues from industrialized countries our sectoral approach builds on three premises i cap and trade systems are established in industrialized countries and intensity targets in developing countries ii sectors subject to international trade abide by the rules of the countries in which they trade and iii a fraction of the revenues from permits in industrialized countries go towards carbon mitigation in developing countries we design an economic model that features interactions in three carbon intensive sectors two of which are internationally traded and two countries an industrialized country and a developing country two scenarios are constructed an enhanced sectoral approach which refers to our proposal and a global cap which implements a uniform co2 price we compare the two scenarios in terms of total welfare and equity it is shown that for a minor global welfare loss the enhanced sectoral approach ranks high in terms of equity for emerging countries this approach also eliminates competitiveness and leakage issues

property taxation congestion and local public goods abstract the residential property tax has been viewed as a congestion fee even if it distorts housing decisions this paper shows that the rule for a competitive jurisdiction s optimal public good supply may be written in a form in which no such role appears congestion costs enter the cost side of this rule in the same way that they enter when only a land tax is available the new rule is reconciled with an alternative rule in the literature which contains no congestion costs

redistribution and the marginal cost of public funds abstract discussions of the marginal cost of public funds with distortionary taxation are often cast in the framework of a one consumer economy while the main justification of distortionary taxes is that they are needed for redistribution this paper analyzes the issue in a model with heterogeneous consumers and a linear income tax focusing on the tradeoff between labour market distortions and the redistribution from high wage to low wage workers in an optimal tax system the mcf will be the same for all sources of funds and under certain assumptions less than one without optimality the mcf will in general differ between different sources of finance

the relationship between the marginal cost of public funds and marginal excess burden a large literature has recently developed which attempts to measure the marginal cost shadow price of public funds the motivation for much of this literature is the recognition that many of the tax instruments used by governments generate substantial amounts of excess burden deadweight loss jerry a hausman 1981 for example estimates that for an average prime aged american male with a wage of ten dollars in 1975 the excess burden generated by the federal income tax was over fifty percent of the revenue raised from taxing that individual one might suspect that such large excess burden estimates would require a change in the way government project costs are calculated in benefit cost analysis if the revenue required to finance a project is raised through distortionary taxation then intuition would suggest that the excess burden generated by the increase in tax rates needed to finance the project should be incorporated into the cost of the project however this analysis is not entirely consistent with the theoretical literature on the optimal provision of public goods which are financed by distortionary taxation when distortionary taxes are used to finance public goods and the level of public good provision does not affect consumption of the taxed goods the standard samuelsonian rule which equates the sum over consumers of the marginal rates of substitution between a private good and a public good with the marginal rate of transformation between the two goods must be modified to account for the marginal effect of increases in tax rates on the revenue raised from the existing taxes 2 the intuition behind this result is that we need to correct for indirect leakages from existing government revenue sources when considering an incremental expenditure if the increase in tax rates needed to finance the project causes a reduction in the revenue raised by the current tax structure then we need to account for this loss in calculating the cost of the project it is important to note that this result concerns the values of uncompensated demand elasticities an example first provided by atkinson and stern 1974 illustrates this point consider a world where the only tax is on labor earnings and incremental expenditure on the public good does not affect the demand for leisure in this case the marginal rate of transformation will overstate the cost of the public good as long as the uncompensated wage elasticity of labor supply is negative this is because an increase in the tax rate causes an increase in labor supply leading to an indirect increase in government revenue from the excess burden perspective described earlier this example is very puzzling it is well known that even if the uncompensated own price elasticity of a good is zero a tax on that good can still result in a large deadweight loss we instead need the compensated elasticity to be zero to ensure that there will be no excess burden however the department of economics university of california davis ca 95616 this paper is based on chapter two of my dissertation at the university of wisconsin madison i wish to thank the members of my dissertation committee martin david robert haveman chair and arthur goldberger for very helpful advice and comments i have also benefited from comments by don fullerton and bruce hamilton an anonymous referee provided unusually helpful comments and corrected an error in the figure 1don fullerton 1989 provides a recent survey and analysis of this literature 2this is shown by anthony atkinson and nicholas h stern 1974 and david e wildasin 1979 the effect of provision of the public good on consumption of the taxed goods must also generally be taken into account

