Promoting innovation and competition with patent policy

Recently the role of institutions on growth, and especially the influence of Intellectual Property Rights, has been integrated into the Schumpeterian Growth Framework. In this contribution, we highlight the possibility using one patent’s characteristic, the patent height, as an instrument for promoting innovation and growth. We introduce this possibility into the Segerstrom (Am Econ Rev 80:1290–1310, 1998)/Li (Am Econ Rev 93:1009–1018, 2003) quality ladders model of growth. The Li (Am Econ Rev 93: 1009–1018, 2003) generalized model overturns Segerstrom (Am Econ Rev 80:1290–1310, 1998) policy implication in terms of the size of innovations having to be taxed or subsidized by relaxing a crucial assumption on the value of the elasticity of substitution between goods. In this paper, we point out the fact that the innovation size requirement has to be considered as a policy instrument, so that it appears extremely important to consider the case when the innovation size has been made endogenous. A patent policy using the novelty requirement as an instrument for innovation policy enables implementation of the social optimum. The consequences of this policy for market structure and economic growth are then discussed. When the level of the patent novelty requirement is initially high, a patent policy that weakens the patent height can reinforce competition and promote innovation.     

Fictitious students creation incentives in school choice problems

We identify a new channel through which schools can potentially manipulate the well-known student and school-optimal stable mechanisms. We introduce two fictitious students creation manipulation notions where one of them is stronger. While the student and school-optimal stable mechanisms turn out to be weakly fictitious student-proof under acyclic (Ergin in Econometrica 88:485–494, 2002) and essentially homogeneous (Kojima in Games Econ Behav 82:1–14, 2013) priority structures, respectively, they still lack strong fictitious student-proofness. We then compare the mechanisms in terms of their vulnerability to manipulations in the sense of Pathak and Sönmez (Am Econ Rev 103(1):80–106, 2013) and find out that the student-optimal stable mechanism is more manipulable than the school-optimal one. Lastly, in the large market setting of Kojima and Pathak (Am Econ Rev 99(3):608–627, 2009), the student-optimal stable mechanism becomes weakly fictitious student-proof as the market is getting large.     

Are the treasures of game theory ambiguous?

Goeree and Holt (Am Econ Rev 91:1402?C1422, 2001) experimentally study a number of games. In each case, they initially find strong support for Nash equilibrium; however, by changing an apparently irrelevant parameter, they find results which contradict Nash equilibrium. In this paper, we study the five normal form games from Goeree and Holt (Am Econ Rev 91:1402?C1422, 2001). We argue that their results may be explained by the hypothesis that subjects view their opponents?? behaviour as ambiguous. Ambiguity-aversion causes players to avoid strategies, which give low out of equilibrium payoffs. Similarly, ambiguity preference can make strategies with high payoffs more attractive.     

Endogenous population with human and physical capital accumulation

This paper proposes an economic growth model with population growth and physical and human capital accumulation. The physical capital accumulation is built on the Solow growth model (Solow in Q J Econ 70:65–94, 1956). The education and human capital accumulation is influenced by the Uzawa–Lucas model (Uzawa in Int Econ Rev 6:18–31, 1965; Lucas in J Monet Econ 22:3–42, 1988). The population dynamics are influenced by the Haavelmo population model (Haavelmo in a study in the theory of economic evolution. Haavelmo, Amsterdam, 1954) and the Barro–Becker fertility choice model (Barro and Becker in Econometrica 57:481–501, 1989). We synthesize these dynamic forces in a compact framework, applying an alternative utility function proposed by Zhang (Econ Lett 42:105–110, 1993). The model describes a dynamic interdependence between population change, wealth accumulation, human capital accumulation, and division of labor. We simulate the model to demonstrate the existence of equilibrium points and to plot the motion of the dynamic system. We also examine the effects of changes in the propensity to have children, the mortality rate parameter, the propensity to receive education, the human capital utilization efficiency, and the mortality rate elasticity of human capital upon dynamic paths of the system.     

Information revelation in competitive markets

This paper analyzes a market with multiple sellers and horizontally differentiated products. We investigate the sellers’ incentives to reveal product relevant information that affects the buyer’s private valuation. The main finding is that if the number of sellers is sufficiently large, there is a unique symmetric equilibrium with full information disclosure. Thus, unlike the results by Lewis and Sappington (Int Econ Rev 35:309–327, 1994) and Johnson and Myatt (Am Econ Rev 93:756–784, 2006) for monopoly, which state that the monopolist reveals either full information or no information, intense competition results in a single extreme with respect to information disclosure. We show that the market is always inefficient, but the magnitude of inefficiency converges to zero at a high rate as competition intensifies.     

