DESIGNING A MARKET STRUCTURE WHEN FIRMS COMPETE FOR THE RIGHT TO SERVE THE MARKET*

In many industries, a regulator designs an auction to select ex‐ante the firms that compete ex‐post on the product market. This paper considers the optimal market structure when firms incur sunk costs before entering the market and when the government is not able to regulate firms in the market. We prove that a free entry equilibrium results in an excessive entry when the entry costs are private information. Then, we consider an auction mechanism selecting the firms allowed to serve the market and show that the optimal number of licences results in the socially optimal market structure. When all the potential candidates are actual bidders, the optimal number of firms in the market increases with the number of candidates and decreases with the social cost of public funds. When the market size is small, as the net profit in the market decreases with the number of selected firms, entry is endogenous. As increasing competition in the market reduces competition for the market, the optimal structure is more concentrated than in the previous case.     

Fuelled Power: Oil,Financiers and Central Bank Policy in Nigeria

While the literature on business power and global finance has illuminated the ways in which financial institutions limit the policy autonomy of states in developing countries, we know much less about the circumstances under which the power of financiers is undermined. In this article, I advance explanations of these circumstances by arguing that state access to natural resource revenues reduces the power of financial institutions and enhances the capacity of the state to pursue central bank policies which violate the interests of major financiers. I employ a case study of central bank policy in Nigeria to probe this argument and find evidence that supports the claim that whenever the Nigerian government's access to resource revenues increased, the state's capacity to diverge from financiers’ preferred central bank policies and to advance its own preferences increased as well. The analysis provides the basis for broader propositions about the policy space of developing countries vis-à-vis financial institutions and the variability of structural power.     

A body without a voice: A literary approach to Linguet's opposition to the physiocrats over the free trade in grain

Abstract

Linguet was a critic of the physiocrats and of what he perceived as the disastrous consequences the liberalisation of the trade in grain on the people. Linguet's rhetorical use of the voice of the people is studied here through its rhetorical device and its fantasmatic and ideological echoes. With his dramatised and polyphonic style Linguet quotes many different protagonists, but he chooses to neuter the people's voice on the rare occasions when it is heard. Despite this rather conventional suppression of the people's voice, Linguet's claims to be a spokesman or advocate of the people are quite convincing. Through his detailed and hyperbolic depiction of the physical suffering of starving people, Linguet shines a light on one of the blind spots of the Physiocratic doctrine which sees no damage in economic prosperity.     

Cost-effectiveness of telaprevir in combination with pegylated interferon alpha and ribavirin in treatment-experienced chronic hepatitis C genotype 1 patients

Background:

Telaprevir (TVR,T) and boceprevir (BOC,B) are direct-acting antivirals (DAAs) used for the treatment of chronic genotype 1 hepatitis C virus (HCV) infection. This analysis evaluated the cost-effectiveness of TVR combined with pegylated interferon (Peg-IFN) alfa-2a plus ribavirin (RBV) compared with Peg-IFN alfa-2a and RBV (PR) alone or BOC plus Peg-IFN alfa-2b and RBV in treatment-experienced patients.

Methods:

A Markov cohort model of chronic genotype 1 HCV disease progression reflected the pathway of experienced patients retreated with DAA therapy. The population was stratified by previous response to treatment (i.e., previous relapsers, partial responders, and null responders). Sustained virologic response (SVR) rates were derived from a mixed-treatment comparison that included results from separate Phase III trials of TVR and BOC. Incremental cost per life year (LY) gained and quality-adjusted-life-year (QALY) gained were computed at lifetime, adopting the NHS perspective. Costs and health outcomes were discounted at 3.5%. Uncertainty was assessed using deterministic and probabilistic sensitivity analyses. Sub-group analyses were carried out by interleukin (IL)-28B genotype.

Results:

Higher costs and improved outcomes were associated with T/PR relative to PR alone for all experienced patients (ICER of £6079). T/PR was cost-effective for each sub-group population with high SVR advantage in relapsers (ICER of £2658 vs £7593 and £20,875 for partial and null responders). T/PR remained cost-effective regardless of IL-28B sub-type. Compared to B/PR, T/PR prolonged QALYs by 0.57 and reduced lifetime costs by £13,960 for relapsers. For partial responders T/PR was less costly but less efficacious than B/PR, equating to an ICER of £128,117 per QALY gained.

Limitations:

No head-to-head trial provides direct evidence of better efficacy of T/PR vs B/PR.

Conclusion:

T/PR is cost-effective compared with PR alone in experienced patients regardless of treatment history and IL-28B genotype. Compared to B/PR, T/PR is always cost-saving but only more effective in relapsers.     

Measuring agricultural knowledge and adoption

Understanding the tradeoffs in improving the precision of agricultural measures through survey design is crucial. Yet, standard indicators used to determine program effectiveness may be flawed, and at a differential rate for men and women. We use a household survey from Mozambique to estimate the measurement error from male and female self‐reports of their adoption and knowledge of three practices: intercropping, mulching, and strip tillage. Despite clear differences in human and physical capital, there are no obvious differences in the knowledge, adoption, and error in self‐reporting between men and women. Having received training unanimously lowers knowledge misreports and increases adoption misreports. Other determinants of reporting error differ by gender. Misreporting is positively associated with a greater number of plots for men. Recall decay on measures of knowledge appears prominent among men but not women. Findings from regression and cost‐effectiveness analyses always favor the collection of objective measures of knowledge. Given the lowest rate of accuracy for adoption was around 80%, costlier objective adoption measures are recommended for a subsample in regions with heterogeneous farm sizes.     

Inward Investment and Technical Progress in the United Kingdom Manufacturing Sector

This paper investigates the impact of direct investment by foreign‐owned companies on technical progress and hence labour productivity in the UK manufacturing sector. Using an industry‐level panel data set we find that foreign‐owned firms have a significant positive effect on the level of technical efficiency in domestic firms. There is evidence of significant intra‐industry and inter‐industry spillovers from inward investment. These findings remain robust even when other factors such as imports and domestic R&D expenditures are allowed for. Inward investment appears to be a much more important source of technical progress than foreign trade.     

Monetary and Fiscal Policy Rules in the EMU

Abstract. This paper studies the design and effects of monetary and fiscal policy in the euro area. To do so, a stylized two‐region model of monetary and fiscal policy rules in the EMU is built. We analyse how monetary and fiscal rules affect the adjustment dynamics in the model. Both the effects on the individual countries and on the EMU aggregate economy are studied. Three aspects play an important role in the analysis: (i) the consequences of alternative monetary and fiscal policy rules, (ii) the consequences of asymmetries between EMU countries (asymmetries in macroeconomic shocks and macroeconomic structures), and (iii) the role of alternative degrees of backward‐ and forward‐looking behaviour in consumer decisions and inflation expectations.