Competitive nonlinear tariffs

This paper generalizes the study of nonlinear tariffs, i.e., those depending nonlinearly on the quantity purchased, to the case of a symmetric oligopoly. Competitive equilibria and the corresponding tariffs are analyzed in a Cournot framework. Various equilibria are obtained, which depend both upon the number of competing suppliers and the choice of market parameters used to characterize the competitors' strategies. Buyers are classified by type, each selecting an optimal consumption level in response to the prevailing tariff. The phenomena of buyer self-selection found in monopoly nonlinear pricing and the scaling of equilibrium demand elasticity found in Cournot models both appear in the results.     

Death of the “organization man”: Temporal relations in strategic alliances

Environment is shifting the power balance between the organization and its members, providing the individual with the power to bargain with the organization. The present article explores the sources and consequences of this change for the individuals who are members of strategic alliances as well as for the organizations they are affiliated with. © 1995 John Wiley & Sons, Inc.     

The characterization of decisive weighted majority rules

This note supplies a rationale for the adoption of decisive weighted majority rules by small decision-making bodies (n<6). It proves that such rules are the only decision rules that satisfy the two common and quite mild conditions of monotonicity and neutrality.     

Contribution to unemployment of insurance-induced labour force participation: Canada - 1972

The 1971 Unemployment Insurance Act is found to raise labour force participation in Canada, accounting for between a third to two-thirds of the alleged Act's effect on unemployment in 1972. Policy implications are considered.     

Mutual fund performance evaluation with active peer benchmarks

We propose a simple approach to account for commonalities in mutual fund strategies that relies solely on information on fund returns and investment objectives. Our approach augments commonly used factor models with an additional benchmark that represents an equal investment in all same-category funds, which we call an active peer benchmark (APB). We find that APBs substantially reduce the average time series correlation of residuals between individual funds within a group when added to a four-factor equity model (or to a seven-factor fixed-income model). Importantly, adding this APB significantly improves the selection of funds with future outperformance.     

Bidder cost revelation in electric power auctions

Competitive auctions for electric power sources whose operation will be based upon economic dispatch raise new challenges for auction designers. The efficient selection and operation of such generation sources requires revelation of bidder types over two-dimensions, fixed and variable costs. The way in which fixed and variable prices are combined into a net score, which determines the winning bids, plays a key role in influencing bidders behavior. This paper analyzes bidder strategies and develops necessary conditions of bid scoring systems for the existence of equilibrium strategies that will result in efficient operations. Existing and proposed bid scoring systems are examined using our results.     

Endogenous Public Policy, Politicization and Welfare

In the two–stage political–economic game that we study public policy is the outcome of the interaction between interest groups and a two–tier government. Implementation of a policy proposed by a bureaucrat requires approval by an elected politician. The objective function of the bureaucrat hinges on the weight assigned to social welfare relative to the rent–seeking outlays of the interest groups. This weight represents the degree of politicization of the government. Our main result is that, in contrast to common belief, increased politicization need not adversely affect the public well–being.     

Discrimination in contests: a survey

The objective of this paper is to provide a comprehensive answer to some fundamental questions related to discrimination within the context of contests. For example, what forms of discrimination are possible? Can discrimination be justified? What mode of discrimination is expected? Does discrimination necessarily result in the elimination of polarization? How effective are the different modes of discrimination in inducing efforts (revenue)? How do the most widely studied contests based on an all-pay-auction and on a lottery compare under different modes of discrimination? Applying a contest-design approach, we examine four alternative types of discrimination that can be selected by a contest designer who maximizes the contestants’ efforts (his revenue). Our survey focuses on the leading principles of the separate and joint effective application of the alternative modes of direct, overt covert and head starts-discrimination that are assumed to be exercised under the widely studied family of (logit) contest success functions (CSFs). Whereas direct discrimination refers to differential taxation of the contested prize subject to a balanced-budget constraint, overt, covert and head starts-discrimination relate to structural discrimination that involves the parameters of the CSF. While the direct mode of discrimination is legally feasible, the structural modes of discrimination are more subtle and more difficult to implement and, sometimes, may even involve legal barriers.