political influence motives and the choice between tariffs and quotas abstract tariffs and quotas are not symmetric under a variety of circumstances this paper pursues the implications of one such circumstance domestic market power for the political choice of protectionist instrument in the context of a political support maximization model tariffs dominate quotas in the political model in the absence of revenue seeking motives in the presence of revenue seeking ambiguity arises but limits can be placed on the range of tariff or quota levels also some welfare implications emerge

control rights in complex partnerships this paper develops a theory of the allocation of authority between two players who are in a complex partnership that is a partnership which produces impure public goods we show that the optimal allocation depends on technological factors the parties valuations of the goods produced and the degree of impurity of these goods when the degree of impurity is large control rights should be given to the main investor irrespective of preference considerations there are some situations in which this allocation is optimal even if the degree of impurity is very low as long as one party s investment is more important than the other party s if the parties investments are of similar importance and the degree of impurity is large shared authority is optimal with a greater share going to the low valuation party if the importance of the parties investments is similar but the degree of impurity is neither large nor small the low valuation party should receive sole authority we analyze an extension in which side payments are infeasible we check for robustness of our results in several dimensions such as allowing for multiple parties or for joint authority and apply our results to interpret a number of complex partnerships including those involving schools and child custody jel d02 o23 h41 l31

children as collective goods and divorce settlements the failure of many divorced fathers to comply with court mandated child support awards has been identified as a major reason why a growing number of children live in poverty in female headed households this paper presents a model that seeks to explain why so many divorced fathers allow their children s welfare to suffer as a consequence of divorce the point of departure is the recognition that children are collective consumption goods from the point of view of the father and mother within marriage proximity and altruism serve to overcome the free rider problem associated with the provision of public goods however on divorce the noncustodial parent suffers a loss of control over the allocative decisions of the custodial parent and it is not feasible for the couple to achieve a pareto optimal allocation of their joint resources a model of optimal marriage contracts is constructed in which a couple decides on the allocation of resources within marriage and on the terms of a settlement in the event

efficiency and equalization payments in a federal system of government a synthesis and extensions of recent results this paper investigates the rationale for a system of equalization transfers in a federal system of government the existing sources of inefficiency of resource allocation in economies with more than one level of government are synthesized in the framework of a simple decentralized multiprovince model with mobile factors of production the sources of inefficiency arise first because migrants respond at the margin to incorrect signals owing to the phenomena of rent sharing and fiscal exterality and second because of global rather than local inefficiencies the model is then extended to consider the role of the federal government in providing intergovernmental transfers in the face of such inefficiencies in addition to synthesizing the sources of inefficiency in federal models the equity arguments for equalization are briefly recounted efficacite et paiements de perequation dans un systeme federal de gouvernement synthese et extensions de certains resultats recents ce memoire examine la logique qui soustend un systeme de paiements de perequation dans un systeme fdderal de gouverement les auteurs utilisent un modele simple d un systeme multi provincial decentralise avec des facteurs de production mobiles pour definir les sources d inefficacite dans l allocation des ressources dans les dconomies qui possedent plus d un niveau de gouvernement ces inefficacites proviennent de ce que d abord ceux qui se deplacent le font en reponse a la marge a des signaux incorrects engendres par le partage de la rente sur la base de la residence et par les phenomenes d exteralites fiscales elles sont aussi le resultat d inefficacites globales plutot que locales dans le cadre de ce modele les auteurs analysent le role du gouvernement federal effectuant des transferts inter gouverementaux pour corriger ces inefficacites en plus de presenter une synthese des sources d inefficacite dans les regimes federaux les auteurs font un bref rappel en passant a l ensemble des arguments fondes sur l equite qu on utilise pour rationaliser les paiements de perequation this paper is a linear combination of two papers presented at the may 1982 meetings of the canadian economics association in halifax entitled the case for equalization payments by the authors and recent developments in the theory of regional economic policy in canada by boadway the authors are grateful for comments by the discussants jim johnson and baxter macdonald and by jack mintz brian scarfe gerard belanger david sewell tom courchene and the referees we are especially heavily indebted to dan usher for many stimulating comments and suggestions while the work was in progress some of the above persons will undoubtedly disagree with the emphasis we have chosen to put on various aspects of the analysis for policy purposes support for some of this work has been provided by the economic council of canada and is gratefully acknowledged canadian journal of economics revue canadienne d economique xv no 4 november novembre 1982 printed in canada imprimd au canada 0008 4085 82 0000 0613 01 50 1982 canadian economics association this content downloaded from 207 46 13 127 on wed 12 oct 2016 04 27 47 utc all use subject to http about jstor org terms 614 robin boadway and frank flatters

