Public Good Contributions Between Communities

The four fundamental determinants of voluntary contributions to public goods are taste, community size, wealth, and wealth distribution. This paper argues that for policy purposes it is important to discriminate between the four hypotheses. To do this, it is necessary to consider the comparative static effects of the above determinants not only on total contribution, but also on per capita contribution and the participation rate. Furthermore, just as members of a smaller community would contribute more than their identical counterparts in a larger community, we show that members of a community that has more poor members would also contribute more than their identical counterparts in a community that has more rich members.     

Method in Experiment: Rhetoric and Reality

The methodological ideal of experimentalists, E, is easily stated: derive a testable hypothesis, H, from a well-specified theory, T; implement experiments with a design; implicitly in the latter are auxiliary hypotheses, A, that surface in the review/discussion of completed research reports (payoffs are 'adequate,' Ss are 'relevant,' instructions, context are 'clear,' etc.). We want to be able to conclude, if statistical test outcomes support not-H, that T is 'falsified.' But this is not what we do; rather we ask if there is a flaw in the test, i.e. not-A is supported, and we do more experiments. This is good practice—much better than the statistical rhetoric of falsificationism. Undesigned social processes allow E to accumulate technical and instrumental knowledge that drive the reduction of experimental error and constitute a more coherent methodology than falsificationism.     

Optimal advertising of auctions

We study a symmetric independent private values auction model where the revenue-maximizing seller faces a cost cn of attracting n bidders to the auction. If the distribution of valuations possesses an increasing failure rate (IFR), the seller overinvests in attracting bidders compared to the social optimum. Conversely, if the distribution is DFR, the seller underinvests compared to the social optimum. If the distribution of valuations becomes more dispersed, both, a revenue- and a welfare-maximizing seller, attract more bidders.     

Pricing Discretion and Price Regulation in Competitive Industries

Price capped firms enjoy a large degree of pricing discretion, which may harm customers and competition. We study two alternative regulatory regimes to limit it: the first regime (Absolute) places a fixed upper limit to the prices charged in captive markets, while the other regime (Relative) constrains the captive prices relatively to the competitive ones. Under the Relative regime, captive prices are only weakly lower and competitive prices are always higher than under the Absolute regime. However, the number of competitors and/or their output may be higher under the Relative regime. While the effects on aggregate welfare are ambiguous, there is some evidence that the Relative regime is more likely to increase consumers’ surplus and social welfare the more efficient are the competitors.     

Mass media effects on trading activities: television broadcasting evidence from Japan

This study examines how information broadcasting through television (TV) media influences stock market activities. Consistent with the effect of TV information to attract investor attention, we find that increased information flow through TV is significantly associated with greater trading volume and larger price change. For information type, hard news from business-oriented programmes and earnings-related news strongly contributes to the attention effect, while the effect of soft news is weaker. Bid–ask spread widens for more TV information flows, suggesting that new information arrival in the market expands information asymmetry. Finally, the impact of TV is more influential for stocks with more individual shareholders than those with institutional shareholders.     

The Grand Tableau of François Quesnay's economics

Quesnay scholarship has neglected the 40 tableaux that he and Mirabeau published in 1763 in Philosophie rurale, which they originally entited Grand tableau ecccconomique. This 1,400-page book, described by Louis Salleron as the most complete and authentic expositionof the physiocraticc system considered as a whole, contains detailed sequences of tableaux that describe and economy is disquilibrium, of which three are outlined and explained. The first shows what occurs when agricultyral advances yield more than the 100 per cent asssumed in the equilibrium tableaux, as in England where they yielded up to 150 per cent, and in Spain and France where they yielded to more than 25 to 50 per cent. The second explains how French agriculture could be restored and agricultural advances vastly increrased in nine years. The third explains the adverse effects on growth of an increase in luxe de decoration. It is argued that Philisopie ruraleprovides a more detailed account of Quesnay and Mirabea's policy analysis than the essays in Du Pont' Physiocratie, on which Quenay scholarship has predominantly focused.     

Public Enterprise Privatization: A General Equilibrium Analysis

This paper develops a general equilibrium model to examine the short‐run and long‐run optimal privatization policies. By assuming that all firms are public firms initially, the paper focuses on how the degree of product differentiation γ and the average efficiency of the industry influence the determination of the optimal privatization policy. The paper shows that privatization decreases the more efficient firms' outputs while increases the less efficient firms' outputs in the short run, and reduces all firms' outputs in the long run. The paper also shows that the larger is γ and the smaller is the number of firms, the more privatized will be the public firm in the short run. Moreover, as γ or the entry barrier f_E is sufficiently small, full privatization is the best policy in the long run. On the contrary, as γ and f_E are large enough, partial privatization is optimal.     

Commons with increasing marginal costs: random priority versus average cost*

Indivisible units are produced with increasing marginal costs. Under average cost, each user pays average cost. Under random priority, users are randomly ordered (without bias) and successively offered to buy at the true marginal cost. Both average cost (AC) and random priority (RP) inefficiently overproduce. RP tends to overproduce less, but which game collects more surplus depends much on the demand configuration. We show that a key to compare the welfare properties of the two mechanisms is the crowding factor, i.e., the number of potential users over the number of units of output users can afford: The more crowded the commons, the more RP outperforms AC. In the quadratic cost case, beyond the threshold value of 2.4 for the crowding factor, RP strongly outperforms AC; beneath it AC only mildly outperforms RP. Thus the RP mechanism manages crowded commons better than AC.     

Factor-price equalization under joint and nonjoint production

We investigate how joint production affects the likelihood of factor price equalization (FPE) through trade. Following up on recent contributions by Samuelson (1992) and Jones (1992), we propose to take the relative size of the FPE region of endowment distributions to measure this likelihood, and we show that it mayincrease even if joint production leads to adecrease of the number of basic production processes, and it maydecrease even if the number of basic production processes operated in equilibrium isthe same as under nonjoint production. A 2×2×2 example is analyzed in more detail. Moreover, we show that the argument of Jones (1992) can be reinterpreted in a more applied direction by considering the effects of switching from a regime where only intermediate products are traded to a regime where all products are traded. The paper shows that the likelihood of FPE may decrease by integrating product markets in this way. Still more surprising is the fact that integration may even destroy FPE.     

Lexicographic composition of simple games

Certain voting bodies can be modeled as a simple game where a coalition's winning depends on whether it wins, blocks or loses in two smaller simple games. There are essentially five such ways to combine two proper games into a proper game. The most decisive is the lexicographic rule, where a coalition must either win in G₁, or block in G₁ and win in G₂. When two isomorphic games are combined lexicographically, a given role for a player confers equal or more power when held in the first game than the second, if power is assessed by any semi-value. A game is lexicographically separable when the players of the two components partition the whole set. Games with veto players are not separable, and games of two or more players with identical roles are separable only if decisive. Some separable games are egalitarian in that they give players identical roles.