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

optimal tax and public investment rules for congestion type of externalities optimal government policy is considered in a second best framework where consumers and producers cause an externality of the congestion type and income distribution issues are taken into account the theoretical results of the optimal tax literature are adapted using the concept of the net social pigouvian tax an illustrative age model uncovers the relative importance of its components the model demonstrates that the level of the externality tax does not depend strongly on distribution concerns as reoptimization of the other taxes ensures that the income distribution objective is reached the model also allows us to study the interaction between externality taxes and public abatement

when do distortionary taxes reduce the optimal supply of public goods abstract it is often argued that the optimal level of public good provision is below the first best level as long as the government s expenditures have to be financed by distortionary taxes i examine this hypothesis and show that it is correct in a representative consumer economy if i the public good is normal and ii private commodities are normal and gross substitutes otherwise counterexamples can be constructed these results hold also with heterogeneous households provided that equity considerations are ignored in general however distributional objectives may lead to a higher level of public expenditures in second best than in first best

optimal public good provision with limited lump sum taxation it is often argued that the use of distortionary taxation lowers the optimal provision of public goods below its optimal level in a first best economy which contains no restrictions on lump sum taxation however this issue is usually investigated using commodity tax models that contain no lump sum taxes this paper examines a many consumer economy in which the only tax instruments are commodity taxes and a poll tax subsidies are negative taxes the optimal level of public good provision in this economy typically exceeds the first best level at least for distributionally neutral public goods copyright 1991 by american economic association

optimal safety stock levels of subassemblies and manufacturing components abstract in order to control the time to market and manufacturing costs companies produce and purchase many parts and components before receiving customer orders consequently demand forecasting is a critical decision process using modular product design and super bills of materials are two effective strategies for developing a reliable demand forecasting process they reduce the probability of stockouts in diversified production contexts furthermore managing and controlling safety stocks for pre assembled modules provide an effective solution to the problem of minimizing the effects of forecast errors this paper develops evaluates and applies innovative cost based analytical models so that the optimal safety stock of modular subassemblies and components in assembly to order and manufacturing to order systems respectively can be rapidly quantified the implementation of the proposed models in two industrial case applications demonstrates that they significantly reduce the safety stock inventory levels and the global logistical cost

industrial and institutional restructuring of the russian electricity sector status and issues abstract the reform of the russian electricity industry represents one of the largest and most technically complex post soviet era industrial restructurings this paper presents the framework status and perspectives for the russian electricity sector liberalisation uncertainties regarding the effective implementation of the reform are specifically examined ultimately the critical analysis of the reform questions the feasibility and adequacy of the recommended measures in the specific russian context current theories fail to answer a fundamental issue namely how to promote investment in an obsolete electrical infrastructure and more generally whether a pure free market model is compatible with physical constraints posed by the electricity sector a careless deregulation of the russian electricity system could hinder the country s stable and sustainable development as its economy and the population s service have traditionally been closely linked to the electricity industry

bidding of price taker power generators in the deregulated turkish power market abstract in deregulated power markets power firms bid into the day ahead power market either with buy offers or sell offers the auction mechanism and competition determine the equilibrium price and quantity for each hour if the bid price of a company is below the market clearing price then the offer of the company is accepted and rewarded with the market price a company can be a price maker or price taker depending on the capacity it offers to the market a price taker unit must determine the right offer that will maximize their profit given price uncertainty and blind auction rules this paper first examines power supply in the turkish electricity market and bidding process then a marginal cost based monte carlo method is developed to determine hourly and block bidding strategies of price taker units historical market prices are then implemented in a normal distribution to generate hourly price scenarios a solution methodology is developed that maximizes the expected profit of each hourly and block bidding strategy over price scenarios the generator is able to both evaluate the hourly bidding and block bidding strategies and find the best bidding strategy that will be submitted to the market using the proposed methodology the model is illustrated for two coal units in turkish power market and the results are presented