decentralization and intra country transfers in the great recession the case of the european union empirical evidence is found supporting the assignment of the redistribution function to the central government viewing the great recession or recessions in general as a shock it is found that a

income redistribution in a common labor market when households are mobile among jurisdictions income redistribution by individual jurisdictions creates fiscal externalities a model of interjurisdictional migration is used to study the nature of this redistributive externality analysis of optimal redistribution and optimal corrective subsidies from higher level governments shows that benefit levels for the recipients of income transfers and tax rates on mobile taxpayers should be equalized across jurisdictions a system of jurisdictions with a common labor market can achieve welfare improvements through coordination of domestic redistributive policy or through the intervention of a higher level government copyright 1991 by american economic association

incentive effects of the u s welfare system a review the author would like to acknowledge support for prior work on this topic from the u s department of health and human services and helpful comments from three anonymous referees rebecca blank howard chernick john fitzgerald irwin garfinkel peter gottschalk edward gramlich david greenberg judith gueron james heckman v joseph hotz robert hutchens michael keane frank levy larry mead michael murray robert plotnick anuradha rangarajan philip robins howard rolston jeffrey smith and daniel weinberg all opinions and errors are those of the author alone

the effect of child support policies on visitations and transfers recent research on child support issues has been concerned with normative problems involvingthe distribution of welfare between divorced parents and their children as well as with the assess ment of the behavioral responses of parents to child support orders and custody arrangements see e g del boca and flinn 1995 gar nkel and klawitter 1990 bartfeldt and gar nkel 1996 del boca 1996 del boca and ribero 1998 and flinn 2000 while there is bynow an extensive literature analyzing the e ects of child support policies on monetary transfersof noncustodial parents and the extent of compliance with child support orders little researchhas been done on the relationship between monetary transfers between parents and the divisionof the child s time while income transfers to the custodial parent are no doubt importantfor the child s consumption and general well being there exists considerable empirical evidencesuggesting that the division of the child s time between the parents has important e ects on thechild s welfare beller and graham 1993 there have been few analyses of this relationship weiss and willis 1985 provide one theoretical motivation for the positive relationship betweenthe noncustodial parent s contact time with the child and their level of transfers they claimthat increased contact time allows better monitoring of the custodial parent s expenditures onthe child which induces higher levels of transfers to the custodial parent we have developed a model del boca and ribero 1999 in which visitations and childsupport are the outcomes of a negotiation process whereby the father exchanges income forvisitation time institutional agents such as judges state legislatures etc can impact thewelfareofthemembersofthenonintactfamilybyalteringtheendowmentsofeachofthe1

rationalizing child support decisions the authors provide a framework within which the child support compliance decisions of noncustodial fathers and the child support awards set by institutional agents can be coherently interpreted the model of child support transfers is able to capture qualitatively the features of the monthly payment distribution estimated parental decision rules are used to infer the implicit weights given by institutional agents to the postdivorce welfare of parents and children the authors find that the weight attached to the combined welfare of the custodial mother and child is significantly less than the weight given to the father s welfare in most sample cases copyright 1995 by american economic association

redundant tariffs as rational endogenous protection i introduction in a competitive market tariff protection is redundant whenever the tariff exceeds the difference between the domestic autarky price and the world price with redundant protection domestic price rises by less than the full nominal tariff since a smaller tariff would be sufficient to generate prohibitive protection such excess protection is easily dismissed as economic ignorance on the part of lobby groups and or policy makers yet redundant tariff protection also called water in the tariff is a common feature of 19th and early 20th century u s tariff history more recently the developing nations penchant for redundant nominal tariffs has complicated world bank attempts to calculate effective rates of protection this paper develops political economy models in which the endogenous tariff may be redundant when the world price is uncertain even if agents themselves are risk neutral the possibility of world price declines or domestic cost increases creates positive expected benefits to producers from tariffs that are initially redundant these positive expected benefits provide the rationale or demand for redundant protection embedding this demand within simple political economy models generates endogenous tariffs that appear redundant to casual observation these political economy models also permit us to assess the comparative static effects of changes in the mean preserving spread of the world price an extensive literature explores the links between protection and world price uncertainty most authors address one or more of the following i the optimal choice of protective instrument ii risk aversion by private agents or iii protection as social insurance young and anderson 1980 show that the optimal policy to maximize expected consumer surplus given a constraint on expected imports on expected import expenditure is a specific an ad valorem tariff using the same constraint on expected imports they demonstrate 1982 that quantitative restraints dominate tariffs if consumers exhibit risk aversion toward real income fluctuations in the same vein but in a dynamic setting falvey and lloyd 1986 show that producers prefer non tariff barriers since they concentrate protection on down side risk cassing hillman and long 1986 examine trade policy as social insurance in a ricardo viner model given sufficient risk aversion both mobile and immobile factors exhibit an ex ante preference for reduced domestic price variability under terms of trade uncertainty these papers however do not address the empirically relevant case of above prohibitive protection an existing rationale for tariffs that exceed the prohibitive level is that they facilitate cartel formation fishelson and hillman 1979 show that a domestic monopoly benefits from tariff protection that exceeds the prohibitive level since the tariff that yields full monopoly profit and beyond which additional protection is redundant may exceed the tariff that drives imports to zero an interesting example of this is the formation in 1898 of the american tin plate company this trust was formed to exploit tariff protection that exceeded the prohibitive level the company sold stock whose par value was set at four to five times the cash price of the assets of other tin plate manufacturers that it acquired 1 the existence of potential domestic market power forces a distinction between prohibitive and redundant protection and in this example the above prohibitive tariff is clearly not redundant since domestic price rises by the full amount of the tariff 2 in the u s the 19th century protectionist weapon of choice was the specific tariff usually in the form of a minimum valuation proviso so that all products worth less than a certain amount were taxed as if they were worth the specified minimum specific tariffs generated high and often redundant levels of protection for domestic producers of the coarser grades of manufactures while allowing continued imports of the finer grades that were not produced domestically