Definitions of ambiguous events and the smooth ambiguity model

We examine a variety of preference-based definitions of ambiguous events in the context of the smooth ambiguity model. We first consider the definition proposed in Klibanoff et?al. (Econometrica 73(6):1849?C1892, 2005) based on the classic Ellsberg two-urn paradox (Ellsberg Q J Econ 75:643?C669, 1961) and show that it satisfies several desirable properties. We then compare this definition with those of Nehring (Math Soc Sci 38(2):197?C213, 1999), Epstein and Zhang (Econometrica 69:265?C306, 2001), Zhang (Econ Theory 20:159?C181, 2002), and Ghirardato and Marinacci (J Econ Theory 102:251?C289, 2002). Within the smooth ambiguity model, we show that Ghirardato and Marinacci (J Econ Theory 102:251?C289, 2002) would identify the same set of ambiguous and unambiguous events as our definition while Epstein and Zhang (Econometrica 69:265?C306, 2001) and Zhang (Econ Theory 20:159?C181, 2002) would yield a different classification. Moreover, we discuss and formally identify two key sources of the differences compared to Epstein and Zhang (Econometrica 69:265?C306, 2001) and Zhang (Econ Theory 20:159?C181, 2002). The more interesting source is that these two definitions can confound non-constant ambiguity attitude and the ambiguity of an event.     

Geography, institutions, and the making of comparative development

While the direct impact of geographic endowments on prosperity is present in all countries, in former colonies, geography has also affected colonization policies and, therefore, institutional outcomes. Using non-colonized countries as a control group, I re-examine the theories put forward by La Porta et al. (J Law Econ Org 15(1):222–279, 1999 and Acemoglu et al. (Am Econ Rev 91(5), 1369–1401, 2001. I find strong support for both theories, but also evidence that the authors’ estimates of the impact of colonization on institutions and growth are biased, since they confound the effect of the historical determinants of institutions with the direct impact of geographic endowments on development. In a baseline estimation, I find that the approach of Acemoglu et al. (2001) overestimates the importance of institutions for economic growth by 28 %, as a country’s natural disease environment affected settler mortality during colonization and also has a direct impact on prosperity. The approach of La Porta et al. (1999) underestimates the importance of colonization-imposed legal origin for institutional development by 63 %, as Britain tended to colonize countries that are remote from Europe and thus suffer from low access to international markets.     

Estimating noncooperative and cooperative models of bargaining: an empirical comparison

This paper examines the issue of model selection in studies of strategic situations. In particular, we compare estimation results from a noncooperative formulation of government formulation à la (Baron and Ferejohn in Am Poli Sci Rev 87:34–47, 1989) with those from two alternative cooperative formulations (Nash in Econometrica 18:155–162, 1950; Shapley and Shubik in Am Poli Sci Rev 48:787–792, 1954). Although the estimates of the ministerial ranking are similar, statistical testing suggests that the noncooperative formulation is best fitted to the observed data among the alternative models. This result implies that modeling the noncooperative structure in bargaining situations is crucially important at the risk of possibly misspecifying the details of the game.     

Pluralism(s) in economics: lessons from complexity and innovation. A review paper

My analysis focuses on two main observations. First, many competing schools of thoughts are currently present in economics with no predominant paradigm. We are experiencing an era of pluralism (Davis J Econ Methodol 14(3):275–290, 2007, Camb J Econ 32:249–366, 2008; Colander 2000; Colander et al. J Polit Econ 16(4):485–499, 2004). The term ‘pluralism’ is extremely interesting since, as I will show, it has different dimensions to it. These offer insights into interpreting the tangled universe of the economics. Second, there is a progressive intertwining of innovation economics with complexity economics, which I argue provides an instance of the above-described shift toward pluralism.     