discounting according to output type federal discount rate policies advocate both a high rate representing the marginal productivity of capital and a low rate representing the government borrowing rate these differential discount rate policies could be inconsistent and biased in favor of projects on which the lower discount rate is applied this paper shows that the coexistence of different discount rates may be appropriate depending on the type of project output when a project s outputs are perfect substitutes for private consumption both its costs and benefits should be discounted using the marginal productivity of capital however if the project s outputs are separable in the utility function the benefits should be discounted using the net of tax rate of return

when is efficiency separable from distribution in the provision of club goods abstract using the homogeneous of degree zero inverse congestion quality function employed most frequently in the literature we characterise completely the families of utility functions which are then necessary and sufficient for break even utilitarian welfare maximising provision of club goods with self selection to be separable from distribution two types of separation involving alternatively a the price and quality b the price quality facility size and total utilisation are considered when separation is possible utility functions and optimal decisions take simple intuitive forms our results extend the scope of separation results previously obtained only for pure public goods journal of economic literature classification numbers d62 h23 h40

public goods tax policies and unemployment in ldcs 1 introduction traditionally an analytically convenient and widely used assumption in the international trade and development economics literature has been that of lump sum distribution of direct e g income or indirect e g consumption tariff tax revenue when various policy implications of such instruments e g terms of trade or welfare effects were to be examined this analytical shortcut however hardly ever constitutes a real world practice either in rich developed or in poorer developing economies on the other hand another extensive branch of economics the public finance literature has adopted a more realistic approach regarding the economic activity of a government a government is viewed among other things as a provider of public collective consumption goods and or of public inputs that enhance the productive capacity of the private sector being so it can use revenues from nondistortionary e g lump sum taxes or distortionary e g consumption taxes to finance the provision of such goods and services within this public finance context a long standing proposition states that when nondistortionary taxes are used to finance the provision of a public good the first best efficiency rule requires that the sum of the marginal rates of substitution i e the social marginal benefit equal the marginal rate of transformation i e the social marginal cost e g see samuelson 1954 when distortionary taxes are used to finance the provision of the public good pigou 1947 argued that the social marginal cost exceeds the private marginal cost because of the induced indirect cost from raising tax revenue through distortionary taxation stiglitz and dasgupta 1971 atkinson and stem 1974 and wildasin 1984 among others demonstrate that in certain cases e g when the taxed and the public goods are complements in consumption pigou s argument fails to hold and the social cost may fall short of the private marginal cost because of its more realistic appeal this public finance approach to the use of tax revenue has been subsequently adopted by the relevant international trade and development economics literature recently the efficiency rule for public good provision has been examined in the context of a small open economy by among others feehan 1988 when tariff revenue finances the provision of the public good in an economy producing two traded goods and a nontraded public consumption good michael and hatzipanayotou 1995 examine the same issue and derive the formulae for the optimal tax rates on traded or nontraded goods in an economy producing many traded and nontraded goods and where consumption tax revenue finances the provision of the public good michael and hatzipanayotou 1997 demonstrate the failure of the first best efficiency rule when lump sum taxes are used to finance the provision of a public good in a small open economy in the presence of trade restrictions i e a tariff or a ver two features in the above reviewed studies of the international trade development economics and public finance literature motivate the present paper first all these studies derive the efficiency rule for public good provision in the context of a small open or closed economy with full employment unemployment however to a lesser or to a larger extent remains a structural feature of many developed or developing economies from an analytical standpoint the existence of such a distortion may alter both the optimal tax formulae and the efficiency rule for public good provision second the above reviewed literature considers the case where a government uses a single policy instrument e g lump sum taxes income taxes tariffs to finance the provision of the public good more than often however governments may have at their disposal several tax instruments that they can simultaneously use in order to raise revenue for financing the provision of public consumption goods