migration and income redistribution responsibilities this study examines whether afdc benefits determine or discourage state to state migration flows in the united states a pooled cross section time series model is developed to estimate afdc benefits in a state and recipients and whether benefits in one state affect benefits in other states a second model using data from the 1980 census and the panel study of income dynamics estimates migration of afdc recipients and the level of benefits in in migration and out migration states both models indicate that small but statistically significant amounts of migration occur which may be quite important but only in the long run movers although small in number are much more likely to move to a state with higher benefits states perceive this migration as important indicating that states should have less control and the federal government more control over income redistribution

the effect of welfare and wage levels on the location decisions of female headed households abstract this paper develops and estimates a model designed to calculate the impact of welfare benefit levels wages and tax rates on the location choices of female headed households the empirical model assumes that women simultaneously choose both where they will live and whether or not they will participate in the welfare system based on their expected income and expected hours of work for each location participation possibility these income and hours expectations depend in turn on the welfare benefits wage and tax rates facing each household in each location it is found that both regional welfare levels and wage rates have a significant effect on the location decisions of this population the probability of a typical female headed household with little outside income leaving an area with low welfare payments and low wages can be as much as 12 points higher over a 4 year period than the probability of leaving a high welfare high wage area

incremental protection and efficient political choice between tariffs and quotas this paper offers a new political economy explanation for the increasing use in recent years of quotas instead of or in combination with tariffs as a form of trade protection we show that under domestic monopoly the comparative efficiency of tariffs and quotas in achieving political objectives will vary depending on the nature of the mark et and the level of protection at high levels of protection quotas can become more politically efficient than tariffs we also show that at low levels of protection a price equivalent quota may not exist

interjurisdictional capital mobility fiscal externality and a corrective subsidy abstract recent studies emphasize that local property taxation may result in inefficiently small amounts of local public spending this paper shows that the inefficiency can be traced to a fiscal externality when one jurisdiction increases its taxes it causes a flow of capital to other jurisdictions that increases their tax revenues the inefficiency can be corrected with a subsidy that internalizes the externality key empirical parameters determining the magnitude of the externality are identified illustrative calculations indicate that subsidy rates on the order of 40 might be required to achieve efficiency

a single welfare benefit level for europe efficiency implications of policy harmonization in a federal system within the european union it has been suggested that greater economic integration will help european economies regardless of the kind of integration europe chooses to pursue in this paper i examine economic integration in the context of redistributive policy and find that the effects of such integration are crucially dependent upon the level of redistribution to be adopted as a common policy with higher welfare benefit levels associated with lower levels of federation output this suggests that the case for policy harmonization at a generous level must rest on equity rather than efficiency considerations

tax transfer policies and the voluntary provision of public goods abstract the purpose of this paper is twofold first it extends previous models of non cooperative private funding of pure public goods by allowing both for distortionary taxation of private goods and for subsidies based on contributions to the public goods second it clarifies the type of behavioral and informational assumptions which are needed to insure neutrality of both lump sum and distortionary policies the analysis is developed in the context of fiscal federalism

