Household internal and external electricity contract switching in EU countries

Using a representative sample of more than 13,000 households from eight countries in the European Union (EU), this article empirically studies the factors related to household electricity contract switching by distinguishing between internal switchers (households that switched contracts but stayed with the same supplier) from external switchers (households that switched to a new supplier). The econometric analysis includes individual preferences, household structural factors and socio-demographic characteristics, as well as electricity market characteristics. The study explicitly explores the role of risk and time preferences on switching behaviours, with risk and time preferences elicited through incentivized experiments as well as self-assessment scales. The main results suggest that internal and external switching are not related to the same factors, that risk and time preferences affect switching behaviours, and that renters are less likely to switch than homeowners; further, electricity market characteristics are found to affect household electricity contract switching.     

Optimal Quotas, Price Competition And Products'' Attributes

We characterize the Nash equilibrium in the Hotelling model in the presence of an import quota. The optimal quota is identified and shown to be invariant to the mode of competition. We also prove that in the presence of a quota maximal differentiation is not achieved at equilibrium.     

Commodity money in the presence of goods of heterogeneous quality

Summary The aim of this paper is to demonstrate that uncertainty about the quality of a particular commodity does not necessarily exclude it from emerging as commodity money. This is shown in the context of the model of a simple economy with specialized agents and decentralized trade described in Kiyotaki and Wright (1989). In order to derive this result, considerations about marketability of the different goods are taken into account.I wish to thank Pierre de Trenqualye for many helpful conversations and ideas. For their comments and suggestions I am also very grateful to G. de Fraja and P. J. Simmons. Special thanks are due to Randall Wright for his kind advice. The usual disclaimer applies. Financial support was provided by CIRIT (Generalitat de Catalunya, Spain).     

SKILL BIAS AND EMPLOYMENT FRICTIONS IN THE U.S. LABOR MARKET 1970–1990*

This article studies simultaneous changes in four labor market variables: the unemployment rates for college and high‐school graduates, the education wage premium, and the level of college participation. It develops an equilibrium search and matching model of the labor market where education is endogenously determined. Then the model is used to investigate quantitatively whether the change in the above labor market variables from 1970 to 1990 in the United States can be traced to changes in the environment. A skill‐biased change in technology together with an increase in employment frictions can explain much of the observed variation in these variables.     

Decentralized resource allocation and increasing returns

We study the possibility of designing a decentralized resource allocation mechanism that yields optimal solutions in economies with increasing returns. After a brief review of the mechanisms already designed to cope with nonconvexities, we find out that either they fail to provide efficient solutions in Koopmans' sense, or else they use extremely complex messages. The question arises whether it is possible to define a nonwasteful and privacy-preserving mechanism over a class of environments with increasing returns using finite-dimensional vectors as messages. We show that the answer is no.     

Consumption Externalities,Habit Formation and Equilibrium Efficiency*

We analyze the welfare properties of the competitive equilibrium in a capital accumulation model where individual preferences are subject to both habit formation and consumption spillovers. Using an additive specification for preferences, according to which the argument in the utility function is a linear combination of present and past values of own consumption and consumption spillovers, we analyze the circumstances under which these spillovers are a source of inefficiency. It is shown that consumption externalities have to interact with habits in order to generate an inefficient dynamic equilibrium. Finally, we characterize optimal tax policies aimed at restoring efficient decentralized paths.     

ON THE APPLICATION OF EFFICIENCY ANALYSIS TO THE STUDY OF THE DIMENSIONS OF HUMAN DEVELOPMENT

This paper is an attempt to translate empirically some of the categorizations of human development reviewed by Alkire (2002) . It compares the estimates of human development obtained on the basis of Sen's (1985 ) capability approach, Narayan et al.'s (2000 ) dimensions of well‐being, Cummins (1996 ) domains of life satisfaction and Allardt's (1993 ) comparative Scandinavian welfare study. To obtain these estimates of human development use is made of techniques developed in efficiency analysis, an approach rarely applied to the study of consumption and standards of living (see, however, Lovell et al., 1994 ). Our database is the British Household Panel Survey. Our findings vindicate the multidimensional approach to human development but show a great empirical resemblance between the four conceptual approaches to well‐being.     

Monetary union in West Africa: who might gain,who might lose,and why?

Abstract.  We develop a model in which governments' financing needs exceed the socially optimal level because public resources are diverted to serve the narrow interests of the group in power. From a social welfare perspective, this results in undue pressure on the central bank to extract seigniorage. Monetary policy also suffers from an expansive bias, owing to the authorities' inability to precommit to price stability. Such a conjecture about the fiscal‐monetary policy mix appears quite relevant in Africa, with deep implications for the incentives of fiscally heterogeneous countries to form a currency union. We calibrate the model to data for West Africa and use it to assess proposed ECOWAS monetary unions. Fiscal heterogeneity indeed appears critical in shaping regional currency blocs that would be mutually beneficial for all their members. In particular, Nigeria's membership in the configurations currently envisaged would not be in the interests of other ECOWAS countries unless it were accompanied by effective containment on Nigeria's financing needs. JEL classification: E58, E61, E62, F33