procurement and renegotiation parties bound by an incomplete contract have an incentive to renegotiate after acquiring new information the issue of the parties investment in the relationship before renegotiation is analyzed in a simple two period procurement model the firm invests in the first period it then learns its production cost and the sponsor learns its value for the project williamson s underinvestment presumption is shown to hold under very general assumptions about bargaining and about the ex post asymmetry of information as long as the firm s investment is not observable by the sponsor the introduction of a cancellation fee may well lead to even less investment contrary to what is sometimes argued the role of ex ante price fixing as an alternative way to reintroduce some form of commitment and the problem of cost overruns are discussed last it is shown that if investment is observable by the sponsor andthus may become a joint decision variable the two parties may choose to under or overinvest

benefits of leadtime information and of its combination with demand forecast information abstract this paper studies both the benefits of leadtime information and the interrelationships among demand forecast information leadtime uncertainty and leadtime information for improving inventory control performance to this end it explicitly incorporates both leadtime information and demand forecast information into an inventory model although they have conventionally been dealt with individually in the literature specifically it considers a periodic review inventory model with uncertain leadtimes in which both leadtime information and demand forecast information are available the leadtime information is modeled as the information of the arrival of outstanding orders and the demand forecast information as the martingale model of forecast evolution mmfe the paper analyzes the way to use both leadtime information and demand forecast information for inventory control operations specifically under certain conditions the optimality of the state dependent base stock policy is shown and an effective heuristic policy is developed it also derives some managerial insights for exploiting both leadtime information and demand forecast information in the case where leadtimes are uncertain for instance while leadtime information itself significantly improves inventory control performance it also enhances the benefits of demand forecast information specifically the benefits of demand forecast information may significantly decrease as leadtime uncertainty increases however the decrease of the benefits of demand forecast information may be alleviated with leadtime information

is public spending good for you the whole world is marching towards the right with the transformation of the soviet union and eastern europe the drastic economic reforms in china and the privatisation liberalisation and reversing the historical increasing trend reduction in public spending in many western countries 1 much about these changes is applaudable and economists may feel proud for partially contributing to them however this paper argues that the reduction in public spending especially in education research and environmental protection is counter productive this may not be so viewed in the narrow perspective of production and consumption especially in the short run but is almost certainly so viewed in the wider perspective of welfare or happiness in the long run it is well known that public spending has some efficiency problems but the probably much worse inefficiency of private consumption has been largely ignored this paper attempts to provide a broader and more balanced picture from an interdisciplinary perspective

behavior of the firm under regulatory constraint a recent article by akira takayama discusses an earlier paper by harvey averch and leland l johnson on fair rate of return regulation of public utilities although takayama p 255 agrees with averch and johnson s general conclusions that a firm will tend to increase its investment with the introduction of an active constraint on its rate of return he criticizes the a j argument as being confusing ambiguous and in error takayama then attempts a clarification and presents a new formulation which leads to the a j result quoted above this comment will discuss several of takayama s criticisms in addition to showing that the so called a j effect cannot be derived from the basic assumptions made by both averch and johnson and takayama 1 we will show that the very assumptions used to prove the a j effect by defining the region of x require an assumption that the a j effect exists in the first place

anticipating costs and benefits and the social discount rate when the capital market is distorted social discount rates and required benefit cost ratios depend on the adjustments in capital stocks that are induced by undertaking a public project assuming that the government cannot set the taxes that induce individuals to choose the socially optimal consumption paths these adjustments are derived as individuals optimal consumption saving choices in a multiperiod framework social discount rates are shown to exceed the rate of substitution between consumption in two consecutive periods and to be closer to this rate the longer costs and benefits are anticipated the optimal timing of undertaking a project is also analyzed