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

assistance to the poor in a federal system abstract this paper explores the roles of different levels of government in assisting the poor using a model incorporating utility interdependence the paper first presents some theoretical results indicating how levels of poor relief vary with the extent of mobility of the poor under both centralized and decentralized systems of support it then provides a survey of the empirical work on migration of the poor along with a brief historical discussion of the experience under the english poor laws the concluding section turns to normative issues and contends that mobility of the poor is a basic source of inefficiency in wholly decentralized systems of support this inefficiency along with certain other equity considerations establishes a role for the central government in assistance to the poor

economic integration and fiscal devolution abstract in this paper we investigate how economic integration influences the political decision of integration and separation of jurisdictions in a model with imperfect capital mobility we consider that not only the redistributive policy itself but also the level of policy centralization is decided by a majority vote we find that the net benefit from integration is not monotonic with the level of world capital market integration and present a case where integration of two regions occurs only for intermediate levels of mobility this conclusion relies on the comparison of the regional majorities utility under the various regimes the benefits from integration arise from the elimination of tax competition across jurisdictions which allows for more income redistribution whereas the costs are linked to the diversity of preferences across regions namely that of the decisive voters we also show that a federal regime is better than complete centralization in keeping a nation united

decentralized income redistribution and immigration abstract we analyze the welfare and other effects of immigration on a system of jurisdictions with a common labor market mobile capital and redistributive tax transfer policies comparative statics analysis of a model of nash non cooperative equilibria in tax transfer policies shows that the welfare effect of immigration depends on whether immigrants are net fiscal contributors or burdens any one jurisdiction s redistribution and immigration policies generate fiscal externalities for others in the system which a central government can internalize by appropriate taxes and subsidies

wages rents and the quality of life this study focuses on the role of wages and rents in allocating workers to locations with various quantities of amenities the theory demonstrates that if the amenity is also productive then the sign of the wage gradient is unclear while the rent gradient is positive the theory is extended to include the housing market and nontraded goods these extensions require little modification of the conclusion the empirical work on wages shows that the regional wage differences can be explained largely by these local attributes with the use of site price data implicit prices are estimated and quality of life rankings for the cities are computed

new estimates of quality of life in urban areas implicit markets capture compensation for intraurban and interregional differe nces in amenities and yield differences in housing prices and wages these pecuniary differences become preference based weights in a qual ity of life index hedonic equations are estimated using microdata fr om the 1980 census and assembled county based amenity data on climati c environmental and urban conditions ranking of 253 urban counties reveals substantial variation within as well as among the 185 urba n areas the quality of life differences across counties within one s msa is almost one half of the difference between the top and bottom ranked counties in the nation copyright 1988 by american economic association

pigou tiebout property taxation and the underprovision of local public goods abstract pigou s proposition that the use of distorting taxes rather than neutral head taxes reduces public service levels is examined in this paper a simple model with a national system of competing local governments is utilized to demonstrate that the use of a distorting property tax on mobile capital decreases the level of residential public services the case where public services are an intermediate producer good is also considered

risk aversion and optimal trade restrictions if the representative consumer of a country is risk averse then the choice of trade controls must take account of their effects on the fluctuations of domestic real income if the world price of the importable is uncertain and risk aversion is high then the optimal policy for achieving a ceiling on expected imports involves a reduction in imports and a rise in the domestic price as the world price falls moreover a quota is superior to a tariff in achieving the ceiling under domestic uncertainty a tariff is superior to a quota but it could be optimal to reduce the domestic price as imports increase economists have long recognized the equivalence of price and quantity controls under certainty the comparison of these control modes and the characterization of the optimal form of control under uncertainty has been undertaken by two groups of authors weitzman 1974 1978 considered a planning authority which faces uncertainty about the costs and benefits of producing a good he showed that the ranking of price and quantity controls depends on the curvature of the cost and benefit functions and that an optimal policy can be considered as a mixture of price and quantity controls his work was developed by laffont 1977 ireland 1977 malcomson 1978 and yohe 1978 in the context of international trade the comparison of tariffs and quotas under uncertainty has been undertaken by fishelson and flatters 1975 pelcovits 1976 dasgupta and stiglitz 1977 young 1979 1980a b and helpman and razin 1980 recently young and anderson 1980 showed that the policy maximizing expected consumer s surplus given a constraint on expected imports expected import expenditure is a specific tariff an ad valorem tariff in contrast to weitzman s planning model the price instrument is superior to the quantity instrument whatever the curvature of the benefits function 2 the conclusion of young and anderson appears to provide a strong argument against using quantity instruments to restrict trade however the expected surplus criterion is a valid welfare measure only if the marginal utility of income is constant in this paper we characterize the optimal form of trade restriction if the representative consumer of the importing country exhibits risk aversion toward income fluctuations the optimal policy can have surprising properties properties which with high risk aversion are better approximated by a quota rather than a tariff hence the second best justification for using quantity controls to restrict trade turns out to depend on