Transboundary Marine Resources and Trading Neighbours

The importance of space in analyzing issues pertaining to renewable resources can hardly be overstated. Many such resources are mobile and spatially heterogeneous with respect to bio-economic variables, with important implications for both domestic management regimes and for international externalities and policy interactions. This paper uses a simple general-equilibrium framework to show that acknowledging the inter-jurisdictional mobility of a resource such as fish has the potential to alter or qualify some of the conservation and welfare results obtained in the canonical models. The previous literature on trade and renewable resources has focused on cases where national resource stocks are independent. Brander and Taylor (Can J Econ 30(3):526?C552, 1997a; Resour Energy Econ 19(4):267?C297, 1997b; J Int Econ, 1998a; Am Econ Rev, 1998b) find that trade leads to resource stock depletion for an open-access resource-exporting country, while the non-resource exporter is necessarily diversified. In contrast, we find that the country with a comparative advantage in the resource good may gain from a conservation standpoint, while its partner can specialize in the manufactured good and may incur conservation and even welfare losses from trade.     

Bargaining over productivity and wages when technical change is induced: implications for growth, distribution, and employment

I study a model of growth and income distribution in which workers and firms bargain à la Nash (Econometrica 18(2):155–162, 1950) over wages and productivity gains, taking into account the trade-offs faced by firms in choosing factor-augmenting technologies. The aggregate environment resulting from self-interested, objective function-maximizing decision rules on wages, productivity gains, savings and investment, is described by a two-dimensional dynamical system in the employment rate and output/capital ratio. The economy converges cyclically to a long-run equilibrium involving a Harrod-neutral profile of technical change, a constant rate of employment of labor, and constant input shares. The type of oscillations predicted by the model is qualitatively consistent with the available data on the United States (1963–2003), replicates the dynamics found in earlier models of growth cycles such as Goodwin (A growth cycle, in C.H. Feinstein (ed). Socialism, Capitalism and Economic Growth. Cambridge University Press, Cambridge 1967. Cambridge University Press, Cambridge, 1967); Shah and Desai (Econ J 91:1006–1010, 1981); van der Ploeg (J Macroecon 9:1–12, 1987); Flaschel (J Econ: Zeitschrift für Nationalökonomie 44:63–69, 1984) and Sportelli (J Econ: Zeitschrift für Nationalökonomie 61(1):35–64, 1995), and can be verified numerically in simulations. Institutional change, as captured by variations in workers’ bargaining power, has a positive effect on the long-run rate of growth of output per worker but a negative effect on long-run employment. Economic policy can also affect the growth and distribution pattern through changes in the unemployment compensation, which also have a positive long-run impact on labor productivity growth but a negative long-run impact on employment. In both cases, employment can overshoot its new equilibrium value along the transitional dynamics.     

The effects of the take-option in dictator-game experiments: a comment on Engel’s (2011) meta-study

In this paper, we report a replication of Engel’s (Exp. Econ. 14(4):583–610, 2011) meta-study of dictator game experiments. We find Engel’s meta-study of dictator game experiments to be robust, with one important exception: the coding of the take-option (List in J. Polit. Econ. 115(3):482–493, 2007; Bardsley in Exp. Econ. 11(2):122–133, 2008; Cappelen et al. in Econ. Lett. 118(2):280–283, 2013). While Engel reports this as having no statistically significant effect, in our replications, we find an economically and statistically significant negative effect on giving in line with the relevant literature.     

More equal but not so fair: an analysis of Brazilian income distribution from 1995 to 2009

This study measures unfair inequality in Brazil between 1995 and 2009. To achieve that, we used the statistical tool developed by Almås et al. (J Public Econ 95:488–499, 2011) and the concept of “responsibility-sensitive” fairness proposed by Bossert (Math Soc Sci 29:1–17, 1995), Konow (J Econ Behav Organ 31(1):13–35, 1996) and Cappelen and Tungodden (Fairness and the proportionality principle, Discussion paper SAM 31/2007. Norwegian School of Economics and Business Administration, 2007). The results indicate that the fairness level in Brazil remained unchanged throughout the analyzed period.     

A revisit on the tax burden distribution and GDP growth: fresh evidence using a consistent nonparametric test for causality for the USA

We revisited the evidence of Karagianni et al. (Int Rev Econ Fin 21:186–194, 2012) and Tiwari (Econ Bull 32:147–159, 2012) by employing a recently developed and more powerful nonlinear Granger-causality test proposed by Nishiyama et al. (J Econ 165:112–127, 2011) to investigate the existence of Granger-causality from a set of alternative tax burden (ratios) to GDP (per capita GDP), for the period 1947:q1–2009:q3 for the United States of America (USA). The nonlinear Granger-causality test provides strong evidence that personal current taxes and taxes on production and imports Granger-cause GDP and weak evidence that CR Granger-cause GDP. As a consequence, in order to influence (rebalance) the USA’s GDP through taxation, it is recommended to the USA government to adjust the tax structure, focusing on PCT and taxes on production and imports’ shocks. In this case, the tax policy is oriented especially on labour supply and investments.     