the strategic use of capacity slack in the economic lot scheduling problem with random demand growing interest in designing systems with capacity slack as one form of flexibility raises many questions about its use and its usefulness in the framework of the economic lot scheduling problem with stochastic demand we develop on optimization based model that considers capacity slack safety stock and overtime explicitly and has the objective of minimizing the expected cost per unit time of inventory overtime and where applicable setup costs the solution is a continuous time production plan that consists of a time dependent inventory trajectory for each of the parts including the placement of planned idle time in the schedule we consider schedule stability to be desirable because of potential effects on upstream and downstream operations in multistage production settings thus the plan also has certain characteristics that contribute to achieving stability our results on the relative merits of capacity slack and safety stock indicate that capacity slack in the form of planned idle time is

slow adjustment and the level of government spending abstract a distortionary tax finances a public service and because of an adjustment cost the tax base adjusts slowly to any change in the tax rate i compare the steady state public service level with the level achieved using lump sum taxation first best utility is assumed to be additively separable if the government can commit the public service is unaffected by the adjustment rate and is likely to be less than the first best level however if the government cannot commit this outcome is time inconsistent if the government cannot commit but reoptimizes continuously the public service is affected by the adjustment rate a very slow adjustment rate causes the marginal cost of funds to be approximately unity and the public service to strictly exceed the first best level

social accounting and the public sector this article contributes to the theory of social accounting as such it tries to extend earlier literature on the welfare equivalence of the comprehensive net national product in two main directions both of which refer to the public sector one is by considering welfare measurement problems associated with public good provision and redistributive policy respectively when the public revenues are raised by distortionary taxes the other is by addressing the consequences of a federation like decision structure where independent tax and expenditure decisions are made both by the central government and by lower level governments

electricity market reform failures uk norway alberta and california an analysis of electricity market reforms already taken place in the uk norway alberta canada and california usa leads to our overall conclusion that the introduction of a competitive generation market of itself has failed to deliver reliable service at low and stable prices the market reform failures are attributed to market power abuse by few dominant sellers especially at times of transmission congestion poor market design that invites strategic bidding by suppliers the lack of customer response to price spikes capacity shortage caused by demand growth not matched by new capacity and thin trading of forward and futures contracts that are critical for price discovery and risk management the paper then explains why an electricity market reform can easily fail to deliver the promised gains of better service at lower and more stable prices the policy implication is that an electric market reform can be extremely risky and may lead to a disastrous outcome thus it is imprudent to implement such a reform in countries with limited sites for newgeneration and no indigenous fuels e g israel and hong kong these countries should therefore consider introducing performance based regulation that can immediately benefit electricity consumers in terms of lower prices more stable prices improved reliability more choices while encouraging the electric sector to pursue efficient operation and investment r 2003 elsevier science ltd all rights reserved

imperfect competition the marginal cost of public funds and public goods supply abstract this paper analyses the impact of changes in product market competition on the marginal cost of public funds mcpf and public goods supply when distortionary commodity taxes are used to raise revenue first less competition measured by a switch from bertrand to cournot conduct or a decrease in the elasticity of demand does not necessarily raise the mpcf second even if it does optimal public good supply does not necessarily fall the paper also presents a method for modelling bertrand and cournot competition in general equilibrium that may be of independent interest

a pareto improving commodity tax reform under a smooth nonlinear income tax abstract this paper analyzes the welfare effects of commodity tax reform in an economy with a nonlinear income tax and linear commodity taxes the main result is that we can find a tax reform program that improves every consumer s utility in the pareto sense unless efficiency loss in the economy is minimized under incentive compatibility the tax reform rule proposed here applies to a broad class of economies with arbitrary smooth income taxes the expenditure function approach makes our analyses clear and simple some intuition is presented on the role of commodity taxation in a mixed tax economy the relationship with previous work in optimal tax and tax reform theory is also discussed we extend our result to the case where the government spends tax revenue to provide a public good