divorce and the cognitive achievement of children children of divorced parents exhibit lower test scores and educational attainment have these correlations a causal interpretation parents who divorce may be less likely to invest in their children while together or they may divorce to shield their children from the effects of marital conflict i study the relationship between children s achievement and the marital status of their parents within a dynamic framework in which partners decide on whether to remain married how to interact with or without conflict and child investments i then assess whether a child whose parents divorced would have been better off had divorce not occurred

a theory of competition among pressure groups for political influence this paper presents a theory of competition among pressure groups for political influence political equilibrium depends on the efficiency of each group in producing pressure the effect of additional pressure on their influence the number of persons in different groups and the deadweight cost of taxes and subsidies an increase in deadweight costs discourages pressure by subsidized groups and encourages pressure by taxpayers this analysis unifies the view that governments correct market failures with the view that they favor the politically powerful both are produced by the competition for political favors

transaction cost two part tariffs and collusion i introduction this paper studies a situation in which cartelization serves to reduce prices and improve social welfare the unusual outcome can be attributed to demand complementarity that exists between the goods under consideration because market demand functions exhibit such complementarity a reduction in either seller s price raises the demand for the other seller s product a cartel internalizes this cross effect and sets prices at relatively low levels whereas the same firms acting as rivals ignore the interdependence and set prices somewhat higher the complementarity originates from transaction costs that customers pay in order to participate in exchange hence complementarity exhibits a specific mathematical form in market demand functions one could even adopt the view that these transaction costs are the underlying circumstance that makes collusion socially more attractive than rivalry another feature that must be mentioned is firms use of two part tariffs under this pricing scheme the customer pays a seller an entrance fee to obtain the privilege of purchasing merchandise then also pays a per unit price on merchandise actually obtained in the context of two part tariffs the paper s main finding can be stated as follows the sum of entrance fees facing customers is smaller when sellers form a cartel than when they set prices independently however per unit prices are the same whether sellers collude or not this model with transaction costs appropriately describes a geographical marketplace such as a shopping mall or central business district in which potential customers face expenses for transportation within the centralized shopping area a department store assesses customers an annual fee for the privilege of shopping this is the store s entrance fee in addition to per unit prices on merchandise a health spa next door imposes membership dues and pay as you go fees on its services a theater sells passes another type of entrance fee that entitle holders to special rates on movies attended later a similar situation is tourism in which case the tourist encounters expenses when traveling to a vacation or convention site at this location hotels charge a daily entrance fee for lodging plus something additional for each meal and telephone call rental cars are available for a fixed charge plus an added price per mile driven entertainment e g disneyland might be marketed through a two part tariff as well a different sort of transaction cost is the expense of educating oneself before being able to effectively utilize certain goods and services speculating in the stock market say requires prior study of finance and irs rules after paying this initial transaction cost the ready investor encounters two part tariffs through which related services are sold entrance fees might take several forms a stock broker levies an annual maintenance charge on accounts an advisory service s newsletter is available at a fixed subscription rate a mutual fund charges new shareholders a roughly constant load it is argued below that these entrance fees would all be lower if the vendors formed a cartel two part tariffs have been studied in this journal before murphy 1977 computes a monopolistic seller s profit maximizing multi part tariff although the seller cannot discriminate between rich and poor customers ex ante self sorting occurs if the seller designs the correct price schedule scott and morrell 1985 investigate a two good monopoly that employs two part tariffs if one good s entrance fee must be set equal to zero for exogenous reasons then optimal values of the remaining price parameters hinge on the exact nature of demand interdependence strong results are obtained when customers are identical levin 1988 compares the stackelberg nash and collusive behavior of firms that employ ordinary pricing in another journal stahl 1982 analyzes rivalry and collusion when buyers pay transportation costs and vendors use ordinary linear pricing

expenditure decisions of divorced mothers and income composition in this paper we analyze the relationship between the income sources of custodial divorced parents and their expenditure patterns we use data from the consumer expenditure survey to directly investigate the issue of whether or not divorced mothers receiving child support income spend larger amounts on child goods than those not receiving child support holding total household income constant by comparing the estimated coefficients on child support income and other income in an endogenous engel curve specification we argue that we can classify child goods as being public or private and say something about the expenditure patterns of noncustodial fathers under a nash equilibrium model of parental expenditures on public child goods and some plausible assumptions regarding the manner in which child support transfer decisions are made by noncustodial fathers our empirical results indicate that income composition does affect the expenditure patterns of divorced mothers and that consumption externalities exist even among divorced parents