Market structure, pigouvian taxation, and welfare

Using a short-run partial equilibrium model of social welfare, this paper examines the social welfare implications of changing Pigouvian taxes under three markets: perfect competition, monopoly, and Cournot oligopoly. The result for perfect competition supports the earlier finding that Pigouvian taxation increases social welfare [Buchanan, 1969]. However, in contrast to the previous result that Pigouvian taxes lower welfare under monopoly, the authors show that if the noncompetitive distortion is small, these taxes might still be useful in correcting monopoly-generated externalities and in improving social welfare. Cournot firms react to the tax depending upon their individual perceptions of the gain in post-tax marginal revenue. Policy implications of the study's results are discussed.     

Broker Compensation Patterns and Trends: 2005–2009

Changes in the mortgage industry have been swiftly effected over the past few years. Many of the changes have come about as a response to the high level of observed delinquencies and defaults on residential mortgages as house prices plummeted, and others have evolved from continuing concerns about the treatment of borrowers during the mortgage origination process. The segmented mortgage industry of the early part of the decade, with loans being originated in the prime, subprime and government mortgage sectors, has been largely replaced with a bifurcated system. By year end 2010, the FHA/VA (government sector) combined with the conventional, conforming market share of originations was 90.8?%. In this paper, we examine some of the observed trends and changes in the types and levels of broker compensation that existed before the regulatory change that brought about the implementation of the Federal Reserve Board??s (FRB) new loan officer compensation rule. Among other questions, we examine the variance in broker compensation across geographies, across lenders, across borrower types, and across loan products. The intent of this ex post analysis is to provide an understanding of the potential impacts of the declining broker industry on both access to mortgage loans and on the pricing of mortgage originations.     

Advancing community resilience research and practice: moving from “me” to “we” to “3D”

Abstract

Research and practice aimed at enhancing community resilience to disasters such as hurricanes have focused primarily on the survival of individuals and the development of social capital and networks. Less consideration has been given to the dynamics of social-ecological conditions that can govern post-disaster outcomes. This article provides a rationale for moving research and practice towards an adaptive systems framework, drawing on the cascading challenges that Gulf of Mexico coastal communities have endured since the 2010 Deepwater Horizon (DWH) oil spill. The adaptive approach recognizes that, in some situations, crises can highlight avenues for improvement, where greater resilience can be achieved by addressing the dynamic context of a disaster. We discuss implications for clarifying interdependencies, bridging the science-society gap, and making course corrections through iterative processes. We also highlight how the approach might foster policy addressing global challenges such as changing climate conditions, rapid urbanization, and disease pandemics.     

Internet diffusion and free riding in insurance markets: An empirical investigation

This paper studies the effect of internet diffusion on free riding in insurance markets, with a focus on automobile insurance. Internet usage affects both the demand and supply sides of insurance markets, while also having a bearing on institutions. Our cross‐sectional analysis based on the United States supports the main hypothesis that greater internet diffusion reduced free riding by uninsured motorists. This response was fairly elastic and the reduction in the prevalence of uninsured motorists holds across different empirical specifications. Implications of these findings are discussed.     

Search cost,trading strategies and optimal market structure

The theory of Walrasian equilibrium yields a set of prices at which the aggregate competitive demand for each commodity equals its aggregate competitive supply. However, even at equilibrium prices the theory of competitive equilibrium does not explicitly offer explanation regarding the manner in which trades are actually executed. This paper considers a model where trade takes place in a decentralized fashion and examines in a dynamic game-theoretic framework, the role of social institution of money and markets in facilitating exchange. The steady state Nash equilibrium derived in the paper demonstrates how, depending on the level of transaction costs associated with a market setup (synonymously, trading posts to exchange possible pairs of goods) appropriate monetary trade emerges, which like a hub and spoke network (Starr and Stinchcombe, 1999) makes some markets non-functioning and in equilibrium only the markets having trade through the medium of exchange continue to exist. However, despite the obvious advantages of a market setup in reducing search costs, pure random search for a complementary trading partner (as considered by Ostroy and Starr, 1974; Kiyotaki and Wright , 1989; and others) prevails in many economies, especially, in many developing economies. This paper models this feature of developing economies by introducing differences in transaction costs across agents and shows why sustainable equilibria might exist exhibiting random search for certain commodities even in the presence of established markets.     

The Game Academics Play: Comment

A recent paper by Faria (Bulletin of Economic Research, 57 (2005), pp. 1–12) deals with the interplay between editors and authors. This research is a welcome addition to the literature on formal analyses of academic markets. This note points out a potential discrepancy in Faria's derivation of the equilibrium journal quality and clarifies the conditions under which journal quality responds to changes in editor's impatience and in author's impatience. Specifically, the effect of a change in author's impatience on journal quality is shown to be not unambiguous. Some implications of these findings are discussed.     

Variations in the Effect of Uncertainty on Different Types of Investment: An Empirical Investigation

Several recent studies, including those by Pindyck (1991), Pindyck and Solimano (1993), Dixit and Pindyck (1994), Episcopos (1995), and Abel et al . (1996), suggest an important linkage between the effect of uncertainty on investment and the irreversibility of the latter. This paper broadly follows the foregoing tradition, but makes the point that it should be possible to distinguish between investments with different degrees of irreversibility and to relate the effect of uncertainty with the degree of investment irreversibility. A simple empirical illustration is provided by using pooled annual data for 12 OECD countries and estimating fixed-effects models for different types of investments. Although caution is appropriate in interpreting the estimates, the evidence suggests that the adverse effect of uncertainty is more severe on investments that have a greater degree of irreversibility.     

Industrial interactions and academic patenting: evidence from German scientists

Using a unique survey of scientists at a large public research organization, this paper examines the effects of industry interactions on academic patenting. Two types of collaborations, industrial cooperation and consulting, are considered. Results show that both cooperation and consultancy increase the likelihood of patenting. However, only the positive influence of industrial cooperation stands up to robustness checks. Effects of personal, professional and institutional factors are in line with the literature, yet with some differences across cooperation and consultancy. Implications for research policy concerning academic patenting and challenges that industry may experience are discussed.     

Cigarette demand and effectiveness of U.S. smoking control policies: state-level evidence for more than half a century

Using state-level U.S. data over 1956–2008 this paper examines the demand for cigarettes. The long data span enables us to compare and evaluate the effectiveness of various policies and to examine cigarette demand across individual states. Our results show cigarette demand to be price inelastic, smoking-habit effects to be strong, income effects to be small, and border price effects can be significant. These findings are quite robust across alternate model specifications. None of the three smoking control policies considered (Fairness Doctrine, Broadcast Ban, and Master Settlement Agreement) were shown to be effective in curbing overall smoking, although most were effective in a few states. Policy implications are discussed.