education and taxation policies in the presence of countervailing incentives i examine income taxation and education policy when the government cannot observe individual productivity and there exist conflicting incentives for individuals to understate and overstate their productivity in this setting i identify four possible equilibria and discuss the corresponding taxation education policy mix i show that no general restrictions on optimal taxation and education policy emerge in this environment but each equilibrium and corresponding policy package can be associated with a country on the basis of its relative income and preference for redistribution

foreign aid and public goods abstract most less developed countries ldcs use foreign economic aid to finance public consumption goods or public intermediate inputs this paper constructs a two country general equilibrium trade model where an income transfer that takes place between the two countries is used by the recipient to finance a public consumption good within this framework the paper identifies the conditions under which the income transfer improves or deteriorates the donor country s terms of trade and shows that the transfer can be welfare enriching for the donor and welfare immiserizing for the recipient country the paper also demonstrates that the transfer can raise reduce world welfare in which case a welfare increase decrease in both the donor and the recipient country is possible

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 pigovian rule for the optimum provision of public goods abstract the integrated treatment of optimal taxation and public expenditure presented here is based on the dual relationship between the prices of private goods and the quantities of public goods the conditions for optimum public good provision can be expressed as a modification of the samuelson conditions with extra terms representing a the distortionary effect of taxes on the willingness to pay for the public good and b distributional effects the former captures pigou s notion of the indirect damage caused by the need to finance public expenditure out of distortionary taxes and we call this the pigou term in certain cases a very simple benefit cost ratio for public projects emerges that is equivalent to measuring benefits as if they were taxed

cross border pollution terms of trade and welfare we construct a two good general equilibrium model of international trade for two small open economies where pollution from production is transmitted across borders governments in both countries impose emission taxes non cooperatively within this framework we examine the effect of changes in the degree of cross border pollution on nash emission taxes emission levels and welfare we do so under two scenarios when changes in cross border pollution do not affect domestic pollution non strategic and when they do strategic we also examine the effect of changes in international terms of trade on pollution and welfare when cross border pollution is non strategic

regulation competition and liberalization in many countries throughout the world regulators are struggling to determine whether and how to introduce competition into regulated industries this essay examines the complexities involved in the liberalization process while stressing the importance of case specific analyses this essay distinguishes liberalization policies that generally are procompetitive from corresponding anticompetitive liberalization policies

measuring the efficiency of grid companies in china a bootstrapping non parametric meta frontier approach abstract the unbundling policy reform of power industry has become a worldwide trend since 1980s there are quite many studies focusing on the efficiency changes of transmission and distribution sectors in european and latin american countries while few reports on china s issues have been found this paper employs a nonparametric frontier estimation combined with meta frontier and bootstrapping method to measure the productive efficiency and changes in the decomposition index for china s 31 grid companies from 2004 to 2013 in addition it further employs tobit regression model to analyze the influences of relevant policies and heterogeneity factors such as natural conditions and economic development the results indicate that the grouping approach extends the application of non parametric data envelopment analysis which may decrease the assumption of homogeneity for the decision making units and provide better efficiency estimates by increasing the credibility of the evaluation results overall productive efficiency increased during the whole study period with technology progress the main contributor to this improvement efficiency trends fluctuated with changes in economic development and power supply situation and the economics and customer density had positive effects on productive efficiency while the influence of clean power proportion is negative

democratic public good provision this paper analyzes an overlapping generation model of redistribution and public good provision under repeated voting expenditures are financed through age dependent taxation that distorts human capital investment taxes redistribute income both across skill groups and across generations we focus on politico economic markov equilibria and contrast these with the ramsey allocation under commitment the model features indeterminate equilibria with a key role of forward looking strategic voting due to the lack of commitment to future policies the tax burden may be on the wrong side of the dynamic laffer curve moreover restrictions on government policies can in some cases be welfare improving