Kaldorian assumptions and endogenous fluctuations: a note on Schinasi’s IS–LM model

Results on Schinasi’s (Rev Econ Stud 48:649–653, 1981; J Econ Theory 28:369–375, 1982) variant of the dynamic fixed-price IS–LM model have remained so far confined to Kaldorian type economies, namely to those economies which present a greater-than-unity marginal propensity to spend out of income. This paper shows that, in the case of a negative interest rate sensitivity of savings, stable endogenous cycles can actually emerge as equilibrium solutions of the model also in the case of non-Kaldorian type economies.     

On a closed-form solution to the stochastic Lucas–Uzawa model

Bucci et al. (J Econ 103:83–99, 2011) argue that under two parametric restrictions, there exists a closed-form solution path to the two-sector endogenous growth model of Lucas–Uzawa. However, they assume that the value function is a function of both the current and the initial values of the state variables. As Wälde (J Econ Dyn Control 35:616–622, 2011a) argues, the value function should depend only on the current state variables when the technology follows a geometric Brownian motion. I follow Wälde (J Econ Dyn Control 35:616–622, 2011a) and obtain, under some inequality constraints, a different value function.     

Inequality aversion and separability in social risk evaluation

This paper examines how to satisfy “independence of the utilities of the dead” (Blackorby et al. in Econometrica 63:1303–1320, 1995; Bommier and Zuber in Soc Choice Welf 31:415–434, 2008) in the class of “expected equally distributed equivalent” social orderings (Fleurbaey in J Polit Econ 118:649–680, 2010) and inquires into the possibility to keep some aversion to inequality in this context. It is shown that the social welfare function must either be utilitarian or take a special multiplicative form. The multiplicative form is compatible with any degree of inequality aversion, but only under some constraints on the range of individual utilities.     

Unawareness of theorems

This paper provides a set-theoretic model of knowledge and unawareness. A new property called Awareness Leads to Knowledge shows that unawareness of theorems not only constrains an agent’s knowledge, but also can impair his reasoning about what other agents know. For example, in contrast to Li (J Econ Theory 144:977–993, 2009), Heifetz et al. (J Econ Theory 130:78–94, 25 2006) and the standard model of knowledge, it is possible that two agents disagree on whether another agent knows a particular event. The model follows Aumann (Ann Stat 4:1236–1239, 1976) in defining common knowledge and characterizing it in terms of a self-evident event, but departs in showing that no-trade theorems do not hold.     

Dominance testing for ‘pro-poor’ growth with an application to European growth

This article introduces statistical testing procedures to evaluate ??pro-poor?? growth. Our measure of ??pro-poorness?? follows Kakwani (J Quant Econ 16(1):67?C80, 2000), Kakwani and Pernia (Asian Dev Rev 18(1):1?C16, 2000), and Son (Econ Lett 82:307?C314, 2004), who decompose the generalized Lorenz ordinates into a growth effect and an inequality effect. We derive an asymptotic distribution-free covariance matrix for the decomposed generalized Lorenz curves. Using this decomposition (and our standard errors), we test for pro-poor dominance in the growth process. We illustrate our test for the pro-poor dominance by evaluating the degree of pro-poor growth in five European countries.     

Optimality of impulse harvesting policies

We explore the link between cyclical and smooth resource exploitation. We define an impulse control framework which can generate both cyclical solutions and steady-state solutions. Our model can admit convex and concave profit functions and allows the integration of different stock-dependent profit functions. We show that the strict concavity of the profit function is only a special case of a more general condition, related to submodularity, that ensures the existence of optimal cyclical policies. We then establish a link with the discrete-time models with cyclical solutions by Benhabib and Nishimura (J Econ Theory 35:284–306, 1985) and Dawid and Kopel (J Econ Theory 76:272–297, 1997). For the steady-state solution, we explore the relation to Clark’s (1976) continuous control model.