russian electricity market reform deregulation or re regulation abstract russia commenced liberalization of electricity prices in 2007 increasing the liberalization rate by 10 25 every six months it was planned to reach full liberalization by 2011 currently the degree of liberalization is uncertain because of intense price regulation and a highly concentrated market in the hands of four large generating companies increased regulation and further consolidation may drive the market towards its pre reform state this paper analyses the competitive landscape of the russian electricity market by assessing the ownership structure of electricity generation price drivers and government involvement in the electricity wholesale market in russia the main research question is why the targeted level of market liberalization has not been fully achieved in the russian electricity market

using the inventory theoretic framework to determine cost minimizing supply strategies in a stochastic setting abstract in a stochastic supply link between a supplier and a receiver a crucial component of the total logistics costs is formed by the costs of safety stock held by the receiver to protect against stockouts the level of safety stock depends on among other things the statistical distribution of demand during lead time ddlt for practical reasons ddlt is often assumed to be normally distributed however previous research has indicated that this assumption is often invalid in real life situations and that it can have a significant impact on safety stocks or service levels this paper first presents an extensive review of previous research on stochastic inventory models with specific emphasis on the distributions used to model period demand lead time and or ddlt the paper also discusses a real life case study in which the total logistics costs are calculated for a number of different transport modes for a gamma demand gamma lead time setting

effects of long term tariff regulation on investments under low credibility of rules rate of return and price cap in russian electricity grids abstract the transition from a short term cost plus tariff regulation to either a long term rate of return or long term price cap regulation in russia started in 2009 and was completed in 2012 causing substantial changes in investment over the course of the reform we estimate panel data of 46 russian electricity distribution entities with a dynamic investment model using the system generalized method of moments and addressing potential endogeneity issues we show that despite the noncredible regulatory policy the transition from short to long term regulation had a positive and significant effect on the investment rate of regulated entities the specific long term regulation design applied in russia from 2008 to 2017 either rate of return or price cap had no effect on the investment rate these results are important for the introduction of changes in regulatory frameworks in developing countries

the benefit rule for a pure public good in the presence of a social security program public good whereby the sum of the marginal rates of substitution between the public good and some numeraire private good for all agents who benefit frqm the public good must be equal to the corresponding marginal rate of transformation i e xmrs mrt this rule can be implemented in a decentralized fashion if the government has enough financing instruments available e g person specific lump sum taxes and government debt however whether or not the first best benefit rule can be implemented when the government only has control over relative prices is an open issue pigou 1947 diamond and mirrlees 1971 dasgupta and stiglitz 1971 atkinson and stern 1974 pestieau 1974 and more recently wildasin 1979 1984 1985 king 1986 and batina 1987 have considered the effect of decentralizing the government s policy on the optimal first best benefit rule for a public good it is generally true that if the government cannot completely control the economy because of a lack of policy instruments then the first best benefit rule governing the provision of the public good must be modified as a result

liberalisation of the russian power sector abstract the paper discusses the russian power sector reform plan approved by the government in july 2001 which outlines the framework for competition and changes in ownership structure the paper focuses on the following issues related to the plan price reform restructuring of regional energos and large generating companies restructuring of transmission and system operation the mechanism for introducing competition competition for residential consumers and reform sequencing one key message of the paper is that price and regulatory reform is central to success of market liberalisation a second key message is that the restructuring of energos should not create companies with market power ideally local generation and distribution companies would be owned separately with multiple generators in each region at a minimum commonly owned companies should keep separate accounts with regulation of generation a possibility where there is market power regarding transmission and dispatch common ownership would not be a problem given that transmission and generation are separately owned on competition a fully fledged pool may not be appropriate in the case of russia with the alternative of a market based on bilateral contracts with a balancing pool functioning better in a context of non payment and constrained institutional capacity and providing security for investments regarding competition for residential consumers this is not a priority in the short to medium term lastly on sequencing it is better that structural and institutional change takes place before competition begins

asymmetric information incentives and price cap regulation a regulatory incentive mechanism is presented in which the regulated firm has superior information about both cost and demand compared to the regulator the mechanism leads to truthful revelation of the demand function and extracts all rents due to private demand information in a nondistorting way the scheme assumes that the regulator can observe lagged expenditures by the firm this mechanism leads to efficient pricing operating and investment behavior by the firm finally it is shown that the mechanism is closely related to recent proposals for price cap regulation and that under certain assumptions simple modifications of these proposals will lead to the mechanisms discussed herein

on the interpretation of the modified samuelson rule for public goods in static models with heterogeneity abstract pigou argued that use of distorting taxation would increase the social cost of a public good due to the excess burden created by a distorting tax system samuelson s rule governing a pure public good must then be modified a second best rule has appeared in the literature when heterogeneity exists and an interpretation for the various effects captured by the additional terms appearing in the rule has been given we present a counterexample to the standard interpretation and provide an alternative derivation and interpretation which allows us to make a more precise distinction among the effects mentioned in the literature

commodity tax competition under destination and origin principles abstract this paper studies the effect of switching from the destination to the origin principle of taxation on non cooperative commodity tax equilibrium when taxes are constrained to be uniform across commodities the switch has no effect when differentiated taxes are allowed the effects of the switch depend on whether countries are small or large in both cases the switch imposes the requirement that taxes must be uniform across commodities within each country in the second case there are two further effects of the switch i negative spillover effects from tax policy are introduced ii incentives to manipulate the terms of trade are changed the switch does not necessarily lead to a fall in all tax rates

optimal public good provision in the ramsey tax model a generalization abstract for the single consumer ramsey tax model the use of distortionary taxation to finance public good provision is shown to lower the optimal level of public good provision below its optimal value ina first best economy where lump sum taxation is available the assumptions used in the proof include a previous cobb douglas example as a special case

dynamics of price regulation we study the dynamics of price regulation for an industry adjusting to exogenous technological progress first we characterize the optimal capacity path and replacement cycles in a neoclassical investment model second we show that naive rate ofreturn regulation which ignores components of economic depreciation eventually results in a deficient level of capacity due to excessively high retail prices burdened by the need to recover the underdepreciated costs of historical investments third we explain how price cap regulation leads to more efficient capital replacement decisions compared to naive rate of return regulation and we show how finite price cap horizons distort capital replacement finally we interpret recent regulatory reforms in telecommunications markets

exclusion and moral hazard a further analysis abstract this paper examines the impact of increasing exclusion costs on the price of a shared good and establishes a simple elasticity condition which determines whether or not the price increases with the exclusion costs we correct an error in the reasoning in silva and kahn s journal of public economics 1993 52 217 235 paper on exclusion and moral hazard and construct a class of examples to show that contrary to their claim costly exclusion of non subscribers from the consumption of a non rivalrous good can result in a lower price as compared with the first best with costless exclusion

welfare effects of migration in societies with indirect taxes income transfers and public good provision abstract we construct a general equilibrium trade model of a two class small open host or source country when consumption tax revenue finances the provision of a public good marginal migration reduces social welfare in the source country and raises it in the host when consumption tax revenue is equally distributed among domestic households in each country then migration has an ambiguous impact on social welfare in either country when tariff revenue in either country is either equally distributed among domestic households or it is used to finance the provision of a public good then migration has an ambiguous effect on social welfare in the host country and is expected to reduce social welfare in the source

consumption vs wage taxation and the capital levy abstract based on a representative consumer framework it has been argued that wage taxation is inferior to consumption taxation this note shows that the opposite result may emerge in a model where households are heterogeneous and where a uniform poll tax or subsidy is available